Iran’s understandable insistence on the maximization of local content (i.e., the obligation of IOCs to subcontract the maximum possible level of the project components to Iranian companies) will require substantive qualitative capacity building in the local industry. In some cases, the desire to deploy the latest technologies in upstream projects may clash with the utilization of local content.
Consequently, the MoP and its subsidiaries need to find the right balance between foreign and local technological content. The guiding principle should be one of the stated objectives, i.e., “increasing the rate of recovery,” which will enhance Iran’s national wealth and empower the country to invest more to create needed jobs.
From a national economic perspective, the most significant objectives are those that promote local value creation, i.e., the completion of the petrochemical value chain as well as the focus on exporting petroleum products rather than crude oil. The more value is generated in Iran, the more wealth will be created and the less dependent Iran will be on the dynamics of the international crude market.
However, in achieving additional value in the petroleum sector, the MoP needs to think of strategic partnerships not only with technology providers but also with other partners that can help finance projects and also offer access to international markets. In other words, the MoP needs to develop a new mindset that has to go far beyond simply producing and selling crude oil. The shift in mindset could go hand in hand with a demand from some of the stakeholders who request that younger managers be promoted in the petroleum sector.
In fact, the current leadership in the petroleum sector has been around for the past three decades, and the time has come for the empowerment of younger managers.