Azadegan Oil Field, one of the key priorities of Iran's Fourteenth Administration in the energy sector, has officially entered the execution phase after years of anticipation. The project is being implemented as part of the country's strategy to revitalize, develop, and maximize production from its shared oil and gas fields, following direct intervention and continued support from the President.
With approximately 33 billion barrels of oil in place, Azadegan ranks as the tenth-largest oil field in the world and is shared with neighboring Iraq. Today, it has become one of Iran's most strategically significant economic fronts. On the Iraqi side of the border, international energy companies, including Chevron, are actively producing from the shared reservoir, making accelerated production on the Iranian side a strategic priority for Iran's oil industry.
In an interview with IRNA, Mahmoud Amin-Nejad, CEO of DACO, the company responsible for implementing the project, discussed the latest progress of the development program, future expansion plans, and the Company's medium- and long-term strategy for enhancing recovery from the Azadegan field.
IRNA: More than two decades have passed since the Azadegan Oil Field development project was first launched. During that time, a number of domestic and international contractors were considered for its implementation. Now that DACO has assumed responsibility for the project, what major changes should we expect?
Mahmoud Amin-Nejad: The Azadegan Oil Field is Iran's largest shared oil field with Iraq and ranks as the tenth-largest oil field worldwide, containing more than 33 billion barrels of oil in place. Its strategic significance lies in its shared nature, making the expansion of Iranian operations and the acceleration of production critically important. This is particularly true given that several major U.S. companies are currently operating on the Iraqi side of the field. If we fail to increase our production rate, we will inevitably fall behind our competitors, while the opposite side will continue to advance.
Over the past two decades, domestic companies, including the Petroleum Engineering and Development Company (PEDEC), have been involved in the field's development. At various stages, international companies also participated. At one point, the field was divided into the North Azadegan and South Azadegan developments, with Japanese and Chinese companies responsible for certain sections while Iranian companies managed others.
Despite these efforts, the project did not achieve its intended development objectives or production targets. International restrictions led several foreign contractors to suspend their operations and withdraw from Iran. At the same time, financial constraints prevented the Ministry of Oil from advancing the project according to the original development plan.
To address these financing challenges, a strategy introduced approximately three years ago called for the establishment of the country's largest financial consortium. The consortium brings together the National Development Fund (NDF), Bank Melli Iran, Bank Mellat, Tejarat Bank, Parsian Bank, Shahr Bank, as well as MAPNA Group and Petropars, to finance the project through an investment of approximately USD 10 billion.
However, administrative procedures delayed the official ratification and notification of the contract to DACO, despite the company having been established in 2022. Fortunately, following the President's direct intervention, the contract was officially ratified and assigned to the Company.
The initial ratification took place in late 2025. Shortly thereafter, however, the country faced a series of unforeseen challenges that temporarily disrupted the implementation process. Through continued follow-up by the President, the Minister of Oil, the Minister of Economic Affairs and Finance, and the Plan and Budget Organization, the contract was ultimately issued and became effective on July 14, 2026.
IRNA: Now that the contract has officially entered into force, what developments can be expected at the Azadegan Oil Field?
Mahmoud Amin-Nejad: The field is currently producing approximately 230,000 to 240,000 barrels of oil per day. With the participation of new shareholders and investors, together with secured financing, our first development milestone is to increase production by 40,000 barrels per day within 18 months.
I believe this target can be achieved ahead of schedule. The required contractors have already been selected, the tendering process has been completed, and the necessary financial resources have been secured and are available to the Company.
Having spent 26 years in the oil, gas, and petrochemical industries, I am optimistic about the project's future. Thanks to the experienced team assembled for this project, strong coordination among the country's executive and regulatory bodies, and the strategic importance attached to this field, we are confident that the planned production increase can be achieved.
The second phase of the development program targets production of approximately 375,000 barrels per day, which is expected to be completed within four to four and a half years. This will be followed by water injection and Enhanced Oil Recovery (EOR) operations, with the ultimate objective of increasing production to 550,000 barrels per day within approximately 8.5 years.
It should also be recognized that while Iran is currently facing military challenges, there is simultaneously an economic competition underway. During the recent visit of the Iraqi Prime Minister to the United States, 48 agreements and memoranda of understanding were signed between Baghdad and Washington, the majority of them in the energy sector.
IRNA: Given that Azadegan is a shared field with Iraq and considering the Iraqi Prime Minister's recent visit to the United States, is the operator on the Iraqi side an American company?
Mahmoud Amin-Nejad: Yes. Chevron is one of the principal contractors operating on the Iraqi side of the shared reservoir. We are therefore engaged in a serious competitive environment and must avoid repeating the costly experience encountered in the South Pars field.
At present, Iraq's production from the shared reservoir is slightly higher than ours, although the gap is still manageable. If there is sufficient determination and coordinated action within the country, we remain fully capable of closing this gap and maintaining a competitive position.
The recent war has affected foreign currency revenues generated by Iran's petrochemical and steel industries, creating additional economic challenges. Under these circumstances, the oil sector can play a critical role in compensating for lost revenues, making the Azadegan field one of the country's most accessible opportunities for generating alternative sources of national income.
For this reason, the project receives close attention from executive, regulatory, and economic authorities alike. Both the Minister of Oil and the President closely monitor its development and implementation.
Accordingly, progress reports on the project are submitted on a weekly basis or every ten days, either directly or indirectly. This level of oversight is entirely justified, as the future of the Azadegan field is closely linked to the country's economic well-being and public livelihood.
IRNA: Given the current circumstances, including sanctions and the ongoing conflict, what measures have been taken to secure the equipment and infrastructure required for the next stages of development?
Mahmoud Amin-Nejad: Iran has long operated under sanctions, and the current wartime conditions have introduced additional challenges. Throughout my 26 years in the oil industry, I have experienced various operational constraints. While the current situation has undoubtedly intensified those challenges, the necessary contingency measures had already been anticipated.
A portion of the required equipment has already been supplied by PEDEC, while Petropars, the project's EPC contractor, has also completed the necessary procurement activities. In addition, DACO has utilized its experience and established supply channels to procure the remaining equipment required for the project.
As a result, at the current stage, and particularly for the first phase of development, we do not face any significant challenges regarding equipment availability, including drilling rigs and other essential operational resources.
IRNA: Were these technologies and equipment developed domestically, or had they been procured in advance?
Mahmoud Amin-Nejad: The technical expertise required for this project is now available within the country. For example, the technology for Electric Submersible Pumps (ESPs) has been successfully developed domestically. Naturally, it would not be accurate to claim that every component or piece of equipment is manufactured entirely by a single organization within one country. Even the world's largest industrial projects rely on global supply chains, sourcing different components from multiple suppliers while delivering the final product under a single brand. The same principle applies to this project.
Accordingly, there is no shortage of technical expertise or infrastructure. As I mentioned earlier, thanks to the preparations made over previous years by our colleagues across Iran's oil industry, combined with the financial and logistical capabilities that DACO has mobilized over the past four to five months following its direct involvement in the project, we do not anticipate any major challenges during the first phase of development.
For the second phase, which targets increasing production to approximately 370,000 barrels per day, the procurement of additional drilling rigs and other key equipment has already been incorporated into the project plan. This phase will require an investment of approximately USD 700–800 million, to be financed in cooperation with the National Development Fund (NDF), one of the Company's principal shareholders. The required funding has already been allocated.
There is no doubt that the current wartime environment, like other sectors of the economy, imposes additional constraints on the project. Nevertheless, our primary strength lies in our ability to effectively manage these challenges. By leveraging domestic capabilities, together with established procurement channels that cannot be disclosed publicly, we remain confident that the project will be delivered in accordance with the planned schedule.
IRNA: How many development phases have been defined for the Azadegan Oil Field?
Mahmoud Amin-Nejad: The development plan consists of three phases. The first phase targets an increase of 40,000 barrels per day. The second phase aims to raise production to approximately 370,000 barrels per day. The third and final phase targets production of 550,000 barrels per day.
IRNA: Will the Azadegan Oil Field now be developed as a single integrated field, rather than being divided into the North and South Azadegan projects?
Mahmoud Amin-Nejad: Yes. The project is being implemented under the Iran Petroleum Contract (IPC) framework, which serves as the Ministry of Oil's standard contractual model for the development of oil fields.
Under the terms of the contract, the development period is 8.5 years, commencing on July 14, 2026. Upon completion of the development phase, the operator will undertake a 20-year operating period. At the end of this term, all facilities, equipment, and infrastructure developed under the project will be transferred to the National Iranian Oil Company (NIOC).
Throughout the operating period, the contractor will be responsible for all field operations, including maintenance, artificial lift, production, and the transportation of crude oil to the designated delivery points.
However, under the IPC model, ownership of the produced hydrocarbons remains with the Government. The contractor acts solely as the project operator and is compensated under the contractual framework without acquiring ownership of the produced oil.
This integrated development approach builds upon the experience gained from the previous North Azadegan and South Azadegan developments and effectively treats Azadegan as a single unified field.
IRNA: Have the necessary plans also been made for processing the additional crude oil that will be produced?
Mahmoud Amin-Nejad: Yes. The processing facilities serving the Azadegan area, technically referred to as the Central Treatment and Export Plant (CTEP), currently have a processing capacity of approximately 360,000 barrels per day.
Given that current production stands at approximately 230,000 to 240,000 barrels per day, sufficient downstream processing capacity already exists to accommodate the planned production increase during the first phase of development. Therefore, downstream processing capacity is not expected to become a bottleneck for either field development or enhanced recovery operations.
As previously mentioned, Train 1 and Train 2 have already been completed, while Train 3 and Train 4 are expected to become operational in the near future. Progress on these facilities is continuing in close coordination with the Ministry of Oil, supported by the necessary downstream investment.
Furthermore, following the execution of the relevant agreements on May 16, 2026, responsibility for implementing this portion of the project was officially assigned to DACO.
IRNA: Will DACO also be responsible for transporting the produced crude oil to export terminals and domestic refineries, or does that remain under the Ministry of Oil?
Mahmoud Amin-Nejad: No. The project has clearly defined Battery Limits (BL). DACO's responsibility extends to the point where the produced crude oil is delivered to the West Karoun Pumping Station in Khuzestan Province.
This facility serves as the collection hub for production from several nearby oil fields, including Yaran, Sepehr, Jofeir, Sohrab, and other adjacent fields. From there, the crude oil is transported either to export terminals, such as Kharg Oil Terminal, or through the Goreh–Jask Pipeline. A portion of the production is also supplied to domestic refineries.
Under the IPC framework, our contractual obligation is to deliver crude oil at the designated custody transfer point. Activities such as crude marketing, export, and refining fall outside the scope of the contract.
Accordingly, our primary focus remains on field development and fulfilling our production and delivery commitments.
IRNA: Among the various oil fields in Khuzestan Province, what distinguishes Azadegan from the others?
Mahmoud Amin-Nejad: From both the perspective of areal extent and oil in place, Azadegan ranks among the world's largest oil fields and, as mentioned earlier, is the tenth-largest oil field globally.
In addition, geological studies indicate that the reservoir formations in Azadegan present fewer development complexities than many other fields. Consequently, production costs are significantly more competitive. While lifting costs in some fields may range between USD 35 and USD 50 per barrel, Azadegan offers a highly attractive economic profile, enabling substantial production with comparatively lower capital investment.
These technical and economic advantages have attracted major financial institutions, including Tejarat Bank, Bank Mellat, Parsian Bank, and other organizations whose shares are publicly traded on Iran's capital market.
Had the project lacked strong economic fundamentals, national strategic considerations alone would not have justified such significant investment. These institutions also required a commercially viable return on investment. The combination of strong project economics and strategic importance has therefore made Azadegan one of the country's most attractive upstream investment opportunities.
IRNA: Iran has many experienced oil contractors with proven capabilities. Why was such a major project entrusted to a banking consortium?
Mahmoud Amin-Nejad: Reducing government involvement in economic activities and expanding the role of the private sector should remain a national priority.
State-owned enterprises often face lengthy administrative procedures that can delay procurement and project execution. Recent experience in areas such as foreign investment and economic diplomacy has demonstrated that capable and transparent private-sector organizations can deliver outstanding results when provided with the appropriate operating environment.
Persian Gulf Bidboland Gas Refining Company (PGPIC) represents a successful example. It was the first major instance in which the petrochemical sector entered Iran's upstream oil and gas industry after the project was transferred to the Persian Gulf Petrochemical Industries Holding Company (PGPIC) in 2015 and 2016.
Prior to the transfer, the project had achieved only 18% physical progress over an 18-year period under government management. Following its transfer to the non-governmental sector, however, the urgent need for gas feedstock enabled the project to be completed and commissioned as a mega-project within just 36 months.
The project not only prevented the waste of valuable national resources and significantly reduced environmental pollution caused by gas flaring, but also became a critical source of fuel and feedstock for petrochemical facilities in the Mahshahr region as well as the Dena Pipeline.
This successful experience clearly demonstrated that properly structured partnerships with capable non-
IRNA: Environmental issues related to the Azadegan Oil Field have long been a subject of public concern. What measures has the project operator put in place to ensure that development activities are carried out in an environmentally responsible manner and that the region is adequately protected?
Mahmoud Amin-Nejad: The Azadegan Oil Field is located within the Hoor Al-Azim Wetland, an environmentally sensitive area that is closely linked to the livelihoods of local communities. Over the years, however, a perception has emerged that any environmental degradation in the region is directly attributable to oil industry activities. While the role of the oil industry cannot be entirely dismissed, it is important to recognize that any large-scale development project, particularly in environmentally sensitive areas, inevitably involves some degree of intervention. The key objective is to ensure strict compliance with environmental requirements and to minimize those impacts. Development carried out in accordance with sound environmental standards is not inherently incompatible with environmental protection.
Recent technical studies and environmental assessments indicate that oil operations account for no more than approximately 10% of the environmental challenges affecting the Hoor Al-Azim Wetland. The primary cause has been the reduction of environmental water inflows, particularly from the Tigris and Euphrates river systems, as a consequence of upstream dam construction in Türkiye. Therefore, while the country's strategic resources in this field cannot be overlooked, economic development must not come at the expense of environmental sustainability.
Within the framework of the USD 10 billion Azadegan development project, approximately USD 250 million has been allocated to Corporate Social Responsibility (CSR) initiatives, a significant portion of which is dedicated to environmental protection. Key measures include the treatment of wastewater before discharge into the wetland, preventing the construction of physical barriers that could obstruct natural water flow, and avoiding artificial land formation within the wetland in order to preserve its natural hydrological connectivity.
Infrastructure design has also prioritized environmental protection. For example, in the power distribution system, underground power cables have been used instead of conventional overhead transmission towers to minimize visual and physical impacts on the natural landscape. In parallel, Iran's national and provincial environmental authorities maintain rigorous oversight of the project, ensuring compliance with all applicable environmental regulations and standards.
Given the wetland environment, drilling operations inevitably require the construction of drilling pads and the installation of drilling facilities. Nevertheless, through extensive engineering optimization, every effort has been made to reduce the number of drilling pads to the minimum necessary while still achieving the project's production objectives of approximately 500,000 barrels per day. Minimizing the number of drilling locations has been one of the project's principal environmental design considerations.
Although no major industrial project can claim to eliminate all environmental impacts entirely, our guiding principle has been to minimize potential impacts to the greatest extent possible and to ensure that field development proceeds in full consideration of environmental requirements.
IRNA: Earlier, you referred to the challenges the country has faced as a result of recent attacks and to the efforts made by oil industry professionals to maintain production. As someone with decades of experience in the oil industry, how do you believe people in southern Iran view the current situation and the importance of maintaining oil production under these circumstances?
Mahmoud Amin-Nejad: In recent months, the term "southern Iran" has frequently been used in public discourse. However, it is important to emphasize that Iran is one nation, and any hardship experienced in one region ultimately affects the country as a whole.
As members of this nation, we consider it our responsibility to give the highest priority to the welfare of the people living in the southern provinces. These communities continue to face significant challenges today, just as they bore a substantial share of the hardships during the eight years of the Iran-Iraq War. Accordingly, we are committed to utilizing every available opportunity within this development project to strengthen the region's economic foundations and help mitigate the consequences of these challenges.
There have also been rumors suggesting that existing personnel would be laid off or replaced by non-local employees. These claims are entirely unfounded.
To address such concerns, an operating agreement has been concluded with the field's current operator, Arvandan Oil and Gas Company, ensuring that the employment status of the existing workforce remains unchanged. Moreover, the new development program is expected not only to preserve current employment but also to create additional job opportunities as the project progresses.
Our previous experience supports this approach. For example, during the Bid Boland Gas Refinery project and the Gas Flare Recovery Program, approximately 86% to 87% of the workforce consisted of local personnel from Khuzestan Province, while only 12% to 13% were employed at headquarters in Tehran or other locations.
Moving forward, DACO will continue to pursue a balanced development strategy. By utilizing the financial resources allocated under the Ministry of Oil's development framework, the Company aims both to improve local infrastructure and living conditions and to maximize the participation of local talent throughout the implementation of the Azadegan development project.
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