This presentation explores the critical and paradoxical state of Iran’s energy sector. Despite holding the world’s second-largest natural gas reserves and the fourth-largest proven oil reserves, the country is on a precarious path toward becoming a net energy importer. The analysis moves beyond the surface-level numbers of vast resources to uncover a deep-seated structural imbalance between production, consumption, and economic policy. It paints a picture of a nation rich in resources but struggling with inefficiencies that threaten its long-term energy independence and economic stability. The core of the issue lies not in a lack of resources, but in how they are managed and consumed domestically.
The primary driver of this looming crisis is a combination of supercharged domestic consumption and a flawed system of massive energy subsidies. Iran’s energy mix is almost entirely dependent on natural gas and oil, which together account for a staggering 98% of its primary energy use. This consumption is heavily encouraged by a “hidden subsidy” system that makes Iran’s gasoline the cheapest in the world and results in the country having one of the highest energy subsidy-to-GDP ratios globally. A significant portion of this subsidized energy is directed towards the residential sector, which consumes a disproportionately large share compared to international standards, highlighting a pattern of inefficient and unsustainable energy use.
This trajectory of soaring demand against a backdrop of slower growth in supply creates a collision course. The presentation projects a critical crossover point where, if current trends persist, Iran’s final energy consumption will outstrip its supply in less than two decades. This scenario would force a country, long-defined by its role as a major energy exporter, to begin importing energy to meet its domestic needs. The consequences extend beyond economics to severe environmental impacts. This inefficient energy model has placed Iran among the top eight global CO2 emitters, with its contribution to pollution far outweighing its share of the world’s GDP.
Ultimately, the presentation argues that the current path is unsustainable and that fundamental, structural reforms are “inevitable”. The analysis concludes by outlining four key pillars for a strategic shift: drastically improving energy consumption efficiency, deepening the domestic value chain for oil and gas products, reforming financial and investment models in the energy sector, and leveraging Iran’s strategic location to become a regional hub for energy trade and swapping. These proposed changes suggest a move away from a model of subsidizing raw consumption toward creating a more sustainable and economically sound energy future.
