$40b Projects Up for Grab

 

Over the past eight years, international sanctions have been targeting Iran’s petroleum industry which is the main source of income for the Islamic Republic.

But since President Hassan Rouhani took office in August 2013, Iran’s international status has improved. The results of President Rouhani’s successful foreign diplomacy are tangible both at national and international levels.

In line with the policies of the Rouhani administration, Petroleum Ministry is following up on plans to attract foreign investment in a bid to realize its development objectives particularly in hydrocarbon reservoirs shared with neighboring countries. In the meantime, the ministry does not ignore the potentialities of domestic companies in designing, management and manufacturing.

Investment opportunities in Iran’s petroleum industry are so significant that they easily attract foreign companies and investors. In this regard, Iran can seize on the moment to transfer in state-of-the-art technology.

The first step taken by Iran’s Petroleum Ministry in tempting back foreigners was revision of oil contractual frameworks to make them more attractive. Minister of Petroleum Bijan Namdar Zangeneh established the Oil Contracts Revision Committee last year to devise a new framework of contracts.  

Iran is poised to present $40 billion oil projects during a conference scheduled for early next year in London.

Forty or fifty projects, worth $40 billion, are to be unveiled when Iran Petroleum Contract (IPC), the new framework of oil contracts, is to be introduced to foreign investors in London.

IPC is replacing “buy-back” contracts which are no longer attractive to foreign companies.

Under a buyback deal, the host government agrees to pay the contractor an agreed price for all volumes of hydrocarbons the contractor produces.

But under the IPC, NIOC will set up joint ventures for crude oil and gas production with international companies which will be paid with a share of the output.

As hopes are soaring of a nuclear deal between Iran and six world powers for a final lifting of sanctions against Tehran, the London conference is widely expected to attract back oil giants to develop Iran’s petroleum industry.

 

OPEC Maintains Market Share

 

Oil ministers from 12 members of the Organization of the Petroleum Exporting Countries (OPEC) agreed during their 166^th meeting in Vienna on November 27 to keep the oil producer group’s production ceiling unchanged at 30 mb/d for the sixth consecutive year.

Brent oil prices have plunged nearly $45 since June this year mainly due to market overglut. OPEC, as an organization which has traditionally shored up prices, was expected to agree on production cut in order to increase prices which have been fluctuating. But OPEC member states argued that the current market oversupply is not due to their production and they did not accept to reduce their market share. In their most important meeting in recent years, OPEC members preferred preservation of their market share to high oil prices.

Immediately after OPEC announced this decision, oil prices slumped $5, marking the highest weekly loss in three years. US crude was traded at $68, down from $70 in recent weeks. Brent fell below $72. According to the OPEC website, its basket price fell $3 to $70 the day after its ministerial meeting.

The market oversupply coincides with falling demand. Two big economies – Europe and Japan – are in recession and China, the second largest consumer of oil in the world, is experiencing sluggish economy.

The weaker demand has been more influential than the oversupply on the price decline. OPEC countries are convinced that they would not lose their market and the current prices will slow down shale oil production; therefore, the prices would go up in the future. Of course OPEC was not unanimous on maintaining the production ceiling because member states have different economic conditions and all of them have not suffered equally from oil price slump. Some countries tried to convince the organization to cut its production in order to boost prices. For instance, Venezuelan Foreign Affairs Minister Rafael Ramirez had suggested a 2mb/d cut in the OPEC production. He had made the proposal on behalf of Venezuela and Ecuador. After OPEC decided to keep the production ceiling unchanged, Ramirez walked out.

Venezuela is under tough economic pressure due to generous subsidies it grants to commodities. It needs at least to sell oil at $160 in order to be able to realize its economic plans. Ecuador is the smallest OPEC member state, but it needs high oil prices.

The position taken by Iran’s Petroleum Minister Bijan Namdar Zangeneh is significant. His performance could be assessed as positive. Following his consultations with oil-rich countries in recent months, Zangeneh had already predicted the outcome of the OPEC ministerial meeting. Upon his arrival in Vienna for the meeting, Zangeneh said OPEC member states should stick to any decision adopted by the oil producer group.

After the meeting, Zangeneh said the outcome “was not what we desired”, adding: “I’m not sad with the OPEC decision.”

The Iranian minister said OPEC member states have to exchange views further in a bid to bring their views closer together.

Iran is currently under sanctions and it is impossible for the country to increase its oil exports to gain more revenues. Moreover, oil price falls are squeezing Iran’s hard currency revenues.

By saying that Iran respects OPEC’s decision, Zangeneh sought to avoid any discrepancy between member states to avoid a sharp reduction in the prices. The Iranian minister did not let others think that Iran is a weak OPEC member.

“I don’t think that decision would be in the interest of all OPEC member states, because some members were opposed to this decision, but it was necessary for OPEC unity and solidarity. We decided not to act against this decision,” he said.

“I can’t say that nobody disagreed with this decision, but what I can say is that most countries tried to make decision differently,” said Zangeneh.

He said that the US shale oil production poses a big challenge for OPEC as shale oil is currently competing with conventional oil; therefore, OPEC share of the market is falling.

“We are not looking for war in OPEC. OPEC members have to exercise unity vis-à-vis oil oversupply and non-OPEC producers should contribute to any decision for cutting production,” he said.

Zangeneh said analysts forecast oil oversupply to keep rising in the coming years.

 

Meeting with Oil Giants

 

On the sidelines of OPEC ministerial meeting, Zangeneh met with representatives of a number of Western oil companies. He said his meetings were aimed at preparing the ground for the return of these companies to Iran once sanctions have been lifted.

Zangeneh said the recent decision by Iran and six world powers to extend nuclear talks again did not mean that Western oil companies would no longer be able to operate projects in Iran.

Nigeria’s oil minister was elected the rotating president of OPEC for one year, starting in January. OPEC Secretary General Abdalla Salem el-Badri saw his term extended for another six months.

An important point with OPEC is that Saudi Arabia is an influential member state, which produces more than 9 mb/d of oil. Saudi Arabia and its allies who were behind the OPEC decision are supplying 15 mb/d of oil, half the OPEC ceiling for the market. Definitely, Saudi Arabia and three other Arab members of OPEC wield more clout than other eight members with OPEC.

Iran is seeking to wean its economy off oil. The administration of President Hassan Rouhani has taken effective steps for breaking the dependence of Iran’s economy on oil. In recent years, Iran’s economy has become more and more dependent on oil and the ongoing price fall would be of great help in weaning economy off oil revenues.

OPEC members look to have taken the best decision they could although they could act in a better way, too. They preferred higher oil prices in the short-term to safeguarding their market against shale oil and non-OPEC producers in the long-term.

Despite what some analyses say, non-OPEC rivals are not so weak. Russia alone is holding 14% of the world’s total oil reserves and the US is making up 14% of oil production in the world. Russia, the US and Mexico – all three of them non-OPEC producers – are producing more than 40% of the world oil. The trio has said that they would not suffer any loss even though prices fall to $60 a barrel.

Therefore, had OPEC cut its production ceiling it would have emerged loser. Meanwhile, 500,000 b/d production cut would not affect the market because OPEC and non-OPEC producers are currently oversupplying 1.5 mb/d to 2 mb/d of oil.

Should OPEC member states comply with the decision adopted by the body it would be a great success because it would help stabilize oil market as shale oil producers are targeting OPEC’s share of the market.

Iran’s Oil Diplomacy

 

The Organization of the Petroleum Exporting Countries (OPEC) held its 166^th ministerial meeting at a time when crude oil prices have fallen by more than 30 percent since June to around $80, the four-year lows.

The sharp oil price decline had added to the urgency of such a meeting. Oil market analysts described it as one of the most important ministerial meetings of OPEC in the past 15 years.

Ahead of the meeting, prediction was rife about how OPEC would deal with the price falls, but OPEC oil ministers had already fine-tuned their calls about oil production.

Iran’s Petroleum Minister Bijan Namdar Zangeneh exchanged views with his Qatari, Kuwaiti and Emirati counterparts, as well as Iraqi and Venezuelan officials about oil. Iran’s minister had said that Tehran supports a cut in the OPEC production ceiling in order to prevent further price falls and safeguard the interests of MCs.

Zangeneh had said that he was seriously following up on the issue of oil in order to persuade OPEC members to close ranks.

“Although Persian Gulf littoral states are willing to preserve their market share, they are unwilling to cut production, all member states should express themselves because even the opposition of a single member state will be effective,” the minister said.

Zangeneh also travelled to non-OPEC Azerbaijan Republic to discuss its cooperation with OPEC for bringing back stability to the oil market.

Venezuelan Foreign Minister Rafael Ramirez also embarked on an oil tour to solicit oil producers over production cut. He travelled to Saudi Arabia and Russia and he also visited Tehran. Venezuela’s economy is heavily dependent on oil revenues and oil price decline seriously harms its economy.

In his meetings, Zangeneh did not rule out the possibility of impact of political issues like the US’s intention to lower the oil prices in order to ramp up pressure on oil-rich Russia.

“Given the dominant share of revenues from oil and gas exports in Russia’s exports revenues, this country is losing 25 to 30 percent of its exports income due to oil price fall. Even before any sanctions are enforced, the revenue of this country is falling by around one-fourth,” Zangeneh said. “Although oil price decline is not a good event but Iran would not be harmed like Russia by falling prices because Iran’s oil production has declined in recent years and we have managed to run the country with this [low] level of production.”

Analysts say Saudi Arabia’s behavior in the market is a political game for lowering prices. In their view, Saudi Arabia is increasing its oil supply on the market and cutting prices in order to make shale oil production in the US uneconomical so that this [shale] oil would be driven out of market. To that effect, Saudi Arabia even moved to cut the price of oil supplies to its Asian buyers.

The US has cut its oil imports from OPEC countries and Saudi Arabia is making stronger efforts to sell its oil in Asia and it is facing such rivals as Nigeria. A main reason for Saudi Arabia’s decision to cut its oil prices in recent weeks was to be able to sell more on this competitive market. Some analysts say Saudi Arabia, whose political influence in regional developments has been weakened, is trying to flex muscles and prove to the Middle East and the world that it has the final say on oil prices.

Saudi Oil Minister Ali al-Naimi recently visited Mexico where he agreed with Mexican Energy Minister Pedro Joaquin Coldwell to make efforts for stabilizing oil prices.

The Saudi minister broke his months-long silence by dismissing any intention of price war. He said that Saudi Arabia is trying to help stabilize oil markets, but stopped short of expressing himself about falling prices.

The oil price fall is not as worrying for everyone. It augurs well for Europe’s economy which is likely to plunge into a third cycle of recession. Economists say 10-percent decline in the oil prices means 0.1% increase in the Europe’s production. In Asia, China is benefiting from oil price falls while Japan’s economy is getting a boost. Japan imports half of its oil consumption. High energy prices stoke up inflation in Japan. India relies on imports for 75% of its oil needs and lower oil prices are in favor of India’s budget deficit.

 

OPEC Consensus

 

The Iranian petroleum minister believes that striking balance into an unstable oil market is difficult; however, he underscores unity among OPEC member states.

“OPEC member states should refrain from taking any position which would question the unity of this organization because any decision in OPEC needs consensus,” he said in a televised interview.

Zangeneh said OPEC member states should not accuse each other of wrongdoing.

The minister believes that when the prices are above $100, OPEC has no role to play, noting that OPEC’s role is pushed to bold relief when oil prices fall.

Zangeneh said five decades of experience show that OPEC member states have always reached unanimity under tough conditions.

 

Oil Price Test

 

It is not the first time in history that OPEC member states have to deal with falling oil prices. OPEC member states once experienced price fall to below $10 a barrel in 1998. The reason was that OPEC had raised its output despite falling demand amid economic crisis in Southeast Asia. It took OPEC three years to bring balance back to the market.

In 2008, when the world plunged into economic turmoil, oil price sharply fell from $147 to $47. OPEC ministers met in September that year, and cut the group’s production ceiling by 1.5 mb/d that proved to be insufficient. In December the same year, OPEC held an emergency meeting in Algeria. Oil market was facing a growing glut and OPEC agreed to slash production by 2.2 mb/d more as of January 2009. That was the biggest production cut in OPEC history. The body had already cut production by 1.7 mb/d in 1999.

Throughout these two crises, OPEC member states exercised unity and solidarity and they managed to stabilize the market and prices.

Non-OPEC oil producers often agree with production cut only in words. However, they were very cooperative with OPEC in 2008 when Russia cut 100,000 b/d from its oil production and Azerbaijan 300,000 b/d.

Over the past five years, oil market has been relatively calm and stable and oil prices have been fluctuating between $100 and $120.

Major crude oil consumers had accepted these prices despite economic problems and the prices sounded logical for all producers.

A new round of oil price fall started in June 2014 and has fallen by 24% to $75-$80. OPEC producers are once again worried that the falling trend would continue.

 

Supply Overtakes Demand

 

Oil market analysts see numerous factors affecting oil prices, but they mainly believe that the main reason is that the market is over supplied and ample supply is overtaking the sluggish demand.

“Market estimates show that the world is facing excess in supply in 2014 and it results from overproduction by some OPEC members, shale oil and oil production by minor producers,” Zangeneh said recently.

The Iranian minister predicted that the world would see 1.8 mb in excess glut in 2015, noting that the future market is behind the current price falls.

Zangeneh said surplus oil production is stored and that the volume of storage is very important for the market. “Oil speculators are regularly monitoring the volume of oil storage and they set the price based on that volume.”

He said the oil market is affected both physically and psychologically, adding: “I also experienced $7 oil and I know how difficult it would be to stabilize an unbalanced market.”

Zangeneh also said that Iran’s oil exports have fallen from 2.5 mb/d to around 1 mb/d. “And if the market obliges us to move in a direction to be forced to cut 150,000 to 200,000 barrels, it would not change our position and it would not worry us.”

At present, the oil market has between 1.5 and 2mb in excess supply, mainly produced by non-OPEC and shale oil producers. If non-OPEC oil producers do not help OPEC get out of the present circumstances, OPEC member states may not be able to do their job and may be unwilling to reduce production despite pressures piled up on their national budgets due to falling prices.

This time, the conditions are quite different because even non-OPEC oil producers are feeling the pinch from oil price slump.

Russia has been slapped sanctions by the US and the West due to the crisis in Ukraine. It is deeply worried over the oil price fall. Norway is complaining that investment in its oil sector is diminishing. Mexico also showed signs of anxiety and it had to consult with OPEC’s kingpin.

The current price slump will definitely harm the countries operating in recovery from deepwater hydrocarbon reservoirs, shale oil and tar sand.

If the price slide continues, many development projects would be put on hold and some companies may go bankrupt.

Iran’s Oil Diplomacy

 

The Organization of the Petroleum Exporting Countries (OPEC) held its 166^th ministerial meeting at a time when crude oil prices have fallen by more than 30 percent since June to around $80, the four-year lows.

The sharp oil price decline had added to the urgency of such a meeting. Oil market analysts described it as one of the most important ministerial meetings of OPEC in the past 15 years.

Ahead of the meeting, prediction was rife about how OPEC would deal with the price falls, but OPEC oil ministers had already fine-tuned their calls about oil production.

Iran’s Petroleum Minister Bijan Namdar Zangeneh exchanged views with his Qatari, Kuwaiti and Emirati counterparts, as well as Iraqi and Venezuelan officials about oil. Iran’s minister had said that Tehran supports a cut in the OPEC production ceiling in order to prevent further price falls and safeguard the interests of MCs.

Zangeneh had said that he was seriously following up on the issue of oil in order to persuade OPEC members to close ranks.

“Although Persian Gulf littoral states are willing to preserve their market share, they are unwilling to cut production, all member states should express themselves because even the opposition of a single member state will be effective,” the minister said.

Zangeneh also travelled to non-OPEC Azerbaijan Republic to discuss its cooperation with OPEC for bringing back stability to the oil market.

Venezuelan Foreign Minister Rafael Ramirez also embarked on an oil tour to solicit oil producers over production cut. He travelled to Saudi Arabia and Russia and he also visited Tehran. Venezuela’s economy is heavily dependent on oil revenues and oil price decline seriously harms its economy.

In his meetings, Zangeneh did not rule out the possibility of impact of political issues like the US’s intention to lower the oil prices in order to ramp up pressure on oil-rich Russia.

“Given the dominant share of revenues from oil and gas exports in Russia’s exports revenues, this country is losing 25 to 30 percent of its exports income due to oil price fall. Even before any sanctions are enforced, the revenue of this country is falling by around one-fourth,” Zangeneh said. “Although oil price decline is not a good event but Iran would not be harmed like Russia by falling prices because Iran’s oil production has declined in recent years and we have managed to run the country with this [low] level of production.”

Analysts say Saudi Arabia’s behavior in the market is a political game for lowering prices. In their view, Saudi Arabia is increasing its oil supply on the market and cutting prices in order to make shale oil production in the US uneconomical so that this [shale] oil would be driven out of market. To that effect, Saudi Arabia even moved to cut the price of oil supplies to its Asian buyers.

The US has cut its oil imports from OPEC countries and Saudi Arabia is making stronger efforts to sell its oil in Asia and it is facing such rivals as Nigeria. A main reason for Saudi Arabia’s decision to cut its oil prices in recent weeks was to be able to sell more on this competitive market. Some analysts say Saudi Arabia, whose political influence in regional developments has been weakened, is trying to flex muscles and prove to the Middle East and the world that it has the final say on oil prices.

Saudi Oil Minister Ali al-Naimi recently visited Mexico where he agreed with Mexican Energy Minister Pedro Joaquin Coldwell to make efforts for stabilizing oil prices.

The Saudi minister broke his months-long silence by dismissing any intention of price war. He said that Saudi Arabia is trying to help stabilize oil markets, but stopped short of expressing himself about falling prices.

The oil price fall is not as worrying for everyone. It augurs well for Europe’s economy which is likely to plunge into a third cycle of recession. Economists say 10-percent decline in the oil prices means 0.1% increase in the Europe’s production. In Asia, China is benefiting from oil price falls while Japan’s economy is getting a boost. Japan imports half of its oil consumption. High energy prices stoke up inflation in Japan. India relies on imports for 75% of its oil needs and lower oil prices are in favor of India’s budget deficit.

 

OPEC Consensus

 

The Iranian petroleum minister believes that striking balance into an unstable oil market is difficult; however, he underscores unity among OPEC member states.

“OPEC member states should refrain from taking any position which would question the unity of this organization because any decision in OPEC needs consensus,” he said in a televised interview.

Zangeneh said OPEC member states should not accuse each other of wrongdoing.

The minister believes that when the prices are above $100, OPEC has no role to play, noting that OPEC’s role is pushed to bold relief when oil prices fall.

Zangeneh said five decades of experience show that OPEC member states have always reached unanimity under tough conditions.

 

Oil Price Test

 

It is not the first time in history that OPEC member states have to deal with falling oil prices. OPEC member states once experienced price fall to below $10 a barrel in 1998. The reason was that OPEC had raised its output despite falling demand amid economic crisis in Southeast Asia. It took OPEC three years to bring balance back to the market.

In 2008, when the world plunged into economic turmoil, oil price sharply fell from $147 to $47. OPEC ministers met in September that year, and cut the group’s production ceiling by 1.5 mb/d that proved to be insufficient. In December the same year, OPEC held an emergency meeting in Algeria. Oil market was facing a growing glut and OPEC agreed to slash production by 2.2 mb/d more as of January 2009. That was the biggest production cut in OPEC history. The body had already cut production by 1.7 mb/d in 1999.

Throughout these two crises, OPEC member states exercised unity and solidarity and they managed to stabilize the market and prices.

Non-OPEC oil producers often agree with production cut only in words. However, they were very cooperative with OPEC in 2008 when Russia cut 100,000 b/d from its oil production and Azerbaijan 300,000 b/d.

Over the past five years, oil market has been relatively calm and stable and oil prices have been fluctuating between $100 and $120.

Major crude oil consumers had accepted these prices despite economic problems and the prices sounded logical for all producers.

A new round of oil price fall started in June 2014 and has fallen by 24% to $75-$80. OPEC producers are once again worried that the falling trend would continue.

 

Supply Overtakes Demand

 

Oil market analysts see numerous factors affecting oil prices, but they mainly believe that the main reason is that the market is over supplied and ample supply is overtaking the sluggish demand.

“Market estimates show that the world is facing excess in supply in 2014 and it results from overproduction by some OPEC members, shale oil and oil production by minor producers,” Zangeneh said recently.

The Iranian minister predicted that the world would see 1.8 mb in excess glut in 2015, noting that the future market is behind the current price falls.

Zangeneh said surplus oil production is stored and that the volume of storage is very important for the market. “Oil speculators are regularly monitoring the volume of oil storage and they set the price based on that volume.”

He said the oil market is affected both physically and psychologically, adding: “I also experienced $7 oil and I know how difficult it would be to stabilize an unbalanced market.”

Zangeneh also said that Iran’s oil exports have fallen from 2.5 mb/d to around 1 mb/d. “And if the market obliges us to move in a direction to be forced to cut 150,000 to 200,000 barrels, it would not change our position and it would not worry us.”

At present, the oil market has between 1.5 and 2mb in excess supply, mainly produced by non-OPEC and shale oil producers. If non-OPEC oil producers do not help OPEC get out of the present circumstances, OPEC member states may not be able to do their job and may be unwilling to reduce production despite pressures piled up on their national budgets due to falling prices.

This time, the conditions are quite different because even non-OPEC oil producers are feeling the pinch from oil price slump.

Russia has been slapped sanctions by the US and the West due to the crisis in Ukraine. It is deeply worried over the oil price fall. Norway is complaining that investment in its oil sector is diminishing. Mexico also showed signs of anxiety and it had to consult with OPEC’s kingpin.

The current price slump will definitely harm the countries operating in recovery from deepwater hydrocarbon reservoirs, shale oil and tar sand.

If the price slide continues, many development projects would be put on hold and some companies may go bankrupt.

Germans Willing to Invest in Iran Oil Sector

 

German companies have expressed their willingness for involvement in oil and gas fields’ exploration and drilling projects in Iran. To that effect, they have started talks with National Iranian Oil Company (NIOC) officials.

Iran’s newly appointed ambassador to Germany, Ali Majedi, is a former deputy petroleum minister for international affairs. He said talks have started between NIOC and several oil drilling companies.  So far, these talks have not led to any official outcomes.

German companies have long been present in Iran’s industrial projects although they have faced ups and downs in recent years.

The latest cooperation between Iran and Germany in the petroleum industry was in exploration of shale oil reserves in Zagros region.

Recently, a German company signed an MOU with Iran’s Research Institute of Petroleum Industry (RIPI) for producing fuel from heavy crude and oil residues. The technology for the production of this kind of fuel is expected to be indigenized in Iran. The content of oil fields in Iran is changing from light oil to heavy oil; therefore, acquiring technology to produce fuel from heavy oil is important for the country.

Gholam-Hossein Shafei, head of Iran Chamber of Commerce, recently met with a German delegation in Tehran. After the meeting, he said Iranian and German companies are to broaden their energy cooperation.

“Cooperation in the energy sector and development of small-sized and different industries are among plans we can follow up on with Germans because this country has good experiences in this sector,” he said.

Iran’s oil and gas industries are so attractive that oil giants cannot resist their desire for investment. That is why they are in talks with Iran’s Petroleum Ministry and NIOC.

 

Petchem Cooperation Resumed

 

The German delegates also met with the managing director of National Petrochemical Company, Abbas Sha'ri-Moqaddam. Both sides expressed willingness for the resumption of cooperation after the lifting of sanctions.

“The two countries are preparing for renewed cooperation immediately after sanctions are lifted,” said Sha'ri-Moqaddam.

He highlighted the high quality of German products used in Iran’s petrochemical industry in recent years, saying: “It is now in the interest of the economy of both countries to continue cooperation in the oil, gas and petrochemical sectors.”

The head of German delegation expressed happiness with the renewed presence of German companies in Iran, saying this visit can be a start for the removal of impediments ahead of petrochemical cooperation between the two countries.

He said Iran, which sits atop the world’s largest hydrocarbon reserves, is among Germany’s top target markets.

Representatives from more than 20 renowned German petrochemical companies introduced their products and discussed challenges to their return to Iran’s petrochemical industry.

 

$62b Gas Investment Opportunity

 

The managing director of National Iranian Gas Company (NIGC) has said that Iran’s gas industry needs $62 billion in investment for financing the required infrastructure to boost gas production.

Hamid-Reza Araqi said Iran needs to double gas production to 330 bcm a year in three years, adding that the country’s gas management must change.

He said demand for gas has doubled, big industrial customers have joined gas network, the number of houses consuming gas is raising and gas is making up a 70% share in Iran’s energy mix. Araqi added that the necessity of cooperation with leading international companies to acquire technology and entry into global gas trade are among challenges requiring planning.

The official said all gas projects envisaged in the country are facing financial challenges.

Araqi said NIGC is tasked with managing gas supply in the country, renew gas industry structure and make efforts for active presence in global gas trading opportunities.

“NIGC is an organization in charge of national security and financial interests. Therefore, it should build trust for achieving its goals,” he said.

 

Iran Petroleum Minister Visits South Pars

 

Iran’s Petroleum Minister Bijan Namdar Zangeneh traveled to South Pars gas field and visited phases 15&16, 12 and 17&18 of this offshore giant gas reservoir.

During his tour, he was briefed about the physical progress of these development phases.

“Development of five prioritized phases is on the agenda of Petroleum Ministry and we hope to be able to realize most of our objectives by the end of the [current calendar] year,” said the minister.

“Accelerating the completion of South Pars phases is important and we will reach good results with further and more effective efforts,” added the minister.

Four terrains of sweetening in the refineries of phases 12, 15&16, as well as the offshore platforms of phases 16 and 18 were recently launched.

 

Oil Price Fall and Mid-Term Interests

 

Iran’s President Hassan Rouhani said the fall in oil prices could guarantee Iran’s mid-term interests.

“Oil price slide can be followed by mid-term interests,” Rouhani said as he submitted a draft budget for the next calendar year to the parliament.

“One of the most significant economic chapters of the proposed budget of the government has been to increase non-oil exports whose growth in recent months helped the economy get out of stagnation,” he said.

The president added that non-oil exports will have a significant share in the country’s economic growth rate in the future.

Statistical data show that non-oil exports reached $5.31 billion at the end of the eighth month of the calendar year, up 7.19 percent year-on-year, Rouhani said and expressed hope that Iran’s non-oil exports would exceed $50 billion by March next year.

He said National Development Fund of Iran (NDFI) is expected to deposit $1 billion with Exports Development Bank in order to help exporters in marketing.

He said that the Central Bank of Iran (CBI) is tasked with depositing $200 million in foreign banks for the issuance of letters of guarantee for Iranian exporters. The CBI is also assigned to provide support for exporters of technical and engineering services.

Rouhani said his administration’s plan for leading the country out of stagnation mainly focuses on boosting non-oil exports and strengthening the power of banks in granting facilities to business activities.

With regards to oil prices, the president said: “Such a decline has been unprecedented in recent decades. Regardless of the root of the present conditions and how long they will last, we concluded that it is necessary to draft next year’s budget with prudence.” He said that the present circumstances “create new threats and opportunities for our economy.”

“On the one hand, our revenues will decline in the short run and the government’s budget which depends on oil sales will face pressure, but on the other hand, it could create conditions in favor of mid-term interests,” said Rouhani.

“Our economy should move towards development of non-oil exports. Oil price slide provides a new opportunity to accelerate this move. In order to make up for reduced hard currency revenues gained from oil exports, non-oil exports should be developed,” he said.

Oil Market Balance, Key to Energy Security

 

Economic Cooperation Organization (ECO) Secretary General Shamil Alaskerov has said creating balance in international oil market and responding to world’s increasing demand for energy are moves aimed at providing energy security.

Speaking at the 2nd ECO Conference on International Cooperation in Energy Field, Alaskerov referred to the major challenges with which the world energy market is faced with today, arguing that creating balance in the market and responding to the increasing demands for energy in the world aimed at provision of energy security is a very important issue in the world now.

The 2nd ECO Conference on International Cooperation in Energy Field, cosponsored by the University of Tehran’s Exclusive Studies Center, was held in the presence of the former secretary general of ALBA (formally the Bolivarian Alliance for the Peoples of Our America), oil market and economy experts and some ambassadors of Latin American countries.

The conference, held at the College of Laws and Political Sciences of the University of Tehran was aimed at adopting joint policies in energy field, especially on oil market, had three panel discussions on world energy status.

The ECO secretary general expressed that organization’s enthusiasm is taking effective and influential steps and having evermore dynamic participation in the international energy market regulation.

He expressed hope that the Sunday ECO conference will provide an appropriate opportunity aimed at better understanding of ALBA’s capacities in oil market regulations.

Alaskerov said that the ECO member countries, with their 8 million square meter vast territory and 400 million strong population have since the ECO establishment been focusing on devising a framework and providing appropriate structures for broader cooperation in energy field.

He said ECO, which covers more than 400 million people in its member countries, has been setting frameworks and designing structures for broadening cooperation in the energy sector.

Alaskerov said reducing energy risk is among main objectives of ECO, adding that this organization is making efforts to help reduce greenhouse gas emissions.

He noted that one-third of ECO member states are rich in oil and gas and make great contribution to world energy security. “ECO provides good opportunities for its member states to broaden cooperation in the energy sector.”

He said that ECO has been trying to eradicate energy poverty and has already established a regional electricity market, saying this process would expand with the participation of Iran and Turkey.

Alaskerov also referred to ECO members’ potentialities for investment in renewable energies, saying the member states desperately need investment in this sector.

ECO is an intergovernmental regional organization established in 1985 by Iran, Pakistan and Turkey aimed at promoting economic, technical and cultural cooperation among member states.

The organization was expanded in 1992 to include seven new members, namely Afghanistan, Republic of Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan.

ECO provides its members with a platform to discuss ways of improving economic development, and promoting trade and investment opportunities.

ALBA is an intergovernmental organization based on the idea of the social, political and economic integration of the countries of Latin America and the Caribbean. The name "Bolivarian" refers to the ideology of Simón Bolívar, the 19th-century South American independence leader born in Caracas who wanted Hispanic America to unite as a single "Great Nation."

Founded initially by Cuba and Venezuela in 2004, it is associated with socialist and social democratic governments wishing to consolidate regional economic integration based on a vision of social welfare, bartering and mutual economic aid. The nine member countries are Antigua and Barbuda, Bolivia, Cuba, Dominican Republic, Ecuador, Nicaragua, Saint Vincent and the Grenadines, Venezuela and Saint Lucia.

 

Iran, China Eye Broader Oil Cooperation

 

Iran and China have underscored the need for broader oil cooperation. The issue was discussed during a meeting between Chairman of China National Petroleum Corporation (CNPC) Zhou Jiping and Iranian Ambassador to China Ali-Asghar Haji.

The two sides said Iran and China, given their long-standing friendly ties, need to expand their oil cooperation.

Zhou and Haji exchanged views about joint efforts by the two countries to enter new oil interactions.

According to official figures, Iran was a main supplier of oil to China in 2013.

Despite international sanctions against the Islamic Republic, China’s oil imports from Iran have not changed significantly over the past two years. Iran has been selling 350,000 to 540,000 b/d of oil in the past two years.

According to China’s customs office data, Iran exported 421,530 b/d on oil on average to China in 2013. In November 2013, China’s oil imports from Iran reached 538,513 b/d, twice the October’s imports.

 

Iran Self-Sufficient in Oil Platforms

 

Managing director of National Iranian Tanker Company (NITC) Ali-Akbar Safaei has said that Iran has become self-sufficient in building oil platforms.

“Measures have also been started for transferring in technology of building and overhauling big vessels and drafting marine standards. They will become operational in the near future,” he said.

Safaei said Iran’s marine industry is still far from favorable conditions, adding that appropriate measures have been taken in recent years in this sector despite international restrictions.

He referred to the construction and reparation of oil platforms and reparation of vessels in Iran as a big achievement for Iran’s marine industry, saying the most secure way for acquiring shipbuilding technology would be to start from reparation.

“By conducting reparation and acquiring a share of this market, we will definitely win the confidence of foreign owners for building,” said Safaei.

He said that it would be logical to envisage domestic manufacturing of vessels carrying liquefied natural gas (LNG). However, he added, the LNG carrying vessels are complicated in construction.

Safaei said building LNG vessels require infrastructure, transfer of technical savvy and acquiring skills which would be achieved by building smaller ships.

He said that NITC has in the past paved the way for the transfer of seven instances of technology into the country to help domestic manufacturing.

“We hope that we will soon witness close cooperation between shipping and shipbuilding companies with a view to developing this industry in the country,” said Safaei.

 

Forouzan Output to Double

 

Production from Forouzan oil field, jointly operated by Iran and Saudi Arabia, is to double in two years, head of Forouzan development project said.

“After completion of platform 18F in 2015 and platform 19F in 2016, the production capacity in Forouzan will double,” Ebrahim Delavaran said.

He said that construction of two new platforms – LQA and FZA – have started in Forouzan oil field and the required equipment is being purchased.

“After gas supply operations are done, production from this field will rise by 10,000 barrels,” he added.

Delavaran said realization of objectives set for production enhancement in this field depends on financial issues.

Forouzan was among fields whose production is expected to rise under a deal signed between National Iranian Oil Company (NIOC) and eight Iranian universities.

Located 100 kilometers southwest of Kharg Island, Forouzan is shared with Saudi Arabia where it is known as Marjan.

Forouzan was discovered in 1966 with 2.309 billion barrels of oil in place. 

Iran to Unveil $40b Oil Projects

 

Iran is poised to present $40 billion oil projects during a conference scheduled for early next year in London, a deputy head of National Iranian Oil Company said.

“Forty or fifty projects, worth $40 billion, are to be unveiled when Iran Petroleum Contract (IPC), the new framework of oil contracts, is to be introduced to foreign investors in London,” Moshtaq-Ali Gowhari said.

He said some of these projects are associated with the development of the remaining phases of the giant South Pars gas field, as well as other onshore and offshore reservoirs.

There are also projects about exploration and development of new fields, he added.

Gowhari said NIOC is benefitting from domestic resources for financing 40 to 50 percent of its projects. He added that this percentage has reached 70 in some years.

“Energy Fund, banking facilities and credits, bonds in IRR and hard currencies, National Development Fund of Iran, buyback, finance, refinance and a wide spectrum of financial instruments are currently being used by NIOC for financing projects,” he said.

Gowhari said Iran has spent $120.7 billion in the upstream oil sector over the past ten years, while $200 billion should have been invested in this sector.

He said $18 billion was planned to be provided for financing upstream oil projects during the first eight months of the current calendar year, but only $7.5 billion has been provided.

Gowhari said the upstream oil sector is expected to receive $22 billion next calendar year.

Iran is poised to introduce a new model of oil contracts, known as IPC to replace “buy-back” contracts which are no longer attractive to foreign companies.

Under a buyback deal, the host government agrees to pay the contractor an agreed price for all volumes of hydrocarbons the contractor produces.

But under the IPC, NIOC will set up joint ventures for crude oil and gas production with international companies which will be paid with a share of the output.

 

Iran to Raise Annual Gas Output 44bcm

 

Iran’s Petroleum Minister Bijan Namdar Zangeneh has said that the country’s gas production will be 44 bcm higher next calendar year starting in March.

“A 120-mcm gas production hike up to the end of the current [calendar] year means that next [calendar] year, we will have 44 bcm more gas,” Zangeneh said.

He added that extra gas production will replace liquid fuel in the country.

“We follow up on important petroleum industry issues like gas production capacity enhancement and fuel supply to power plants on a regular daily basis,” he said.

Zangeneh added that it was not possible to supply 12 billion liters of diesel fuel to power plants this year.

“Currently, 600 mcm/d of gas is being delivered to NIGC,” he said, adding that Iran’s gas production capacity has increased 100 mcm year-on-year.

“Within three years, as gas production increases, fuel supply to industries with gasoil and fuel and fuel delivery to small cities and villages will decline and gas will replace it,” he said.

 

Special Oil/Gas Zone Envisaged in Khuzestan

 

The secretary of Committee for Development of Technology and Renovation of Oil, Gas and Coal of Iran has announced the planned establishment of special oil and gas zone in the southwestern province of Khuzestan.

“Despite a great deal of strategic capacities in Khuzestan and the century-old history of oil and gas in this province, the ground is more prepared than ever for the presence of foreign companies in these industries,” said Jaafar Towifqi.

He said that Khuzestan special oil and gas zone project is currently under study, calling on National Iranian South Oil Company (NISOC) to support Khuzestan’s Association of Oil, Gas and Petrochemical Industries Manufacturers and Committee for Development of Technology and Renovation of Oil, Gas and Coal of Iran to that effect.

NIGC Gas Feeding Up 11bcm

 

National Iranian Gas Company’s supply of gas to national trunklines during the first eight months of the current calendar year was 11 bcm higher year-on-year, an NIGC official said.

“During the first months of this year, this company processed 103.743 bcm of gas and delivered it to national trunklines. It was up 11 bcm compared with last year,” Abdol-Hossein Samari said. Iranian calendar year starts on March 21.

During the same eight-month period, NIGC also produced more than 16.7 bcm of gas condensate, up 15.573 bcm from a year ago.

Samari said South Pars, Khangiran and Ilam refineries produced 607,000 tons of sulfur during the eight-month period, adding that sulfur production reached 639,000 tons.

Iran Oil Exports to Rise If Sanctions Lifted

 

A senior Iranian official has said that the easing of sanctions against the Islamic Republic will help Iran boost its oil exports.

“In case sanctions are lifted, Iran will be able to reach a proper figure for exports in two to three months,” Mohsen Qamsari, director for international affairs of National Iranian Oil Company, said.

“Of course we cannot reach the previous figures quickly because other countries have taken Iran’s seat in the market,” he added.

He said that Iran has been in touch with European oil buyers despite tough sanctions against the country.

“Contracts with Iran’s former oil buyers continued even after sanctions. These contracts were not like before, but they still continue,” said Qamsari.

He said that Iran and its European customers are exchanging views and reviewing the market conditions.

Qamsari also said that Iran has not discussed any further oil sales to its Asian buyers provided that the Western governments would lift sanctions against Iran’s energy sector.

Production Test Over in Sardar-e-Jangal

 

Production tests have been carried out successfully at a second exploration well drilled in the offshore Sardar-e-Jangal field.

This second well is 3,500 meters deep and oil production tests have been done to ensure the recovery from the field located off Caspian Sea waters.

The tests included pressure and temperature data, oil and gas recovery rate and other production parameters.

The field is being operated by Khazar Exploration and Production Company (KEPCO) which runs onshore activities in the three provinces of Golestan, Mazandaran and Guilan and offshore activities in the south of the land-locked lake.

The first well in Sardar-e-Jangal was spudded more than two years ago. The field is estimated to hold two billion barrels of oil in place, 25% of which is recoverable.

Director of exploration at KEPCO, Yousef Etemadi, recently expressed hope that new hydrocarbon reserves are likely to be discovered as the drilling of a second exploration well is under way.

He said that Iran needs extensive studies and detailed planning for recovery from deep waters because the country lacks the required technology.

 

5,000-Meter Well Spudded in South Pars

 

The deepest ever well, 5,000 meters, has been drilled in the supergiant South Pars gas field which is jointly operated by Iran and Qatar, a deputy head of National Iranian Drilling Company said.

Ali-Reza Layji said this well has been spudded for gathering geological data about formations located deeper underground.

He said that directional wells are drilled in South Pars, but 5,000 meters have been drilled vertically in order to find complementary geological studies about formations.

Layji said the drilling of wells in South Pars often deviates after 200 meters.

He said that NIDC has completed drilling four EPD wells in Phase 1 of South Pars.

These four wells include two development wells, one appraisal well and one workover well.

 

Iran 8-Month Petchem Output at 30mt

 

Iranian petrochemical companies produced more than 30 million tons of petrochemical products during the first eight months of the current calendar year which started on March 21, a top official said.

Ali-Mohammad Basaqzadeh, production control manager of National Petrochemical Company, said the company has so far reached 71% of its production capacity.

He said should National Iranian Gas Company (NIGC) supply enough feedstock, petrochemical production will exceed 42 million tons by March next year.

Basaqzadeh also said South Pars gas field is expected to see its gas production rise by 75 mcm, adding that Iran’s petrochemical stockpiles have declined in a sign of growing exports.

Iran produced 40 million tons of petrochemicals in the last calendar year (ended March 20), with $9 billion worth of its products being exported.

The country, which is a major oil exporter, plans to increase its petrochemical exports to $12 billion this year.

Iran has significantly expanded the range and volume of its petrochemical production over the past few years.

Basaqzadeh also said South Pars gas field is expected to see its gas production rise by 75 mcm, adding that Iran’s petrochemical stockpiles have declined in a sign of growing exports.

 

101 Oil/Gas Wells Drilled

 

A total of 101 oil and gas wells have been drilled and completed during the first eight months of the current calendar year which started in March, a deputy head of National Iranian Drilling Company said.

Mehran Makvandi said 252,581 meters of onshore and offshore drilling has been done by NIDC during the eight-month period.

He said 12 wells were drilled 246 days ahead of schedule, adding that completion of wells ahead of plan would free up drilling rigs and accelerate projects.

The wells drilled this year included 51 development/ appraisal wells, one exploration and 49 repair wells.

The wells were ordered by National Iranian South Oil Company (NISOC), Iran Central Oil Fields Company (ICOFC), Iranian Offshore Oil Company (IOOC) and Petroleum Engineering and Development Company (PEDEC). NISOC had ordered 72, ICOFC 9, IOOC 7 and PEDEC 2. The remaining 9 wells were drilled on a turnkey basis.

Makvandi said NIDC is using 30% of its operational capacity in joint onshore and offshore oil and gas fields including Azadegan, Yaran and South Pars.

He said that 74 offshore and onshore drilling rigs owned by NIDC are operating in oil-rich zones in ten provinces.

Iran Companies Show Off in Khuzestan

 

By Mahnaz Mohammadi

 

On December 6, the southwestern city of Ahvaz – better known as the capital of Iran’s petroleum industry – started hosting a specialized exhibition of petroleum industry equipment. During the four-day event, Iranian manufacturers put on display their latest achievements and products.

The event, which was the sixth annual exhibition held in Khuzestan province, was sponsored by National Iranian South Oil Company (NISOC). It was timed to coincide with the second exhibition of National Iranian Drilling Company (NIDC).

 

Shortage of Space

 

A total of 291 private companies had voiced their readiness to put their achievements on display in this exhibition, but due to shortage of space, only 200 were accommodated.

Statistically, the province of Khuzestan was represented by 73 companies (34% of booths), Tehran by 116 companies (54%), Isfahan and Markazi provinces respectively by 6 and 5 companies (or 3% each). In general, ten provinces were represented in the exhibition which saw the number of Iranian manufacturers rise by 16% compared to a year ago.

 

12 Contracts Signed

 

Throughout the exhibition, 12 contracts were signed between NISOC and domestic manufacturers of equipment for the petroleum industry. These contracts are valued at more than IRR 30 billion. The contracts require the supply of spare parts for turbines and compressors, oil sampling cylinders and drilling equipment. All these items used to be bought from foreign companies.

 

Panel Discussions

 

Two seminars and two panel discussions were held on the sidelines of the exhibition. These seminars aimed at introducing the potentialities of MAPNA group in manufacturing rotary machinery particularly turbines and the capabilities of Wira Tehran Engineering Services Company with regards to API 678 standards.

NIDC’s Directorate of Research and Technology also held a panel discussion to discuss the role of knowledge-based companies in manufacturing drilling equipment. Another panel discussion was held by Khuzestan Petroleum University of Technology to discuss challenges to the indigenization of petroleum industry equipment.

 

New Equipment Unveiled

 

Managing director of NIOC Rokneddin Javadi unveiled three basic equipment of drilling industry (mud pump, coiled tubing and offshore logging skid) and five items widely used in NISOC projects (rotor compressor, honey comb seal, dry gas seal, wellhead rotating blowout preventer and compressor’s stuffing box).

 

Rotor Compressor

 

Rotor compressor has been manufactured for the first time in Iran by Turbine Machine Middle East Company through reverse engineering. This compressor is a product of Germany and is installed in gas injection facilities.

The compressor conducts gas compression operations in eight phases. The fluid fed into this compressor is sour gas with high degree of corrosion. The components of this compressor are made of alloys designed specifically to withstand 186 BAR pressure under 120 degrees Celsius. This compressor is instrumental in gas injection into oil reservoirs.

 

Honeycomb Seal

 

Honeycomb seals are used in preventing gas leak throughout stages of transition from one compressor to another. The technology for these seals was indigenized after two years of efforts by Iranian manufacturers.

Honeycomb seals are used to optimize the turbine clearance between the rotating and stationary parts of aircraft engines.

Honeycomb Seals in turbines are part of the manufacturer’s design strategy to achieve and control proper levels of compression throughout the engines or turbines. Honeycomb is a critical part of these important components that are required in new engines and subsequently are inspected with Standard Practices and replaced per manufacturer’s specifications if required due to damage or wear. Honeycomb availability is especially important in this repair.

 

Dry Gas Seals

 

Dry gas seals are non-contacting, dry-running mechanical face seals consisting of a mating (rotating) ring and a primary (stationary) ring. When operating, lifting geometry in the rotating ring generate a fluid-dynamic force causing the stationary ring to separate and create a gap between the two rings. Dry gas seals are mechanical seals but use other chemicals and functions so that they do not contaminate a process. These seals are typically used in a tough working environment such as oil exploration, extraction and refining, petrochemical industries, gas transmission and chemical processing.

In Iran, Faraz Energy Asia Company has manufactured dry gas seals for Karoun Oil and Gas Production Company. Currently, 110 drug gas seals are installed in companies run by Karoun Oil and Gas Production Company.

The dry gas seal have a lift geometry, which provides for lifting force and maintains separation of seal faces during operation. Machines in lift profiles on one side of the seal face direct gas inward toward an extremely flat portion of the face. The gas that is flowing across the face generates a pressure that maintains a minute gap between the faces, optimizing fluid film stiffness and providing the highest possible degree of protection against face contact. The seal's film stiffness compensates for varying operations by adjusting gap and pressure to maintain stability.

 

Rotating Blowout Preventer

 

Blow-Out Preventers (BOPs) are vital to the safety of the crew of any drilling operation. As oil exploration becomes more extreme, BOPs and associated components play an increasingly important safety role in the overall operation.

Not only do BOPs help prevent disasters that can be potentially harmful to the environment, they are also used to prevent tubing, tools and drilling fluid from being blown out of the well bore if maintenance or repair work is being carried out.

Iranian engineers have designed rotary blowout preventers.

 

Stuffing Box

 

A stuffing box is an assembly which is used to house a gland seal. It is used to prevent leakage of fluid, such as water or steam, between sliding or turning parts of machine elements.

In a steam engine, where the piston rod reciprocates through the cylinder cover, a stuffing box provided in the cylinder cover prevents the leakage of steam from the cylinder.

Stuffing box is a major component of compressors. A 2,000-KW compressor installed in NISOC facilities can inject 16 mcf/d of gas.

NISOC engineers, in collaboration with the private sector, have managed to acquire technology for manufacturing stuffing box.

 

Coiled Tubing

 

A research project jointly carried out by NIDC and Directorate of Research and Technology of NIOC have resulted in the development of coiled tubing.

In the oil and gas industries, coiled tubing refers to a very long metal pipe; normally 1" to 3.25" in diameter which is supplied spooled on a large reel. It is used for interventions in oil and gas wells and sometimes as production tubing in depleted gas wells. Coiled tubing is often used to carry out operations similar to wire-lining. The main benefits over wire-line are the ability to pump chemicals through the coil and the ability to push it into the hole rather than relying on gravity. Pumping can be fairly self-contained, almost a closed system, since the tube is continuous instead of jointed pipe.

The manufacturing of coiled tubing by Iranian engineers is saving the country IRR 70 billion, not to mention Iran’s self-reliance. 

A coiled tubing operation is normally performed through the drilling derrick on the oil platform, which is used to support the surface equipment, although on platforms with no drilling facilities a self-supporting tower can be used instead.

 

Mud Pump

 

NIDC, University of Tehran’s Park of Science and Technology and the Iranian companies Sapno and Peyman Press have jointly designed and manufactured mud pump for drilling operations. Each mud pump cost Iran IRR 10 billion.

A mud pump is a reciprocating piston/plunger device designed to circulate drilling fluid under high pressure (up to 7,500 psi (52,000 kPa) ) down the drill string and back up the annulus.

Mud pump is a large reciprocating pump used to circulate the mud (drilling fluid) on a drilling rig. It is an important part of the oil well drilling equipment.

Mud Pumps can be divided into single-acting pump and double-acting pump based on the completion times of the suction and drainage acting in one cycle of the piston's reciprocating motion.

The pressure size of the pump depends on the depth of the drilling hole, the resistance of flushing fluid (drilling fluid) through the channel, as well as the nature of the conveying drilling fluid. The deeper the drilling hole and the greater the pipeline resistance, the higher the pressure needed.

 

Offshore Logging Skid

 

Offshore logging skid has been manufactured by Faliz Pazouhesh Pars Company which is based in the Khuzestan province.

Logging throughout drilling operations is like a light showing the way to drilling engineers.

The equipment used in high-risk drilling operations, particularly in offshore drilling, need to be anti-explosive.

Iran used to purchase logging skids from abroad due to advanced technology applied in pneumatic, hydraulic and instrumentation systems of this equipment.

 

70% of Petroleum Ministry Budget for South Pars

 

Accelerating the development of the supergiant South Pars gas field has become the central theme of Iran’s Petroleum Ministry. Full development of the offshore field shared with Qatar can bring about a major development in Iran’s national economy.

Petroleum Minister Bijan Namdar Zangeneh recently visited South Pars, the fifth time since taking office in August 2013.

On the sidelines of his tour of South Pars in Assaluyeh – known as Iran’s gas capital – the minister talked to Iran Petroleum.

 

Q: What do you think of the current status of development of main phase of South Pars?

A: A great deal of activities is under way in both offshore and onshore sections of these phases. Platforms 12B and 12C are expected to come on-stream in one month. The platforms of phases 11 and 18 are now ready to deliver gas to land. The gas from the platform of Phase 16 has already reached the refinery of this phase.

So far, two phases of the refinery of Phase 12 have become operational and the last phase is waiting for gas from the sea. The refinery of Phase 15 has come to a halt due to technical glitches, but will restart working along with the refinery of Phase 16 soon.

Sweet gas production in the first terrain of refinery of phases 17&18 is expected to start in a month.

Sweet gas production from South Pars is almost 80mcm.

 

Q: South Pars development is to be over in two to three years. What plans does Petroleum Ministry have for the field then?

A: South Pars gas field is unique in Iran’s petroleum industry. With the full development of this field in 29 phases, development of this field will continue qualitatively and within the framework of production preservation, refining and petrochemical projects.

Petroleum Ministry plans to refine gas condensate produced from all phases of South Pars and the investors for the construction of eight mini-refineries with a refining capacity of 480,000 b/d of gas condensate have been designated.

Q: You talked about mini-refineries. Have financiers of Siraf refining park project been selected?

A: The financiers for the construction of seven 60,000-barrel gas condensate refineries have already been selected and the investor for the eighth facility is being chosen.

Some 35 qualified groups voiced their readiness for the construction of eight gas condensate refineries and seven of them have been selected. Immediately after these gas condensate refineries are constructed, construction of new downstream units in these refineries will start in South Pars. There is a plan for using ethane and LPG produced in South Pars.

 

Q: How do you assess the current status of South Pars gas field?

A: Development of South Pars is going on within a reasonable and balanced management framework and its affairs are much better organized. Given the potentialities of Iran’s Petroleum Ministry, I think that the current management structure in this project can bring the project to fruition fast. At present, the jobs have been divided between the contractors and the outsourcer. The government and the parliament are both contributing to the development of this field so that the seven prioritized phases of South Pars will have been developed in 5 to 6 months.

By the end of the current calendar year, 100 mcm of gas will be fed into national trunklines from the prioritized phases. As promised earlier, production from South Pars would have increased by 200 mcm by the end of the next calendar year.

 

Q: How much is Iran’s petroleum industry investing in South Pars development?

A: More than 70% of the financial resources of Iran’s Petroleum Ministry go to this project. Next year, we will be able to make good on our promises for South Pars with the help of the government, the parliament and the National Development Fund of Iran.

 

Q: Iran is expected to introduce its new type of oil contracts in the coming months at a conference in London. How will Iran’s Petroleum Ministry act in light of extension of nuclear talks between Tehran and six world powers?

A: Our country will move ahead with its plans. Signature of contracts with foreign companies may be delayed, but signing contract with qualified domestic companies would face no restrictions after the new structure of oil contracts is finalized.

 

Q: Will Iran’s crude oil exports rise?

A: Nothing specific will happen in Iran’s oil exports before the nuclear talks are not concluded.

 

Q: What do you think of $70 oil price in next year’s budget?

A: This price estimate is defendable, but nobody can have a precise estimate of future oil prices in the world markets.

 

Q: The deadline for Pakistan to construct its own section of gas pipeline is expiring and it has to pay $200 million in penalties. How will Iran act?

A: We are in talks with Pakistan to that effect.

 

Q: Will you give Pakistan more time?

A: We have to reach conclusion in the talks with Pakistani sides.

 

Q: How much is Iran’s current oil production capacity?

A: Iran’s crude oil production capacity will reach 3.8 mb/d after the lifting of the sanctions.

Countdown in South Pars

 

Thousands of Iranian oil and gas industry staff have been mobilized since the start of the year in March to help raise Iran’s gas production by 100 mcm/d. For this purpose, they have been working round the clock and under very tough ecological and geographical conditions in order to install facilities for extraction, transmission, refining and injection of gas into national trunklines in the Persian Gulf waters. Accelerating development of South Pars, shared by Iran and Qatar in the Persian Gulf, is the main concern of Iranian petroleum industry officials. This issue is now more than an industrial project in Iran because full development of South Pars will significantly change national economy and improve livelihood of Iranian people.

Meaningful relations between development of South Pars gas field and development of economic, social and political infrastructure in Iran are no secret to anyone. South Pars is estimated to have hidden around $8,800 billion in hydrocarbon reserves. Iran is earning less than $80 billion from crude oil sales a year.

Iran is currently recovering more than 300 mcm/d of gas from South Pars and Petroleum Ministry plans to bring its production from this jointly operated field to 800 mcm/d in two years. So far, 10 of 24 phases in South Pars have been developed and the remaining phases are being developed fast.

South Pars is one of the largest gas reservoirs in the world. Its development has been put on hold due to international sanctions and mismanagement in recent years.

Since taking office in August 2013, Petroleum Minister Bijan Namdar Zangeneh has laid the blame on mismanagement for the delayed development of the field. He said in the beginning that development of South Pars will continue based on priorities. Phases 12 and 15-18 of South Pars have been among the prioritized phases of South Pars. Phase 12, which is the main phase, is 90% complete. Other phases have progressed 50% to 60%.

Currently, Iranian Petroleum Ministry is spending more than 60% of its time and energy on completing the remaining phases of South Pars for faster startup of the giant offshore reservoir. Phase 12 is an exceptional one among prioritized phases. It is currently feeding on average 81 mcm/d of natural gas into national trunklines, in addition to producing 120,000 b/d of gas condensate and 750 tons a day of sulfur for exports. Such a valuable asset naturally occupies minds of petroleum industry administrators.

 

98% Progress in Phase 12

 

Phase 12 of South Pars, now 98% complete, is the most important one among others. So far, five terrains of this phase have started work.

Rasoul Fallahnejad, manager of Phase 12 development, has said that this phase would be feeding at least 60 mcm/d of more gas into national trunkline before March next year.

The second and the third platforms of Phase 12 have become operational. Platform 12A of this phase was launched offshore to deliver at least 1 bcm/d of sour gas onshore. So far, more than 6.2 million barrels of gas condensate produced in Phase 12 has been refined and exported. With the startup of platforms 12B and 12C, the volume of gas condensate production will increase and every 10 to 20 days, gas condensate will be exported from this phase regularly.

The refining capacity of Phase 12 refinery has increased from 25 mcm/d to 60 mcm/d as it has been connected to Iran Gas Trunkline-5 (IGAT-5). Therefore, as gas processing in this refinery increases, restrictions on gas supply to power plants will shrink during winter.

The contract for the development of Phase 12 was signed for $7 billion with a domestic contractor in August 2005. It was supposed to come online in March 2015, but due to a variety of reasons, including sanctions, this project could not progress above 90%. However, after President Hassan Rouhani took office in August 2013, Petroleum Ministry focused on this phase. Over the past one year, significant progress has been made in this phase, like the startup of the first offshore platform and three terrains of refinery of this phase.

Economists believe that the startup of each phase of South pars will increase Iran’s gross domestic product (GDP) by one percent. But full operation of Phase 12 will boost GDP by three percent.

Iran’s petroleum industry has been under international sanctions for years, but platforms 12B and 12C are to be launched officially soon.

 

Statoil Record Smashed

 

The delivery of the first cargo of sweet gas produced in Phase 16 to national trunkline started recently. The cargo was 7.5 mcm. Now, the startup of the fourth terrain of sweetening in the refinery of phases 15&16 of South Pars is providing 60 mcm/d of gas, which is expected to increase shortly.

After the start of gas production in Platform 16A, Iranian companies have broken the record of gas-out operations, which was recently held by Norway’s Statoil in phases 15&16. The minimum time span recorded for gas-out by Statoil was six months and a half, but Iranian companies cut it to five months and ten days in Phase 16. Hookup, pre-startup and startup operations have already been done. Gas injection into national trunkline has already been done and production from Phase 15 is set to start soon.

The objective of this project is extracting 56 mcm/d of sour gas from the main reservoir of South Pars and producing 50 mcm/d of sweet gas, 77,000 b/d of gas condensate, 2,900 tons a day of liquefied petroleum gas (LPG), 2,750 tons a day of ethane for feeding petrochemical plants as well as 400 tons a day of sulfur. This phase incorporates a main four-legged jacket, a wellhead platform, two three-legged jackets, two connection bridges, two middle platforms and a flare. They weigh 7,200 tons altogether. In this project, 99.9% of equipment and facilities of platform have been constructed by South Pars Gas Complex.

The contractors developing phases 15&16 of South Pars are Iranian Offshore Engineering and Construction Company (IOEC), Iran Shipbuilding & Offshore Industries Complex Co. (ISOICO), Iran Offshore Industries Company and Dana Kish Drilling Company. Construction of refining units and preparation of the main site are up to Arya Naft Shahab Company.

 

Phases 17&18

 

The first platform in phases 17&18 of South Pars has been launched and its installations have started operation. The first terrain of sweetening in the refinery of this phase is also expected to come online soon with a daily capacity of 10 mcm. The capacity of this terrain will double by March next year.

Currently, less than 10 foreign engineers are working in phases 17&18 for installing equipment purchased from abroad. Earlier, more than 2,000 foreigners were needed in the pre-startup operations.

By operating two refining units in phases 17&18 of South Pars, gas production from these phases will reach 25 mcm/d.  Platform A17 is operational, while satellite platforms are under way with more than 60% progress.

Full operation of phases 17&18 of South Pars, excluding two satellite platforms, will earn the country $10 million a day. Therefore, a $6.2 billion investment in this project will return in two years.

Iranian contractors and companies have handled 90% of engineering, 100% of construction and 50% of material supply in these two phases.

Development of prioritized phases of South Pars is picking up speed as the country braces for cold snap. Different phases of this giant gas reservoir are operating and the flares of these phases have been turned on. Full development of phases of South Pars will supply the country’s energy needs sustainably and increase the country’s revenues by $112 billion annually.

Given the vital role of South Pars in energy supply and revenue generation in the country, faster development of this gigantic gas field has become a top priority for Iran’s Petroleum Ministry.

To that effect, phases 12, 15&16 and 17&18 are prioritized phases and they have received a big budget allocation.

As gas production from South Pars increases this year, Iran will make plans for supplying fuel during winter and saving liquid fuel consumption in power plants and other energy-intensive industries.

Countdown in South Pars

 

Thousands of Iranian oil and gas industry staff have been mobilized since the start of the year in March to help raise Iran’s gas production by 100 mcm/d. For this purpose, they have been working round the clock and under very tough ecological and geographical conditions in order to install facilities for extraction, transmission, refining and injection of gas into national trunklines in the Persian Gulf waters. Accelerating development of South Pars, shared by Iran and Qatar in the Persian Gulf, is the main concern of Iranian petroleum industry officials. This issue is now more than an industrial project in Iran because full development of South Pars will significantly change national economy and improve livelihood of Iranian people.

Meaningful relations between development of South Pars gas field and development of economic, social and political infrastructure in Iran are no secret to anyone. South Pars is estimated to have hidden around $8,800 billion in hydrocarbon reserves. Iran is earning less than $80 billion from crude oil sales a year.

Iran is currently recovering more than 300 mcm/d of gas from South Pars and Petroleum Ministry plans to bring its production from this jointly operated field to 800 mcm/d in two years. So far, 10 of 24 phases in South Pars have been developed and the remaining phases are being developed fast.

South Pars is one of the largest gas reservoirs in the world. Its development has been put on hold due to international sanctions and mismanagement in recent years.

Since taking office in August 2013, Petroleum Minister Bijan Namdar Zangeneh has laid the blame on mismanagement for the delayed development of the field. He said in the beginning that development of South Pars will continue based on priorities. Phases 12 and 15-18 of South Pars have been among the prioritized phases of South Pars. Phase 12, which is the main phase, is 90% complete. Other phases have progressed 50% to 60%.

Currently, Iranian Petroleum Ministry is spending more than 60% of its time and energy on completing the remaining phases of South Pars for faster startup of the giant offshore reservoir. Phase 12 is an exceptional one among prioritized phases. It is currently feeding on average 81 mcm/d of natural gas into national trunklines, in addition to producing 120,000 b/d of gas condensate and 750 tons a day of sulfur for exports. Such a valuable asset naturally occupies minds of petroleum industry administrators.

 

98% Progress in Phase 12

 

Phase 12 of South Pars, now 98% complete, is the most important one among others. So far, five terrains of this phase have started work.

Rasoul Fallahnejad, manager of Phase 12 development, has said that this phase would be feeding at least 60 mcm/d of more gas into national trunkline before March next year.

The second and the third platforms of Phase 12 have become operational. Platform 12A of this phase was launched offshore to deliver at least 1 bcm/d of sour gas onshore. So far, more than 6.2 million barrels of gas condensate produced in Phase 12 has been refined and exported. With the startup of platforms 12B and 12C, the volume of gas condensate production will increase and every 10 to 20 days, gas condensate will be exported from this phase regularly.

The refining capacity of Phase 12 refinery has increased from 25 mcm/d to 60 mcm/d as it has been connected to Iran Gas Trunkline-5 (IGAT-5). Therefore, as gas processing in this refinery increases, restrictions on gas supply to power plants will shrink during winter.

The contract for the development of Phase 12 was signed for $7 billion with a domestic contractor in August 2005. It was supposed to come online in March 2015, but due to a variety of reasons, including sanctions, this project could not progress above 90%. However, after President Hassan Rouhani took office in August 2013, Petroleum Ministry focused on this phase. Over the past one year, significant progress has been made in this phase, like the startup of the first offshore platform and three terrains of refinery of this phase.

Economists believe that the startup of each phase of South pars will increase Iran’s gross domestic product (GDP) by one percent. But full operation of Phase 12 will boost GDP by three percent.

Iran’s petroleum industry has been under international sanctions for years, but platforms 12B and 12C are to be launched officially soon.

 

Statoil Record Smashed

 

The delivery of the first cargo of sweet gas produced in Phase 16 to national trunkline started recently. The cargo was 7.5 mcm. Now, the startup of the fourth terrain of sweetening in the refinery of phases 15&16 of South Pars is providing 60 mcm/d of gas, which is expected to increase shortly.

After the start of gas production in Platform 16A, Iranian companies have broken the record of gas-out operations, which was recently held by Norway’s Statoil in phases 15&16. The minimum time span recorded for gas-out by Statoil was six months and a half, but Iranian companies cut it to five months and ten days in Phase 16. Hookup, pre-startup and startup operations have already been done. Gas injection into national trunkline has already been done and production from Phase 15 is set to start soon.

The objective of this project is extracting 56 mcm/d of sour gas from the main reservoir of South Pars and producing 50 mcm/d of sweet gas, 77,000 b/d of gas condensate, 2,900 tons a day of liquefied petroleum gas (LPG), 2,750 tons a day of ethane for feeding petrochemical plants as well as 400 tons a day of sulfur. This phase incorporates a main four-legged jacket, a wellhead platform, two three-legged jackets, two connection bridges, two middle platforms and a flare. They weigh 7,200 tons altogether. In this project, 99.9% of equipment and facilities of platform have been constructed by South Pars Gas Complex.

The contractors developing phases 15&16 of South Pars are Iranian Offshore Engineering and Construction Company (IOEC), Iran Shipbuilding & Offshore Industries Complex Co. (ISOICO), Iran Offshore Industries Company and Dana Kish Drilling Company. Construction of refining units and preparation of the main site are up to Arya Naft Shahab Company.

 

Phases 17&18

 

The first platform in phases 17&18 of South Pars has been launched and its installations have started operation. The first terrain of sweetening in the refinery of this phase is also expected to come online soon with a daily capacity of 10 mcm. The capacity of this terrain will double by March next year.

Currently, less than 10 foreign engineers are working in phases 17&18 for installing equipment purchased from abroad. Earlier, more than 2,000 foreigners were needed in the pre-startup operations.

By operating two refining units in phases 17&18 of South Pars, gas production from these phases will reach 25 mcm/d.  Platform A17 is operational, while satellite platforms are under way with more than 60% progress.

Full operation of phases 17&18 of South Pars, excluding two satellite platforms, will earn the country $10 million a day. Therefore, a $6.2 billion investment in this project will return in two years.

Iranian contractors and companies have handled 90% of engineering, 100% of construction and 50% of material supply in these two phases.

Development of prioritized phases of South Pars is picking up speed as the country braces for cold snap. Different phases of this giant gas reservoir are operating and the flares of these phases have been turned on. Full development of phases of South Pars will supply the country’s energy needs sustainably and increase the country’s revenues by $112 billion annually.

Given the vital role of South Pars in energy supply and revenue generation in the country, faster development of this gigantic gas field has become a top priority for Iran’s Petroleum Ministry.

To that effect, phases 12, 15&16 and 17&18 are prioritized phases and they have received a big budget allocation.

As gas production from South Pars increases this year, Iran will make plans for supplying fuel during winter and saving liquid fuel consumption in power plants and other energy-intensive industries.

NIOC Investment Opportunities

 

By Hamid-Reza Shakeri-Rad

 

Recently for the first time, National Iranian Oil Company (NIOC) put on tender 20 mcm of flare gases produced in some oil and gas fields for conversion into valuable products like electricity in an attempt to safeguard the environment by avoiding associated gases from being burnt. The plan was warmly welcomed by the private sector.

NIOC officials are offering tender for the associated gases, NGL, ethane recovery and other utilities in order to encourage the private sector to become more active and protect the environment.

Ali Kardor, NIOC deputy managing director for Investment and Finance, shares his views in an interview with Iran Petroleum.

 

Q: What made you consider putting on tender flare gases?

A: Flare gases have been burnt for years and that has inflicted economic damage on the economy and the environment. Mindful of all these, NIOC has worked out different mechanisms like converting these gases into valuable products like NGL. But these projects were delayed due to financial problems. Now, at the order of Petroleum Minister Bijan Namdar Zangeneh, the flare gases are supposed to be given to the private sector to be transformed into valuable products. I think this project could become one of the most effective economic projects in the country. In the meantime, I have to note that NIOC does not seek vested interests in this project but it envisages environmental concerns and involvement of private investors in some sectors of the petroleum industry.

 

Q: Would you please tell us about the basic price, volume and timeframe of selling these gases?

A: The envisaged price is on average 3 cents per cubic meter. The timeframe considered for the sale of flare gases is up to March 2020. The total gas needed to be available for sale is 20 mcm, equal to one phase of South Pars.

 

Q: You just mentioned that this project could be economically effective. How?

A: Flare gases could be converted to a variety of products, but we believe that the best and the simplest method for investors would be to transform these gases into electricity. Currently, around 1,000MW of electricity is being exported from Iran while 20 mcm/d of gas could be converted into 3,000MW of electricity, or thrice Iran’s current gas exports. According to international prices, this volume of gas could earn the country $1.5 billion a year. That would serve the interests of the private sector and would also boost Iran’s electricity exports capacity. Therefore, I believe that this project can be the most economical project in the country, not to mention environmental issues and less air pollution.

 

Q: What other products could be achieved from flare gases?

A: In addition to electricity, other products like gas liquids and LNG could be achieved from flare gases through Mini-LNG or FLNG facilities. That requires huge investment and application of state-of-the-art technology. We have to consider more time than for electricity generation for them.

 

Q: You highlighted economic benefits. Do you have any estimates of rate of return on investment for converting these gases into electricity?

A: Yes. The rate of return on investment for this project is 20-25 percent a year. But given the progressive electricity prices in the coming years in the country, the profitability of these projects will also increase.

 

Q: Have you held any talks with Iran Energy Ministry officials to that effect?

A: There have been preliminary talks, and of course it requires the cooperation of Iran’s Energy Ministry. Getting permit from the Department of the Environment and other bodies and also signing contracts with Energy Ministry for the sale of generated electricity are also up to potential investors.

 

Q: Would you please explain about fields in question?

A: The fields producing flare gas have been picked from 50 operational spots run by National Iranian South Oil Company, Iran’s Central Oil Fields Company, Iran Arvandan Oil and Gas Company, Iranian Offshore Oil Company and National Iranian Gas Company. Their volume of gas varies between 0.01 mcm/d and 5 mcm/d.

 

Q: What are terms and conditions after the signature of contract?

A: The timeframe for the implementation of the project is one year. If it becomes operational sooner than one year, the investor will enjoy a 30% discount. After one year, whether or not the investor would be ready to receive the gas, NIOC will charge 80% of the gas price agreed upon. If NIOC delivers less gas than agreed it will grant discount. Private companies should request for renewal of contract at least six months prior to its expiry. Where there is a possibility of authorizing use of NIOC-owned lands we will make announcement. These plots of land will be rented out to companies only for installations, and the land will remain under ownership of NIOC.

 

Q: How many private companies have so far announced their readiness? When do you think the contract will be signed?

A: More than 40 private companies have voiced readiness and they attended our informative meetings. Applicants will have to submit their requests no later than January 9, 2015 and the contracts will be signed up to March 11, 2015.

 

Q: You have reportedly offered other packages than flare gases to the private sector. Would you please explain more?

A: Yes, we are preparing three other packages on NGL plants, ethane recovery, crude oil and gas condensate storage facilities as well as utility to be commissioned to the private sector. These packages will also have benefits for both sides, let alone significant environmental aspects.

 

Q: What stage are these projects in?

A: A working group has been established for preparing these sectors. In the first step, a formula was developed for determining the price of NGL feedstock and ethane recovery based on the amount of investment and international prices. The formula will be finalized soon. The period envisaged for these formulae is ten years and then it will be renewed.

 

Q: What about NGL and ethane recovery projects?

A: Nine NGL plants including NGL 1700, NGL 1800, NGL 2000, NGL 2300, NGL 2400, NGL 3100, NGL 3200 and NGL Kharg as well as ethane recovery from Phase 12 of South Pars, Parsian and Bidboland are among them.

 

Q: Have you had any estimates of the amount of investment in these projects and the rate of return?

A: The investment needed for the implementation of these projects is estimated to be between $15 and $20 billion. The rate of return will definitely be more than 20%.

 

Q: Is it possible for foreign investors to bid?

A: Yes, there are no restrictions and foreign investors can be present under FIPPA law and following registration in Iran or in collaboration with Iranian investors. Regarding investment in oil and gas fields, Iran Petroleum Contract (IPC) is being finalized and new fields have been discovered. The conditions will be soon announced to domestic and foreign investors.

Bahregan, Largest Heavy Crude Oil Terminal in Iran

 

With the exploration of oil in the Persian Gulf in mid 1950s, Bahregan Oil Center (BOC) located between Geneveh and Deylam ports started work as the first offshore oil zone in Iran. After the establishment of Iranian Offshore Oil Company (IOOC), authority for the extraction, processing and export of crude oil recovered from Hendijan, Bahregansar, Soroush, Norouz and Mahshahr offshore fields was delegated to this company. Possessing technology for producing three categories of heavy crude oil and housing the world’s largest floating storage unit (FSU) are the main characteristics of BOC.

Given the potentialities in BOC and based on decisions adopted by National Iranian Oil Company (NIOC), the necessary installations for storing and exporting 200,000 b/d of heavy crude oil extracted from Azadegan oil field have been planned to be constructed. These installations include 3-million-barrel storage facilities, metering system for oil reception and exports, pipe laying, loading manifold system and offloading, pressure booster pumps and oil export pumps, single-point mooring (SPM) and onshore and offshore pipelines. Once these installations have been established, BOC would become the largest terminal of heavy crude oil exports in Iran.

The last storage facility, with a capacity of one million barrels, was recently inaugurated by Saeed Hafezi, managing director of IOOC. With the startup of this storage facility, the storage capacity of crude oil in BOC increased to 5.8 million barrels and this center became the largest terminal for heavy crude oil in the country. Earlier, a one-million-barrel and two 500,000-barrel storage facilities had been launched in this region.

The crude oil produced in Azadegan field is delivered to Bahregan through a 260-kilometer pipeline before being fed into two one-million barrel storage tanks (A1&A2) and two 500,000-barrel storage tanks (A3&A4).

In order to facilitate the docking of oil tankers of up to 350,000 tons, a new SPM has been installed at a distance of 35 kilometers from Bahregan. The oil held in storage facilities for exports would be transferred into the SPM through offshore and onshore pipelines.

In order to accelerate executive operations, the construction of Bahregan heavy crude oil exports terminal topped the agenda within the framework of construction of two 1-million-barrel and two 500,000-barrel storage facilities.

The 1-million-barrel facilities measure 110 meters in diameter and 18.3 meters in height. Each weighs 3,350 tons with a 950-square-meter surface. The 500,000-barrel facilities measure 75 meters in diameter and are 19.3 meters high. They weigh 1,800 tons with a 4,420-square meter surface.

The storage facilities have been constructed by Iranian contractors.

 

40% of Iran Exports

 

Hafezi told Iran Petroleum that nobody could believe that Iran’s nascent petroleum industry would be able to build even a small jacket, but today “we are building all platforms, not to mention most important events happening in the petroleum industry.”

Following the 1979 Islamic Revolution, the Revolutionary Council declared all production sharing contracts null and void. Offshore oil production has since been conducted by IOOC.

IOOC-run fields currently account for 40% of Iran’s oil exports. IOOC production has never halted and its oil has had its special buyers.

Hafezi said BOC and its oil enjoys unique properties.

 

Irreplaceable Oil

 

Hafezi said: “Saudi Arabia can supply oil to replace Iran’s heavy crude oil and Kuwait can supply oil with the same quality as Iran’s light crude oil, but the oil produced by IOOC has no substitute and it has its special and permanent customers.”

Bahregan comes second after Kharg in terms of level of oil production. Many believed that offshore production should be cut because of high costs.

Hafezi said three main factors – contractor, outsourcer and consultant – can operate a project effectively.

“With the completion of crude oil storage enhancement in BOC, the storage capacity in this region has increased 3 million barrels,” he said, adding that more than 400,000 b/d of water is being injected into Iran’s offshore fields.

Hafezi said 20% of IOOC oil is produced by downhole electric pumps and 15% through gas lift.

 

Loading on Persian Gulf Vessel

 

Transfer of crude oil to Persian Gulf Exports Vessel has begun in Bahregan center which is run by IOOC. So far, 250,000 barrels of crude oil have been stored in this vessel and in total 600,000 barrels are envisaged to be stocked. Then, a South Korean company will launch the facility.

Oil recovered from Soroush and Norouz fields is also being loaded into Persian Gulf vessel and more than 70,000 b/d of crude oil is being transferred into this vessel.

Tests are under way on the reservoir, metering equipment and pumps. Persian Gulf Vessel is to replace Surena vessel in the future. Hafezi said Surena is currently continuing its work, but added that any decision for it to continue to work in the future would be up to NIOC.

It would be also possible to export the crude oil stored in Persian Gulf Vessel.

The capacity of Persian Gulf Vessel’s terminal is 2.2 million barrels and is equipped with advanced metering systems. This vessel, which exports heavy crude oil produced in Soroush and Norouz fields, has highest technology in terms of machinery and capacity.

IOOC has in recent years experienced the designing and operation of Surena vessel and it can now deal with Persian Gulf Exports Terminal most effectively.

Oil produced from Soroush and Norouz fields has long been stored in Surena before being loaded. Now, everything will be shifted to Persian Gulf vessel.

       

Kish, New Energy Hub in Persian Gulf

 

By Mahnaz Mohammadi

 

Kish gas filed is located 30 kilometers east of Lavan Island in the Persian Gulf waters. It was discovered in 1968 following 2D seismic operations. Kangan and Dalan gas reservoirs are located at the depths of 3,200 meters to 5,000 meters beneath this island.

Kangan reservoir, measuring 32 kilometers in length and 25 kilometers in width, is estimated to have a gas column more than 1,200 meters thick. The reservoir pressure at the depth of 3,850 meters is 7,378 pounds per square meter. According to Petroleum Engineering and Development Company (PEDEC) which is operating the project, the field is estimated to contain 38.3 tcf of gas and 398 million barrels of gas condensate.

The first well in this gas field has already been drilled by a foreign company to help assess the hydrocarbon capacity of Asmari horizon, Bangestan group, Khami and Dehrom. The 2,000-meter well never yielded any hydrocarbon reservoir, and drilling operations were abandoned midway.

The first exploration well in this field was drilled in September 1968 and it continued up to the depth of 2,621 meters, but no oil or gas was found.

More seismic tests were conducted on the reservoir before the drilling of a second appraisal well started in January 2005. After 4,409 meters of drilling, water was seen and drilling stopped two years later. Further tests proved the existence of sweet gas in Kangan, Upper Dalan, Lower Dalan and Naar formations.

According to estimates, Kish gas field holds more than 60 tcf of gas in place. It could be developed in six phases. Currently, development of this field is under way in three phases. The gas recovered in this stage is destined for exports. The field is also estimated to contain 514 million barrels of gas condensate. A master development plan (MDP) has been designed for this field and the wells drilled by National Iranian Drilling Company for the first phase development of this field are close to completion.

In this phase, 12 new development wells are being drilled and Well No. 2 will be repaired and completed. The wells are spudded in Kish gas field aimed at gathering underground geological data, assessing different sections of the reservoir and producing gas from Dalan Formation.

Since Kish is a tourist destination, all 12 wells will be drilled in two zones, known as Cluster 1 and Cluster 2.

 

1bcm Output

 

Batch drilling method is envisaged in drilling wells in Kish Island in order to accelerate operations. Pony base system is also used for transferring drilling rig to conduct drilling operations. Each development phase of this field will produce 1 bcf of gas, whose exports would earn the country more than $10 billion in revenues every year.

In line with the development of this field, construction of treatment installations is on the agenda. Last March, an agreement was signed for the implementation of phase 1 of the refinery with the collaboration of Farab and Namvaran companies. The first phase of the refinery is estimated to be ready in 42 months starting from the date the contract was signed.

The Exploration Directorate of National Iranian Oil Company asked NIDC to continue drilling operations in 2004 and the drilling bit reached gas  at the depth of 4,000 meters. Existence of gas in this field was then announced officially.

 

Simultaneous Drilling

 

NIDC, as the contractor for drilling in the development of Kish gas field, has signed a contract with PEDEC for drilling 6 development wells in Cluster A and 6 development wells in Cluster B of the field.

Nasser Pour-Mansouri, director of Fath-61 drilling rig, said drilling in Cluster B has progressed more than 80 percent. He added that six more wells for this cluster would be ready for operation next year.

The six wells currently existing in Cluster A of Kish gas field will need 12 to 18 months for development if drilling is to continue there.

The drilling of Well B6 is under way in Kish gas field and NIDC-owned Fath-61 drilling rig is currently in operation at the depth of 2,957 meters.

The drilling of Well No. 6 in Cluster B recently started and it is expected to be finished on schedule soon.

According to geological data, the depth of drilling in Kish gas field is between 4,150 and 4,160 meters. The wells in this field are being drilled simultaneously and so far, 3,875 meters of drilling has been done. These operations will continue up to depth of 4,150 meters.

Iranian engineers have for the first time designed a pony base for moving onshore drilling rigs to spud wells. This pony base can help transfer the drilling rig easily and bath drilling could be done.

The reason for a halt in drilling operations in Kish gas field is the need for more technical exam and procurement of new commodities. Moreover, Fath-61 and Fath-54 drilling rigs needed reconstruction.

Onshore drilling rigs operating in warm and humid zones often need reconstruction due to corrosion. The urgency of reparation of drilling rig may necessitate halting drilling operations.

NIDC’s onshore drilling rigs are often repaired at Ahvaz site and their reparation usually takes eight months.

Pour-Mansouri said gathering geological data, assessing different sections of drilling and gas production from Dalan Formation are among objectives of drilling in Kish gas field.

Drilling of all wells in Kish gas field is directional and they deviate after the depth of 300 meters.

Currently, Iranian engineers are providing all services including downhole and wellhead services, coiled tubing services, geological and other related services.

Fuel Policy Saves Iran $57.5b

 

National Iranian Oil Products Distribution Company (NIOPDC) was established in 1928. It has since been distributing petroleum products across the country. NIOPDC owns 92 tank farms for storing more than 12.5 billion liters of petroleum products and 49 aviation refueling centers. The company manages and/or supervises more than 3,000 gasoline and gasoil stations, more than 1,996 compressed natural gas (CNG) stations and some 12,000 oil and gas tankers. The company is distributing more than 250 ml/d of petroleum products across the country.

In order to meet growing fuel supply demand, particularly in winter, NIOPDC has established nine new crude oil storage facilities and 59 storage tanks with a capacity of 6.1 billion liters. The company has raised its storage capacity to 18 billion liters.

NIOPDC, which has 9 directorates, has worked out mechanisms to become the top petroleum products distributor in the region.

Iran Petroleum has conducted an interview with Nasser Sajjadi, managing director of NIOPDC.

 

Q: How much has petroleum products consumption grown in the current Iranian year, which started in March, compared with the previous year?

A: At present, most power plants, industries, factories and some petrochemical plants are using liquid fuel and this issue has made the role of NIOPDC more important in this sector.

Although in the current [ Iranian calendar] year, natural gas supply to power plants has increased, nearly 14.5 billion liters of liquid fuel, including 7 billion liters of gasoil and 7.5 billion liters of fuel oil, was delivered to the power plants.

In 1996, 30 ml/d of kerosene was distributed on average all over the country. This amount has declined gradually as natural gas production has increased. In 2013, 12 million liters on average has been produced, falling by more than half. Kerosene consumption is falling and natural gas consumption has increased 8 percent since March. Kerosene consumption is forecasted to reach 11 ml/d across the country by March 2015. Gasoil consumption has grown 2.5 percent during the first eight months of the current year with power plants accounting for the biggest share in the growth.

Gasoline consumption growth during the same eight-month period was less year-on-year. Last year, gasoline consumption grew some 7.7 percent, but this year it grew 2.3 percent. This fall in consumption is due to trips in public transportation vehicles and high price of gasoline.

Fuel oil consumption during the eight-month period declined 30 percent year-on-year with the surplus being exported. CNG consumption rate has not changed and it stood at 18.5 ml/d.

 

Q: How much petroleum products is currently consumed in the country?

A: Gasoline consumption was 68.4 ml/d last year and it reached 70 ml/d after eight months this year. Only 4.4 ml/d was imported. Up to the end of the eighth month of the current year, 8.2 ml/d of kerosene has been consumed, below 8.9 ml/d last year.

During the same period, gasoil consumption reached 102 ml/d, up from 99.5 ml/d last year. The transportation sector is delivered 9 ml/d of euro-4 gasoil.

Fuel oil consumption stood at 36.8 ml/d, down from 51.5 ml/d last year during the same eight-month period.

 

Q: Would you please tell us about Iran’s export of oil products?

A: Up to the end of the eighth month of the calendar year, 10 ml/d of fuel oil has been allocated to bunkers , up more than 32% from a year ago. Moreover, some 30 ml/d of fuel oil has been exported. Currently, 2 ml/d of gasoil is being exported to Iraq. Petroleum products are also exported to Armenia and Iraq’s Kurdistan territory.

Given plans for increasing natural gas production in the country, large amounts of gasoil and fuel oil will be exported to neighboring countries like Iraq and Afghanistan as of next calendar year. In other words as natural gas production rises in Iran; we will witness the peak of exports next year. In the meantime, selling fuel at borders is considered by NIOPDC so that the smuggling of products would be averted. Exports in this sector are growing. During the second month of summer, 11.5 ml/d of gasoil was sold at border stations. The figure recently reached 19 ml/d.

Iran enjoys a geographically strategic position and it can focus on swap besides exports.  Exports are currently focused on liquefied gas, kerosene, gasoil and fuel oil and there are plans for entry into regional markets. Exports to neighbors are being done by NIOPDC, while exports in greater volumes are being done by the Directorate for International Affairs of National Iranian Oil Company.  

 

Q: How about under-construction fuel storage facilities?

A: Currently, fuel storage facilities with a capacity of 700-800 million liters are under construction. They are expected to come on-stream by the end of the calendar year. There is a 300-ml storage tank in Mahshahr, which is in the final stages of construction. A 200-ml storage tank in Shiraz would come on-stream by the end of the year. The storage facilities are mainly located in Mahshahr, Shiraz and Urmia. Mahshahr and Shiraz facilities are to become operational before the end of the year, while Urmia facility would come on-stream with delay.

 

Q: How many CNG units are currently active in the country?

A: Already, 2,242 CNG stations have been launched and 150 others are under construction. Soon, we will have nearly 2,400 CNG stations in the country. Since there are abundant CNG fuel resources in the country, it can be a good substitute for gasoline. When more CNG is added into basket mix, gasoline imports could be avoided. At present, 24 CNG stations are being constructed by the private sector. Over recent years, the number of CNG stations has risen, but consumption of this product has not increased. In 2011, 18 ml/d of CNG was consumed in the country. In 2012, it was 19 ml/d and in 2013 it was 18.5 ml/d. During the first eight months of the current calendar year, CNG consumption has remained at 18.5 ml/d. CNG pricing for next year is to be such that the gasoline price would increase more than the CNG price so that people would be more willing to use CNG.

 

Q: What are the incentives for the private sector’s investment in CNG?

A: In order to motivate private investment, special privileges have been envisaged and 1,000 CNG stations are planned to be constructed by the private sector. To that effect, service fees have doubled. Furthermore, in terms of purchase of equipment and parts, there is no obligation for purchase from inside or outside. Potential investors may buy their required equipment at home or abroad.

 

Q: You referred to the CNG industry development and gasoline rationing. What achievements have they already had and will have for the country in the future?

A: Had the CNG industry not developed and gasoline not rationed, gasoline consumption would have reached 144 ml/d. Due to rationing, our gasoline domestic consumption is 70 ml/d. With the implementation of these two projects, nearly $57.5 billion was saved up to March 2014.

 

Q: Is it possible for foreign investors to invest in Iran’s CNG sector?

A: Since one of advantages of Iran is its access to huge gas reserves, foreign investors can team up with Iran’s private sector for investment in the CNG sector. Moreover, domestic and foreign investors can also be active in the construction of storage facilities. In the past, NIOPDC ran most of these activities, but now private companies have become more active than before.

Iran, Fifth in Underground Gas Storage

 

One may ask why gas-rich countries keep storing gas while they have thousands of kilometers of high-pressure pipelines and tens of gas pressure booster stations.

The main reason for this issue may be quantitative and qualitative fluctuations in the energy consumption under different weather conditions.

For example in Iran, which holds more than 34 tcm of gas, gas consumption rises seven-fold in winter. Despite all-out development, there is no guarantee for winter gas supply. Moreover, due to incomplete chain of energy-consumption industries in the vicinity of gas production centers, it would be illogical to develop underground gas storage facilities and maximize production based on peak consumption in winter.

To that effect, gas storage in underground facilities built near major consumption centers is the best option for both gas producers and consumers. Many countries known as gas giants are also stocking their surplus gas.

Cedigaz, in the fifth edition of its reference report on underground gas storage, expects global gas storage capacity to increase from 377 bcm at the beginning of 2013 to 557-631 bcm by 2030. The incremental growth, 180-254 bcm by 2030, requires sustained investment throughout the period, amounting to a total €120 billion by 2030.

In 2030, according to Cedigaz, storage will represent 11.6% to 13.1% of global gas demand, compared with 11.3% in 2013.

New gas storage markets (Asia and the Middle East) account for about 60% of incremental capacity through 2030. Strong growth is expected in rapidly emerging gas markets, particularly China. In these markets, storage infrastructure has to be built almost from scratch, Cedigaz announced. Investment in China focuses on creating large volumes of storage capacity as well as peak deliverability to cope with rising imports and growing city and power demand, according to the report.

There were 688 underground gas storage facilities in operation in the world at the beginning of 2013, according to Cedigaz, representing working gas capacity of 377 bcm. More than two thirds of the sites are in North America, with 414 in the US, and 59 in Canada, and a combined working capacity of 152 bcm (40% of the global total). There are 144 storage locations in Europe (99 bcm), and 51 sites in the CIS with 51 facilities (115.5 bcm). Asia-Oceania has 18 sites (9.3 bcm of working capacity). There is one site in Argentina and one in Iran, all according to Cedigaz data.

 

Europe Share

 

In mature markets (US, most of Europe, and the Commonwealth of Independent States), growth in storage capacity is limited. The focus is on increasing peak deliverability rather than storage volumes. In developed and liberalized markets, the gas industry has undergone massive changes, largely impacting storage activity which increasingly performs new functions in addition to its traditional operational ones.

New storage needs are linked to development of trading activity and natural gas use to back-up intermittent renewable energy sources in electricity generation. These two trends favor flexible storage (salt caverns). Security of supply is also a major driver of additional storage needs in Europe, where import dependence is increasing.

Cedigaz explained that competition from other sources of flexibility has forced the storage industry to regularly develop techniques to meet market demand for performance, flexibility, and economic efficiency. In recent years, trends have been towards expansion of existing capacities, improvement of efficiency and performance, and development of larger flexible storage (mega-size caverns).

Storage capacity has increased more than 35 bcm since 2010, mainly due to Europe which added almost 14 bcm, Cedigaz’ report says. There are 95 projects under construction globally, adding 68 bcm of working capacity. Most of this capacity will be completed by 2020-25. There are also 141 identified projects at different stages of planning. These projects would add another 85 bcm of working capacity if fully implemented, according to Cedigaz. Europe ranks first in all of Cedigaz’ expansion categories: number of projects, additions to working gas capacity, projects under construction and planned projects.

 

 

        Gas Storage in Iran

 

According to standard formulae, each country has to store 14 percent equivalent of its annual gas consumption. Therefore, if we consider Iran’s annual gas consumption at round 107 bcm, the country has to store at least 14 bcm a year. Therefore, Iran is at the beginning of the way and it currently ranks the fifth in terms of underground gas storage.

Natural gas storage for Iran, which owns the world’s largest gas reserves, is a significant and vital issue. Given this important necessity, valuable steps have been taken in recent years.

In Iran, Sarajeh gas storage facility near the central city of Qom is the first one in the Middle East. The facility became operational in 2012. The second phase of the facility started work last January. The current capacity of Sarajeh gas storage facility stands at 10 mcm/d. So far, 1.3 bcm of gas has been stored in this facility. This volume of stored gas would be injected into gas trunklines across the country if it is needed. Every year, around 300 mcm of gas is transferred from Sajareh facility to gas trunklines following treatment. Gas withdrawal from Shourijeh and Sarajeh facilities is expected to reach 15 mcm/d this winter.

After Sarajeh, Shourijeh is Iran’s major gas storage facility which was launched this year. The gas storage capacity in Shourijeh stands at 4.6 bcm and in the first phase, 2.4 bcm of gas could be stored in the facility.

By March next year, Iran is forecasted to have the storage capacity of 14 bcm, 130 mcm of which could be withdrawn per day.

Based on exploration activities conducted in recent years on 200 storage facilities, only two were picked as appropriate for gas storage. The pair in Ilam province in western Iran can store 32 bcm of gas. Another storage facility has been identified in Kohguiluyeh Boyer Ahmad province with a capacity of 6 bcm of natural gas and a daily supply of 40 to 50 mcm. These three facilities are currently in the stage of post-exploration studies (2D and 3D seismic testing and cost estimate for installation) and no special investment has been made in the trio. Storage is topping the agenda of Iran’s gas industry, but investment is key to studies on the infrastructure.

Growing gas consumption, depletion of aging wells and natural disasters like floods and earthquake in gas refining facilities constitute the main reasons behind the construction of natural gas storage facilities in Iran. Every year, Iran is spending on average $8 billion to $10 billion on the expansion of gas transmission networks, while gas storage facilities can save money and further serve the gas industry.

Gas may be the most inexpensive fuel in the world, but that’s a double-edge sword. Today, we are assured of the huge volumes of gas in the world and we only want to consume it without considering storage of this colorless gold. It has to be noted that shale gases produced by some countries and concomitant drop in natural gas consumption may have provided a golden opportunity for consumer countries to store gas.

By Zakiye Bahrami

Global oil and Asian product market, November & December

OIL HITS 5-YEAR LOWS SINCE 2008 CRISIS 

• December average for Dubai crude fell to near $67/bbl; while Brent slipped below $71/bbl.
• OPEC decided to maintain output ceiling  to counter U.S. shale oil boom.

 

Just when the market was thinking that a 4-year low for crude oil was bad enough, oil market hit a 5-year low after the OPEC meeting on 27 November. Oil has been falling since June 2014. During December, Prices continued to fall to reach its lowest since 2008 crisis as supplies overwhelmed demand. Slower economic growth in China and Europe made the demand outlook gloomy. Slower than expected growth in China's manufacturing sector may add further downward pressure on oil. China's official Purchasing Managers' Index (PMI) slipped to 50.3 in November, a government study showed last month.

The Organization of the Petroleum Exporting Countries had been expected to try to rebalance the market by cutting the production, but agreed to maintain existing production targets.

According to the news, Oil-producing countries from Iraq to Nigeria were revising their 2015 budgets to reflect lower prices.

 

Asian Product Markets

In Singapore products' market- leader product market in Asia- the mean of most products prices, decreased in line with the fall of crude prices (see graph 2).

Some of the changes in product prices are due to crude price changes. Hence, in order to investigate product market fundamental and its performance, it is necessary to look at product price changes in comparison with crude price changes. Naphtha and fuel oil market improved during the reporting period while gasoline fundamentals was weak (see graph 3). 

 

Products market fundamentals in brief

December 2014	Light Distillates Products		Middle Distillates Products		Heavy Products
	Gasoline	Naphtha	Gasoil	Jet Fuel	Fuel Oil 180	Fuel Oil 180
	↓	↑	↑	↑	↑	↑

(Upward arrow: strength, downward arrow: weakness)

Light Distillates (gasoline, naphtha)

Asian naphtha market witnessed some correction During Nov. and Dec. 2014 compared to the dismal performance over October. Especial support was seen from the beginning of December. Naphtha market in Europe was moving up, as a result arbitrage volumes from Europe to Asia waned. On the demand side, end of year buying interest especially in China helped the market to be strong. looking ahead, Japanese demand for naphtha could diminish as soon as next year, following a government announcement encouraging petchem players to close some ethylene-making capacity. Meanwhile, the LPG prices during winter season is expected to go up and demand of naphtha as substitution of LPG may increase. Therefore, the outlook for naphtha market is not clear. looking historically at naphtha trend, the market might face some downward movements from the beginning of new year since the end of each year is usually boom days of naphtha market.

Gasoline market was slightly weakening during November and December. Higher exports from China, Japan, India and Middle East alleviated the market. In Malaysia and Indonesia, fuel subsidies is planned to be removed and this may dent gasoline demand.

 

 

Middle Distillates (gasoil, jet fuel)

Middle distillates products performed strong during reporting month. The strength in middle distillates typically happen over Q4 of each year. This up-tick was partly driven by firmer buying from China, the Philippines and Indonesia seasonally.

Regional jet fuel demand remains fairly healthy, as air carriers have recently noted growing domestic traffic, while additional heating requirements may also be playing a role in elevated jet fuel market. Tight supply in the region was mostly because of decrease in Japanese and Chinese jet fuel export. The export of Japan fell as the country rose its production of kerosene in expense of jet fuel production. In China, domestic consumption of jet fuel prevented the country from more export.

Fuel Oil

Supply tightness in Singapore fuel oil market caused fuel oil crack – differential between fuel oil and Dubai prices- to reach to the highest level since June 2013. Surge in bunker demand, as well as some firm buying interest from South Korea were the driving factors. Supply tightness happened on the back of market mistrust following the bankruptcy of OW Bunker. Since Danish bunker fuel supplier OW Bunker collapsed, ship owners looked to buy product from alternative ports to avoid the uncertainty in Singapore credit markets. The outlook for the market is weaker compared to the current situation because things could soon change and these implications would only be short-lived, as other players would eventually jump in.

 

Second Libra Well on Track Offshore Brazil

 

Petrobras says a second appraisal well in the Libra block in the Santos basin has reached the salt base. Drilling through the reservoir of the LC21 well is expected to follow in the next few days.

On Nov. 6, the Petrobras-led Libra Consortium completed its first appraisal well (NWI) in the northwest portion of the Libra block, 4 km (2.5 mi) southeast of the discovery well 2-ANP-2A-RJS. The location is 185 km (115 mi) from the coast of Rio de Janeiro in a water depth of 1,963 m (3,487 ft).

Results have confirmed a 290-m (951-ft) oil column and a reservoir with good porosity and permeability. Samples collected from the well have confirmed 27° API oil, the same as in the discovery well.

 

Angola Rig Released

 

Statoil has terminated its contract for the drilling rig Stena Carron after completing commitments on blocks 38 and 39 in the Kwanza basin offshore Angola.

Results were disappointing and although Statoil sees further prospectivity on its acreage, it wants to evaluate the well data and work up new prospects before deciding on future plans.

Stena Carron drilled wells on the presalt Dilolo and Jacaré structures.

Statoil is participating in eight commitment wells across five blocks in the Kwanza basin, of which four have so far been drilled. Another, operated by Total, is under way in block 40.

Costs of terminating the operations and associated services including the Stena Carron rig contract could reach $350 million.

 

Japan Hydrate Survey Completed

 

Ocean Floor Geophysics Ltd. (OFG), in cooperation with Fukada Salvage and Marine Works Co. Ltd. (Fukada), has completed a high-resolution CSEM survey of near-surface gas hydrates in Japanese waters using the Scripps Institution of Oceanography Vulcan system for the National Institute of Advanced Industrial Science and Technology (AIST).

The survey comprises over 500 line km (311 line mi) of high-resolution data collected using the Fukada vessel Shin Nichi Maru. Water depths were from 400 m (1,312 ft) to 1,100 m (3,609 ft). A 3D inversion of the EM data for an area of interest has been completed.

 

 

New Zealand Offshore Field Starts Production

 

OMV has delivered first oil from its Maari field redevelopment drilling campaign offshore New Zealand.

The Maari Growth project is designed to enhance production and recovery from the producing Maari field, 80 km (49.7 mi) off the Taranaki coast in 100 m (328 ft) of water. Production started in February 2009 but has declined.

W MR-8A, which came online on Nov. 28, is producing from a previously undrained compartment in the field. The well was side tracked out of an abandoned injection well and drilled horizontally into the Moki formation to a total length of 3,824 m (12,543 ft).

OMV estimates production capacity for this well at 4,500 b/d of oil.

 

 

 

India Receives Biggest LNG Shipment

 

India has received its biggest shipment of liquefied natural gas (LNG) by ship as it looks to diversify supplies and economize parcel size to meet growing energy demand.

A Q-Max LNG vessel, the largest LNG carrier in its class, with a capacity of about 261,000 cubic meters, was received at Petronet LNG Ltd's Dahej import terminal in Gujarat.

The receipt of the ship, carrying cargo from Ras-Laffan, Qatar, has set another benchmark, the company said in a statement here.

Last year, Petronet had successfully unloaded 1,000th cargo at Dahej in a short span of about 9 years.

"We are glad to receive first Q-Max LNG vessel, one of the biggest size LNG ships available today, at Dahej Terminal and expect to receive more such cargoes in future," Petronet Managing Director & CEO Ashok Kumar Balyan said.

In April, Petronet had signed a short-term contract with Qatar's Ras Laffan Liquefied Natural Gas Co to import 800,000 tons of LNG over 12 months to supply to refineries.

Petronet currently imports 7.5 million tons a year of LNG from RasGas on a long-term contract that was signed in 2004.

"The global energy supplier currently makes regular deliveries to Petronet's Dahej and Kochi terminals. After South Korea, India is RasGas' largest recipient of LNG by volume," the statement said.

RasGas will load its 1,000th cargo destined to Dahej in mid-December.

"The safe berthing and unloading of the Mekaines Q-Max vessel at Dahej is another significant milestone to highlight relationship between RasGas and Petronet.

 

Iraq, Kurds Reach Major Oil Deal

 

The Iraqi government reached a deal with the Kurdish local authorities in the country's north to exchange oil from the autonomous region for a nearly 20 percent share of the national budget, officials said.

The deal resolves a months-long impasse that had undermined national unity amid the fight against the Islamic State of Iraq and the Levant group — a battle in which Iraqi soldiers and Kurdish "peshmerga" troops have joined forces against the extremists.

The agreement stipulates that the semi-autonomous Kurdish government will release 550,000 barrels of oil every day to the Iraqi oil ministry, more than half of which will come from the disputed Kirkuk oil fields, according to Iraqi Finance Minister Hoshyar Zebari.

The Kurds took control of the Kirkuk fields to prevent them from falling to the ISIL group during its summer blitz that captured much of Iraq's north and west.

In exchange, the Kurds will receive the 17-percent share of the national budget allocated to their region, plus installments of as much as $1 billion to boost the capabilities of Kurdish "peshmerga" fighters battling the ISIL militants.

 

Bahrain Oil Output to Grow 4% Next Year

 

Bahrain's oil output is expected to grow by four per cent next year, according to an expert analysis.

However, economic growth is expected to slow to an average of 3.5 per cent over 2015-16, thanks to weaker growth in non-oil activities, says a new report by the Institute of Chartered Accountants in England and Wales (ICAEW).

The report, 'Economic Insight: Middle East' is produced by Centre for Economics and Business Research (Cebr), ICAEW's partner and economic forecaster, said the Gulf Daily News (GDN), our sister publication.

The report warns that the impact of continued oil price weakness could put considerable pressure on GCC economies and affect real GDP growth, unless they step up diversification efforts.

According to the International Monetary Fund, the projected 2015 breakeven prices, at which oil must sell in order to balance the budget, put Bahrain and Oman under the greatest pressure at $116 and $108 per barrel ,respectively.

A cut in production levels could be considered in response to falling prices, as done in the past by Saudi Arabia.

However, the spending plans suggested by the breakeven prices imply that most GCC hydrocarbon exporters do not have the flexibility to endure sustained reductions in either output or revenues.

ICAEW economic adviser and Cebr executive chairman Douglas McWilliams told the GDN that large shares of government budgets in the GCC are swallowed up by public spending.

 

Georgia's Batumi Oil Loadings Down

 

Crude oil and refined oil product shipments from Georgia's Black Sea port of Batumi were down 24.4 percent in the first 11 months of the year from a year earlier, a senior official at the terminal said.

Bad weather in Kazakhstan, where the oil is produced, lower-than-expected output from the Kashagan oilfield at the beginning of the year and re-routing part of oil shipments to Baku-Tbilisi Ceyhan pipeline contributed to the decline, said the official, who declined to be identified.

The Batumi terminal, operated by Kazakh state energy company KazMunaiGas , shipped 3.914 million tons of oil and oil products during the 11 months, down from 5.178 million tons in the same period of 2013.

Shipments in November were 423,940 tons, down from 547,158 in November 2013, but up from 266,791 in October this year.

The terminal shipped 5.63 million tons last year, up from 5.19 million in 2012.

Crude and refined oil products from Azerbaijan, Kazakhstan and Turkmenistan are shipped out of Georgia's Black Sea ports of Batumi, Supsa, Poti and the terminal in Kulevi.

Some products are shipped across the Caspian Sea in small tankers, unloaded in the Azeri port of Baku and then sent by rail to Georgian ports for export to the Mediterranean.

 

Norway Asset Transfer Concluded

 

Wintershall has completed a deal to acquire various exploration and production interests from Statoil offshore Norway.

These include 5% and 24% respectively in the producing Gjøa and Vega fields, and operatorship of the Vega field (from end-March 2015). All three fields are in the North Sea. As a result, Wintershall expects to increase its production in Norway from about 40,000 boe/d to roughly 60,000 boe/d.

In addition, the company is taking a 24% stake in the Aasta Hansteen development project, 19% of the Asterix discovery, 13.2% of the Polarled pipeline project, and interests in four exploration licenses near Aasta Hansteen. All these assets are in the Norwegian Sea, with potential combined resources of about 170 MMboe.

Wintershall has paid $1.25 billion for the package, with a further payment of up to $50 million to follow once Aasta Hansteen has been developed in accordance with the current project plan.

 

Northwest European Gasoil Market Remains Weak

 

Northwest European high sulfur gasoil prices have weakened over the last several weeks following continued imports of cargoes from the US.

The FOB delivered 0.1% sulfur Rotterdam gasoil barge cash premium closed at minus $3.50/mt to the December 0.1% ICE gasoil futures contract, its lowest in over seven weeks, according to Platts data.

Traded levels at such sharp discounts to the front-month 0.1% ICE gasoil futures are indicative of a weak market, with traders expecting continued weakness for at least the first half of the month.

Traders expect gasoil exports from the US to Europe to continue to pick up in the next few weeks amid an open arbitrage from both the US Gulf and Atlantic coasts.

High sulfur heating oil prices in the US reached a 20-month low, Platts data shows, with sources in the US saying high sulfur diesel and gasoil are marketable for most arbitrages although there remain some logistical constraints to exporting, particularly on the Colonial pipeline.

 

 

US Crude Exports to Asia Stall

 

An aggressive strategy by Mideast Persian Gulf producers to exploit the lowest oil prices in five years to defend market share is showing signs of bearing fruit as US crude exports to Asia grind to halt.

Asian refineries have suspended imports of condensate, a light crude oil produced from the US shale boom, just four months after they began in favor of cheaper Middle East grades, according to trade and industry sources.

The suspension illustrates how competition between suppliers has heated up following a more than 40% decline in oil prices since June.

Ali al-Naimi, the oil minister of Saudi Arabia, warned his fellow OPEC members they must combat the US shale boom. He argued against cutting OPEC production so as to keep prices depressed and undermine the profitability of North American producers.

“There’s so much oversupply that Middle East crudes are now trading at discounts and it is not economical to bring over crudes from the US anymore,” said Tushar Tarun Bansal of consultancy FGE in Singapore.

US oil became uncompetitive against similar grades from Qatar, Saudi Arabia and the UAE after Persian Gulf producers began dropping prices in August to maintain their market share in an oil market glut.

Crude oil prices have fallen more than 40% since June and the market tumbled further after OPEC, largely led by its Persian Gulf members, decided at a meeting in Vienna against cutting output in order to support market share instead of prices.

Middle East crude currently accounts for about two-thirds of Asia’s imports.

Adding to pressure on US crude exports to Asia, freight rates from the US to Asia have risen by 50%, forcing sellers to market their cargoes to Europe instead. This is partly due to higher demand in the Middle East and Africa.

The US eased a 40-year-old ban on crude exports last year in the wake of its shale oil boom, opening up new trade routes for surplus flows to Asia and Europe this year.

US exports of lightly processed condensate, also known as light oil, started arriving in Asia in August and exports doubled to about 600,000 barrels in October.

Royal Dutch Shell bought the last cargo coming to Asia, due to arrive at its Singapore refinery in December, but as a result of the price shifts no more cargoes are expected to head east for at least the next two months, three traders who specialize in the market said.

The pressure could undermine plans to send further US condensate to Asia. BHP Billiton Ltd and Enterprise Products Partners have both issued tenders to sell condensate next year.

Trading house Vitol, which bought the latest US condensate cargo to load in December, is likely to send it for use at its Swiss refinery instead of Asia, trade sources said.

Asia Pacific States, Russia’s Key Partners

Russia takes Asia-Pacific states as main partners in the oil and gas sector, director of the department of oil and gas production and delivery at Russian Energy Ministry Alexander Gladkov said at the opening of the Russian stand at the 20th Offshore South East Asia Conference and Exhibition (OSEA 2014).

Russia “counts on development of mutually beneficial cooperation in this sphere,” he said.

“In September Singaporean businesspeople visited (Russia’s Far East) Sakhalin where they stated for the first time that they were interested in oil and gas cooperation with Russia,” Russian Ambassador in Singapore Leonid Moiseyev said. In general, the republic “is turning in one of Russian key partners in this region,” he said. This year “the bilateral trade will grow 50% to reach $8 billion” this year, the ambassador noted.

Subprograms on development of the oil industry and development of the gas industry and Russian state-funded program on energy efficiency and energy development will be presented at the forum, members of Russian delegation told TASS. Meanwhile, Energy Ministry’s officials will deliver a report on long-term energy development through new oil-and gas-producing fields and technologies.

Europe to Wean Itself off Russian Gas

 

After Russia called off the South Stream project, EU officials have urged the bloc to end its dependence on gas from Moscow.

Russia meets around 30 percent of the EU’s gas annual needs.

EU Budget Commissioner Kristalina Georgieva said: “This confirms the importance of not being dependent on a single source of gas. Diversification of energy sources is very important.”

The International Energy Agency (IEA) has said that Europe should do more to liberalize its energy markets

Speaking at the European Parliament, former Russian energy tycoon and political prisoner Mikhail Khodorkovsky casted doubt on whether Vladimir Putin’s move to scrap South Stream would be effective.

“I don’t believe that this decision is final, because the alternative solutions economically don’t make sense.”

The Russian president made the announcement on in the Turkish capital of Ankara.

One of the main reasons for pressing ahead with the project was to bypass Ukraine.

It would have cost some 20 billion dollars, or 16 billion Euros.

Aside from the current political climate, there were also doubts whether Russia’s Gazprom would be able to comply with EU competition rules in relation to the pipeline.

No Turkey-Russia Gas Deal Yet

 

Turkey has not reached any new gas deal with Russia beyond an agreement to discuss the possibility of routing Russia's planned southern gas export line (South Stream) via Turkey, Turkish energy minister Taner Yildiz told a press conference.

"An agreement to discuss and no agreement for anything else related to the projected line have been signed" he said, adding that Turkey is not involved in the disputes between Russia and Ukraine or Russia and the European Union.

Yildiz said no agreement has yet been reached with Moscow over its unilateral cutting of gas exports to Turkey via Turkey's western Transbalkan import line which carries gas arriving via Ukraine.

Nor has there been any resolution to Turkey's request for a discount on the gas it buys from Russia, despite a joint press conference by Turkish President Tayyip Erdogan and Russian president Vladimir Putin in which it was suggested that the two countries had reached a number of agreements on Russia's gas exports To Turkey.

Neither Putin nor Erdogan referred to the ongoing gas cuts during their press conference.

Yildiz did not say if the talks covered the 4 billion cubic meters a year of Russian gas being imported by Turkey's state gas importer Botas via the western Transbalkan line, or if it also included the 10 Bcm/year of gas being imported through the same line by seven private companies and the 16 Bcm/year being imported by Botas through the Blue Stream line across the Black Sea.

But he stressed that any discount negotiated with Moscow will not be passed on to consumers because Botas is currently selling gas it imports at below the price it pays, suggesting that the talks may only cover gas being imported by Botas.

"Botas has an (existing) debt of Turkish Lire 2 billion ($900 million) which has to be covered," he said.

Yildiz also made no reference to Gazprom's Turkish subsidiary Bosphorus Gaz, one of the seven private companies importing gas from Russia through the Transbalkan line and holds two contracts and two licenses to import a total of 2.5 Bcm/year despite complaints confirmed by Turkish officials that Gazprom is continuing to supply Bosphorus in preference to other importers despite it having already exceeded its annual licensed import volumes.

Oil Price; New Front in Russia-West Dispute

 

By Shuaib Bahman

 

Introduction

 

Oil price has fallen 34% since June to $76.76 in November, hitting four-year lows. The sharp decline in oil prices in markets could not have happened naturally because the prices slumped amid forecasts by energy experts of oil price hikes in the future.

Some analysts say the price fall might have been a joint Saudi-US plot for ramping up pressure on Iran and Russia. If true, it means that the West resorts to any action for undermining its rivals. What strengthens this possibility is that if the oil prices fall below $70, oil production in the US would no longer be economical. Therefore, what has caused oil prices to fall is not technical and economic issues and it has political and geopolitical aspects.

Russian officials seem to be well aware of developments in the energy sector and have prepared themselves to encounter sharp energy prices.

Russian President Vladimir Putin said recently that Moscow has already made forecasts about oil prices and added that Kremlin is determined to meet its social obligations by dipping into accumulated reserves to keep the country’s economy afloat.

Such remarks by Putin are indicative of the fact that Russia has already prepared itself to face different scenarios in the energy sector.

 

West Objective: Energy War on Russia

 

Russia produced more than 523 million tons of oil in 2013, up 5.2 million tons from 2012. This production hike shows that Russia’s dependence on petrodollars has pursued an upward trend and that oil price fall can seriously impact Kremlin’s economy and foreign policy. The West seems to have the intention of undermining Moscow by pushing energy prices down. Some of West’s Russia policies that could be realized through oil price slump are as follows:

First is that the West plans to curb Russia’s geopolitical ambitions by causing reduction in energy prices. Russia owes the bulk of its revenues to energy sales; therefore, any decline in this sector can affect Moscow’s ambitious goals and stop some of Kremlin’s plans, particularly vis-à-vis Ukraine.

One should always keep in mind that Crimea’s secession from Ukraine and its annexation to Russia constituted the biggest geopolitical tragedy for the West since the end of the Cold War.

Therefore, oil price slide, in addition to impacts on Russia’s economy, can challenge Moscow’s ambitious goals regarding its support for separatists in Ukraine.

Second is that the West intended to pressure Russia into a gas deal with Europe and selling gas to Ukraine. The Europeans feared that Moscow may use energy as a weapon against them in winter they thought that low energy prices would force Russia to deliver gas to Ukraine and other European countries in order to make up for its shortfalls. At a time Russia’s petrodollars have fallen, cutting energy supply to Europe could further harm Moscow’s economy ; therefore, with falling oil prices Russia would have no option but to strike a gas deal with Ukraine and Europe.

Third, oil price fall can result in the devaluation of Russia’s national currency ruble, pushing the government into an economic plight. The ruble has already lost 40% of its value due to Western sanctions and oil price slide can result in significant budget deficit in this country in 2015.

The dependence of Russia’s budget on oil revenues and impossibility of diversifying its sources of revenue would make oil price falls very difficult for this country.

A 30% decline in oil prices since June has created major problems for Russia whose economy depends 50% on petrodollars. The falling oil prices and fiscal challenges in Russia could heavily affect its economy during the coming two years. That could stoke up inflation, trigger social unrest and hinder Russia’s long-term plans. For instance, Russia has had to reconsider its military modernization plan due to decline in its oil revenues. Such conditions are not favorable for President Putin who needs huge financial resources to carry out his reform plans.

Fourth is that oil price fall would dissuade major international companies from investing in Russia’s huge oil reservoirs. It is an undeniable fact that Russia’s petroleum industry is facing a serious and creeping crisis because most oil fields in Siberia that were not developed under the former Soviet Union are going towards depletion and Russia’s oil production will significantly fall if Siberia shale reserves and new offshore reservoirs in North Pole are not developed. The imposition of sanctions against Russia by the West in reaction to Moscow’s actions in Ukraine has restricted the Russian companies’ access to Western financial markets and equipment.

Oil price slide may dissuade Western companies from investing in Russia’s hydrocarbon fields. For instance, ExxonMobil is pulling out of a Russian project in North Pole, striking a big blow to Russia’s energy sector. That will have undesired consequences for Russia in the long-term. Due to these restrictions, Russia’s oil production is likely to decline in the coming years and any decline in Russia’s output will affect the political future of this country and world energy markets. In fact, lower production and oil price slide can always pose a threat to Russia’s national stability and its external influence.

Fifth is that oil price fall would force Russia to scale back on its military aid to the Syrian and Iraqi governments. Russia’s policy vis-à-vis Syria and its support of President Bashar al-Assad and less oil revenues would affect Kremlin’s support of Syria’s embattled president.

Sixth is feared border insecurity for Russia due to oil price fall. Every year, a large number of migrants from Central Asian countries move to Russia in search of job. But at a time Russia is under Western sanctions and its oil revenues are falling sharply, it would no longer be economical for migrant workers to look for jobs in Russia. That is why a large number of these migrant workers have left Russia to join the terrorist Islamic State of Iraq and the Levant (ISIL) group in order to make more gains. The return of these militants from Syria and Iraq to their homeland in the future would make Central Asian and Russian borders insecure.

Seventh is that oil price slump would keep Russia’s national currency, ruble, from becoming an international currency. Since Russia intends to use ruble in its transactions with other countries in a bid to weaken the US dollar in world markets, the West is causing ruble to depreciate by cutting energy prices in order to kill the competitive and attractive nature of Russia’s legal tender. That is an undeniable fact that using two or several currencies in international transactions will make the global trading system, dominated by the US, collapse.

Eighth is related to the financial structure of some emerging bodies, in which Russia is a top member, in the global economy. This structure is poised to suffer blows due to oil price falls. For example, the agreement by BRICS (Brazil, Russia, India, China and South Africa) for the establishment of their own financial body could be considered as a financial coup against the current financial system. Falling oil prices will not only challenge the economic structure of this body like BRICS development bank and its fund, but it will also limit their room for political maneuvering.

 

Russia-West Oil War Perspective

 

Russia is suffering nearly $40 billion in financial losses every year due to the Western sanctions imposed on Moscow over the crisis in Ukraine. The oil price slump in the world markets is also imposing $90 to $100 in losses every year on Russia. Oil and gas sales make up some two-thirds of Russia’s revenues; therefore, the impacts of Western sanctions and falling oil revenues on Russia’s economy are significant.

Juxtaposing the energy price slide and Western sanctions against Moscow would endorse Russian Foreign Minister Sergei Lavrov’s recent accusation that the West is trying to use sanctions imposed on Moscow in the Ukraine crisis to seek “regime change” in Russia.

“As for the concept behind the use of coercive measures, the West is making clear it does not want to force Russia to change policy but wants to secure regime change,” Lavrov recently told a meeting of the advisory Foreign and Defense Policy Council in Moscow.

His comments followed remarks in which President Vladimir Putin said Moscow must guard against a "color revolution" in Russia, referring to protests that toppled leaders in other former Soviet republics.

Anyway, although oil price fall can harm Russia’s economy, the fact is that Kremlin is trying to minimize the impact of this issue on its foreign policy. There are also reasons for the US and its allies, including Saudi Arabia, not to be able to keep the prices low for a long time. Some of these reasons are as follows:

• The US and Saudi Arabia are not the only players in the energy sector and continuation of the present circumstances would bring other influential players in this sector into confrontation with them.
• Oil price decline could harm American and Saudi economies on the long term. Since the US and Saudi Arabia are both producers of oil, they will also be affected by low oil prices in the long term. Therefore, they will have finally to bring oil prices back to their real level.
• Russia, as a leading oil producer, can cut its production to shore up prices.
• There are influential factors like fragile security in Libya and Iraq. Any change in the security and economic conditions of these countries could significantly affect oil prices.
• Lower oil prices would be in the interest of US’s trading rivals like China. These rivals may take advantage of this opportunity to produce commodities at low prices in order to grab bigger shares of world markets. That would not benefit the United States.

 

Last but not least, Russia is suffering losses due to the present conditions dominating world energy markets, but oil prices are unlikely to remain low for a long time; therefore, Russia’s vulnerability to oil prices would not continue for a long time.

Iran Petchem’s Technological Stride

 

Iran’s petrochemical industry has worked out mechanisms to become the top producer in the region. To that effect, it eyes production of 100 m t/y of petrochemical products in order to generate revenues from exporting technical savvy.

Under the present circumstances where catalysts needed in the petrochemical industry are subjected to international sanctions imposed on Iran, Iranian petrochemical experts realized that the production of catalysts would not only be needed in domestic markets, but also in neighboring countries.

Thanks to relentless efforts  made by Iranian researchers, the technical knowhow for a number of catalysts used in the petrochemical industry were developed in the country, some of which are used in dehydrogenation, transformation of methanol to dimethyl ether (DME), methanol synthesis, acetone hydrogenation and dry reforming.

Iran’s Petrochemical Research and Technology Company (PRTC), a hub for development of petrochemical knowhow, has been instrumental in this sector in recent years.

Iran Petroleum has conducted an interview with Esmael Qanbari, managing director of PRTC, about the research achievements by this company in the petrochemical sector.

 

Q: What measures and studies have been undertaken in this company for acquiring new licenses in petrochemical plants?

A: Since the low level of technology’s endogenous production has made the process of attraction of technology very costly and difficult, making investment for upgrading domestic capabilities seems to be a must. That happened in the petrochemical sector with the establishment of PRTC. Research creates capacity for attracting new knowledge and technology. PRTC has elucidated the process of commercialization of domestic knowledge, identified the licenses required by Iran’s petrochemical industry and classified them based on the priorities of National Iranian Petrochemical Company (NPC) with a view to granting license to petrochemical entities in the country. Some of these measures are technical knowhow for the development of methanol, ammoniac, methanol-to-propylene, high-density polyethylene, catalyst and chemicals.

Moreover, given the significance of development and commercialization of modern technologies in the country and in different scientific and industrial sectors, PRTC has established a Modern Technologies Research Group comprised of four subgroups – nanotechnology, biotechnology, membrane technology, recycling technology and renewable energies, HSE, water and wastewater treatment – for the purpose of making policies, formulating plans and monitoring the implementation of projects in the petrochemical sector. We believe that we can make great achievements in indigenizing the licenses required in the petrochemical industry under the aegis of constructive interaction with industry.

Development of tens of R&D products has strengthened economic policies and the valuable achievements acquired in this way can strengthen the pillars of Iran’s petrochemical industry. At present, 30 indigenized savvies are ready to be put into practice.

 

Q: Would you provide a report on the performance of this company in acquiring technical knowhow and its commercialization in the petrochemical sector in recent years?

A: Due to access to sufficient feedstock, downstream petrochemical industries and foreign markets, Iran has been the destination of numerous foreign licenses for the establishment of polyolefin plants. In line with the slogan of self-sufficiency in the petrochemical industry and with the objective of providing the necessary license for petrochemical projects, this company has managed to launch the first high-density polyethylene (HDPE) unit following years of research on catalysts. Iranian researchers also developed slurry technology for HDPE production. PRTC experts continued their relentless efforts and managed to develop multi-modal process (MMP)-HDPE technology which has technical and economic advantages compared with bi-modal process. It is a great honor for PRTC that Bushehr Petrochemical Company has chosen MMP-HDPE to produce 310,000 tons a year of HDPE. Iran has now joined the club of countries granting license for HDPE production. For the aforesaid processes, PRTC has developed two catalysts SAC^IR 510 and SAC^IR 511. SAC^IR 510 can substitute 35% of 500-ton demand for polyolefin catalysts. Some advantages of SAC^IR 510 compared with foreign products include simpler production process, more optimal control of polymerization process, and more valuable production, usability in pressured pipelines, strong tissues and injection products. Moreover, due to a high level of activities and proper mass density, it facilitates enhancing production more than 10% above the nominal capacity of polyolefin units. But SAC^IR 511 is developed specifically for MMP-HDPE and it would be possible to produce multi-modal blown films of various grades. According to polymerization tests, the catalyst used for producing three-modal polyethylene has good specifications like responsiveness to hydrogen, distribution of molecular mass on a wide area and residence time distribution.

Other achievements include development of technology for methanol synthesis and its catalyst, Propylene via Methanol (PVM), PVM catalyst, ethylene dichloride EDC catalysts and chemicals.

 

Q: PRTC has in recent years been considering a research plan for producing biodegradable polymer materials. Would you please tell us about that?

A: One of these projects involves production of polyethylene-based biodegradable materials with starch and exo-peroxydant. The product obtained from this process could be used for different purposes including foodstuff packaging, disposable tablemats and plastic bags.

This year, final products used in foodstuff packaging and other bags have acquired biodegradability license, based on European standards, from Belgium. Given the role of polyethylene bags in environmental pollution, almost all advanced countries and even some Middle East nations like the United Arab Emirates have made the use of biodegradable bags obligatory.

 

Q: Would you please tell us about PRTC’s measures with regard to technical knowhow needed by downstream petrochemical sectors?

A: In order to provide a variety of services to downstream petrochemical industries, completion of organizational infrastructure related to this sector has been taken into consideration in recent years. The infrastructure includes equipment of labs, workshops, integrated management system for more effective use of research potentialities, development of joint research cooperation with domestic and international institutes, monitoring and updating scientific database, offering approaches for qualitative and quantitative optimization, improving the efficiency of products and processes, development of technical knowhow and new catalysts, as well as indigenizing technology.

Companies manufacturing raw materials or plastic products are making efforts to compensate for their shortcomings and go ahead with their production by relying on their own human resources and technology for a number of reasons including restrictions in the supply of raw materials, tightly competitive domestic market, obstacles to exports and inappropriate economic conditions which make it costly to use new technologies. Given the needs of downstream petrochemical industries and the capabilities of the company in research and technology, these services include technical, research and development services for the product, lab services, consultation, education and software.

To that effect, close and active cooperation with downstream petrochemical industries has resulted in the implementation of various research projects, leading to the acquisition of technical knowhow like PC/ABS compound for use in household appliances, vehicles, industrial-scale biodegradable polyethylene, painting master batch in different grades, compounds with high light sustainability properties on semi-industrial scale, Random Copolymer Polypropylene (RCPP) for use in water taps, networkable polyethylene for cable insulation at semi-industrial scale, transparent polypropylene at semi-industrial scale, car bumper compound at semi-industrial scale, application of  processes for the resolution of process problems pertaining to HDPE and LLDPE at semi-industrial scale, polyethylene foam at semi-industrial scale, mica-filled propylene compound at semi-industrial scale, propylene compound for semi-industrial thermo reforming, anti-fire PC/ABS at semi-industrial scale .

 

Q: What have you done with regard to technical and research services and development of products?

A: We have provided numerous services like presenting formulation, technical services for choosing proper polymer materials to be used in downstream industries, technical services for creating optimal conditions, choosing the appropriate technology and formulation standards for testing products.

Lab services include MFI, Tensile, Flextural، HDT/Vicat, DSC, RMS, FNCT (Full Notch Creep Test), Accelerated Weathering Tester, Falling Dart Ceast  Fractovis  (high energy), Particle size analyzer, Milling Machine, Notching Machine, Die Punch, Tear tester, Hardness Tester (shore), Tensile, ester, Digital Thickness meter, Heat Seal Tester & Hot Tack, Dynamic Impact, Tester (cryodispenser) and Density meter (Column & Gravimeter type).

 

Q: Would you please tell us about the background as well as the current level of cooperation between this company and foreign knowledge-based companies? What are the future plans of the company?

A: In order to acquire state-of-the-art technology and narrow down its technological distance with leading companies, we need to broaden our international interaction. For that purpose, we have to believe in our capabilities, benefit from the experience of other companies and use the achievements of domestic and foreign companies. Such cooperation could be a combination of domestic capability and global experiences.

It is clear that implementation of joint research projects with well-known companies will accelerate learning in a more successful manner. In other words, close cooperation with foreign experts throughout the operation of project guarantees transfer of technical savvy into the country. Such experience would be achieved in no seminar, workshop or university.

In choosing an international colleague, the general conditions of the society, the specific conditions of the foreign company and its technological capabilities should be taken into consideration. To that effect, PRTC has developed international communications based on international circumstances in different periods of time.

International companies are showing signs of openness to Iran and at the same time PRTC has boosted its capabilities. We are also looking for joint research and technology activities with foreign research and knowledge-based centers. We are striking a deal with a Norwegian company for research and technology cooperation on polymer. We have technically reached agreement with this Norwegian company and our agreement will be finalized as soon as we could resolve the relevant international legal and financial problems.

 

Q: What do you propose for more diversity in Iran’s petrochemical products?

A: Technological changes in conformity with the needs of global community in the petrochemical industry are occurring at an obviously rapid pace. The diversity of producers and growing quantitative and qualitative expectations as well as cost price has encouraged petrochemical producers to focus on diversity in their products for improvement. A glimpse at the products supplied by some companies and the changes they have introduced in their procedures in recent months bear proof to this undeniable fact. For instance, Basel is a leading producer of polyolefin in the world and it has raised the diversity of its products from 600 grades to 1,100 grades over five years. The company had phased out 200 grades and added 700 new grades. This issue is not limited to Basel and polyolefin as the same goes for other petrochemical products and top producers. For diversifying products, it would not be possible to purchase new licenses or upgrade the existing ones. In order to distance rivals in the market and diversify the products, the only way would be to acquire technical knowhow for production. Complete familiarity through acquiring technical knowhow would facilitate changes and contribute to the development of new products. This issue is especially important with regard to updating production units technically.

An important point that should be taken into account is that improving the quality of products and reducing production costs would help generate more value-added and give a bigger share of the market. Therefore, every company would have to diversify its products and supply products of higher quality and lower cost in order to be able to win a bigger share of the market.

Iran Petchem’s Technological Stride

 

Iran’s petrochemical industry has worked out mechanisms to become the top producer in the region. To that effect, it eyes production of 100 m t/y of petrochemical products in order to generate revenues from exporting technical savvy.

Under the present circumstances where catalysts needed in the petrochemical industry are subjected to international sanctions imposed on Iran, Iranian petrochemical experts realized that the production of catalysts would not only be needed in domestic markets, but also in neighboring countries.

Thanks to relentless efforts  made by Iranian researchers, the technical knowhow for a number of catalysts used in the petrochemical industry were developed in the country, some of which are used in dehydrogenation, transformation of methanol to dimethyl ether (DME), methanol synthesis, acetone hydrogenation and dry reforming.

Iran’s Petrochemical Research and Technology Company (PRTC), a hub for development of petrochemical knowhow, has been instrumental in this sector in recent years.

Iran Petroleum has conducted an interview with Esmael Qanbari, managing director of PRTC, about the research achievements by this company in the petrochemical sector.

 

Q: What measures and studies have been undertaken in this company for acquiring new licenses in petrochemical plants?

A: Since the low level of technology’s endogenous production has made the process of attraction of technology very costly and difficult, making investment for upgrading domestic capabilities seems to be a must. That happened in the petrochemical sector with the establishment of PRTC. Research creates capacity for attracting new knowledge and technology. PRTC has elucidated the process of commercialization of domestic knowledge, identified the licenses required by Iran’s petrochemical industry and classified them based on the priorities of National Iranian Petrochemical Company (NPC) with a view to granting license to petrochemical entities in the country. Some of these measures are technical knowhow for the development of methanol, ammoniac, methanol-to-propylene, high-density polyethylene, catalyst and chemicals.

Moreover, given the significance of development and commercialization of modern technologies in the country and in different scientific and industrial sectors, PRTC has established a Modern Technologies Research Group comprised of four subgroups – nanotechnology, biotechnology, membrane technology, recycling technology and renewable energies, HSE, water and wastewater treatment – for the purpose of making policies, formulating plans and monitoring the implementation of projects in the petrochemical sector. We believe that we can make great achievements in indigenizing the licenses required in the petrochemical industry under the aegis of constructive interaction with industry.

Development of tens of R&D products has strengthened economic policies and the valuable achievements acquired in this way can strengthen the pillars of Iran’s petrochemical industry. At present, 30 indigenized savvies are ready to be put into practice.

 

Q: Would you provide a report on the performance of this company in acquiring technical knowhow and its commercialization in the petrochemical sector in recent years?

A: Due to access to sufficient feedstock, downstream petrochemical industries and foreign markets, Iran has been the destination of numerous foreign licenses for the establishment of polyolefin plants. In line with the slogan of self-sufficiency in the petrochemical industry and with the objective of providing the necessary license for petrochemical projects, this company has managed to launch the first high-density polyethylene (HDPE) unit following years of research on catalysts. Iranian researchers also developed slurry technology for HDPE production. PRTC experts continued their relentless efforts and managed to develop multi-modal process (MMP)-HDPE technology which has technical and economic advantages compared with bi-modal process. It is a great honor for PRTC that Bushehr Petrochemical Company has chosen MMP-HDPE to produce 310,000 tons a year of HDPE. Iran has now joined the club of countries granting license for HDPE production. For the aforesaid processes, PRTC has developed two catalysts SAC^IR 510 and SAC^IR 511. SAC^IR 510 can substitute 35% of 500-ton demand for polyolefin catalysts. Some advantages of SAC^IR 510 compared with foreign products include simpler production process, more optimal control of polymerization process, and more valuable production, usability in pressured pipelines, strong tissues and injection products. Moreover, due to a high level of activities and proper mass density, it facilitates enhancing production more than 10% above the nominal capacity of polyolefin units. But SAC^IR 511 is developed specifically for MMP-HDPE and it would be possible to produce multi-modal blown films of various grades. According to polymerization tests, the catalyst used for producing three-modal polyethylene has good specifications like responsiveness to hydrogen, distribution of molecular mass on a wide area and residence time distribution.

Other achievements include development of technology for methanol synthesis and its catalyst, Propylene via Methanol (PVM), PVM catalyst, ethylene dichloride EDC catalysts and chemicals.

 

Q: PRTC has in recent years been considering a research plan for producing biodegradable polymer materials. Would you please tell us about that?

A: One of these projects involves production of polyethylene-based biodegradable materials with starch and exo-peroxydant. The product obtained from this process could be used for different purposes including foodstuff packaging, disposable tablemats and plastic bags.

This year, final products used in foodstuff packaging and other bags have acquired biodegradability license, based on European standards, from Belgium. Given the role of polyethylene bags in environmental pollution, almost all advanced countries and even some Middle East nations like the United Arab Emirates have made the use of biodegradable bags obligatory.

 

Q: Would you please tell us about PRTC’s measures with regard to technical knowhow needed by downstream petrochemical sectors?

A: In order to provide a variety of services to downstream petrochemical industries, completion of organizational infrastructure related to this sector has been taken into consideration in recent years. The infrastructure includes equipment of labs, workshops, integrated management system for more effective use of research potentialities, development of joint research cooperation with domestic and international institutes, monitoring and updating scientific database, offering approaches for qualitative and quantitative optimization, improving the efficiency of products and processes, development of technical knowhow and new catalysts, as well as indigenizing technology.

Companies manufacturing raw materials or plastic products are making efforts to compensate for their shortcomings and go ahead with their production by relying on their own human resources and technology for a number of reasons including restrictions in the supply of raw materials, tightly competitive domestic market, obstacles to exports and inappropriate economic conditions which make it costly to use new technologies. Given the needs of downstream petrochemical industries and the capabilities of the company in research and technology, these services include technical, research and development services for the product, lab services, consultation, education and software.

To that effect, close and active cooperation with downstream petrochemical industries has resulted in the implementation of various research projects, leading to the acquisition of technical knowhow like PC/ABS compound for use in household appliances, vehicles, industrial-scale biodegradable polyethylene, painting master batch in different grades, compounds with high light sustainability properties on semi-industrial scale, Random Copolymer Polypropylene (RCPP) for use in water taps, networkable polyethylene for cable insulation at semi-industrial scale, transparent polypropylene at semi-industrial scale, car bumper compound at semi-industrial scale, application of  processes for the resolution of process problems pertaining to HDPE and LLDPE at semi-industrial scale, polyethylene foam at semi-industrial scale, mica-filled propylene compound at semi-industrial scale, propylene compound for semi-industrial thermo reforming, anti-fire PC/ABS at semi-industrial scale .

 

Q: What have you done with regard to technical and research services and development of products?

A: We have provided numerous services like presenting formulation, technical services for choosing proper polymer materials to be used in downstream industries, technical services for creating optimal conditions, choosing the appropriate technology and formulation standards for testing products.

Lab services include MFI, Tensile, Flextural، HDT/Vicat, DSC, RMS, FNCT (Full Notch Creep Test), Accelerated Weathering Tester, Falling Dart Ceast  Fractovis  (high energy), Particle size analyzer, Milling Machine, Notching Machine, Die Punch, Tear tester, Hardness Tester (shore), Tensile, ester, Digital Thickness meter, Heat Seal Tester & Hot Tack, Dynamic Impact, Tester (cryodispenser) and Density meter (Column & Gravimeter type).

 

Q: Would you please tell us about the background as well as the current level of cooperation between this company and foreign knowledge-based companies? What are the future plans of the company?

A: In order to acquire state-of-the-art technology and narrow down its technological distance with leading companies, we need to broaden our international interaction. For that purpose, we have to believe in our capabilities, benefit from the experience of other companies and use the achievements of domestic and foreign companies. Such cooperation could be a combination of domestic capability and global experiences.

It is clear that implementation of joint research projects with well-known companies will accelerate learning in a more successful manner. In other words, close cooperation with foreign experts throughout the operation of project guarantees transfer of technical savvy into the country. Such experience would be achieved in no seminar, workshop or university.

In choosing an international colleague, the general conditions of the society, the specific conditions of the foreign company and its technological capabilities should be taken into consideration. To that effect, PRTC has developed international communications based on international circumstances in different periods of time.

International companies are showing signs of openness to Iran and at the same time PRTC has boosted its capabilities. We are also looking for joint research and technology activities with foreign research and knowledge-based centers. We are striking a deal with a Norwegian company for research and technology cooperation on polymer. We have technically reached agreement with this Norwegian company and our agreement will be finalized as soon as we could resolve the relevant international legal and financial problems.

 

Q: What do you propose for more diversity in Iran’s petrochemical products?

A: Technological changes in conformity with the needs of global community in the petrochemical industry are occurring at an obviously rapid pace. The diversity of producers and growing quantitative and qualitative expectations as well as cost price has encouraged petrochemical producers to focus on diversity in their products for improvement. A glimpse at the products supplied by some companies and the changes they have introduced in their procedures in recent months bear proof to this undeniable fact. For instance, Basel is a leading producer of polyolefin in the world and it has raised the diversity of its products from 600 grades to 1,100 grades over five years. The company had phased out 200 grades and added 700 new grades. This issue is not limited to Basel and polyolefin as the same goes for other petrochemical products and top producers. For diversifying products, it would not be possible to purchase new licenses or upgrade the existing ones. In order to distance rivals in the market and diversify the products, the only way would be to acquire technical knowhow for production. Complete familiarity through acquiring technical knowhow would facilitate changes and contribute to the development of new products. This issue is especially important with regard to updating production units technically.

An important point that should be taken into account is that improving the quality of products and reducing production costs would help generate more value-added and give a bigger share of the market. Therefore, every company would have to diversify its products and supply products of higher quality and lower cost in order to be able to win a bigger share of the market.

CO2-Aided EOR

 

Fossil fuels currently account for 80% of world energy needs. The International Energy Agency (IEA) forecasts the percentage to reach 82 in 2030. Higher consumption of fossil fuel has increased greenhouse gas emissions, particularly CO2, from 275 billion tons at the beginning of Industrial Revolution to more than 346 billion tons in recent years. That has resulted in such consequences as higher temperature on Earth, climatic conditions in the world, melting of glaciers and current sea level rise.

Based on the United Nations Framework Convention on Climate Change, by 2020 the concentration of greenhouse gases emitted by developed countries should be cut to the 1990 level.

Since CO2 fixation happens slowly, even if CO2 emission is stopped today, several centuries would be needed for Earth to respond. Therefore, a quick and effective solution to this problem would be to use CO2 in industrial processes.

The main use of CO2 in industrial processes is injection into underground oil and gas reservoirs, chemical methods as well as direct reduction of iron ore by producing synthesis gas.

Since structural and physical properties of oil and gas reservoirs are known and sequestering CO2 in oil reservoirs is considered as CO2-aided enhanced oil recovery, these reservoirs are hoped to be of great help in CO2 sequestration. Moreover, gas reservoirs are also good options because they can hold CO2 without any leak into atmosphere for millions of years.

To significantly reduce global emissions to preindustrial levels, huge volumes of CO2 must be sequestered. For example, a large coal-fired power plant emits about 8 million tons of CO2 annually.

At the pressures and temperatures expected for sequestration reservoirs, the volume required to sequester CO2 as a supercritical fluid is about 10 mcm per year.

Sequestering the CO2 emissions from a power plant with a 50-year lifetime would require a volume of about 500 Mm3. Such large volumes make some CCS critics skeptical.

Vast formations of sedimentary rocks with various textures and compositions provide both the volume to sequester the CO2 and the seals to trap it underground.

Suitable formations should be deeper than 800 m, have a thick and extensive seal, have sufficient porosity for large volumes, and be sufficiently permeable to permit injection at high flow rates without requiring overly high pressure.

CO2Sequesteration below depths of 800 meters provides two advantages, both a result of the high pressures encountered at these depths: CO2 density is high enough to allow efficient pore filling and to decrease the buoyancy difference compared with in situ fluids.

 

Energy Industries and Greenhouse Gases

 

According to official data, more than 70% of greenhouse gas emissions come from energy industries. Due to the possibility of injecting CO2 into oil and gas wells, these industries have strong potentialities to help cut greenhouse gas emissions. In recent years, CO2 emissions have been growing in violation of Kyoto Protocol. Iran is likely to face pressure for capping its gas emissions. That provides Iran with a good opportunity to apply CCS technology to reduce CO2 emission for protecting the environment and make big gain through enhanced oil recovery by CO2 (CO2-EOR).

Iran is estimated to hold 500 billion barrels of oil in place. Therefore, development of CO2-EOR technology would help protect the environment and facilitate profitability of hydrocarbon reservoirs.

Surveys show that it is possible to inject CO2 into oil reservoirs in southern and southwestern Iran.

Given the significance of issue of greenhouse gas emissions, Iran’s Research Institute of Petroleum Industry (RIPI) held a one-day seminar on Oct 29 under the title “Necessities, approaches and opportunities for investment in reducing CO2 emission and consumption”. The event was centered on management of carbon, opportunities and threats for Petroleum Ministry, the necessity of injecting CO2 into oil reservoirs, opportunities of investment for optimal use of this gas, introducing achievements from research projects conducted on gathering CO2 and announcing approaches to reduce CO2 consumption. The specialized seminar was attended by managers and representatives from oil, gas, petrochemical and environment sectors as well as private investors.     

 

CO2 Injection into Ramin Field

 

Mohammad-Ali Emadi, director of research and technology at National Iranian Oil Company, said in the seminar that studies on CO2 injection into hydrocarbon reservoirs for enhanced recovery have been concluded and that it would be carried out for the first time at Ramin field.

“Studies on this method of enhanced recovery have topped NIOC’s agenda in recent years,” he said.

CO2 injection into Ramin field, in southwestern city of Ahvaz, is to be done under a contract between Oil Enhanced Recovery College and National Iranian South Oil Company.

Emadi said CO2 will be received from Ramin Power Plant before being treated and purified to be injected into Ramin field.

He said that CO2 injection into hydrocarbon fields would boost their recovery rate between 16 and 80 percent.

Emadi said CO2-EOR is a well-known method in the world and that 80 such projects have so far been implemented in the world, leading to production of 300,000 b/d more of oil.

 

Capping Greenhouse Gas Emissions

 

Ali Rajabi, a deputy head of HSE at Iran Petroleum Ministry, referred to Iran’s anxiety over CO2 emissions, saying: “At present, Iran’s legal capacities for getting out of this crisis include approval of adhesion to Climate Change Convention, approval of Kyodo Protocol and compiling its executive bylaw, as well as drafting bylaw for CDM projects.”

He said the negative impacts of greenhouse gas emissions include global warming, current sea level rise, flooding, tsunami and drought.

Rajabi said Iran’s energy sector emits 77% of the current CO2 in the country, adding that more than 500 million tons of this polluting substance was produced in Iran in 2009.

He said gas gathering project in Soroush and Norouz fields was Iran’s first registered project in clean development mechanism. This project helped acquire 200,000 tons of carbon credit in ten months.

Rajabi said gas gathering in Hangam field is in the stage of registration for clean development mechanism. He added that carbon management project in the oil and gas industries is to be done in cooperation with Japan International Cooperation Agency.

He said "Amak gas gathering project", and gasoline rationing in Iran largely contributed to reducing greenhouse gas emissions, noting that fuel rationing in Iran saved more than 120 ml/d.

Amak prevented the flaring of 241 mcf of sour gas and concomitant emission of 17,000 tons of pollutants.

Rajabi said gathering associated gases at fields and using them as fuel in the upstream sector is an option on the table. In the downstream sector, he said, reducing methane leak from transmission pipelines and compressors, recovering heat and generating electricity and replacing heavy fuel with natural gas in the combustion system are the available options.

Rajabi said gathering flare gases in refineries, efficient energy use in treatment facilities, reducing leaks in gas injection network and management of wastes are among other solutions for reducing greenhouse gas emissions.

He said these approaches have been announced to subsidiaries of Petroleum Ministry so that the necessary measures would be taken for reducing CO2 emission.

 

Converting CO2 to Petchems

 

Mohammad Keramati, head of Research Center for Reservoir Study and Field Development of RIPI, said Iranian reservoirs provide the potential for CO2 injection in order to reduce its emission.

“Although studies show that CO2-EOR is costly, this method would boost recovery rate by up to 85% and it justifies high costs,” he said.  

Keramati said CO2 injection for enhanced recovery is currently used in more than 150 reservoirs in the world.

He said reservoir pressure is a key index in CO2 injection, adding that the pressure in Iranian reservoirs is above 2,000 psia ; therefore, 90% of Iranian reservoirs are suitable for CO2 injection in terms of pressure.

Keramati said depleted oil and gas reservoirs, reservoirs producing for enhanced recovery and salt domes are good options for CO2 injection.

He said the oil layer of South Pars, as well as Fahlian and Sarvak reservoirs are also suitable for CO2 injection.

“Investment in research for enhanced recovery, investment in the development of technology, equipment and machinery, investment for building wellhead equipment for CO2 injection into fields, setting up an integrated gas gathering system for CO2 transmission, benefitting from international experiences as well as identifying and screening reservoir structures for CO2 injection are all investment opportunities,” said Keramati.

 

Statoil and CO2 Injection

 

Mohsen Rahimzadeh, director of Parsian Refinery affiliated with Iran Gas Engineering and Development Company, said production zones and CO2 storage facilities are close to each other in Iran and that is a good advantage of CO2 injection into reservoirs.

“Iran has also the potential to use CO2 for producing petrochemicals like methanol and urea,” he said.

Rahimzadeh said successful CO2 injection project has already been conducted at Weyburn oil field in Canada.

He said that Norway’s Statoil has already applied this method to the largest gas field in North Sea.

Rahimzadeh said chimneys, incinerators and ethane decarburization are three main sources of CO2 production at South Pars gas field in southern Iran.

“The necessity of finding solutions to reduce greenhouse gas emissions in Iran is felt more than ever,” he said.

CO2-Aided EOR

 

Fossil fuels currently account for 80% of world energy needs. The International Energy Agency (IEA) forecasts the percentage to reach 82 in 2030. Higher consumption of fossil fuel has increased greenhouse gas emissions, particularly CO2, from 275 billion tons at the beginning of Industrial Revolution to more than 346 billion tons in recent years. That has resulted in such consequences as higher temperature on Earth, climatic conditions in the world, melting of glaciers and current sea level rise.

Based on the United Nations Framework Convention on Climate Change, by 2020 the concentration of greenhouse gases emitted by developed countries should be cut to the 1990 level.

Since CO2 fixation happens slowly, even if CO2 emission is stopped today, several centuries would be needed for Earth to respond. Therefore, a quick and effective solution to this problem would be to use CO2 in industrial processes.

The main use of CO2 in industrial processes is injection into underground oil and gas reservoirs, chemical methods as well as direct reduction of iron ore by producing synthesis gas.

Since structural and physical properties of oil and gas reservoirs are known and sequestering CO2 in oil reservoirs is considered as CO2-aided enhanced oil recovery, these reservoirs are hoped to be of great help in CO2 sequestration. Moreover, gas reservoirs are also good options because they can hold CO2 without any leak into atmosphere for millions of years.

To significantly reduce global emissions to preindustrial levels, huge volumes of CO2 must be sequestered. For example, a large coal-fired power plant emits about 8 million tons of CO2 annually.

At the pressures and temperatures expected for sequestration reservoirs, the volume required to sequester CO2 as a supercritical fluid is about 10 mcm per year.

Sequestering the CO2 emissions from a power plant with a 50-year lifetime would require a volume of about 500 Mm3. Such large volumes make some CCS critics skeptical.

Vast formations of sedimentary rocks with various textures and compositions provide both the volume to sequester the CO2 and the seals to trap it underground.

Suitable formations should be deeper than 800 m, have a thick and extensive seal, have sufficient porosity for large volumes, and be sufficiently permeable to permit injection at high flow rates without requiring overly high pressure.

CO2Sequesteration below depths of 800 meters provides two advantages, both a result of the high pressures encountered at these depths: CO2 density is high enough to allow efficient pore filling and to decrease the buoyancy difference compared with in situ fluids.

 

Energy Industries and Greenhouse Gases

 

According to official data, more than 70% of greenhouse gas emissions come from energy industries. Due to the possibility of injecting CO2 into oil and gas wells, these industries have strong potentialities to help cut greenhouse gas emissions. In recent years, CO2 emissions have been growing in violation of Kyoto Protocol. Iran is likely to face pressure for capping its gas emissions. That provides Iran with a good opportunity to apply CCS technology to reduce CO2 emission for protecting the environment and make big gain through enhanced oil recovery by CO2 (CO2-EOR).

Iran is estimated to hold 500 billion barrels of oil in place. Therefore, development of CO2-EOR technology would help protect the environment and facilitate profitability of hydrocarbon reservoirs.

Surveys show that it is possible to inject CO2 into oil reservoirs in southern and southwestern Iran.

Given the significance of issue of greenhouse gas emissions, Iran’s Research Institute of Petroleum Industry (RIPI) held a one-day seminar on Oct 29 under the title “Necessities, approaches and opportunities for investment in reducing CO2 emission and consumption”. The event was centered on management of carbon, opportunities and threats for Petroleum Ministry, the necessity of injecting CO2 into oil reservoirs, opportunities of investment for optimal use of this gas, introducing achievements from research projects conducted on gathering CO2 and announcing approaches to reduce CO2 consumption. The specialized seminar was attended by managers and representatives from oil, gas, petrochemical and environment sectors as well as private investors.     

 

CO2 Injection into Ramin Field

 

Mohammad-Ali Emadi, director of research and technology at National Iranian Oil Company, said in the seminar that studies on CO2 injection into hydrocarbon reservoirs for enhanced recovery have been concluded and that it would be carried out for the first time at Ramin field.

“Studies on this method of enhanced recovery have topped NIOC’s agenda in recent years,” he said.

CO2 injection into Ramin field, in southwestern city of Ahvaz, is to be done under a contract between Oil Enhanced Recovery College and National Iranian South Oil Company.

Emadi said CO2 will be received from Ramin Power Plant before being treated and purified to be injected into Ramin field.

He said that CO2 injection into hydrocarbon fields would boost their recovery rate between 16 and 80 percent.

Emadi said CO2-EOR is a well-known method in the world and that 80 such projects have so far been implemented in the world, leading to production of 300,000 b/d more of oil.

 

Capping Greenhouse Gas Emissions

 

Ali Rajabi, a deputy head of HSE at Iran Petroleum Ministry, referred to Iran’s anxiety over CO2 emissions, saying: “At present, Iran’s legal capacities for getting out of this crisis include approval of adhesion to Climate Change Convention, approval of Kyodo Protocol and compiling its executive bylaw, as well as drafting bylaw for CDM projects.”

He said the negative impacts of greenhouse gas emissions include global warming, current sea level rise, flooding, tsunami and drought.

Rajabi said Iran’s energy sector emits 77% of the current CO2 in the country, adding that more than 500 million tons of this polluting substance was produced in Iran in 2009.

He said gas gathering project in Soroush and Norouz fields was Iran’s first registered project in clean development mechanism. This project helped acquire 200,000 tons of carbon credit in ten months.

Rajabi said gas gathering in Hangam field is in the stage of registration for clean development mechanism. He added that carbon management project in the oil and gas industries is to be done in cooperation with Japan International Cooperation Agency.

He said "Amak gas gathering project", and gasoline rationing in Iran largely contributed to reducing greenhouse gas emissions, noting that fuel rationing in Iran saved more than 120 ml/d.

Amak prevented the flaring of 241 mcf of sour gas and concomitant emission of 17,000 tons of pollutants.

Rajabi said gathering associated gases at fields and using them as fuel in the upstream sector is an option on the table. In the downstream sector, he said, reducing methane leak from transmission pipelines and compressors, recovering heat and generating electricity and replacing heavy fuel with natural gas in the combustion system are the available options.

Rajabi said gathering flare gases in refineries, efficient energy use in treatment facilities, reducing leaks in gas injection network and management of wastes are among other solutions for reducing greenhouse gas emissions.

He said these approaches have been announced to subsidiaries of Petroleum Ministry so that the necessary measures would be taken for reducing CO2 emission.

 

Converting CO2 to Petchems

 

Mohammad Keramati, head of Research Center for Reservoir Study and Field Development of RIPI, said Iranian reservoirs provide the potential for CO2 injection in order to reduce its emission.

“Although studies show that CO2-EOR is costly, this method would boost recovery rate by up to 85% and it justifies high costs,” he said.  

Keramati said CO2 injection for enhanced recovery is currently used in more than 150 reservoirs in the world.

He said reservoir pressure is a key index in CO2 injection, adding that the pressure in Iranian reservoirs is above 2,000 psia ; therefore, 90% of Iranian reservoirs are suitable for CO2 injection in terms of pressure.

Keramati said depleted oil and gas reservoirs, reservoirs producing for enhanced recovery and salt domes are good options for CO2 injection.

He said the oil layer of South Pars, as well as Fahlian and Sarvak reservoirs are also suitable for CO2 injection.

“Investment in research for enhanced recovery, investment in the development of technology, equipment and machinery, investment for building wellhead equipment for CO2 injection into fields, setting up an integrated gas gathering system for CO2 transmission, benefitting from international experiences as well as identifying and screening reservoir structures for CO2 injection are all investment opportunities,” said Keramati.

 

Statoil and CO2 Injection

 

Mohsen Rahimzadeh, director of Parsian Refinery affiliated with Iran Gas Engineering and Development Company, said production zones and CO2 storage facilities are close to each other in Iran and that is a good advantage of CO2 injection into reservoirs.

“Iran has also the potential to use CO2 for producing petrochemicals like methanol and urea,” he said.

Rahimzadeh said successful CO2 injection project has already been conducted at Weyburn oil field in Canada.

He said that Norway’s Statoil has already applied this method to the largest gas field in North Sea.

Rahimzadeh said chimneys, incinerators and ethane decarburization are three main sources of CO2 production at South Pars gas field in southern Iran.

“The necessity of finding solutions to reduce greenhouse gas emissions in Iran is felt more than ever,” he said.

No More Fuel Oil for Iran Power Plants

 

Air pollution has become a major cause of concern in big cities in all countries. The excess consumption of different fossil fuels emits life-threatening pollutants like carbon monoxide, sulfur dioxide and mercury. These pollutants also leave undesirable impacts on the environment. Fuel oil causes serious air pollution.

Fuel oil is a fraction obtained from petroleum distillation, either as a distillate or a residue. Broadly speaking fuel oil is any liquid petroleum product that is burned in a furnace or boiler for the generation of heat or used in an engine for the generation of power, except oils having a flash point of approximately 40 °C (104 °F) and oils burned in cotton or wool-wick burners.

It is very dangerous for health due to its high sulfur dioxide content. It is commonly used in power plants and refineries because of its low price.

The pollution caused by fuel oil is such that it could be seen even with naked eye. When fuel oil is burnt, harmful suspended particles are emitted in the air and human body cannot resist them.

Environmentalists believe that a power plant burning fuel produces as much pollution as one million substandard vehicles. This type of pollution threatens health and contributes to global warming. That poses a serious threat for the future of Earth. Many countries have banned the use of fuel oil in their industrial facilities for environmental reasons, but power plants in many countries are still using fuel oil. In cold seasons, much more pollution is produced from the burning of fuel oil. That is why Iran’s Petroleum Ministry plans to ban the use of fuel oil in power plants. Iranian President Hassan Rouhani recently said fuel oil is expected to be dropped off Iran’s fuel mix in the near future.

Iran’s Petroleum Ministry is making every effort to produce more gas from the giant South Pars gas field in an attempt to phase out fuel oil from the country’s fuel mix. Natural gas is a clean and environment-friendly fuel that could replace fuel oil.

Petroleum Minister Bijan Namdar Zangeneh recently told a meeting of the Energy Committee of the Iranian parliament that development of South Pars gas field will bring an end to the consumption of fuel oil in power plants.

There is currently close cooperation between ministries of petroleum and energy and the Department of the Environment with a view to reducing fuel oil consumption in power plants and refineries across the country.

Masoumeh Ebtekar, head of Department of Environment (DOE), recently announced that refineries have been producing a lower level of pollution since they switched from liquid fuel to natural gas.

Saeed Motesaddi, deputy head of DOE, said this organization has undertaken extensive measures for removing fuel oil from the fuel cycle of power plants.

As Petroleum Ministry is accelerating efforts for the development of South Pars, natural gas is expected to start replacing fuel oil in power plants and refineries as of next year.

 

Solar Energy Supply to Gas Pressure Reduction Stations

Iran is one of the energy richest countries in the world and owns massive fossil fuel resources thanks to its huge oil and gas reserves. It also enjoys potential for mastering renewable sources of energy including wind, solar, biomass and geothermal energies.

In line with the policy of applying renewable energies technology, a first-ever project is under way in Iran for supplying electricity to gas pressure reducing stations through solar energy. This project is being operated by Khorasan Razavi Provincial Gas Company.

In order to supply power to the pressure reducing station, two scenarios were worked out:

1. Power supply through national power distribution network

2. Using solar energy

The second scenario was chosen for economic reasons, given the distance of the station from the power distribution network and installation costs.

 

Research Procedure

 

• Studying the technical and economic feasibility of the project and considering different options for lighting and finally choosing the best method
• Purchasing domestically manufactured and foreign equipment
• Designing and implementing solar system
• Trial run
• Testing and starting up power plant on the site
• Giving instructions for installation, startup, maintenance and commissioning
• Final commissioning

 

Certain Specifications

 

• It is the first power supply project through solar energy in gas pressure reducing stations in eastern Iran. It has had numerous complications and difficulties.
• It cut fixed costs of power supply to gas pressure reducing stations by 50%.
• The costs for power supply to gas pressure reducing stations are minimized.
• Following its successful implementation in Khorasan Razavi province, this system was planned to be installed in other pressure reducing stations.

 

Achievements

 

• 50% reduction in expenditures
• Use of free renewable sources of energy instead of fossil fuels
• Compliance with environment protection criteria in order to cut emission of pollutants
• No need for transmission and distribution system
• Return of capital in five to six years
• Energy security
• Reduced dependence on national energy networks
• Compatibility with the typology of place of installation
• Energy storage
• Silent system

 

Oil Pricing System

 

Oil pricing systems have drastically changed throughout centuries. These developments have not been merely stemmed from the application of modern economic theories in the global markets, but in fact, they have been promoted by powers holding key role in the oil market. Due to interaction between international oil companies and OPEC oil producers, oil price calculation has been handled by different powers during different periods of time.

 

Gulf of Mexico Pricing Center

 

Throughout the 19^th century and in the early 20^th century, the Gulf of Mexico was he center for crude oil pricing in the world. The US government was the only controller of crude oil prices. This issue resulted from two facts: the US was the largest oil producer in the world and when oil production in the Middle East was based on oil concessions, production costs in this region was lower than in the US. The latter is still true.

 

From Gulf of Mexico to Persian Gulf

 

After the end of the World War II Britain, which used to get its required oil from Iran, realized that it is paying heavier costs based on the Gulf of Mexico pricing system. Britain was unwilling to spend too much on energy because it was rebuilding the country following the war destructions. The Britons objected to this pricing system and made Persian Gulf the center for pricing. France followed suit in importing oil from Saudi Arabia. Relatively low costs of oil production in the Persian Gulf and the volume of exports from this region stabilized Persian Gulf pricing formula.

 

Relative Stability in Oil Prices

 

In the 1950s, the Seven Sisters expanded their upstream oil activities outside the US, particularly in the Middle East. In the 50s and the following decade, oil companies decided the prices which were calculated based on income taxes and oil concessions in host countries. The price calculation mechanism was complicated and the data exchanged between the buyer and the seller was never transmitted to the market. The companies used to engage in bilateral interaction. Therefore, the market was not transparent and there was no clear price for international transactions. This system was in effect into the 1960s. Due to big oil companies’ control on the amount of production, oil prices were relatively stable during these years.

 

Oil Producers Jump to Fray

 

In the 1970s, political events transpired leading oil producers, and the oil market conditions were deeply affected. Due to these factors, the governments of oil-producing countries won the power of bargaining in the contracts and managed to modify the terms of the contracts in their own favor.

The Arab-Zionist Regime war and later on the Islamic Revolution of Iran sent oil prices to record levels. In 1973, Saudi light oil was chosen as the index and price of crude oil produced by other countries was calculated based on Saudi oil price. In this method, the prices were introduced as the official selling price (OSP).

 

OPEC Rise and Fall

 

During these two decades, oil pricing formula changed hands from oil companies to the Organization of the Petroleum Exporting Countries. OPEC member states took control of production and oil revenues were achieved exclusively from direct oil sales. OPEC exercised its control over the market until 1985. During this period, crude oil prices jumped sharply. In the 1980s, non-OPEC boosted its supply in order to have the prices cut. As a result, OPEC share of the market was slashed. In the meantime, falling demand for oil due to recession in industrialized countries intensified this issue and OPEC’s role was eclipsed in the oil market.

 

Modern Pricing Systems

 

After the collapse of the OPEC-administered pricing system in 1985, and a short-lived experiment with netback pricing, oil-exporting countries adopted a market-linked pricing mechanism.

First adopted by PEMEX in 1986, market-linked pricing received wide acceptance, and by 1988 became and still is the main method for pricing crude oil in international trade. The current references, or pricing markers, are Brent, WTI, and Dubai/Oman.

After the second oil shock, major oil consumers thought of a solution to cover risks from oil price hikes. That was when oil transactions bourses emerged in 1982. In these stock exchanges, futures are traded for WTI and Brent crude oil, as well as for oil products. In these stock exchanges, supply and demand are the main parameters in the pricing.

Urmia, City of Religions

 

Iran’s West Azarbaijan Province shares border with Azerbaijan Republic and Armenia in the north, East Azarbaijan and Zanjan provinces in the east, Kurdestan province in the south and Turkey and Iraq in the west.

Located in northwestern Iran, the province covers around 43,600 square kilometers, or 2.25% of Iran’s total area.

West Azarbaijan province shares 135 kilometers of sea border with Azerbaijan Republic and Armenia, 200 kilometers of border with Iraq and 488 kilometers with Turkey.

Due to its geographic, environmental, cultural and historic strong points, the province enjoys great potential for investment and attraction of tourists.

Urmia, the capital city of West Azarbaijan province, is a densely populated city in Iran. According to latest census, Urmia is home to 667,499 people, which makes it the tenth most densely populated city in Iran and the second in northwestern Iran. Urmia Lake is east of this city.

Thanks to its three-millennium history, Urmia is the most ancient city in northwestern Iran. It is among the 19 historic cities of Iran, registered by the United Nations Educational, Scientific and Cultural Organization (UNESCO). Some historians in Urmia believe that Zoroaster was born in this city.

During the past centuries, Urmia has experienced numerous events including occupation by Ottomans and Russians. Due to its geographically strategic position – located at the intersection of Caucasus, Mesopotamia and Asia the Minor – Urmia has been a major trading center.

Most residents of Urmia are of Turkic origin, but there are also Jews, Nestorians and Armenians in this city.

As of 1921, Urmia was also called, Urumia and Urmi. During the Pahlavi Dynasty (1925–1979), the city was called Rezaiyeh after Reza Shah, the dynasty's founder, whose name ultimately derives from the Islamic concept of Reza via the eighth Shiite imam.

Urmia is often nicknamed “Cradle of Water” and “Paris of Iran”.

Urmia's climate is cold semi-arid with cold winters, mild springs, hot dry summers and warm autumns. Precipitation is heavily concentrated in late autumn, winter, and especially spring, while summer precipitation is very scarce.

 

Friday Mosque

 

Urmia’s Friday Mosque is one of the most ancient monuments in the city. Located near Urmia’s traditional bazaar, the mosque dates back to Seljuq dynasty. Some historians believe that a fire temple used to stand there before Muslims conquered Iran. The building materials used in this mosque are stone and brick.

The history of the ancient dome of this mosque dates back to the period of the Seljuquids and its altar to the Eilkhanian era 676 AH.

Evidence of broken articles found in excavations from the base of the 40 pillars in the domed nocturnal area, have further fortified this theory. These pillars have been repaired several times. There are old arcades around the courtyard of the mosque which belong to early Zandiyeh period. Its engraving also indicates the date of construction, i.e., 1184 AH.

Kufi inscriptions around the dome, and plaster molding of the altar can be accounted as special adornments of this mosque. The new parts have been constructed over recent decades.

 

Traditional Bazaar

 

Urmia Bazaar is known for its variety of ware and is located in the southeastern part of the city. Although many parts of the bazaar can no longer be seen as they have been ravaged by time, yet one can still see a major part still standing here. Structures like bazaars have been always in function being used and occupied on a continual basis. That is why various sections of them may be destroyed and rebuilt.

There are many landmarks near it with many different sections. The Friday Mosque can be seen in one part, the construction of which can be placed in the 12^th century. Some other sections of the bazaar have been built during the Safavid period.

There are beautiful bath houses, the architecture of which is reminiscent of the Zand and Qajar periods. This can be noticed by the distinct style of the constructions.

Urmia Bazaar has many wings and narrow alleys and each of them are unique in their own ways. Besides these, one can also see many mosques, arcades, bathhouses and abodes in the area which indicate that the people were very prosperous here and enjoyed their lives. All these activities were in progress till a few years back when many parts of the complex were gradually ruined.

 

St. Mary Church

 

This church is one of the most ancient in Iran. It was built in the first century and is among East churches.

Churches emerged in Iran after the arrival of Christianity. During the 4^th and 5^th centuries, Nestorian churches were built in Iran.

St. Mary Church was restored by a Chinese prince who had travelled to Iran for pilgrimage in 644. The church underwent restoration in the following centuries, but the most important one was in 1918 by Russia’s Orthodox Church.

In 1944, the Ottomans destroyed the church after their occupation of Urmia and rebuilt it based on Sassanid architecture.

The church has two sections. The older section is used mainly for pilgrimage, while the newer section sees religious ceremonies every Sunday.

The altar and several tombs where cardinals are buried are the outstanding features of the older section of the church. One of the tombs belongs to Bishop Johanna who travelled to the US to learn English and then returned to establish Iran’s first English school in Urmia.

 

Museum of Archeology

 

Urmia’s Museum of Archeology is one of the most museums in this city. It exhibits 27,000 artifacts including pottery, chinaware, glasswork, stone inscriptions, jewelry and warfare. The most ancient artifacts put on display in this museum date back to 6^th millennium BC and the newest ones date from Qajar dynasty.

 

Museum of Anthropology

 

Urmia’s Museum of Anthropology launched two years ago is among sight-seeing destinations in this city. The museum, which is housed at a former City Hall building, showcases more than 500 objects in agriculture, animal husbandry, clothing, armament, lighting, photography and arts. They cover a period starting from Safavid dynasty.

 

St. Thaddeus Monastery        

 

St Thaddeus Monastery is an ancient Armenian monastery located in the mountainous area of Iran's West Azerbaijan Province, about 20 kilometers from the town of Maku.

The monastery is visible from a distance due to the massiveness of the church, strongly characterized by the polygonal drums and conical roofs of its two domes. There are several chapels nearby: three on the hills east of the stream, one approximately 3km south of the monastery on the road to Bastam, and another that serves as the church for the village of Ghara-Kilisa.

One of the 12 Apostles, St. Thaddeus, also known as Saint Jude, (not to be confused with Judas Iscariot), was martyred while spreading the Gospel. He is revered as an apostle of the Armenian Apostolic Church. Legend has it that a church dedicated to him was first built on the present site in AD 68.

Not much appears to remain of the original church, which was extensively rebuilt in 1329 after an earthquake damaged the structure in 1319. Nevertheless, some of the parts surrounding the altar apse date from the 10th century.

Much of the present structure dates from 1811 when Qajar prince Abbas Mirza helped in renovations and repairs. Undertaken by Simeon, Father Superior of the monastery, a large narthex-like western extension was added to the medieval church. This structure exactly duplicates the design of the cathedral at Etchmiadzin.

The 19th century additions are from carved sandstone. The earliest parts are of black and white stone, hence its Turkic name Kara Kilisa, the Black Church.

A fortified wall surrounds the church and its now-abandoned monastery buildings.

In July 2008, the St. Thaddeus monastery was added to UNESCO's World Heritage List, along with two other Armenian monuments located in the same province: Saint Stepanos Monastery and the chapel of Dzordzor.

According to Armenian Church tradition, the Apostles Thaddeus and Bartholomew traveled through Armenia in AD 45 to preach the word of God; many people were converted and numerous secret Christian communities were established there.

The ancient Christian historian Moses of Khorene tells the following story, considered a legend by most modern historiography.

Thaddeus converted King Abgar V of Edessa. After his death, the Armenian kingdom was split into two parts. His son Ananun crowned himself in Edessa, while his nephew Sanatruk ruled in Armenia. About 66 AD, Ananun gave the order to kill St. Thaddeus in Edessa. The king's daughter Sandokht, who had converted to Christianity, was martyred with Thaddeus. Her tomb is said to be located near the Ghara Kilisa.

It only has one service a year, on the Day of St. Thaddeus (near July first), which is attended by Armenian pilgrims from all over Iran and other countries.

 

Shams Tabrizi Tomb

 

The tomb of Sufi Persian poet Shams Tabrizi in the city of Khoy in West Azarbaijan province is a place for sight-seeing and homage. In 2007, he was proven to have been buried there. Next to this tomb stands a minaret-style tower dating back to the Safavid dynasty.

The external surface of the minaret is adorned with antlers belonging to deer hunted by Shah Esmaeil Safavid during his 40-day stay there.

Evidence indicates that the monument was built at the order of Shah Esmaeil and its minaret was then decorated with antlers to show the king’s brinksmanship.

Miniature images show that there were initially three minarets, but due to natural events, two have disappeared.

The tomb was restored in 2007 with the help of Italian architects.     

Urmia, City of Religions

 

Iran’s West Azarbaijan Province shares border with Azerbaijan Republic and Armenia in the north, East Azarbaijan and Zanjan provinces in the east, Kurdestan province in the south and Turkey and Iraq in the west.

Located in northwestern Iran, the province covers around 43,600 square kilometers, or 2.25% of Iran’s total area.

West Azarbaijan province shares 135 kilometers of sea border with Azerbaijan Republic and Armenia, 200 kilometers of border with Iraq and 488 kilometers with Turkey.

Due to its geographic, environmental, cultural and historic strong points, the province enjoys great potential for investment and attraction of tourists.

Urmia, the capital city of West Azarbaijan province, is a densely populated city in Iran. According to latest census, Urmia is home to 667,499 people, which makes it the tenth most densely populated city in Iran and the second in northwestern Iran. Urmia Lake is east of this city.

Thanks to its three-millennium history, Urmia is the most ancient city in northwestern Iran. It is among the 19 historic cities of Iran, registered by the United Nations Educational, Scientific and Cultural Organization (UNESCO). Some historians in Urmia believe that Zoroaster was born in this city.

During the past centuries, Urmia has experienced numerous events including occupation by Ottomans and Russians. Due to its geographically strategic position – located at the intersection of Caucasus, Mesopotamia and Asia the Minor – Urmia has been a major trading center.

Most residents of Urmia are of Turkic origin, but there are also Jews, Nestorians and Armenians in this city.

As of 1921, Urmia was also called, Urumia and Urmi. During the Pahlavi Dynasty (1925–1979), the city was called Rezaiyeh after Reza Shah, the dynasty's founder, whose name ultimately derives from the Islamic concept of Reza via the eighth Shiite imam.

Urmia is often nicknamed “Cradle of Water” and “Paris of Iran”.

Urmia's climate is cold semi-arid with cold winters, mild springs, hot dry summers and warm autumns. Precipitation is heavily concentrated in late autumn, winter, and especially spring, while summer precipitation is very scarce.

 

Friday Mosque

 

Urmia’s Friday Mosque is one of the most ancient monuments in the city. Located near Urmia’s traditional bazaar, the mosque dates back to Seljuq dynasty. Some historians believe that a fire temple used to stand there before Muslims conquered Iran. The building materials used in this mosque are stone and brick.

The history of the ancient dome of this mosque dates back to the period of the Seljuquids and its altar to the Eilkhanian era 676 AH.

Evidence of broken articles found in excavations from the base of the 40 pillars in the domed nocturnal area, have further fortified this theory. These pillars have been repaired several times. There are old arcades around the courtyard of the mosque which belong to early Zandiyeh period. Its engraving also indicates the date of construction, i.e., 1184 AH.

Kufi inscriptions around the dome, and plaster molding of the altar can be accounted as special adornments of this mosque. The new parts have been constructed over recent decades.

 

Traditional Bazaar

 

Urmia Bazaar is known for its variety of ware and is located in the southeastern part of the city. Although many parts of the bazaar can no longer be seen as they have been ravaged by time, yet one can still see a major part still standing here. Structures like bazaars have been always in function being used and occupied on a continual basis. That is why various sections of them may be destroyed and rebuilt.

There are many landmarks near it with many different sections. The Friday Mosque can be seen in one part, the construction of which can be placed in the 12^th century. Some other sections of the bazaar have been built during the Safavid period.

There are beautiful bath houses, the architecture of which is reminiscent of the Zand and Qajar periods. This can be noticed by the distinct style of the constructions.

Urmia Bazaar has many wings and narrow alleys and each of them are unique in their own ways. Besides these, one can also see many mosques, arcades, bathhouses and abodes in the area which indicate that the people were very prosperous here and enjoyed their lives. All these activities were in progress till a few years back when many parts of the complex were gradually ruined.

 

St. Mary Church

 

This church is one of the most ancient in Iran. It was built in the first century and is among East churches.

Churches emerged in Iran after the arrival of Christianity. During the 4^th and 5^th centuries, Nestorian churches were built in Iran.

St. Mary Church was restored by a Chinese prince who had travelled to Iran for pilgrimage in 644. The church underwent restoration in the following centuries, but the most important one was in 1918 by Russia’s Orthodox Church.

In 1944, the Ottomans destroyed the church after their occupation of Urmia and rebuilt it based on Sassanid architecture.

The church has two sections. The older section is used mainly for pilgrimage, while the newer section sees religious ceremonies every Sunday.

The altar and several tombs where cardinals are buried are the outstanding features of the older section of the church. One of the tombs belongs to Bishop Johanna who travelled to the US to learn English and then returned to establish Iran’s first English school in Urmia.

 

Museum of Archeology

 

Urmia’s Museum of Archeology is one of the most museums in this city. It exhibits 27,000 artifacts including pottery, chinaware, glasswork, stone inscriptions, jewelry and warfare. The most ancient artifacts put on display in this museum date back to 6^th millennium BC and the newest ones date from Qajar dynasty.

 

Museum of Anthropology

 

Urmia’s Museum of Anthropology launched two years ago is among sight-seeing destinations in this city. The museum, which is housed at a former City Hall building, showcases more than 500 objects in agriculture, animal husbandry, clothing, armament, lighting, photography and arts. They cover a period starting from Safavid dynasty.

 

St. Thaddeus Monastery        

 

St Thaddeus Monastery is an ancient Armenian monastery located in the mountainous area of Iran's West Azerbaijan Province, about 20 kilometers from the town of Maku.

The monastery is visible from a distance due to the massiveness of the church, strongly characterized by the polygonal drums and conical roofs of its two domes. There are several chapels nearby: three on the hills east of the stream, one approximately 3km south of the monastery on the road to Bastam, and another that serves as the church for the village of Ghara-Kilisa.

One of the 12 Apostles, St. Thaddeus, also known as Saint Jude, (not to be confused with Judas Iscariot), was martyred while spreading the Gospel. He is revered as an apostle of the Armenian Apostolic Church. Legend has it that a church dedicated to him was first built on the present site in AD 68.

Not much appears to remain of the original church, which was extensively rebuilt in 1329 after an earthquake damaged the structure in 1319. Nevertheless, some of the parts surrounding the altar apse date from the 10th century.

Much of the present structure dates from 1811 when Qajar prince Abbas Mirza helped in renovations and repairs. Undertaken by Simeon, Father Superior of the monastery, a large narthex-like western extension was added to the medieval church. This structure exactly duplicates the design of the cathedral at Etchmiadzin.

The 19th century additions are from carved sandstone. The earliest parts are of black and white stone, hence its Turkic name Kara Kilisa, the Black Church.

A fortified wall surrounds the church and its now-abandoned monastery buildings.

In July 2008, the St. Thaddeus monastery was added to UNESCO's World Heritage List, along with two other Armenian monuments located in the same province: Saint Stepanos Monastery and the chapel of Dzordzor.

According to Armenian Church tradition, the Apostles Thaddeus and Bartholomew traveled through Armenia in AD 45 to preach the word of God; many people were converted and numerous secret Christian communities were established there.

The ancient Christian historian Moses of Khorene tells the following story, considered a legend by most modern historiography.

Thaddeus converted King Abgar V of Edessa. After his death, the Armenian kingdom was split into two parts. His son Ananun crowned himself in Edessa, while his nephew Sanatruk ruled in Armenia. About 66 AD, Ananun gave the order to kill St. Thaddeus in Edessa. The king's daughter Sandokht, who had converted to Christianity, was martyred with Thaddeus. Her tomb is said to be located near the Ghara Kilisa.

It only has one service a year, on the Day of St. Thaddeus (near July first), which is attended by Armenian pilgrims from all over Iran and other countries.

 

Shams Tabrizi Tomb

 

The tomb of Sufi Persian poet Shams Tabrizi in the city of Khoy in West Azarbaijan province is a place for sight-seeing and homage. In 2007, he was proven to have been buried there. Next to this tomb stands a minaret-style tower dating back to the Safavid dynasty.

The external surface of the minaret is adorned with antlers belonging to deer hunted by Shah Esmaeil Safavid during his 40-day stay there.

Evidence indicates that the monument was built at the order of Shah Esmaeil and its minaret was then decorated with antlers to show the king’s brinksmanship.

Miniature images show that there were initially three minarets, but due to natural events, two have disappeared.

The tomb was restored in 2007 with the help of Italian architects.     

 

Urmia, City of Religions

 

Iran’s West Azarbaijan Province shares border with Azerbaijan Republic and Armenia in the north, East Azarbaijan and Zanjan provinces in the east, Kurdestan province in the south and Turkey and Iraq in the west.

Located in northwestern Iran, the province covers around 43,600 square kilometers, or 2.25% of Iran’s total area.

West Azarbaijan province shares 135 kilometers of sea border with Azerbaijan Republic and Armenia, 200 kilometers of border with Iraq and 488 kilometers with Turkey.

Due to its geographic, environmental, cultural and historic strong points, the province enjoys great potential for investment and attraction of tourists.

Urmia, the capital city of West Azarbaijan province, is a densely populated city in Iran. According to latest census, Urmia is home to 667,499 people, which makes it the tenth most densely populated city in Iran and the second in northwestern Iran. Urmia Lake is east of this city.

Thanks to its three-millennium history, Urmia is the most ancient city in northwestern Iran. It is among the 19 historic cities of Iran, registered by the United Nations Educational, Scientific and Cultural Organization (UNESCO). Some historians in Urmia believe that Zoroaster was born in this city.

During the past centuries, Urmia has experienced numerous events including occupation by Ottomans and Russians. Due to its geographically strategic position – located at the intersection of Caucasus, Mesopotamia and Asia the Minor – Urmia has been a major trading center.

Most residents of Urmia are of Turkic origin, but there are also Jews, Nestorians and Armenians in this city.

As of 1921, Urmia was also called, Urumia and Urmi. During the Pahlavi Dynasty (1925–1979), the city was called Rezaiyeh after Reza Shah, the dynasty's founder, whose name ultimately derives from the Islamic concept of Reza via the eighth Shiite imam.

Urmia is often nicknamed “Cradle of Water” and “Paris of Iran”.

Urmia's climate is cold semi-arid with cold winters, mild springs, hot dry summers and warm autumns. Precipitation is heavily concentrated in late autumn, winter, and especially spring, while summer precipitation is very scarce.

 

Friday Mosque

 

Urmia’s Friday Mosque is one of the most ancient monuments in the city. Located near Urmia’s traditional bazaar, the mosque dates back to Seljuq dynasty. Some historians believe that a fire temple used to stand there before Muslims conquered Iran. The building materials used in this mosque are stone and brick.

The history of the ancient dome of this mosque dates back to the period of the Seljuquids and its altar to the Eilkhanian era 676 AH.

Evidence of broken articles found in excavations from the base of the 40 pillars in the domed nocturnal area, have further fortified this theory. These pillars have been repaired several times. There are old arcades around the courtyard of the mosque which belong to early Zandiyeh period. Its engraving also indicates the date of construction, i.e., 1184 AH.

Kufi inscriptions around the dome, and plaster molding of the altar can be accounted as special adornments of this mosque. The new parts have been constructed over recent decades.

 

Traditional Bazaar

 

Urmia Bazaar is known for its variety of ware and is located in the southeastern part of the city. Although many parts of the bazaar can no longer be seen as they have been ravaged by time, yet one can still see a major part still standing here. Structures like bazaars have been always in function being used and occupied on a continual basis. That is why various sections of them may be destroyed and rebuilt.

There are many landmarks near it with many different sections. The Friday Mosque can be seen in one part, the construction of which can be placed in the 12^th century. Some other sections of the bazaar have been built during the Safavid period.

There are beautiful bath houses, the architecture of which is reminiscent of the Zand and Qajar periods. This can be noticed by the distinct style of the constructions.

Urmia Bazaar has many wings and narrow alleys and each of them are unique in their own ways. Besides these, one can also see many mosques, arcades, bathhouses and abodes in the area which indicate that the people were very prosperous here and enjoyed their lives. All these activities were in progress till a few years back when many parts of the complex were gradually ruined.

 

St. Mary Church

 

This church is one of the most ancient in Iran. It was built in the first century and is among East churches.

Churches emerged in Iran after the arrival of Christianity. During the 4^th and 5^th centuries, Nestorian churches were built in Iran.

St. Mary Church was restored by a Chinese prince who had travelled to Iran for pilgrimage in 644. The church underwent restoration in the following centuries, but the most important one was in 1918 by Russia’s Orthodox Church.

In 1944, the Ottomans destroyed the church after their occupation of Urmia and rebuilt it based on Sassanid architecture.

The church has two sections. The older section is used mainly for pilgrimage, while the newer section sees religious ceremonies every Sunday.

The altar and several tombs where cardinals are buried are the outstanding features of the older section of the church. One of the tombs belongs to Bishop Johanna who travelled to the US to learn English and then returned to establish Iran’s first English school in Urmia.

 

Museum of Archeology

 

Urmia’s Museum of Archeology is one of the most museums in this city. It exhibits 27,000 artifacts including pottery, chinaware, glasswork, stone inscriptions, jewelry and warfare. The most ancient artifacts put on display in this museum date back to 6^th millennium BC and the newest ones date from Qajar dynasty.

 

Museum of Anthropology

 

Urmia’s Museum of Anthropology launched two years ago is among sight-seeing destinations in this city. The museum, which is housed at a former City Hall building, showcases more than 500 objects in agriculture, animal husbandry, clothing, armament, lighting, photography and arts. They cover a period starting from Safavid dynasty.

 

St. Thaddeus Monastery        

 

St Thaddeus Monastery is an ancient Armenian monastery located in the mountainous area of Iran's West Azerbaijan Province, about 20 kilometers from the town of Maku.

The monastery is visible from a distance due to the massiveness of the church, strongly characterized by the polygonal drums and conical roofs of its two domes. There are several chapels nearby: three on the hills east of the stream, one approximately 3km south of the monastery on the road to Bastam, and another that serves as the church for the village of Ghara-Kilisa.

One of the 12 Apostles, St. Thaddeus, also known as Saint Jude, (not to be confused with Judas Iscariot), was martyred while spreading the Gospel. He is revered as an apostle of the Armenian Apostolic Church. Legend has it that a church dedicated to him was first built on the present site in AD 68.

Not much appears to remain of the original church, which was extensively rebuilt in 1329 after an earthquake damaged the structure in 1319. Nevertheless, some of the parts surrounding the altar apse date from the 10th century.

Much of the present structure dates from 1811 when Qajar prince Abbas Mirza helped in renovations and repairs. Undertaken by Simeon, Father Superior of the monastery, a large narthex-like western extension was added to the medieval church. This structure exactly duplicates the design of the cathedral at Etchmiadzin.

The 19th century additions are from carved sandstone. The earliest parts are of black and white stone, hence its Turkic name Kara Kilisa, the Black Church.

A fortified wall surrounds the church and its now-abandoned monastery buildings.

In July 2008, the St. Thaddeus monastery was added to UNESCO's World Heritage List, along with two other Armenian monuments located in the same province: Saint Stepanos Monastery and the chapel of Dzordzor.

According to Armenian Church tradition, the Apostles Thaddeus and Bartholomew traveled through Armenia in AD 45 to preach the word of God; many people were converted and numerous secret Christian communities were established there.

The ancient Christian historian Moses of Khorene tells the following story, considered a legend by most modern historiography.

Thaddeus converted King Abgar V of Edessa. After his death, the Armenian kingdom was split into two parts. His son Ananun crowned himself in Edessa, while his nephew Sanatruk ruled in Armenia. About 66 AD, Ananun gave the order to kill St. Thaddeus in Edessa. The king's daughter Sandokht, who had converted to Christianity, was martyred with Thaddeus. Her tomb is said to be located near the Ghara Kilisa.

It only has one service a year, on the Day of St. Thaddeus (near July first), which is attended by Armenian pilgrims from all over Iran and other countries.

 

Shams Tabrizi Tomb

 

The tomb of Sufi Persian poet Shams Tabrizi in the city of Khoy in West Azarbaijan province is a place for sight-seeing and homage. In 2007, he was proven to have been buried there. Next to this tomb stands a minaret-style tower dating back to the Safavid dynasty.

The external surface of the minaret is adorned with antlers belonging to deer hunted by Shah Esmaeil Safavid during his 40-day stay there.

Evidence indicates that the monument was built at the order of Shah Esmaeil and its minaret was then decorated with antlers to show the king’s brinksmanship.

Miniature images show that there were initially three minarets, but due to natural events, two have disappeared.

The tomb was restored in 2007 with the help of Italian architects.     

 

Oil Products Distribution

 

As mentioned earlier, West Azarbaijan province shares borders with Turkey, Iraq, Azerbaijan and Armenia.

Due to the strategic location of this province, National Iranian Oil Products and Distribution Company (NIOPDC) – one of four subsidiaries of Petroleum Ministry – is playing a crucial role in the supply of oil products – gasoline, gasoil, fuel oil, and kerosene and jet fuel – to this province.

Asghar Towfiqi, manager of the Urmia branch of NIOPDC, says 1.068 billion liters of petroleum products including gasoline, kerosene, gasoil and fuel oil distributed across the province during the first seven months of the Iranian year which started on March 21.

He said that gasoline made up a 290-ml share, gasoil a 525-ml share, kerosene a 134-ml share and fuel oil a 117-ml share.

Towfiqi said the fuel tank control project applied to foreign vehicles entering Iran via West Azarbaijan province border earned the government more than IRR 1.82 trillion. He said Sarv, Razi, Bazargan and Goldasht are the checkpoints that have contributed to this revenue.

The fuel tanks of foreign vehicles are controlled to prevent oil products from being smuggled out of the country.

During the seven-month period, 52 ml of gasoil and gasoline were supplied to foreign cars, including buses, private cars and trucks, at border stations.

Towfiqi said compressed natural gas (CNG) stations have saved 156 ml of gasoline during the seven-month period.

He said that West Azarbaijan province has 33 CNG stations and 85 CNG-gasoline stations, adding that filling in the CNG capsule does not take more than two minutes at CNG stations.

Towfiqi said 290 ml of gasoline was distributed in Urmia during the seven months of the Iranian calendar year, showing no growth compared with a year before.