From dream to reality: Why didn’t China and Russia invest in Iran’s oil industry?

According to Energy Press, in the past two decades, the development perspective of Iran’s oil and gas industry was always designed based on cooperation with foreign countries, including Russia and China. As strategic partners, these countries were supposed to play an important role in investment and technology transfer, but over time, this belief changed, especially during the administration of President Masoud Pezzekian, and the focus on cooperation with these foreign countries to improve the oil and gas industry in the country decreased.
The main obstacles to foreign investment
Morteza Behrouzifar, an energy expert, said in an exclusive interview with Energy Press, referring to the change in the new government’s perspective: “In Mr. Pezzekian’s administration, optimism towards foreign cooperation has decreased and has been replaced by realism. Contrary to some unrealistic expectations in previous governments, especially Mr. Raisi’s government, which had counted on large-scale agreements, such as the $40 billion contract with these countries, experts have emphasized from the beginning that as long as the sanctions remain in place, no reputable country or company, including China and Russia, will make large-scale investments in Iran.
On the other hand, Behrouzifar points to the competitive relations between Iran and Russia in the energy market and believes that, in particular, Russia, as one of the largest oil and gas producers, is Iran’s strategic competitor in the energy market. With one of the largest oil and gas reserves in the world and the second largest gas reserves, Iran is a serious competitor to Russia. Therefore, expecting Russian investment to promote Iran’s oil and gas industry is illogical, because this country has no interest in strengthening its competitor.
Domestic Investment Challenges
Regarding the challenges of domestic investment in the oil and gas sector, this expert says: Iran is almost devoid of real private companies in the oil and gas industry. The existing companies, such as MAPNA or Khatam al-Anbiya, are mostly quasi-state and do not have the technical and financial capacity to implement large projects. These companies are not only deprived of technical knowledge and advanced equipment, but also do not show a desire to make large investments in this sector due to the lack of sufficient profitability under sanctions.