Legal Requirements of Good Energy Governance in Iran’s Oil and Gas Contractual Framework

Abstract

The governance of energy resources has become a defining issue for resource-rich states, where legal design, institutional performance, and national development objectives intersect. In Iran, oil and gas contracts have gradually evolved from narrow commercial instruments into comprehensive governance mechanisms that structure authority, allocate risks, regulate economic relations, and embed public policy goals into the operational core of the petroleum sector. This article investigates the legal requirements of good energy governance as reflected in Iran’s oil and gas contractual framework and evaluates the extent to which contemporary Iranian petroleum contracts embody the principles of transparency, accountability, participation, rule of law, efficiency, sustainability, and national interest protection. Employing a narrative review combined with descriptive legal analysis, the study synthesizes interdisciplinary scholarship on energy governance and petroleum law with an in-depth examination of Iran’s contractual evolution, institutional architecture, and regulatory environment. The findings demonstrate that Iran’s recent contractual reforms—particularly the development of the Iran Petroleum Contract—reflect a deliberate effort to align contractual design with international governance standards by strengthening disclosure obligations, audit mechanisms, legal stability, environmental safeguards, and structured risk allocation. However, significant governance gaps persist, notably in the areas of public transparency, institutional independence, stakeholder participation, and regulatory coherence. These structural constraints limit the capacity of contractual mechanisms to fully achieve the objectives of good governance in practice. The study concludes that while contractual reform constitutes a critical pillar of energy governance modernization, it cannot substitute for comprehensive institutional and legal reform. Sustainable and effective energy governance in Iran ultimately requires an integrated approach that harmonizes contractual architecture with broader governance structures, regulatory capacity building, and inclusive policy processes.