Iran issues first Caspian Sea drilling order in three decades

Iran has issued its first drilling order in the Caspian Sea in nearly 30 years, aiming to revive long-stalled exploration in the region, Oil Minister Mohsen Paknejad said on Friday.

Paknejad said the new operations could unlock substantial reserves. “There is potential to extract over 600 million barrels of crude oil in place from this area,” he told reporters on the sidelines of the 29th International Oil Exhibition in Tehran.

Exploratory drilling in Iran’s sector of the Caspian Sea had been largely inactive since the mid-1990s, due to technical, financial, and logistical challenges.

The minister did not specify when drilling would begin or which block would be targeted first.

The decision marks a renewed effort to join other Caspian littoral states — including Russia, Azerbaijan, Kazakhstan, and Turkmenistan — that have developed significant offshore production in recent decades.

Iran remains the only Caspian country not currently extracting oil or gas from the sea. According to industry data, the region’s other coastal states collectively produced over 1.2 million barrels per day of oil and 50 billion cubic meters of gas in 2023, backed by more than $160 billion in cumulative investments.

International companies such as BP, TotalEnergies, Lukoil, Eni, and Dragon Oil have led offshore development in neighboring states. Meanwhile, Iran’s own efforts have faced repeated setbacks, including equipment failures, limited foreign investment, and deepwater technical constraints.

Despite previous announcements, including seismic surveys and attempted drillings using the Amir Kabir rig, Iran’s Caspian offshore activity has yielded no commercial output to date.