Iran's Oil Industry Held Hostage by Fragmented Governance

The oil industry in Iran faces significant challenges related to governance and accountability. Rather than just addressing sanctions or investment shortages, the country must address the issue of who makes decisions, signs contracts, receives money, and is ultimately accountable.

The oil industry involves a complex chain of reservoir expertise, production planning, engineering, safety, financing, sales, and accountability. However, this chain has been badly fragmented over the past two decades, particularly under President Mahmoud Ahmadinejad's rule.

During this period, projects were handed to military institutions, shares and assets were transferred to pension funds and quasi-state bodies, and oil cargoes were used to cover budget shortfalls in organizations outside the Oil Ministry. This fragmentation has led to billions of dollars in investment and advanced technology potentially reproducing old disorders on a larger scale.