Iran's Aspiration for Natural Gas Encountering Challenging Geopolitical Conditions
Iran, the world's second-largest holder of natural gas reserves, is currently grappling with energy shortages. Despite possessing vast resources, the country faces challenges due to aging infrastructure, underinvestment, high domestic demand, geopolitical tensions, and recent destructive attacks on critical energy sites.
The energy sector in Iran is heavily reliant on old equipment and facilities that have not seen sufficient modernization or maintenance, leading to production inefficiencies and declines in output. Economic sanctions and international isolation have further limited foreign investment and technology transfer, impeding the development and upgrading of energy infrastructure.
The high domestic consumption of natural gas is another significant factor contributing to the shortages. Iran consumes around 255.5 billion cubic meters of the 266 billion produced annually, leaving little surplus for export. This high consumption has created shortages in some regions, exacerbating the problem.
Geopolitical tensions and recent attacks have also played a role in Iran's energy crisis. In 2025, Israeli airstrikes targeted key Iranian energy facilities, including the South Pars Gas Field—the world's largest gas field—and critical offshore production platforms and refineries. These strikes disrupted up to two-thirds of Iran’s domestic gas supply and temporarily halted production in major sites.
Iran's economic reliance on oil and gas revenues, a significant portion of its government income, is also a challenge. Sanctions force the country to resort to evasive export methods, complicating efficient resource management.
Despite these challenges, Iran has sought partnerships to develop its energy resources. In 2015, after agreeing to the nuclear deal with world powers, Iran secured a $5 billion deal with the French energy major Total to further establish and mount one new platform at the South Pars area. However, Total left the project in 2018 when the USA withdrew from the nuclear accord and reestablished sanctions that might punish companies working with Tehran.
Iran has also sought partnerships with Russia, China, and the China National Petroleum Company (CNPC), but these partnerships have not been successful. Iran has not received any of the 55 million cubic meters of Russian gas it was to import under the deal with Moscow, and the CNPC withdrew from the South Pars project in 2019.
The administration of President Ebrahim Raisi has been criticized for its lack of understanding of energy protection, energy diplomacy, and energy transition. Making a transition to green and clean powers requires big funds and advanced technology, which Iran currently lacks.
Experts warn that Iran's current solutions, such as the promotion of plans to create its energy market, are not long-term solutions. The deficit in Iran's gas production is growing bigger as domestic manufacturing decreases, aging infrastructure deteriorates, and Iran struggles to obtain the international investment and technology it needs to turn things around.
As the winter season approaches, Iranian citizens are facing higher gas bills and potential gas shortages. Protests have erupted over higher gas costs and potential cutoffs. Despite these challenges, the mood in Iran remains confident, with the government expressing confidence in its ability to weather the cold, despite Europe's potential deep freeze and the possibility of increased gas imports.
However, Iran's wasteful practices are also contributing to the crisis. Dalga Khatinoglu claims that Iran wastes much of its natural gas due to gas leakages, inefficient electrical power production, lack of correct storage facilities, and flaring off of gas that the country does not have the innovation to capture.
In conclusion, Iran's energy crisis is a complex issue stemming from a combination of structural, technical, and geopolitical factors. The country's inability to use its natural gas reserves effectively has resulted in energy shortages that are likely to continue unless significant changes are made to Iran's energy management and infrastructure.
- The reliance of Iran's energy sector on outdated equipment and facilities is a significant contributor to production inefficiencies and declines in output.
- Economic sanctions and limited foreign investment, along with a lack of technology transfer, have hindered the development and upgrading of Iran's energy infrastructure.
- Geopolitical tensions and recent attacks on energy facilities, such as the South Pars Gas Field, have disrupted domestic gas supply and exacerbated the energy crisis.
- The administration's lack of understanding in energy protection, energy diplomacy, and energy transition has hindered Iran's efforts to transition to green and clean powers, a critical step in overcoming its energy crisis.
