Hamid Mollazadeh
While Iran and Saudi Arabia hold relatively comparable oil reserves, the revenue generated from these resources reveals a significant disparity. The key to boosting oil production lies in increasing recovery rate with the help of cutting-edge enhanced oil recovery methods, yet Iran's performance in this area lags far behind global standards thanks to not having access to advanced know-how.
Iran's vast hydrocarbon reserves have helped it become a key player in the global energy market. Nevertheless, despite growth in exploration and reserve development, the country's production efficiency remains low, leading to a decline in overall productivity. Although Iran currently relies on reservoir natural pressure and outdated extraction methods to extract its oil—many of its wells are still in the first half of their lifecycle—this approach will not be sustainable in the long term. Industry leaders have warned that without the adoption of advanced pressure-enhancement technologies, current production levels will encounter a sharp decline sooner rather than later.
Losing Potential Profits
The fact of the matter is that the global average recovery rate from oil reserves is over 40 percent, whereas the figure stands at no more than 25 percent, in the best case scenario. This inefficiency has cost Iran billions of dollars in potential profits—not due to a lack of oil, but due to the inability to extract it efficiently. What was once considered an inevitable decline in reservoir pressure is now being addressed through enhanced oil recovery (EOR) techniques, which have become a pressing demand from Iran's Oil Ministry. These methods could transform the industry by boosting production efficiency and increasing supply to both domestic and international markets.
The recovery factor, one of the most critical indexes in reservoir management, specifies the percentage of oil that can be technically and economically extracted. Statistics show that Iran's performance in this area falls significantly behind global standards. This gap is not primarily due to unavoidable geological constraints, but rather has something to do with the country's technological isolation in key EOR fields.
Unlocking Substantial Revenues
However, officials from the National Iranian Oil Company have noted that this gap is gradually narrowing down. Even a small increase in the recovery factor can unlock substantial revenue potentials. In 2023, Iran's oil revenues amounted to $20 billion, while that of Saudi Arabia reported to be around $101 billion—five times higher. This massive revenue gap occurs despite the relatively small difference in proven oil-in-place reserves between the two countries. Iran ranks third globally with 208 billion barrels of proven oil reserves, while Saudi Arabia ranks second with 267 billion (a difference of about 28 percent). This mismatch between reserve shares and revenue shares highlight the core productivity crisis in Iran's oil industry.
Despite the complexity of EOR projects, domestic companies have successfully implemented pilot water and gas injection projects in the southern oil-rich regions. Extraction from the Bangestan reservoirs, for instance, face significant challenges due to severe pressure drops and low-quality reservoir rock. As a result, gas-based methods are often risky and water injection is typically the preferred approach for EOR in such reservoirs.
Water-Based EOR Projects
According to the NIOC’S officials, water injection in the Bangestan reservoir of the Ahvaz field in Khuzestan Province has begun as the first operational water-based EOR projects in the area. The project includes different phases namely reservoir studies, injection validation, oil well planning and monitoring infrastructures. Many of such activities including reservoir modeling for water injection, advanced testing and reservoir characterization at the laboratory, have been successfully executed for the first time in Iran.
Gas injection is also a highly effective method for maintaining reservoir pressure and ensuring sustainable oil production. A significant portion of the NIOC’s development plans is focused on this approach.
According to Shana, gathering associated gas from oil fields and injecting it to the Heftkal field in Ahvaz has reached its final stage and is expected to be operational by the end of the current Iranian fiscal (March 2026). Meanwhile, the associated gas gathering project for the Qaleh-Nar field in the same region is already underway. Plans are also in place to expand gas injection infrastructures to other fields including Bibi Hakimeh, Kangan, Nargesi, Lavan, Marun and Gachsaran, all in southern oil-rich Khuzestan Province.
Hamid Bovard, CEO of the NIOC has recently noted that there has been a noticeable upward trend in EOR and associated gas gathering projects compared to previous years. Despite the ongoing economic pressures, oil and gas production levels, onshore and offshore drilling activities and the number of drilling rigs remain in a relatively stable state. The official also announced a significant reduction in gas flaring at South Pars gas complex. He predicted that flaring would drop to 3 million cubic meters per day by March 2026, reflecting a strong commitment to reducing environmental pollution and optimizing energy use.
