Present and future of oil and gas exploration and production transition-out: What can Iran learn from Quebec's Act?

Abstract

Iran's share of global greenhouse gas emissions has increased. This trend shows that demand-side policies are insufficient on their own. More robust measures, including phasing out the petroleum production, are necessary. However, such measures are still emerging in Iran, and an appropriate legal mechanism is required for their development and implementation. Most academic literature focuses on international agreements that aim to limit fossil fuel production. In contrast, the impact of national laws that govern petroleum phase-out, and their potential to inform legal frameworks in other countries, remains underexplored. One example of such national legislation is Quebec's Act on Ending Exploration and Production of Petroleum Resources. The Act not only prohibits new licenses, but also revokes existing ones. It therefore serves as a comprehensive example of transition-out policies. Legal elements from Quebec's Act may provide a useful benchmark for designing Iran's phase-out policy in a way that supports a swift, just, and equitable transition away from fossil fuels. This research examines Iran's current legal regime governing petroleum exploration and production. It then draws on key legal elements from Quebec's Act to propose an appropriate future legal framework for phasing-out petroleum production in Iran. While the study focuses on Iran, its findings may be adapted for other oil- and gas-rich developing countries. The analysis shows that effective governance of phase-out policies in Iran requires fundamental reforms to laws and regulations concerning the awarding of petroleum contracts. It also suggests that a dedicated fund should be established to compensate holders of revoked licenses or contracts prior to ending petroleum production.