Petroleum Business Review (PBR)

One of the main challenges for the regulators of oil contracts in Iran is the financial and taxation system and the auditing procedures of oil contracts. This issue has, even after the Islamic Revolution and until today, always been one of the concerns of oil stakeholders, especially in Iran. Nowadays with the selection of the service contract format as the only approved contractual template in upstream oil operations, oil companies, acting as contractors, carry out the investment in oil operations and, if the contractual objectives are achieved, are entitled not only to the reimbursement of costs but also to receive fees. Based on the principle of “no profit, no loss” and in order to prevent the contractor from unjustly benefiting by overstating incurred expenses, the parties classify the costs and, using accounting and auditing principles, stipulate the definitions, instances, and calculations methods of the costs, and so forth. Given Iran’s growing need to conclude Joint Operating Agreements (JOAs) aimed at facilitating technology transfer through enhanced reservoir recovery by assigning operational responsibilities to an Iranian operating company while maintaining the contractor’s overall responsibility it is essential to revise and adapt Iran’s accounting and auditing procedures to align with the specific requirements of such agreements. In this regard, the model accounting procedures published by international petroleum associations can serve as effective and practical benchmarks for reform.

The Arash (Al-Durra) gas field, located in the northern Persian Gulf, is a shared natural resource claimed by Iran, Kuwait, and Saudi Arabia. Ongoing maritime boundary disputes have made the development of this field a geopolitical and legal challenge. Game theory is used in this research to model the strategic interactions between the three states under various cooperation and competition scenarios. The results indicate that trilateral cooperation would be the greatest economic and security benefits for all parties; however, political tensions and legal barriers, particularly Iran’s non-membership in the United Nations Convention on the Law of the Sea (UNCLOS), hinder such outcomes in the short term. Iran experiences the greatest losses under competitive strategies, while Saudi Arabia and Kuwait benefit more from bilateral agreements. The study also explores how Iran’s legal position could be strengthened through accession to UNCLOS and the adoption of a flexible strategy that combines active diplomacy with cautious resource exploitation. This approach could improve Iran’s bargaining power and reduce its isolation in the dispute. The research offers a comprehensive analysis of the legal, geopolitical, and economic dimensions of the Arash field conflict and provides actionable policy recommendations to reduce tensions and promote equitable, long-term resource sharing in the region.

This study conducts a comprehensive examination of the interlinkages among four key financial markets—crude oil, gold, currency, and equities—over the July 23, 2013, to March 12, 2025. This study employs the Contemporaneous and Lagged R2 Decomposed connectedness approach recently introduced by Balli et al. (2023), which allows us to decompose the connectedness among variables into lagged and contemporaneous components. As the previous approaches only show overall or contemporary results, this novel approach fills the gap in the literature. The findings reveal that most spillovers occur contemporaneously, with the U.S. dollar playing a central role in the propagation of contemporaneous shocks. In contrast, gold emerges as a significant transmitter of long-term shocks, underscoring its relevance for strategic risk management. Moreover, crude oil is the main receiver of shocks in the average and lagged connectedness in the network. Dynamic analyses indicate heightened market sensitivity during periods of geopolitical tension, particularly under intensified sanctions and currency volatility in Iran. By uncovering the evolving structure of cross-market dependencies, this research offers valuable insights for portfolio allocation, systemic risk assessment, and the formulation of responsive economic policies in times of financial stress.

The resource-based model (centered on the extraction and sale of crude oil) has been a significant contributor to the phenomenon of the "natural resource curse," undermining sustainable economic growth. Consequently, this study advocates for a paradigm shift in Iran’s oil industry, moving from the current model of crude oil extraction and export toward a technology-driven model. The technology-centric approach is proposed as a solution to mitigate this challenge and facilitate long-term development. In this context, critical questions arise: How prepared is a nation’s oil industry across technical, human, structural, and other dimensions to adopt a technology-driven approach? This research focuses on the human capability components within Iran’s oil industry for implementing such a model. To this end, 36 components across four key domains—organizational talent management, leadership, human resources, and organizational capabilities—were analyzed using the Importance-Performance Analysis (IPA) method. The findings reveal that leadership-related components predominantly fall within Quadrant I of the IPA matrix, indicating high importance but weak performance, necessitating urgent strategic interventions. Conversely, most human resource components reside in Quadrant IV, reflecting the existing workforce’s high readiness for adopting a technology-driven approach in Iran’s oil industry. Components related to organizational capabilities and talent management are dispersed across multiple quadrants, underscoring the need for tailored policies and context-specific measures. Further results highlight that transitioning to a technology-driven model could yield significant competitive advantages and profitability for Iran’s oil industry. However, this transformation demands a comprehensive evaluation of existing capabilities and the design of targeted strategies to address identified gaps.

This study investigates the multifaceted challenges of implementing digital transformation within Iranian oil and gas companies, focusing on organizational barriers and managerial solutions. Despite the global momentum toward digitalization, Iran’s oil and gas sector faces unique obstacles, including resistance to change, skill gaps, legacy infrastructure, and insufficient alignment between technology providers and large enterprises. Utilizing a mixed-methods approach, we conducted a survey of 210 managers and IT professionals across upstream and downstream organizations, complemented by in-depth interviews with key stakeholders. Exploratory factor analysis (EFA) and structural equation modeling (SEM) were employed to identify and validate critical barriers and their interrelations. Findings reveal that organizational inertia, lack of digital competencies, and inadequate investment in digital infrastructure are the most significant impediments, while leadership commitment and targeted training programs emerge as effective managerial remedies. The study contributes actionable insights for policymakers and executives by outlining a roadmap for overcoming digital transformation hurdles and achieving sustainable competitive advantage. The results underscore the necessity of a holistic strategy integrating technological, human, and process dimensions to facilitate successful digital transformation in Iran’s oil and gas industry.

This study uses spatial econometric and dynamic analyses to examine the temporal and spatial effects on three performance indicators of petrochemical companies active in the Tehran Stock Exchange: price performance, retained earnings, and total performance. The target population comprises all petrochemical companies listed on the Tehran Stock Exchange that have been active since the beginning of 2013 to the end of 2024. The findings suggest that, while information asymmetry positively influences companies' retained earnings, it simultaneously has a negative impact on price and total performance. Additionally, an examination of the H-index revealed that the market structure of this industry is monopolistic. However, monopolistic behavior is observed in the distribution of retained earnings, which can be attributed to the centralized structure governing the management of the Iranian petrochemical industry. Findings concerning financial structure suggest that elevated financial leverage and financing costs negatively impact returns, while investment in physical assets has the most favorable impact. Furthermore, identifying significant spatial effects corroborates the idea that proximity and spillover effects between companies are substantial. This study provides substantial empirical evidence that enhancing information transparency, optimizing financial structures, and reforming corporate governance mechanisms could increase market returns and improve stock returns in the petrochemical industry.