Ramifications of a National Megaproject

 

What was the impact of West’s tough and extensive sanctions against Iran? That is a fundamental question to which two extremist groups have given misleading replies. These answers could further complicate relationships in this world which is fed up with crises and conflicts.

One group claims that the sanctions have had no impact on the everyday life of the Iranian people, while another claims that the sanctions have brought Iran to its knees.

Both have made strategic errors in their efforts to provide a realistic analysis of affairs.

It would be false to claim that the international sanctions have not affected life in Iran. But in the meantime, it would be wrong to claim that the sanctions have pushed the country into a halt. The sanctions have failed to deprive the Iranian engineers of motivation for indigenization. In certain stages, the sanctions have been of help on the grounds that Iranians have been motivated to develop technological breakthroughs.

Phase 12 of South Pars gas field is one of these sophisticated megaprojects which came online at a time Iran was under sanctions and therefore it faced restrictions in purchasing commodities and equipment and transferring in technology. This project, which was fully operated by Iranians, makes great contribution to gas and condensate production in Iran.

All necessary work, including design, engineering, procurement of commodity, manufacturing and commissioning, were done by Iranian engineers in Phase 12 and more than 145 million man/hours were spent on the project. The products from this phase are valued at more than $327 million a month.

At a time Iran’s petroleum industry is under Western sanctions, estimates indicate that the commissioning Phase 12 would increase Iran’s gross domestic product (GDP) by three percent. For this reason, many experts believe that accelerating the development of South Pars gas field, which is shared by Iran and Qatar, is beyond an industrial project and could bring about major changes in national economy and improve the livelihood of Iranian people.

The world has realized that Iran managed to complete its largest petroleum industry project despite the imposition of sanctions against the country. The question posed to Western companies is to know how they would have benefited from Iran’s projects if there were no sanctions on Iran.

Western economic activists, particularly those engaged in oil and gas, are fully aware that they would have pocketed big benefits from Iran’s hydrocarbon projects over the past years had they not been barred from the country due to the sanctions.

Today, the world is revolving around interaction and communications, and mutual benefits constitute a principle which no party can ignore easily. Interaction and collaboration would make sense when Iran would also benefit from allowing foreign companies to operate its oil and gas projects.

Oil giants have said on many occasions that they are willing to operate projects in Iran. They have to convince their officials that Iran’s vast hydrocarbon market could not be ignored easily. They should be convinced that political pressures would prove ineffective in economic projects.

Iran has now reached a level in expertise and capability to continue its way under any circumstances. Iran’s hope for sanctions relief is based on interaction so that foreign partners would gain profits and Iran would be able to benefit from the potentialities of foreign companies in accelerating its development projects. If respected by Western parties, such a standpoint could consolidate the bases of regional and global interactions and bestow peace upon people in the global community.

Phase 12 of South Pars; Symbol of Iran Self-Reliance

 

After his landslide election win in 2013, Iranian President Hassan Rouhani pledged to seek remedies for the country’s ailing economy, accelerate development of joint oil and gas fields, particularly South Pars gas filed and bring an end to Iran’s nuclear standoff with the West to have sanctions removed.

Few people imagined that these promises would come true in two years. But everyone can see that the country’s economy has improved and Iran’s nuclear negotiations with P 5+1 (the United States, Britain, France, Germany, China and Russia) are improving in favor of the lifting of sanctions imposed against the Islamic Republic. But the most prominent example of success of the Rouhani administration in the last Iranian calendar year was the inauguration of Phase 12 of the supergiant South Pars gas reservoir.

Since the very beginning of the formation of Rouhani administration, Ministry of Petroleum, steered by Bijan Namdar Zangeneh, focused on the development of South Pars gas field as its main mission. Zangeneh classified the development phases based on their priorities and followed up on them seriously. The project came on-stream on March 17 as planned, and the main development phase of South Pars was inaugurated by President Rouhani.

Iranian officials say Phase 12 startup is evidence of potentialities of Iranian engineers and the strength of Iran’s petroleum industry under circumstances of international sanctions.

Development of Phase 12 of South Pars started in February 2010 for the production of 84 mcm/d of sour gas. With the startup of Phase 12, Iran will see its sweet gas production rise 81 mcm/d, its gas condensate output rise 120,000 b/d and its sulfur production rise 75,000 tons a year.

Designing, engineering, commodity procurement, construction and startup of Phase 12 have all been handled by Iranian engineers and more than 145 million man/hours have been recorded in this project.

Legally, this phase should have counted on Iranian manpower for 51%, but it exceeds 71%. The products from Phase 12 are valued over $2 billion till end of 1393(20 March 2015).

 

Living Up to Promises

 

After inaugurating Phase 12 of South Pars in Assaluyeh, President Rouhani said this national project was a symbol of his administration’s sincerity in making good on its promises.

He said his administration promised in the Iranian calendar year to March 2013 that the country’s gas production would grow 100 mcm/d.

“Some believed that such a thing would be impossible, but based on my knowledge of the petroleum minister, I was sure that would happen,” he added.

Rouhani said the development of South Pars at a time the country is under sanctions is a breakthrough. “This event occurred while sanctions are in force, but we will keep making efforts.”

He said the top priority for his administration with regard to the petroleum industry is the development of joint oil and gas fields.

Rouhani expressed hope that new phases of South Pars, including phases 15&16 and 17, would be inaugurated in the new Iranian year. He said the remaining phases are hoped to become operational in three years.

“South Pars should reach a point to produce 5.8 million barrels of oil and gas. That’s a big job which will continue,” he said.

Rouhani underlined the need for paying attention to environmental issues in industrial projects, saying: “Naturally after these phases are launched, safeguarding the environment for people living nearby, and would be difficult and necessary. This issue is demanded by the government and many steps have been taken with the help of Petroleum Ministry to that effect.”

He said Iran experienced cleaner air in the last calendar year as power plants switched from liquid fuel to natural gas. He added that boosting the quality of gasoline and gasoil production is another measure taken by the government in favor of the environment.

Rouhani also said that sustainable development should always take into account environmental concerns.

 

New Phases

 

The petroleum minister said in the inauguration ceremony that Phase 12 came on-stream without any foreign help.

He said the project was operated despite financial restrictions due to sanctions in effect against Iran.

“Even if we were not under sanctions and this job was done by foreign companies that would be a great job. But we did it without reliance on foreign companies,” said Zangeneh.

The minister said no foreign observer or Iranian official believed a 100-mcm/d increase in Iran’s gas production in a year. He said that strenuous efforts were made by managers and all Iranian contractors and manufacturers made contribution.

Zangeneh said phases 15&16 of South Pars, which Iran and Qatar are jointly operating in the Persian Gulf, are expected to become operational in the upcoming months.

He said two top drives for phases 15&16 are ready, adding: “Four refining terrains of these phases are active and they will become operational in months. The offshore section of Phase 17 of South Pars is ready and two refining phases are active. The offshore section of Phase 18 is also ready, but activities are under way in the offshore section.”

Zangeneh said the prioritized phases of South Pars are expected to produce more than 125 mcm/d. He said Phase 12 accounts for 75 mcm/d, phases 15&16 for 38 mcm/d and Phase 17 for 15 mcm/d.

Regarding the significance of startup of Phase 12, he said: “This phase, with a strategic role in the country’s economy, came on-stream under difficult conditions of sanctions and this important development is a golden chapter in the history of Iran’s petroleum industry.”

Zangeneh said precise planning has been made for the completion of all phases of South Pars. “We hope that we would move towards more success and development based on preplanned schedule.”

He touched on the finance for all phases of South Pars, saying: “Given plans for this project, the Economic Council has already approved a portion of finance for this project and the rest is to be provided by National Development Fund of Iran, National Iranian Oil Company’s domestic resources and money saved from the consumption of oil products due to increased gas production.”

He said prioritization of South Pars phases first drew criticism, but the inauguration of Phase 12 proved that the prioritization and decisions made about South Pars development phases were correct.

Zangeneh said the inauguration of Phase 12 was the most desirable event in the petroleum industry, 64 years after its nationalization. “Phase 12 is a symbol of self-reliance and nationalization of petroleum industry for the Iranian nation.”

“Phase 12 is the largest project to have come online throughout history of Iran’s petroleum industry and the coincidence of the official inauguration of this project with nationalization of petroleum industry shows that the petroleum industry has reached self-reliance.”

The minister said 27 billion liters of liquid fuel, worth $18 billion, was consumed in the calendar year to March 2014 by power plants and industrial units.

He said gas supply to consumers rose from 36 bcm/d to 50 bcm/d in the last calendar year to help save liquid fuel.

 

$127b Annual Income

 

The supergiant South Pars gas field is estimated to earn Iran $127 billion in annual revenues in three years, managing director of National Iranian Oil Company, said.

“The value of products from this field will reach $127 billion up to” the Iranian calendar year starting in March 2018, Rokneddin Javadi said.

He said that South Pars output is forecast to reach 250 bcm a year by that time.

“Due to [international sanctions] and the [ensuing] delay in the development of this project (Phase 12), $12 billion has so far been spent on it,” he said, adding that the investment made in this project is expected to return in one year.

Javadi said revenues from Phase 12 which are valued more than $2 billion till end of 1393(20 March 2015) are projected to reach 6 to $9 billion a year up.

He said that Phase 12 is supplying 81 mcm/d of gas and 120,000 b/d of condensate onto world markets, noting that the startup of this phase is of great significance as the country is facing tough international sanctions.

South Pars produced more than 107 bcm of gas in the last calendar year, said Javadi. He added that full development of South Pars would result in the production of 5.8 mb/d of crude oil equivalent.

He also stressed separation of %88.8 of gas producing in Phase 12. He said that Phase 12 is also the cleanest one in terms of environmental issues. Javadi said desulfurization units in this phase are 70% complete now.

He also announced a plan for the construction of ethane and liquefied gas separation units in Phase 12 in two years.

 

Iran Contractors Set Record

 

Ali-Akbar Shabanpour, managing director of Pars Oil and Gas Company, said the production capacity of Phase 12 is 3 bcf/d or 84 mcm/d of sour gas.

He said the phase is already producing 75 mcm/d of sweet gas, 120,000 b/d of gas condensate and 750 tons a day of sulfur. This phase has four platforms: three main and one satellite platforms.

Shabanpour said the simultaneous load-out of two platforms at Khorramshahr Yard for this phase symbolizes a record set in this project.

He said six sweetening terrains of the onshore refinery of Phase 12 are now working.

Phase 12 of South Pars; Symbol of Iran Self-Reliance

 

After his landslide election win in 2013, Iranian President Hassan Rouhani pledged to seek remedies for the country’s ailing economy, accelerate development of joint oil and gas fields, particularly South Pars gas filed and bring an end to Iran’s nuclear standoff with the West to have sanctions removed.

Few people imagined that these promises would come true in two years. But everyone can see that the country’s economy has improved and Iran’s nuclear negotiations with P 5+1 (the United States, Britain, France, Germany, China and Russia) are improving in favor of the lifting of sanctions imposed against the Islamic Republic. But the most prominent example of success of the Rouhani administration in the last Iranian calendar year was the inauguration of Phase 12 of the supergiant South Pars gas reservoir.

Since the very beginning of the formation of Rouhani administration, Ministry of Petroleum, steered by Bijan Namdar Zangeneh, focused on the development of South Pars gas field as its main mission. Zangeneh classified the development phases based on their priorities and followed up on them seriously. The project came on-stream on March 17 as planned, and the main development phase of South Pars was inaugurated by President Rouhani.

Iranian officials say Phase 12 startup is evidence of potentialities of Iranian engineers and the strength of Iran’s petroleum industry under circumstances of international sanctions.

Development of Phase 12 of South Pars started in February 2010 for the production of 84 mcm/d of sour gas. With the startup of Phase 12, Iran will see its sweet gas production rise 81 mcm/d, its gas condensate output rise 120,000 b/d and its sulfur production rise 75,000 tons a year.

Designing, engineering, commodity procurement, construction and startup of Phase 12 have all been handled by Iranian engineers and more than 145 million man/hours have been recorded in this project.

Legally, this phase should have counted on Iranian manpower for 51%, but it exceeds 71%. The products from Phase 12 are valued over $2 billion till end of 1393(20 March 2015).

 

Living Up to Promises

 

After inaugurating Phase 12 of South Pars in Assaluyeh, President Rouhani said this national project was a symbol of his administration’s sincerity in making good on its promises.

He said his administration promised in the Iranian calendar year to March 2013 that the country’s gas production would grow 100 mcm/d.

“Some believed that such a thing would be impossible, but based on my knowledge of the petroleum minister, I was sure that would happen,” he added.

Rouhani said the development of South Pars at a time the country is under sanctions is a breakthrough. “This event occurred while sanctions are in force, but we will keep making efforts.”

He said the top priority for his administration with regard to the petroleum industry is the development of joint oil and gas fields.

Rouhani expressed hope that new phases of South Pars, including phases 15&16 and 17, would be inaugurated in the new Iranian year. He said the remaining phases are hoped to become operational in three years.

“South Pars should reach a point to produce 5.8 million barrels of oil and gas. That’s a big job which will continue,” he said.

Rouhani underlined the need for paying attention to environmental issues in industrial projects, saying: “Naturally after these phases are launched, safeguarding the environment for people living nearby, and would be difficult and necessary. This issue is demanded by the government and many steps have been taken with the help of Petroleum Ministry to that effect.”

He said Iran experienced cleaner air in the last calendar year as power plants switched from liquid fuel to natural gas. He added that boosting the quality of gasoline and gasoil production is another measure taken by the government in favor of the environment.

Rouhani also said that sustainable development should always take into account environmental concerns.

 

New Phases

 

The petroleum minister said in the inauguration ceremony that Phase 12 came on-stream without any foreign help.

He said the project was operated despite financial restrictions due to sanctions in effect against Iran.

“Even if we were not under sanctions and this job was done by foreign companies that would be a great job. But we did it without reliance on foreign companies,” said Zangeneh.

The minister said no foreign observer or Iranian official believed a 100-mcm/d increase in Iran’s gas production in a year. He said that strenuous efforts were made by managers and all Iranian contractors and manufacturers made contribution.

Zangeneh said phases 15&16 of South Pars, which Iran and Qatar are jointly operating in the Persian Gulf, are expected to become operational in the upcoming months.

He said two top drives for phases 15&16 are ready, adding: “Four refining terrains of these phases are active and they will become operational in months. The offshore section of Phase 17 of South Pars is ready and two refining phases are active. The offshore section of Phase 18 is also ready, but activities are under way in the offshore section.”

Zangeneh said the prioritized phases of South Pars are expected to produce more than 125 mcm/d. He said Phase 12 accounts for 75 mcm/d, phases 15&16 for 38 mcm/d and Phase 17 for 15 mcm/d.

Regarding the significance of startup of Phase 12, he said: “This phase, with a strategic role in the country’s economy, came on-stream under difficult conditions of sanctions and this important development is a golden chapter in the history of Iran’s petroleum industry.”

Zangeneh said precise planning has been made for the completion of all phases of South Pars. “We hope that we would move towards more success and development based on preplanned schedule.”

He touched on the finance for all phases of South Pars, saying: “Given plans for this project, the Economic Council has already approved a portion of finance for this project and the rest is to be provided by National Development Fund of Iran, National Iranian Oil Company’s domestic resources and money saved from the consumption of oil products due to increased gas production.”

He said prioritization of South Pars phases first drew criticism, but the inauguration of Phase 12 proved that the prioritization and decisions made about South Pars development phases were correct.

Zangeneh said the inauguration of Phase 12 was the most desirable event in the petroleum industry, 64 years after its nationalization. “Phase 12 is a symbol of self-reliance and nationalization of petroleum industry for the Iranian nation.”

“Phase 12 is the largest project to have come online throughout history of Iran’s petroleum industry and the coincidence of the official inauguration of this project with nationalization of petroleum industry shows that the petroleum industry has reached self-reliance.”

The minister said 27 billion liters of liquid fuel, worth $18 billion, was consumed in the calendar year to March 2014 by power plants and industrial units.

He said gas supply to consumers rose from 36 bcm/d to 50 bcm/d in the last calendar year to help save liquid fuel.

 

$127b Annual Income

 

The supergiant South Pars gas field is estimated to earn Iran $127 billion in annual revenues in three years, managing director of National Iranian Oil Company, said.

“The value of products from this field will reach $127 billion up to” the Iranian calendar year starting in March 2018, Rokneddin Javadi said.

He said that South Pars output is forecast to reach 250 bcm a year by that time.

“Due to [international sanctions] and the [ensuing] delay in the development of this project (Phase 12), $12 billion has so far been spent on it,” he said, adding that the investment made in this project is expected to return in one year.

Javadi said revenues from Phase 12 which are valued more than $2 billion till end of 1393(20 March 2015) are projected to reach 6 to $9 billion a year up.

He said that Phase 12 is supplying 81 mcm/d of gas and 120,000 b/d of condensate onto world markets, noting that the startup of this phase is of great significance as the country is facing tough international sanctions.

South Pars produced more than 107 bcm of gas in the last calendar year, said Javadi. He added that full development of South Pars would result in the production of 5.8 mb/d of crude oil equivalent.

He also stressed separation of %88.8 of gas producing in Phase 12. He said that Phase 12 is also the cleanest one in terms of environmental issues. Javadi said desulfurization units in this phase are 70% complete now.

He also announced a plan for the construction of ethane and liquefied gas separation units in Phase 12 in two years.

 

Iran Contractors Set Record

 

Ali-Akbar Shabanpour, managing director of Pars Oil and Gas Company, said the production capacity of Phase 12 is 3 bcf/d or 84 mcm/d of sour gas.

He said the phase is already producing 75 mcm/d of sweet gas, 120,000 b/d of gas condensate and 750 tons a day of sulfur. This phase has four platforms: three main and one satellite platforms.

Shabanpour said the simultaneous load-out of two platforms at Khorramshahr Yard for this phase symbolizes a record set in this project.

He said six sweetening terrains of the onshore refinery of Phase 12 are now working.

Iran Ready to Export 1mb/d More Oil

 

Iran’s Minister of Petroleum Bijan Namdar Zangeneh recently said that the country is ready to increase its crude oil exports by 1 mb/d in case international sanctions against the Islamic Republic are lifted.

The minister made the remarks to reporters one day before the inauguration of Phase 12 of the giant offshore South Pars gas field.

“Once sanctions against Iran have been lifted, we forecast that 1 mb/d would be added to Iran’s crude oil exports,” he said.

Zangeneh added: “Oil markets are numerous and if the sanctions are lifted we will be able to export oil to anywhere in our interest and our marketing body has such potential.”

He also said that $7.5 billion has so far been invested in Phase 12 and that $20 billion is still needed for the full development of South Pars.

Zangeneh also said Iran is ready to cooperate with Chinese companies in its oil and gas projects.

He said that Iran raised its gas production by 120 mcm/d in the last Iranian calendar year, adding that Phase 12 of South Pars contributed around 68 mcm/d.

Zangeneh said Phase 12 of South Pars is the largest ever project in the history of Iran’s petroleum industry.

The minister said full development of Phase 12 would add 80 mcm/d of gas and 120,000 b/d of gas condensate to the country’s production capacity.

Zangeneh said the administration of President Hassan Rouhani faced numerous challenges with regard to gas shortage due to international sanctions and concomitant financial restrictions imposed on Iran.

He gave a positive assessment of progress in gas projects in the country.

Zangeneh denied rumors about ethane and liquefied petroleum gas (LPG) units not being ready, noting that such units had never been envisaged for Phase 12.

He reiterated the need for interaction with the global community, saying: “We are interested in improving life standards for Iranian people as the country makes progress.”

 

100mcm/d Gas

 

Zangeneh said prioritization of seven phases of South Pars helped the country raise its gas production by more than 100 mcm/d in the last calendar year.

He said Phases 12, 15&16 and 17&18 are currently producing more than 68 mcm/d, 37 mcm/d and 18 mcm/d, respectively. He said phases 15&16 and 17&18 are to be inaugurated in the new Iranian calendar year.

Zangeneh said the startup of seven phases of South Pars while foreign companies were barred by international sanctions to operate them was very difficult.

“By launching these phases under conditions of sanctions and financial restrictions, the Iranians showed that Iran’s petroleum industry has been fully nationalized,” he said.

Asked if Iran Petroleum Contract (IPC) is expected to serve as the framework for new development projects in South Pars, Zangeneh said: “Since contracts for all phases of South Pars have been signed and they are more than 60% complete, this type of contract could no longer be used for South Pars phases.”

He said that another type of contract is expected to be used for the development of Phase 11 of South Pars.

 

$20b Investment

 

Zangeneh said completion of all South Pars phases needs $20 billion in investment.

“Given plans [for this project], the Economy Council has already approved a portion of finance for this project and the rest is to be provided by National Development Fund of Iran, National Iranian Oil Company’s domestic resources and money saved from the consumption of oil products due to increased gas production,” he said.

He said the remaining phases are hoped to become operational in three years.

 

China, Russia; Iran’s Strategic Partners

 

Zangeneh also referred to Iran’s cooperation with Chinese companies, saying: “We are always ready to cooperate with Chinese companies, both under sanctions and even after sanctions are lifted. This is not such that we would not cooperate with Chinese companies were Iran not under sanctions.”

Zangeneh said Iran’s Ministry of Petroleum is ready to negotiate with Chinese firms willing to invest in Iran’s projects.

He said Russia and China are Iran’s strategic partners, adding: “The countries that worked with us under tough sanctions’ conditions will be our priority after sanctions are lifted.”

 

Other Priorities

 

Zangeneh said other prioritized phases of South Pars are to come on-stream by September this year. He said Phase 19, which is the size of two normal phases, as well as phases 20&21 are next in line.

He said that the Central Bank of Iran (CBI) has yet to be reimbursed for Iran’s oil sales, adding that easing of sanctions would facilitate money transfer into CBI’s account to help finance projects.

Zangeneh said foreign companies would be asked to invest in Iran’s petroleum industry once all sanctions are lifted.

The minister heaped praise on Iranian offshore companies for their installation of seven platforms in South Pars last calendar year. He said foreign companies could install only two platforms in a year.

 

Q&A

 

Q: You have repeatedly called for paying attention to Iranian companies and manpower in implementing oil projects in Iran. Meantime, important events including the drafting of IPC and full lifting of international sanctions due to Iran’s positive nuclear agreement with six world powers are about to happen to facilitate the presence of foreign companies in Iran’s oil development projects. The question here is to know how Iran’s Ministry of Petroleum would plan for benefitting from the potential of domestic and foreign companies at the same time. 

A: I have to highlight this point that our objective behind cooperation with foreign companies is to be able to upgrade national technologies and capabilities. In our development projects, including oil recovery, we are interested in cooperation with big international companies, but it does not mean we would ignore domestic potential and manpower. We are also trying to strengthen our national capacities. Today, some domestic companies like Petropars are able to run major projects and development of Phase 12 is an example. Petropars is a source of honor for Iranians and huge investment has been made in it. It can become an international company if it works alongside a top foreign company.

Second Priorities at South Pars

 

South Pars gas field, the largest gas reservoir in the world, is shared by Iran and Qatar in the Persian Gulf. It is a major source of energy in Iran which owns a 3,700-square kilometer share of the 9,700-sq km gas field. Iran’s share of the reservoir holds 14.2 tcm of gas and 19 billion barrels of gas condensate. That accounts for 8% of world’s total gas reserves and 47% of Iran’s total gas reserves. In total, South Pars contains 40 tcm of natural gas (21% of world’s total) and around 50 billion barrels of gas condensate.

Development of this gas field has experienced ups and downs over the past two decades. Qatar started developing its share of this offshore field when Iran was involved in imposed war (1980-1988). Iran first recovered gas from South Pars after a 12-year delay.

Now, as second priority development phases are coming on-stream in the coming years, Iran’s output from South Pars is forecast to exceed 800 mcm/d in three years.

Iran’s Ministry of Petroleum did its utmost to enhance the gas field’s output by 100 mcm/d in the current calendar year which ends on March 20. That let the ministry meet its objectives for winter fuel supply and save some liquid fuel which was previously consumed at power plants.

South Pars produced 92 bcm of gas in the last calendar year and it is expected to surpass 100 bcm this year.

South Pars needs $43 billion in investment for financing its development. So far, a total of $34 billion has been spent on the development of this gas reservoir. Iran has so far recovered nearly 697 bcm of gas from South Pars.

Iran is suffering $100 million in losses for a single day of delay in developing the gas field. Iran has to invest $1 billion in South Pas in order to realize its development objectives.

Seventeen phases of South Pars are expected to be supplying 400 mcm/d of gas and 600,000 b/d of gas condensate in three years.

Bringing the prioritized development phases of South Pars to their rated capacity and operating the second priority phases are among major plans followed up by Iran’s petroleum ministry in the coming years.

 

Phase 13

 

Phase 13 development of South Pars is expected to produce 56.6 mcm/d of sour gas. Full startup of Phase 12 will provide 50 mcm/d of sweet gas, 75,000 b/d of gas condensate, 400 tons a day of sulfur, 2,870 tons a year of liquefied petroleum gas (propane and butane) and 2,740 tons a year of ethane. Ethane will be used to feed petrochemical plants.

Phase 13 development project was awarded in June 2010 to a consortium of Petro Paydar Iranian Company, Iran Marine Industrial Company and Iran Power Plant Projects Management Company. The consortium is led by Petro Paydar.

The project, which costs $5.18 billion, has so far progressed more than 73%.

 

Phase 14

 

Phase 14 development is aimed at producing 56.6 mcm/d of sour gas. This project was agreed, in 2010, to come on-stream 35 months after the signature of contract.

From this phase, 50 mcm/d of gas, 75,000 b/d of gas condensate, 400 tons a day of sulfur as well as one million tons a year of ethane and 1.1 million tons a year of liquefied gas would be recovered.

The contract for this phase was signed in June 2010. A consortium comprising Industrial Development and Renovation Organization (IDRO), Iran Industrial Projects Management Company, Iran Offshore Engineering and Construction Company (IOEC), National Iranian Drilling Company (NIDC), Iran Shipbuilding & Offshore Industries Complex Co (ISOICO), Iran Power Plant Projects Management Company, Paybandan Company and Mashin Sazi Arak Company. IDRO is leading the project.

Ali-Akbar Shabanpour, managing director of Pars Oil and Gas Company, has said that Phase 14 development is 58% complete.

 

Phase 19

 

Phase 19 development is under way for a daily recovery of 56.6 mcm of sour gas from South Pars. Phases 17&18 are aimed to produce 50 mcm/d of natural gas, 75,000 b/d of gas condensate, 400 tons a day of sulfur, 1 million tons a year of ethane and 1.05 million tons a year of LPG.

Phase 19 development is being operated by Petropars and Iranian Offshore Engineering and Construction Company (IOEC). The operation for the development of this phase started in June 2010 under a $5 billion deal. According to the latest official reports, Phase 19 is more than 85% complete.

 

Phases 20&21

 

Phases 20&21 development of South Pars will go ahead for the production of 56.6 mcm/d of sour gas. Iranian contractors and domestic manufacturers are operating the engineering, procurement, construction (EPC) project.

Phases 20&21 are planned to produce 50 mcm/d of gas, 75,000 b/d of gas condensate, 400 tons a day of sulfur, one million tons a year of ethane and 1.1 million tons a year of LPG.

These phases have been awarded to National Iranian Oil Engineering and Construction Company (NIOEC), the main contractor, and Iranian Offshore Engineering and Construction Company (IOEC).

The contract for this $5 billion project was signed in June 2009. A year later, the project was kicked off.

According to latest reports, these phases have had more than 65% progress.

 

Phases 22-24

 

Phases 22-24 development of South Pars is designed for the production of 56.6 mcm/d of sour gas. Phases 22-24 are aimed to supply 50 mcm/d of gas, 75,000 b/d of gas condensate, 400 tons a day of sulfur, 1 million tons a year of ethane and 1.1 million tons of LPG.

These phases are being developed by Petro Sina Arya and Iran Marine Industrial Company. The $5 billion project is now 62 percent complete.

 

Remaining Phases

 

Iran is reaping more than $30 billion a year, or $100 million a day, from the remaining 14 phases of South Pars. These big figures assign a heavier mission to Iran’s petroleum managers.

Iran and Qatar are currently recovering 15 bcf/d and 22 bcf/d, respectively of gas from South Pars. Iran, which hopes to bring its output to 17 bcf/d, is still not producing as much as its partner does.

Iran, a Secure Energy Supplier

 

The global economy is in unprecedented recession and sanctions imposed against Iran have ramped up economic pressure on some other countries, as well. Therefore, a much-needed lifting of these sanctions in light of a likely nuclear accord between Iran and P5+1 in the near future would guarantee economic growth both in Iran and world countries.

The significance of this issue is pushed into bold relief as many foreign companies and investors are preparing to invest in Iran’s petroleum industry.

A permanent nuclear deal between Iran and P5+1 – the US, Britain, France, China, Russia and Germany – could also bring stability back to fluctuating oil market. A nuclear agreement will not only stop unilateral moves by certain oil-rich countries, but will also balance the oil market. Such an agreement could also set the stage for Iran to deliver energy to European countries. In other words, an accord between Iran and the P5+1 will lift restrictions and Iran’s oil exports and the country would be able to raise its oil production and exports in a short period of time. Then, Iran would become a secure supplier of energy in the world.

Iran Petroleum has conducted an interview with the director for international affairs at National Iranian Oil Company (NIOC), Mohsen  Qamsari, about Iran’s plans for the post- nuclear agreement period between Iran and P5+1.

 

Q: To begin the interview, would you please give your analysis of oil price slump and its impacts?

A: I’ve been wondering why crude oil prices stayed above $100 a barrel over the past five years. If we study the year 2014 economically, we will see that economic factors like supply and demand did not change significantly from the beginning to the end of the year. If we accept that these economic factors had no role in the oil price fall, one may ask how come the prices were $100 a barrel at the beginning of the year. In my opinion, crude oil prices were kept artificially high in the past years so that alternative energies could be found for crude oil. I mean that no shale oil would have been produced had crude oil prices varied between $50 and $60 over the past five years. Illogically high oil prices will harm producers in the long term because when prices grow, research and development on modern energies will become economical and then modern energies will replace fossil energies. That would impose losses on oil producers. Therefore, the oil price decline policy may harm the economy of producers in the short term, but in the long term, the prices should be set such that oil could not be substituted by alternative energies.

 

Q: So what do you think of future oil prices?

A: Oil price forecast is no longer possible and all oil market analysts are unable to predict any price. One cannot even forecast oil prices for the near future. Unlike gas market, the oil market is very complicated and that is an advantage for gas. Over recent years, when oil prices were above $100 a barrel, consumers switched to gas consumption. Furthermore, development of modern technologies has reduced the harmful impacts of coal consumption on the environment and increased tendency for using gas which is of lower price and we see that this energy replacement has been due to illogical rise in oil prices. It is very difficult to speak about the future of oil market because given the current realities; oil price is unlikely to exceed $60 a barrel in 2016. But nothing could be forecasted for the following years.

 

Q: Has NIOC’s International Affairs Department envisaged any plans for the post- nuclear accord period?

A: All oil suppliers in the world are making efforts to get a bigger share of world market and that is why oil price has become competitive. Since NIOC has been recognized as a secure supplier of oil in the world for many years, a nuclear accord and concomitant sanctions relief for Iran’s petroleum industry would bring back big buyers of Iran’s oil. In this regard, the NIOC is in full harmony with Ministry of Petroleum and the government. Our objective is to sell more oil in order to boost Iran’s share in the market and stabilize Iran’s position as a major and secure supplier of oil to the world market.

 

Q: What about Iran’s gas exports?

A: New agreements are being signed now. Due to the positive measures under way for boosting Iran’s gas production level; a bright future is awaiting Iran. However, based on existing accords, Iran is mainly exporting gas to Turkey and the largest buyer of Iran’s gas is Turkey. Iran’s gas export to Pakistan has not yet started, but Iran will soon start supplying gas to Iraq.

 

Q: How are Iran’s oil products’ exports and imports?

A: Iran’s oil sale is not facing embargo but its buyers are facing restrictions. Iran is currently selling its oil only to China, India, South Korea, Japan, Turkey and Taiwan because they have won waivers. Iran is also exporting fuel oil, liquefied petroleum gas (LPG), gasoil and petrochemicals.  At the moment ,gasoline is the only oil product Iran imports.

 

Q: How much oil product does Iran export?

A: Petroleum product exports, including fuel oil and gasoil, vary during different seasons. Fuel oil exports are done without any problems throughout the year, but gasoil exports drop to zero in some seasons and it depends on gas production and domestic consumption. But generally speaking, Iran is exporting its surplus production.

 

Q: New phases of South Pars are being developed. Will it affect our exports rate?

A: By completing and commissioning phases of South Pars, the country’s gas production will rise significantly and it will boost Iran’s liquid fuel exports in addition to meeting domestic needs.

2^nd National Drilling Congress

 

Seven years ago, Iran’s oil capital Ahvaz hosted the country’s first national congress on drilling with focus on challenges to the petroleum industry. Given the significance of drilling industry and its indigenization, the second conference on drilling was held from March 3 to 4 with a view to drawing up a roadmap for Iran’s drilling industry. The event was co-sponsored by Iran’s Ministry of Petroleum, Iran’s Research Institute of Petroleum Industry (RIPI), National Iranian South Oil Company (NISOC) and the Association of Petroleum Engineering Alumni and Students.

The main objectives pursued in the congress were summing up, documenting and elucidating surveys conducted on challenges to Iran’s drilling industry, considering strategies for development of drilling industry and creating a venue for drilling industry activists to exchange views and communicate.

 

Iran Oil & Gas Output

 

Rokneddin Javadi, managing director of National Iranian Oil Company (NIOC), said in the first day of the congress that Iran’s crude oil production capacity stands at around 4 mb/d.

“At present, due to [international] sanctions, [oil] production is much lower than this amount, but it will go above 4.7 mb/d by the end of the fifth [five-year economic] development plan [in March 2016] and the start of the sixth plan,” he said.

“In order to make up for the natural production loss of 300,000 barrels a year in Iran’s oil reservoirs, 400 to 500 new wells have to be drilled every year so that we would reach the 4.7 mb/d production capacity,” he added.

Javadi also said Iran is currently producing 660 mcm/d of gas, adding that the output is planned to exceed 1 bcm/d by the end of the fifth development plan.

He said drilling industry has to be focused upon because it is a fledgling industry in Iran. He noted that drilling is the key to the realization of Iran’s oil and gas production plans.

“The exit of foreign drilling companies after the 1979 Islamic Revolution resulted in the indigenization of the drilling industry by Iranian specialists, but this industry has not yet reached an acceptable level in terms of commodity, drilling rigs and related services,” said Javadi.

He said 140 to 150 offshore and onshore drilling rigs are currently operating in Iran. “At present, the share of drilling industry from the $15 billion spent on the development of Iran’s petroleum industry is 25%-30%, which amounts to around $4 billion a year.”

Javadi said Iran’s private sector accounts for 50% of oil and gas drilling operations.

 

Drilling, Key to Oil and Gas Reservoirs

 

Hamid Bovard, the chairman of the conference, said drilling industry is like a key which opens oil and gas reservoirs.

“Currently, 2,500 rigs are operating in the US, making up 50% of the world total rigs. The drilling rig count in the Middle East varies between 450 and 500, making 12% of the total drilling rigs operating in the world,” he said.

Bovard said knowledge management, non-application of modern methods, migration of human resources and weak service providing, constitute the main challenges to the drilling industry in Iran. “Access to huge oil and gas reservoirs and expert/skilled manpower are Iran’s strength in drilling sector,” he said.

 

Domestic Manufacturing of Rigs

 

Mohammad-Reza Kamali, head of the upstream department of RIPI, said further development of the drilling industry would help enhance oil and gas production in the country.

“The imposition of international sanctions in recent years spurred domestic manufacturing, and the drilling industry met its needs through domestic manufacturers,” he said.

He said technological progress, creation of wealth and export of technical and engineering services were instrumental in realizing the objectives set for the drilling industry.

Several specialized workshops were held on the sidelines of the forum and such issues as management of drilling industry and challenges were discussed.

 

Strategic Management

 

Addressing a specialized workshop on macro and strategic management in drilling industry, Javadi highlighted the necessity of establishment of working groups to identify challenges to the drilling industry and finding solutions to them.

“In case of a nuclear accord between Iran and the P5+1, foreign investors and state-of-the-art technology will flow into Iran. New oil contracts have been defined such that domestic companies and manufacturers involved in drilling would have a good share of petroleum industry projects, provided that they improve quantitatively and qualitatively,” he said.

Javadi underscored the need for respecting ethics in drilling companies in order to boost the efficacy of drilling.

Heydar Bahmani, managing director of National Iranian Drilling Company (NIDC), said in the workshop that 4,000 meters of wells have been spudded over the past 35 years.

“Today, despite all problems lying ahead, NIDC is forcefully pushing ahead with its activities and all offshore and onshore activities are being handled by domestic specialists,” he said.

Abdol-Hamid Delparish, director for consolidated planning of NIOC, referred to high drilling costs, required for the development of oil and gas fields, and said that the low efficiency of drilling rigs in Iran constitutes a serious challenge.

He said that 30 offshore and 100 onshore drilling rigs are currently operating in Iran, noting that only two wells are being drilled per year. He said at least four wells are expected to be drilled per year.

Delparish said drilling development, exploration and work over wells in Iran cost more than $10 million. “To preserve onshore and offshore oil and gas production rate, around $7 billion a year is required to be invested, but this amount is currently below $3 billion.

He said that foreign investors are waiting for the signature of a nuclear accord between Iran and P5+1. He, however, said that domestic companies ought to upgrade their potentialities, as well.

“Iran’s petroleum industry will need to have 150 to 180 offshore and onshore drilling rigs by the end of the sixth development plan. Given plans for oil and gas production, a revolution is expected to happen in the drilling industry in coming years,” he said.

For his part, Bovard, advisor to NIOC managing director, said Iran’s drilling capacity is appropriate for 150 rigs.

He said that oil reservoirs and production should be looked differently, more than one century after exploration of oil in Iran.

Hamid-Reza Golpayegani, advisor to NISOC managing director, said NIDC was dependent on foreign countries before the 1979 Islamic revolution, but today is the top company in the Middle East.

“At that time, drilling specialists were non-Iranian and the drilling industry was run by foreigners, but today, this industry is run by Iranian specialist managers,” he said.

Golpayegani said no drilling disciple existed in Iranian universities before the revolution. “Today, the best universities are training students of drilling so that the country’s drilling industry would benefit from specialized manpower,” he said.

Mohammad-Javad Asemipour, faculty member of Petroleum University of Technology, told the panel that international sanctions have created obstacles and restrictions for the petroleum industry in Iran. He said petroleum industry managers are expected to know how to manage crises.

“According to surveys conducted by the International Energy Agency (IEA), sustainable energy supply in the world would need $328 billion a year in investment in the oil and gas sectors from 2015 to 2030. For its part, Iran should invest at least $16 billion a year by the end of 2030 in order to cover 7% of the world oil market,” he said.

 

Geology and Exploration in Drilling

 

The second specialized workshop held on the sidelines of the drilling congress was on geology and exploration in drilling.

Ali-Reza Shakeri, director of oil geology research group at RIPI, said geology is instrumental in optimizing the drilling industry.

“Hydrocarbon deposits are in underground layers and access to them requires crossing these layers. Access to hydrocarbon reservoirs is programmed based on the depth they are in and several specialties are needed to push ahead drilling operations,” he said.

He stressed the need for the establishment of a strategic council for drilling operations, saying specialized forces, equipment and earth layers are the three parameters involved in drilling operations.

Javad Yazdanian, director of geology studies at Iranian Offshore Oil Company, said geology facilitates drilling of wells with lowest risk possible.
“Today, geology plays a very significant role in exploration and development of hydrocarbon fields,” he said.

Yazdanian said application of new technologies in geology reduces drilling risk, adding that slant drilling requires sufficient geological data. He said that the main strategy in drilling is to reduce costs and geology can be of great help in this regard if advanced systems are used. He added that geo-mechanics can help drill wells in the shortest possible time and at lowest cost.

 

Drilling Fluids

 

Another program held on the sidelines of the congress was a specialized workshop studying drilling fluids’ services.

Jasem Dasht Bozorgi, director of drilling fluid department of NISOC, said domestic production of these fluids was focused upon following the 1979 Islamic revolution.

“The NIOC followed up on the indigenization of drilling fluids by conducting separate tests on the materials used in this industry,” he said.

Dasht Bozorgi said a major challenge to drilling fluids is their high costs.

Bahman Pir-Moradian, director of chemical drilling department of the Exploration Directorate of NIOC, said the drilling industry’s challenges stem directly and indirectly from drilling mud and wellhead problems.

“The diversity of drilling mud should decline so that by optimizing drilling mud they could be used in different stages,” he said.

 

Under-Balanced Drilling

 

Mohsen Mousavi, head of underbalanced drilling department at NIDC, said underbalanced drilling (UBD) leads to higher efficacy in well drilling, reduces drilling problems and optimizes production from underground reservoirs. He said all wells were spudded by overbalanced method since the first oil well was drilled in Masjed Soleyman in 1908 until December 2005.

He said progress in UBD over the past 20 years has made this method economical and resolved many problems related to drilling.                           

Mousavi said minimizing damage to reservoirs during drilling, reducing costs for reparation of drilling fluid, preventing the pollution of the environment, effective  well acidizing, accelerating drilling, prolonging the lifecycle of drilling bits and optimal extraction from underground reservoirs are among advantages of UBD.

He said that 82 wells have been drilled by applying UBD method, adding that 300,000 barrels of crude oil was transferred to NISOC during UBD drilling.

 

Lost Time

 

Another specialized roundtable focused on time lost during drilling due to problems in this sector.

Farhad Ekram-Nia, head of drilling operations at the NIOC Exploration Directorate, said that in 2011, 13 rigs drilled 20 wells, in 2012, 9 rigs drilled 14 wells and in 2013, 4 rigs drilled 12 wells.

“Problems outside the borehole in 2011 caused a 26-day delay in the drilling of 13 wells. That imposed half a million euro in extra costs on wells,” he said.

Ekram-Nia laid the blame partly on blowout preventers for the time lost in drilling operations, noting that the sanctions imposed on Iran’s energy sector have intensified this problem.

Mohammad Keshavarz, director of drilling at MAPNA, said quality is an important factor in drilling, which requires training of manpower.

He said drilling costs $68 per meter in the US while in Iran, it costs $3,000 to $3,500 due to longer time needed for drilling, inexperienced staff and the low quality of drilling equipment.

Mohammad-Reza Ardakani, senior expert at NIOC Exploration Directorate, said structural problems, supply of equipment and lack of expertise are the main challenges to drilling outside the borehole.

He said the main challenges to domestic manufacturing of commodities were absence of standard for production in drilling, lack of modern quality control system and lack of motivation among producers for improving quality of production due to lack of competition.

 

Deepwater Drilling Challenges

 

Saeed Rahmanlou, drilling chief at NISOC, said Amir-Kabir semi-submersible drilling rig operating in the Caspian Sea was built in Sadra shipping yard. The rig started work in 2010 and made discovery a year after.

He said that the rig, which is unique in Iran, weighs between 20,657 tons and 26,540 tons.

This rig, he said, can drill up to 7,620 meters deep and carry 5,000 tons of cargo at the same time.

Amir-Reza Jafari-Azar, who heads drilling operations at Khazar Exploration and Production Company (KEPCO), said the installation of wellhead equipment at seabed poses a major challenge because the seabed is soft and the equipment installed there sinks gradually.

He said deepwater drilling is a new development in Iran. “There are major differences between drilling equipment used in deep water and those used in shallow waters or on land. Procurement of this special equipment and full familiarity with them is of great significance,” he said.

 

2^nd National Drilling Congress

 

Seven years ago, Iran’s oil capital Ahvaz hosted the country’s first national congress on drilling with focus on challenges to the petroleum industry. Given the significance of drilling industry and its indigenization, the second conference on drilling was held from March 3 to 4 with a view to drawing up a roadmap for Iran’s drilling industry. The event was co-sponsored by Iran’s Ministry of Petroleum, Iran’s Research Institute of Petroleum Industry (RIPI), National Iranian South Oil Company (NISOC) and the Association of Petroleum Engineering Alumni and Students.

The main objectives pursued in the congress were summing up, documenting and elucidating surveys conducted on challenges to Iran’s drilling industry, considering strategies for development of drilling industry and creating a venue for drilling industry activists to exchange views and communicate.

 

Iran Oil & Gas Output

 

Rokneddin Javadi, managing director of National Iranian Oil Company (NIOC), said in the first day of the congress that Iran’s crude oil production capacity stands at around 4 mb/d.

“At present, due to [international] sanctions, [oil] production is much lower than this amount, but it will go above 4.7 mb/d by the end of the fifth [five-year economic] development plan [in March 2016] and the start of the sixth plan,” he said.

“In order to make up for the natural production loss of 300,000 barrels a year in Iran’s oil reservoirs, 400 to 500 new wells have to be drilled every year so that we would reach the 4.7 mb/d production capacity,” he added.

Javadi also said Iran is currently producing 660 mcm/d of gas, adding that the output is planned to exceed 1 bcm/d by the end of the fifth development plan.

He said drilling industry has to be focused upon because it is a fledgling industry in Iran. He noted that drilling is the key to the realization of Iran’s oil and gas production plans.

“The exit of foreign drilling companies after the 1979 Islamic Revolution resulted in the indigenization of the drilling industry by Iranian specialists, but this industry has not yet reached an acceptable level in terms of commodity, drilling rigs and related services,” said Javadi.

He said 140 to 150 offshore and onshore drilling rigs are currently operating in Iran. “At present, the share of drilling industry from the $15 billion spent on the development of Iran’s petroleum industry is 25%-30%, which amounts to around $4 billion a year.”

Javadi said Iran’s private sector accounts for 50% of oil and gas drilling operations.

 

Drilling, Key to Oil and Gas Reservoirs

 

Hamid Bovard, the chairman of the conference, said drilling industry is like a key which opens oil and gas reservoirs.

“Currently, 2,500 rigs are operating in the US, making up 50% of the world total rigs. The drilling rig count in the Middle East varies between 450 and 500, making 12% of the total drilling rigs operating in the world,” he said.

Bovard said knowledge management, non-application of modern methods, migration of human resources and weak service providing, constitute the main challenges to the drilling industry in Iran. “Access to huge oil and gas reservoirs and expert/skilled manpower are Iran’s strength in drilling sector,” he said.

 

Domestic Manufacturing of Rigs

 

Mohammad-Reza Kamali, head of the upstream department of RIPI, said further development of the drilling industry would help enhance oil and gas production in the country.

“The imposition of international sanctions in recent years spurred domestic manufacturing, and the drilling industry met its needs through domestic manufacturers,” he said.

He said technological progress, creation of wealth and export of technical and engineering services were instrumental in realizing the objectives set for the drilling industry.

Several specialized workshops were held on the sidelines of the forum and such issues as management of drilling industry and challenges were discussed.

 

Strategic Management

 

Addressing a specialized workshop on macro and strategic management in drilling industry, Javadi highlighted the necessity of establishment of working groups to identify challenges to the drilling industry and finding solutions to them.

“In case of a nuclear accord between Iran and the P5+1, foreign investors and state-of-the-art technology will flow into Iran. New oil contracts have been defined such that domestic companies and manufacturers involved in drilling would have a good share of petroleum industry projects, provided that they improve quantitatively and qualitatively,” he said.

Javadi underscored the need for respecting ethics in drilling companies in order to boost the efficacy of drilling.

Heydar Bahmani, managing director of National Iranian Drilling Company (NIDC), said in the workshop that 4,000 meters of wells have been spudded over the past 35 years.

“Today, despite all problems lying ahead, NIDC is forcefully pushing ahead with its activities and all offshore and onshore activities are being handled by domestic specialists,” he said.

Abdol-Hamid Delparish, director for consolidated planning of NIOC, referred to high drilling costs, required for the development of oil and gas fields, and said that the low efficiency of drilling rigs in Iran constitutes a serious challenge.

He said that 30 offshore and 100 onshore drilling rigs are currently operating in Iran, noting that only two wells are being drilled per year. He said at least four wells are expected to be drilled per year.

Delparish said drilling development, exploration and work over wells in Iran cost more than $10 million. “To preserve onshore and offshore oil and gas production rate, around $7 billion a year is required to be invested, but this amount is currently below $3 billion.

He said that foreign investors are waiting for the signature of a nuclear accord between Iran and P5+1. He, however, said that domestic companies ought to upgrade their potentialities, as well.

“Iran’s petroleum industry will need to have 150 to 180 offshore and onshore drilling rigs by the end of the sixth development plan. Given plans for oil and gas production, a revolution is expected to happen in the drilling industry in coming years,” he said.

For his part, Bovard, advisor to NIOC managing director, said Iran’s drilling capacity is appropriate for 150 rigs.

He said that oil reservoirs and production should be looked differently, more than one century after exploration of oil in Iran.

Hamid-Reza Golpayegani, advisor to NISOC managing director, said NIDC was dependent on foreign countries before the 1979 Islamic revolution, but today is the top company in the Middle East.

“At that time, drilling specialists were non-Iranian and the drilling industry was run by foreigners, but today, this industry is run by Iranian specialist managers,” he said.

Golpayegani said no drilling disciple existed in Iranian universities before the revolution. “Today, the best universities are training students of drilling so that the country’s drilling industry would benefit from specialized manpower,” he said.

Mohammad-Javad Asemipour, faculty member of Petroleum University of Technology, told the panel that international sanctions have created obstacles and restrictions for the petroleum industry in Iran. He said petroleum industry managers are expected to know how to manage crises.

“According to surveys conducted by the International Energy Agency (IEA), sustainable energy supply in the world would need $328 billion a year in investment in the oil and gas sectors from 2015 to 2030. For its part, Iran should invest at least $16 billion a year by the end of 2030 in order to cover 7% of the world oil market,” he said.

 

Geology and Exploration in Drilling

 

The second specialized workshop held on the sidelines of the drilling congress was on geology and exploration in drilling.

Ali-Reza Shakeri, director of oil geology research group at RIPI, said geology is instrumental in optimizing the drilling industry.

“Hydrocarbon deposits are in underground layers and access to them requires crossing these layers. Access to hydrocarbon reservoirs is programmed based on the depth they are in and several specialties are needed to push ahead drilling operations,” he said.

He stressed the need for the establishment of a strategic council for drilling operations, saying specialized forces, equipment and earth layers are the three parameters involved in drilling operations.

Javad Yazdanian, director of geology studies at Iranian Offshore Oil Company, said geology facilitates drilling of wells with lowest risk possible.
“Today, geology plays a very significant role in exploration and development of hydrocarbon fields,” he said.

Yazdanian said application of new technologies in geology reduces drilling risk, adding that slant drilling requires sufficient geological data. He said that the main strategy in drilling is to reduce costs and geology can be of great help in this regard if advanced systems are used. He added that geo-mechanics can help drill wells in the shortest possible time and at lowest cost.

 

Drilling Fluids

 

Another program held on the sidelines of the congress was a specialized workshop studying drilling fluids’ services.

Jasem Dasht Bozorgi, director of drilling fluid department of NISOC, said domestic production of these fluids was focused upon following the 1979 Islamic revolution.

“The NIOC followed up on the indigenization of drilling fluids by conducting separate tests on the materials used in this industry,” he said.

Dasht Bozorgi said a major challenge to drilling fluids is their high costs.

Bahman Pir-Moradian, director of chemical drilling department of the Exploration Directorate of NIOC, said the drilling industry’s challenges stem directly and indirectly from drilling mud and wellhead problems.

“The diversity of drilling mud should decline so that by optimizing drilling mud they could be used in different stages,” he said.

 

Under-Balanced Drilling

 

Mohsen Mousavi, head of underbalanced drilling department at NIDC, said underbalanced drilling (UBD) leads to higher efficacy in well drilling, reduces drilling problems and optimizes production from underground reservoirs. He said all wells were spudded by overbalanced method since the first oil well was drilled in Masjed Soleyman in 1908 until December 2005.

He said progress in UBD over the past 20 years has made this method economical and resolved many problems related to drilling.                           

Mousavi said minimizing damage to reservoirs during drilling, reducing costs for reparation of drilling fluid, preventing the pollution of the environment, effective  well acidizing, accelerating drilling, prolonging the lifecycle of drilling bits and optimal extraction from underground reservoirs are among advantages of UBD.

He said that 82 wells have been drilled by applying UBD method, adding that 300,000 barrels of crude oil was transferred to NISOC during UBD drilling.

 

Lost Time

 

Another specialized roundtable focused on time lost during drilling due to problems in this sector.

Farhad Ekram-Nia, head of drilling operations at the NIOC Exploration Directorate, said that in 2011, 13 rigs drilled 20 wells, in 2012, 9 rigs drilled 14 wells and in 2013, 4 rigs drilled 12 wells.

“Problems outside the borehole in 2011 caused a 26-day delay in the drilling of 13 wells. That imposed half a million euro in extra costs on wells,” he said.

Ekram-Nia laid the blame partly on blowout preventers for the time lost in drilling operations, noting that the sanctions imposed on Iran’s energy sector have intensified this problem.

Mohammad Keshavarz, director of drilling at MAPNA, said quality is an important factor in drilling, which requires training of manpower.

He said drilling costs $68 per meter in the US while in Iran, it costs $3,000 to $3,500 due to longer time needed for drilling, inexperienced staff and the low quality of drilling equipment.

Mohammad-Reza Ardakani, senior expert at NIOC Exploration Directorate, said structural problems, supply of equipment and lack of expertise are the main challenges to drilling outside the borehole.

He said the main challenges to domestic manufacturing of commodities were absence of standard for production in drilling, lack of modern quality control system and lack of motivation among producers for improving quality of production due to lack of competition.

 

Deepwater Drilling Challenges

 

Saeed Rahmanlou, drilling chief at NISOC, said Amir-Kabir semi-submersible drilling rig operating in the Caspian Sea was built in Sadra shipping yard. The rig started work in 2010 and made discovery a year after.

He said that the rig, which is unique in Iran, weighs between 20,657 tons and 26,540 tons.

This rig, he said, can drill up to 7,620 meters deep and carry 5,000 tons of cargo at the same time.

Amir-Reza Jafari-Azar, who heads drilling operations at Khazar Exploration and Production Company (KEPCO), said the installation of wellhead equipment at seabed poses a major challenge because the seabed is soft and the equipment installed there sinks gradually.

He said deepwater drilling is a new development in Iran. “There are major differences between drilling equipment used in deep water and those used in shallow waters or on land. Procurement of this special equipment and full familiarity with them is of great significance,” he said.

 

NIDC Seeks Toehold in Iraq

 

Oil and gas could not be extracted from the depth of land and sea unless drilling equipment starts working to explore oil and gas. In fact, drilling industry is the prelude to oil production and that is why drilling is known as key to conquering oil reservoirs. Drilling industry in Iran is as old as oil production; more than a century. But half a century after oil was explored in Iran, the drilling industry did make good progress. After nationalization of oil in 1953, the ownership of oil, as a national wealth, was given to Iranians, but oil-related industries remained dependent on foreigners and drilling was no exception.

The bulk of investment made in oil and gas industry goes to the purchase or hiring of drilling rigs, particularly offshore rigs. Despite efforts made for indigenizing drilling equipment, there is not enough domestically manufactured drilling equipment to meet growing needs. In recent years, huge progress has been made in Iran’s drilling industry and domestic companies have replaced some foreign companies that provided drilling services in Iran.

Over the past century, more than 4,000 oil and gas wells have been drilled in Iran, including 3,000 after the victory of the 1979 Islamic Revolution.

With the exit of foreign companies and experts from Iran, National Iranian Drilling Company (NIDC) was set up for self-sufficiency in drilling industry. NIDC currently operates more than 70 onshore and offshore drilling rigs and has more than 18,000 staff.

Heydar Bahmani, managing director of NIDC, says the company hopes to win one-third of Middle East drilling market.

NIDC is active in ten provinces across the country, ranging from northernmost to southernmost regions. According to Bahmani, 90% of drilling operations in Iran are handed by NIDC.

He said a memorandum has been signed between NIDC and Iraq’s private oil companies.

“This memorandum is a starting point for the presence of this company in Iraq’s oil industry,” he said. “Presence in the drilling market of southern Iraq and particularly in Basra province is currently one of objectives of NIDC.”

Bahmani said NIDC is looking at foreign markets in order to make sustainable revenues. “Currently, companies active in Iran’s drilling industry can acquire one-third of the Middle East’s drilling market.”

Bahmani said: “The experience of operation by this company in the most geologically complex oil and gas reserves in the world is a main advantage of Iranian companies compared with foreign companies.”

He said that “provision of technical services and particularly drilling services” has been a major advantage for NIDC.

Bahmani said that there is no independent drilling industry in the Persian Gulf littoral states and that Western oil companies are extracting oil and gas from their reservoirs.

He added that the NIDC’s objectives include focus on knowledge, qualitative and technical growth, steering of projects based on engineering, procurement, drilling and commissioning (EPDC) model, full development of a hydrocarbon field, acquisition of the highest world standards for sustainable development, maintaining market share and expanding activities overseas, active presence in oil and gas development projects particularly in joint fields. Bahmani said these projects lie within the framework of Iran’s 20-year development plan.

 

Cooperation with Universities

 

Bahmani said further communications with Iranian universities is the only option for the country’s drilling industry to be saved.

“Knowledge pushes this industry ahead and universities are known as centers for the birth of knowledge in the country,” he said.

Bahmani said NIDC is setting up offices in nine universities, adding that management and experience should be used in the drilling industry.

He said NIDC is operating more than 70 drilling rigs.

“Now, due to oil price fall, running oil industry has become more difficult than it was during imposed war (1980-1988), but Iran’s Ministry of Petroleum has managed to afford this issue by taking necessary measures,” said Bahmani. “If we manage to produce 4 mb/d of oil, it would be all due to the capability of Iranians,” he said.

Bahmani said NIDC raised its rig count from 6 to 19 during its first decade of activity. The company’s rig count reached 46 in the second decade of activity. By that time, it joined the International Union of Contractors and had its staff undergo 50 months of training.

In this third decade of activity, the NIDC’s rig count reached 56 and it applied ISO standards. That was when the privatization of the company started.

“The NIDC is a private entity and has no budgetary dependence on the government or National Iranian Oil Company,” he said. He noted that no portion is allocated for NIDC in the country’s annual budget bill.

Bahmani said NIDC’s rig count soared to 75 during its fourth decade of work. During this decade, huge investment was made in technical equipment and operational sectors and plans were drawn up for the realization of the objectives of the petroleum industry in the drilling sector. NIDC opened offices in ten top universities as part of its plans for further communication with universities and knowledge-based centers.

“The NIDC is the only organization in the Middle East to offer oil and gas well completion services and there is no other company to provide such integrated technical services,” said Bahmani.

 

Overseas Operation

 

Bahmani said NIDC is active in ten Iranian provinces, adding that the company has developed knowledge for containing blowouts from oil and gas wells.

He said that foreign companies did not let Iranian engineers learn blowout prevention before the Islamic Revolution.

“Well blowout containment is a technically complicated issue and no other country but the US, Canada and Britain mastered it, but after Iran’s revolution, it has become indigenized in the country,” he said.

Bahmani said NIDC is operating projects in Libya, Kuwait and Turkmenistan.

“As a strong arm of the country’s petroleum industry and in line with Ministry of Petroleum’s plans, this company is active in joint fields,” he said.

Referring to domestic manufacturing, Bahmani said: “NIDC was first Iranian company to start talks about domestic manufacturing...Today, no restrictions can stop the country’s industry, and manufacturers have proven that they can support the petroleum industry effectively even under sanctions.”

20mt Oil Products Exports Eyed

 

Minister of Petroleum Bijan Namdar Zangeneh has announced plans to considerably increase the volume of the country’s oil products exports in the current calendar year.

“We are planning to export 20 million tons of oil derivatives in the new Iranian year,” Zangeneh said.

He underlined the importance of a rise in export of oil derivatives for Iran, saying, “Oil projects are financed this way.”

“The export of oil derivatives plays an important role in the implementation of the oil industry projects,” Zangeneh added.

He said that some gas supply projects or some parts of South Pars gas field need to be financed through selling petroleum products.

Zangeneh said that National Iranian Oil Products Distribution Company (NIOPDC) would have to redefine its mission to catch up with new changes in the energy distribution sector.

He said that further gas supply to cities, villages, industries and power plants would require the NIOPDC to redefine its tasks.

Zangeneh said gasoil distribution in the heating, industrial and power plants’ sectors is to decline this year. He said that fuel oil; liquefied gas and kerosene distribution in the country is expected to fall to nil.

 

South Pars Phase 14 Drilling at 70,000m

 

Drillings at Phase 14 of Iran's South Pars gas field have amounted to the total of 70,000 meters on 22 wells.

South Pars Phase 14 drilling manager Hamid-Reza Shafiei Makvand said that the drilling operations which have been carried out on platforms A and C with two drilling rigs have so far made 51 percent progress.

The final drilling will hit 95 thousand meters, he said.

The official pointed out that the drilling is carried out by Pars Oil and Gas Company, which provides the platforms, equipment, engineering expertise, logistics, and other related services.

A total number of 44 wells will be drilled in the phase.

Phase 14 is projected to daily produce 56.5 million cubic meters of gas, 75,000 barrels of gas condensates, and 400,000 metric tons of sulfur. The phase will also produce one million metric tons of liquid fuel and one million metric tons of ethane each year.

South Pars is a joint gas field of Iran and Qatar.

 

Iran Petchem Output to Hit 180 mt/y

 

Iran hopes to raise its petrochemical production capacity to 180 million tons a year in ten years, a deputy head of National Petrochemical Company said.

“In case the necessary finance is provided, the production capacity of petrochemicals will reach 180 million tons a year in ten years. Once this objective is realized, Iran will acquire the top ranking in the petrochemical industry in the Middle East,” Mohammad Hassan Peyvandi said.

He said that Iran’s petrochemical sector needs a roadmap, adding that $35 billion is needed for the projects which remain to be completed.

In 2013, Iran exported $9.9 billion worth of petrochemical products to world markets.

Iran's annual petrochemical production capacity is expected to plateau at 100 million tons from the current 60 million tons by 2020, if Western governments ease their sanctions.

Iran hopes to see its petrochemical production capacity increase 1.3 million tons by next March which marks the end of Iran’s calendar year.

Iran produced 40 million tons of petrochemical products in the last calendar year, with $9 billion gained from exports. Iran predicts to obtain around $12 billion from petrochemical exports this calendar year.

Iran is determined to become the leading producer of petrochemicals in the Middle East.

Iran has significantly expanded the range and volume of its petrochemical production over the past few years, and the NPC has become the second largest producer and exporter of petrochemicals in the Middle East after Saudi Arabia.

Iran Oil Buyers Queuing

 

A senior Iranian official said buyers of Iran’s oil are lining up as hopes are growing for sanctions relief for the country.

“Iran’s traditional customers are ready to increase the rate of their oil purchase from Iran, but we have to wait for the sanctions to be lifted,” Mohsen Qamsari, director for international affairs at National Iranian Oil Company, said.

He said that Iran would be able to raise its oil exports in one or two months after the lifting of the sanctions.

“Iran would be able to supply more oil on world markets in a short period of time,” he added.

Qamsari said buyers from different countries have expressed their readiness to import crude oil from Iran.

 

 

 

 

 

 

 

Sulfur Recovery Units, a Must  

 

Iran’s Research Institute of Petroleum Industry (RIPI) has successfully conducted a sulfur recovery unit in a bid to end the country’s need to purchase license from foreign companies.

After more than 30 times of license purchase for sulfur recovery units, sulfur could be recovered at high efficacy rate merely by reliance on domestic engineering potential.

Ali-Reza Khaleqi-Nasab, head of equipment design and technology at RIPI, said sulfur compounds are some sort of impurities associated with crude oil. “This impurity is separated from oil hydrocarbons throughout refining by hydrogen and turns into sulfurized hydrogen before being converted into acid gas,” he said.

“Natural gas is refined in the gas refineries and its associated sulfur is separated from the natural gas stream in the form of sulfurized hydrogen along with carbon dioxide,” he added.

Khaleqi-Nasab said the easiest method for eliminating acid gases is to burn them. But he noted that burning gases would extremely pollute the environment.

He said that environmental standards with regard to acid gases’ entry into the atmosphere are strict. “The objective behind the construction of sulfur recovery units at refineries is to prevent air pollution by sulfur dioxide and boost profitability of refining units through sulfur production from acid gases,” he said.

Khaleqi-Nasab said a contract was signed between RIPI and the R&D Directorate of National Iranian Gas Company (NIGC) in 2012 for the development of sulfur recovery units with 99.5% efficiency rate.

“Under this contract, basic designing was done for the sulfur recovery unit of Bidboland-1 gas refinery with a production capacity of 160 tons of sulfur,” he said. He added that this first-ever project was done through reverse engineering and won the endorsement of NIGC and a number of Iranian consulting companies.

Khaleqi-Nasab said the SFU for Bidboland gas refinery would be built on a piece of land measuring 15,000 square meters.

He said there are different methods for eliminating sulfur from acid gases, adding that one of the oldest methods, which is still in use, is Claus process.

The Claus process is the most significant gas desulfurizing process, recovering elemental sulfur from gaseous hydrogen sulfide. First patented in 1883 by the scientist Carl Friedrich Claus, the Claus process has become the industry standard.

He said the efficiency rate for the multi-step Claus process stands at 95%. The process recovers sulfur from the gaseous hydrogen sulfide found in raw natural gas and from the by-product gases containing hydrogen sulfide derived from refining crude oil and other industrial processes.

“As crude oil becomes heavier, their contamination with sulfur compounds is also increasing,” said Khaleqi-Nasab. “Meantime, the global standards for sulfur level in oil products are falling day by day; therefore, the volume of acid gases produced in refineries is increasing on a daily basis.”

“If no solution is found for boosting the efficacy of sulfur recovery units, air pollution will rise significantly,” said Khaleqi-Nasab.

He said complementary processes have boosted the efficacy of the Claus process to more than 99.7%.

Gases with an H2S content of over 25% are suitable for the recovery of sulfur in straight-through Claus plants, while alternate configurations such as a split-flow set up or feed and air preheating can be used to process leaner feeds.

Gas refining industry is growing fast in Iran which sits atop the second largest gas reserves in the world, said Khaleqi-Nasab.

“Development projects in the oil refining industry have been under way for years and development of Imam Khomeini refinery is one of them,” he said.

He said one of the main objectives of these projects is to supply more oil products like gasoline and gasoil in compliance with international standards.

Khaleqi-Nasab said development projects in the oil and gas sectors have necessitated construction of sulfur recovery units. To that effect, he said, Iran’s Ministry of Petroleum has concentrated its attention on a higher efficacy for these projects.

He said that designing and construction of new recovery units at oil and gas refineries are being pursued more seriously.

“Given the RIPI’s mission for developing technologies needed in the oil and gas refining industries, good success has been achieved in recent years and numerous technologies have been developed and even patented,” said Khaleqi-Nasab, citing nanotechnologies, gas sweetening technologies and euro-4 and euro-5 gasoline production.

 

Talks Under Way for Electricity Exports

 

National Iranian Gas Exports Company (NIGEC) is in talks with three foreign companies for building highly-efficient power plants and electricity exports.

Ali-Reza Kameli, managing director of NIGC, said 6 cooperation agreements have so far been signed with domestic companies for exporting electricity and constructing power plants overseas.

“Now, the companies applying to build power plants are conducting technical and economic feasibility studies and locating the power plants,” he said.

Kameli said determining location of power plants would be done by companies willing to build them and has nothing to do with NIGEC.

He said that the candidate companies will finally provide the results of their preliminary economic and technical studies to NIGEC for final decision-making.

He said one of the candidate companies has suggested four spots for building power plants, adding that this company would specify the shortest route for gas delivery to the power plant.

Kameli said six domestic companies and three foreign companies are willing to export electricity from Iran.

 

IOPTC Boosting Oil Products Transfer Capacity

Increasing the diameter of Veresk-Sari pipeline in the northern province of Mazandaran will raise the capacity of oil products transfer by more than double, director of engineering and projects at Iran’s Oil Pipeline and Telecommunication Company (IOPTC) Seyyed Abolghasem Mosavi said.

 Mosavi said recently IOPTC has approved a plan for replacing part of current 12- inch pipeline with a 16- inch pipeline which will raise the capacity of oil products transfer from the 110 km pipeline from current level of 50tousand to 120 thousand barrels per day. Setting up a pump station is another part of the project which will be built in Moghanak, he said, adding the project will take two years to complete.

 

 

 

Steps for Iran Petroleum Industry Development

 

Iran’s petroleum industry is one of the most vital pillars of the country. Despite twists and turns, it has always made great contribution to national economy.

In recent years, Iran’s oil sector has been in a state of stagnation. But in light of progress in Iran’s nuclear talks with world powers under the administration of President Hassan Rouhani, this industry is largely expected to grow fast in the future.

Iran’s Ministry of Petroleum has drawn up numerous plans for realizing its development projects.

"Iran Petroleum" has conducted an interview with Iran’s deputy petroleum minister for planning and supervision on hydrocarbon reserves, Mansour Moazzami.

 

Q: Would you please tell us about policies of Iran’s Ministry of Petroleum, both at national and international levels, with regard to oil price decline?

A: At the international level, we plan to interact further with OPEC members in order to narrow differences of viewpoints within the organization. The strategic policy of the Ministry of Petroleum of Iran is making efforts for further convergence.

The budget bill for next fiscal year has been drawn up based on two scenarios in order to effectively manage the crisis stemming from a fall in crude oil prices and the subsequent decline in the amount of Iran’s petrodollars, and to make efforts to gain maximum benefits from the position of neighboring countries, particularly Iraq, for boosting the level of exports and services through private sector. Iran has potential to earn more than $20 billion from exporting commodities and services to Iraq. Other plans envisaged by Ministry of Petroleum are moving towards expansion and diversification of the country’s economy by reliance on the private sector and switching from petroleum based economy, reducing government expenditures and prioritizing budget allocation and deciding upon subsidies payment, stopping payment of subsidies to some rich groups based on the approval of the parliament and the government by reliance on maximum capabilities of the domestic manufacturers.

 

Q: What are government plans for enhancing production rate and oil export level?

A: Iran’s crude oil production started falling in 2012 following the imposition of international sanctions on crude oil sales. It continued into 2013. Over this period of time, Iran’s oil production fell by 20%. But the country’s oil production has been growing in the past year and it has increased 8%. The focus has been on further crude oil production from joint hydrocarbon fields, particularly West Karoun fields and reconsidering conditions for contractors (one contractor was expelled from South Azadegan field, contracts were drawn up with other contractors and drilling rig count rose from 3 to 16).

Moreover, revising the terms of oil contracts in order to make them more attractive, focus on crude oil by National Iranian Oil Company (NIOC), transparency in crude oil and gas condensate trading and eliminating intermediaries are among other policies.

 

Q: You referred to gas condensate. Would you please tell us about the production of petroleum products?

A: In the calendar year 1393 [ending on March 20], clean fuel production [in compliance with international standards] grew at Imam Khomeini Refinery in Shazand, Tondguyan refinery of Tehran and Tabriz refinery. Over the past one year, gas oil production at Imam Khomeini of Shazand and Shahid Tondguyan of Tehran oil refineries have increased. Meantime, fuel oil production fell from 77.6 ml/d in the year 1392 to 70 ml/d in the first half of 1393. Hence, the index of share of light products supplied by oil refineries in the country increased from 66% in 1392 to 67.3% in the first half of 1393. That shows the growing share of oil products of high value. Meanwhile, Siraf refining park project, entailing 8 independent gas condensate refineries with capacity of 60,000 b/d each, is in the preliminary stage in Pars Special Economic Energy Zone (PSEEZ). The final winners of the tender bid for the project have been named and eight companies selected for the project are in the stage of completing documents to continue work. Construction of these refineries will increase petroleum products supply in the country.

 

Q: Has 1394 budget’s dependence on oil declined?

A: The government’s budget revenues depend on capital and financial assets, taxes and oil. Crude oil and gas condensate have been a major source of income for the country. The dependence of government-drafted budget on oil revenues stands at 44%. Given the fixed volume of subsidies paid for the implementation of subsidy reform plan, the government’s dependence on petrodollars declines as oil prices fall.

 

Q: Setting price for petrochemical plants' feedstock has always posed a challenge to the petroleum industry. What are your plans for that purpose?

A: Setting a fixed and long-term price for feedstock is customary nowhere in the world and the prices fluctuate depending on developments in domestic and international markets. Setting a formula for petrochemical plants' feedstock is upon the government, and Ministry of Petroleum will do the job. The price of gas and petrochemical plants' feedstock is set based on a variety of criteria. Consistency with the price of gas or liquid fuel delivered for domestic consumption, consistency with the price of gas exports, consistency with the price of petrochemicals for safeguarding the competitiveness of products in international markets and improvement of macro-economic variables, motivating attraction of domestic and foreign investment and giving discount to enterprises in underdeveloped regions are among criteria for price setting.

 

Q: Given the enhancement of Iran’s gas production capacity, what are your plans for gas exports?

A: The measures taken so far to that effect include extensive talks, coordination at the highest levels with destination countries in order to enhance crude oil exports, revising oil and gas contracts to become more attractive, negotiations with international companies for investment and transfer of technology into domestic companies after the lifting of sanctions. We are also seriously following up on the project for exporting gas to Iraq, Pakistan, Oman and other countries in southern Persian Gulf.

I have to note that Iran’s natural gas exports rose from 25.4 mcm/d in 1392 to 26.9 mcm/d during the first ten months of 1393. Natural gas imports fell from 14.7 mcm/d in 1392 to 18.1 mcm/d during the ten months of 1393.

 

Q: Would you please update us about the development of South Pars gas field?

A: Focus on the development of South Pars gas field and using up capacities for boosting rich gas production from this joint gas field are on the agenda. Meantime, development of South Pars, particularly phases 12, 15 &16 and 17&18 are the ministry’s priorities.

The latest data about South Pars development is as follows:    

 

Phase	Progress in Sept 2013 (percent)	Progress in March 2013	Progress in December 2014
Old Development Projects
12	90.6	94.7	96.5
15&16	91.1	92.3	94.4
17&18	77.8	81	88.5
New Development Projects
13	63.8	66.8	71.7
14	50.6	53.8	57
19	65.3	74.1	83.5
20 &21	50.2	59.4	69.6
22, 23&24	63.4	67.5	73.2

 

 The latest achievements with regard to the development of South Pars, by January are as follows:

Ten gas refineries, each with capacity of 14 mcm/d and five offshore platforms each with capacity of 1 bcf/d of gas and a 500 mcf platform have become operational in phases 12, 15&16 and 17&18. Two more refineries are expected to become operational soon.

The prioritized phases of South Pars for next year have been determined. They are expected to raise Iran’s gas output by 100 mcm/d. Rich gas production started in Phase 12 of South Pars in January 2013 (3 mcm/d on average) and it has now reached 3.3 mcm/d.

 

Q: Would you please brief us about the major measures Iran’s Ministry of Petroleum has undertaken under President Rouhani?

A: Stabilizing petroleum industry management and 20% increase in rich gas production from 634 mcm/d to 750 mcm/d are the most highlighted achievements. Another important measure was prioritizing the completion and operation of Persian Gulf Star Refinery to treat gas condensate, structural reforms in this project in terms of finance, management and composition of stakeholders as well as acceleration of this project for faster production. The point is that this project was 69.5% complete by October 2013, while now it is 83% complete. Another measure was a significant growth in gas delivery to power plants for saving liquid fuel and generating more value-added and safeguarding the environment. Natural gas delivery to power plants during the first ten months of 1393 grew 34% year-on-year. A decline in the share of liquid fuel in the power plants’ fuel mix from 46% in 2013 to 30% in 2014, paved the ground for supply of gas to petrochemical plants and other industries, formulation and execution of bunkering plan in the Persian Gulf and the Sea of Oman are among other measures to that effect.

 

Q:  How do you evaluate Iran’s petroleum industry instrumental role in pushing the objectives of Iran’s Five-Year Economic Development Plan?

A: Iran’s Ministry of Petroleum is focusing on mid-term and long-term strategies and policies within the framework of the sixth development plan while taking into consideration international conditions and financial restrictions. Under the sixth development plan (2016-2020), key challenges of petroleum industry are to be removed, while the development of this industry will continue on the right path, revenues of Petroleum Ministry will grow and the ministry will take steps for upgrading the country’s international status. To that effect, the general economic policies of Iran, major objectives and main strategies for the development of petroleum industry in collaboration with different industrial sectors and energy bodies are being drawn up. The strategies defined for the development of petroleum industry in the sixth development plan include expansion of exploration activities in order to enhance oil and gas production and development, enhancing production from joint oil and gas fields, enhancing oil and gas condensate refining capacity by revising and/or adjusting the country’s refining model, increasing the country’s petrochemical production by completing the value chain, boosting the country’s natural gas refining capacity, upgrading the quality of products in the oil, gas and petrochemical industry, enhancing sustainability of gas supply system and increasing the safety coefficient of the country’s refining capacity, optimal development of natural gas, oil products and petrochemicals’ supply infrastructure, minimizing the harmful environmental impacts of oil, gas, refining and petrochemical industries, transforming Iran into a strategic corridor for oil, gas and petrochemical trade in the region by benefitting from the country’s geopolitical position, enhancing Iran’s share of oil, gas and petrochemical industries in global oil and gas markets, strengthening Iran’s effective role and  active presence in international energy fora, creating an environment for healthy competition, attracting domestic and foreign investors, benefitting from modern financing methods, upgrading human resources with focus on health, skill and motivation, acquiring state-of-the-art technologies and their indigenization and commercialization for oil, gas, refining and petrochemical industries and boosting the capacities of contractors, manufacturers, consultants and suppliers in compliance with international standards.

 

Q: In case Iran and six world powers reach a permanent nuclear agreement, which prospect do you predict for foreign investors coming to Iran?

A: Given Iran’s potential and practical advantages in terms of natural resources including oil, gas, mines, human resources as well as geo-economics and geopolitical advantages, it is predicted that the business environment for economic activities would get much better after an agreement has been reached.

Under such pro-investment circumstances, new investment will flow into Iran. Given the conditions prevailing over Iran’s economy, following the imposition of sanctions by the UN Security Council, the US and the European Union in recent years, if a nuclear accord is reached, foreign investment in Iran is forecasted to grow significantly.

Steps for Iran Petroleum Industry Development

 

Iran’s petroleum industry is one of the most vital pillars of the country. Despite twists and turns, it has always made great contribution to national economy.

In recent years, Iran’s oil sector has been in a state of stagnation. But in light of progress in Iran’s nuclear talks with world powers under the administration of President Hassan Rouhani, this industry is largely expected to grow fast in the future.

Iran’s Ministry of Petroleum has drawn up numerous plans for realizing its development projects.

"Iran Petroleum" has conducted an interview with Iran’s deputy petroleum minister for planning and supervision on hydrocarbon reserves, Mansour Moazzami.

 

Q: Would you please tell us about policies of Iran’s Ministry of Petroleum, both at national and international levels, with regard to oil price decline?

A: At the international level, we plan to interact further with OPEC members in order to narrow differences of viewpoints within the organization. The strategic policy of the Ministry of Petroleum of Iran is making efforts for further convergence.

The budget bill for next fiscal year has been drawn up based on two scenarios in order to effectively manage the crisis stemming from a fall in crude oil prices and the subsequent decline in the amount of Iran’s petrodollars, and to make efforts to gain maximum benefits from the position of neighboring countries, particularly Iraq, for boosting the level of exports and services through private sector. Iran has potential to earn more than $20 billion from exporting commodities and services to Iraq. Other plans envisaged by Ministry of Petroleum are moving towards expansion and diversification of the country’s economy by reliance on the private sector and switching from petroleum based economy, reducing government expenditures and prioritizing budget allocation and deciding upon subsidies payment, stopping payment of subsidies to some rich groups based on the approval of the parliament and the government by reliance on maximum capabilities of the domestic manufacturers.

 

Q: What are government plans for enhancing production rate and oil export level?

A: Iran’s crude oil production started falling in 2012 following the imposition of international sanctions on crude oil sales. It continued into 2013. Over this period of time, Iran’s oil production fell by 20%. But the country’s oil production has been growing in the past year and it has increased 8%. The focus has been on further crude oil production from joint hydrocarbon fields, particularly West Karoun fields and reconsidering conditions for contractors (one contractor was expelled from South Azadegan field, contracts were drawn up with other contractors and drilling rig count rose from 3 to 16).

Moreover, revising the terms of oil contracts in order to make them more attractive, focus on crude oil by National Iranian Oil Company (NIOC), transparency in crude oil and gas condensate trading and eliminating intermediaries are among other policies.

 

Q: You referred to gas condensate. Would you please tell us about the production of petroleum products?

A: In the calendar year 1393 [ending on March 20], clean fuel production [in compliance with international standards] grew at Imam Khomeini Refinery in Shazand, Tondguyan refinery of Tehran and Tabriz refinery. Over the past one year, gas oil production at Imam Khomeini of Shazand and Shahid Tondguyan of Tehran oil refineries have increased. Meantime, fuel oil production fell from 77.6 ml/d in the year 1392 to 70 ml/d in the first half of 1393. Hence, the index of share of light products supplied by oil refineries in the country increased from 66% in 1392 to 67.3% in the first half of 1393. That shows the growing share of oil products of high value. Meanwhile, Siraf refining park project, entailing 8 independent gas condensate refineries with capacity of 60,000 b/d each, is in the preliminary stage in Pars Special Economic Energy Zone (PSEEZ). The final winners of the tender bid for the project have been named and eight companies selected for the project are in the stage of completing documents to continue work. Construction of these refineries will increase petroleum products supply in the country.

 

Q: Has 1394 budget’s dependence on oil declined?

A: The government’s budget revenues depend on capital and financial assets, taxes and oil. Crude oil and gas condensate have been a major source of income for the country. The dependence of government-drafted budget on oil revenues stands at 44%. Given the fixed volume of subsidies paid for the implementation of subsidy reform plan, the government’s dependence on petrodollars declines as oil prices fall.

 

Q: Setting price for petrochemical plants' feedstock has always posed a challenge to the petroleum industry. What are your plans for that purpose?

A: Setting a fixed and long-term price for feedstock is customary nowhere in the world and the prices fluctuate depending on developments in domestic and international markets. Setting a formula for petrochemical plants' feedstock is upon the government, and Ministry of Petroleum will do the job. The price of gas and petrochemical plants' feedstock is set based on a variety of criteria. Consistency with the price of gas or liquid fuel delivered for domestic consumption, consistency with the price of gas exports, consistency with the price of petrochemicals for safeguarding the competitiveness of products in international markets and improvement of macro-economic variables, motivating attraction of domestic and foreign investment and giving discount to enterprises in underdeveloped regions are among criteria for price setting.

 

Q: Given the enhancement of Iran’s gas production capacity, what are your plans for gas exports?

A: The measures taken so far to that effect include extensive talks, coordination at the highest levels with destination countries in order to enhance crude oil exports, revising oil and gas contracts to become more attractive, negotiations with international companies for investment and transfer of technology into domestic companies after the lifting of sanctions. We are also seriously following up on the project for exporting gas to Iraq, Pakistan, Oman and other countries in southern Persian Gulf.

I have to note that Iran’s natural gas exports rose from 25.4 mcm/d in 1392 to 26.9 mcm/d during the first ten months of 1393. Natural gas imports fell from 14.7 mcm/d in 1392 to 18.1 mcm/d during the ten months of 1393.

 

Q: Would you please update us about the development of South Pars gas field?

A: Focus on the development of South Pars gas field and using up capacities for boosting rich gas production from this joint gas field are on the agenda. Meantime, development of South Pars, particularly phases 12, 15 &16 and 17&18 are the ministry’s priorities.

The latest data about South Pars development is as follows:    

 

Phase	Progress in Sept 2013 (percent)	Progress in March 2013	Progress in December 2014
Old Development Projects
12	90.6	94.7	96.5
15&16	91.1	92.3	94.4
17&18	77.8	81	88.5
New Development Projects
13	63.8	66.8	71.7
14	50.6	53.8	57
19	65.3	74.1	83.5
20 &21	50.2	59.4	69.6
22, 23&24	63.4	67.5	73.2

 

 The latest achievements with regard to the development of South Pars, by January are as follows:

Ten gas refineries, each with capacity of 14 mcm/d and five offshore platforms each with capacity of 1 bcf/d of gas and a 500 mcf platform have become operational in phases 12, 15&16 and 17&18. Two more refineries are expected to become operational soon.

The prioritized phases of South Pars for next year have been determined. They are expected to raise Iran’s gas output by 100 mcm/d. Rich gas production started in Phase 12 of South Pars in January 2013 (3 mcm/d on average) and it has now reached 3.3 mcm/d.

 

Q: Would you please brief us about the major measures Iran’s Ministry of Petroleum has undertaken under President Rouhani?

A: Stabilizing petroleum industry management and 20% increase in rich gas production from 634 mcm/d to 750 mcm/d are the most highlighted achievements. Another important measure was prioritizing the completion and operation of Persian Gulf Star Refinery to treat gas condensate, structural reforms in this project in terms of finance, management and composition of stakeholders as well as acceleration of this project for faster production. The point is that this project was 69.5% complete by October 2013, while now it is 83% complete. Another measure was a significant growth in gas delivery to power plants for saving liquid fuel and generating more value-added and safeguarding the environment. Natural gas delivery to power plants during the first ten months of 1393 grew 34% year-on-year. A decline in the share of liquid fuel in the power plants’ fuel mix from 46% in 2013 to 30% in 2014, paved the ground for supply of gas to petrochemical plants and other industries, formulation and execution of bunkering plan in the Persian Gulf and the Sea of Oman are among other measures to that effect.

 

Q:  How do you evaluate Iran’s petroleum industry instrumental role in pushing the objectives of Iran’s Five-Year Economic Development Plan?

A: Iran’s Ministry of Petroleum is focusing on mid-term and long-term strategies and policies within the framework of the sixth development plan while taking into consideration international conditions and financial restrictions. Under the sixth development plan (2016-2020), key challenges of petroleum industry are to be removed, while the development of this industry will continue on the right path, revenues of Petroleum Ministry will grow and the ministry will take steps for upgrading the country’s international status. To that effect, the general economic policies of Iran, major objectives and main strategies for the development of petroleum industry in collaboration with different industrial sectors and energy bodies are being drawn up. The strategies defined for the development of petroleum industry in the sixth development plan include expansion of exploration activities in order to enhance oil and gas production and development, enhancing production from joint oil and gas fields, enhancing oil and gas condensate refining capacity by revising and/or adjusting the country’s refining model, increasing the country’s petrochemical production by completing the value chain, boosting the country’s natural gas refining capacity, upgrading the quality of products in the oil, gas and petrochemical industry, enhancing sustainability of gas supply system and increasing the safety coefficient of the country’s refining capacity, optimal development of natural gas, oil products and petrochemicals’ supply infrastructure, minimizing the harmful environmental impacts of oil, gas, refining and petrochemical industries, transforming Iran into a strategic corridor for oil, gas and petrochemical trade in the region by benefitting from the country’s geopolitical position, enhancing Iran’s share of oil, gas and petrochemical industries in global oil and gas markets, strengthening Iran’s effective role and  active presence in international energy fora, creating an environment for healthy competition, attracting domestic and foreign investors, benefitting from modern financing methods, upgrading human resources with focus on health, skill and motivation, acquiring state-of-the-art technologies and their indigenization and commercialization for oil, gas, refining and petrochemical industries and boosting the capacities of contractors, manufacturers, consultants and suppliers in compliance with international standards.

 

Q: In case Iran and six world powers reach a permanent nuclear agreement, which prospect do you predict for foreign investors coming to Iran?

A: Given Iran’s potential and practical advantages in terms of natural resources including oil, gas, mines, human resources as well as geo-economics and geopolitical advantages, it is predicted that the business environment for economic activities would get much better after an agreement has been reached.

Under such pro-investment circumstances, new investment will flow into Iran. Given the conditions prevailing over Iran’s economy, following the imposition of sanctions by the UN Security Council, the US and the European Union in recent years, if a nuclear accord is reached, foreign investment in Iran is forecasted to grow significantly.

Steps for Iran Petroleum Industry Development

 

Iran’s petroleum industry is one of the most vital pillars of the country. Despite twists and turns, it has always made great contribution to national economy.

In recent years, Iran’s oil sector has been in a state of stagnation. But in light of progress in Iran’s nuclear talks with world powers under the administration of President Hassan Rouhani, this industry is largely expected to grow fast in the future.

Iran’s Ministry of Petroleum has drawn up numerous plans for realizing its development projects.

"Iran Petroleum" has conducted an interview with Iran’s deputy petroleum minister for planning and supervision on hydrocarbon reserves, Mansour Moazzami.

 

Q: Would you please tell us about policies of Iran’s Ministry of Petroleum, both at national and international levels, with regard to oil price decline?

A: At the international level, we plan to interact further with OPEC members in order to narrow differences of viewpoints within the organization. The strategic policy of the Ministry of Petroleum of Iran is making efforts for further convergence.

The budget bill for next fiscal year has been drawn up based on two scenarios in order to effectively manage the crisis stemming from a fall in crude oil prices and the subsequent decline in the amount of Iran’s petrodollars, and to make efforts to gain maximum benefits from the position of neighboring countries, particularly Iraq, for boosting the level of exports and services through private sector. Iran has potential to earn more than $20 billion from exporting commodities and services to Iraq. Other plans envisaged by Ministry of Petroleum are moving towards expansion and diversification of the country’s economy by reliance on the private sector and switching from petroleum based economy, reducing government expenditures and prioritizing budget allocation and deciding upon subsidies payment, stopping payment of subsidies to some rich groups based on the approval of the parliament and the government by reliance on maximum capabilities of the domestic manufacturers.

 

Q: What are government plans for enhancing production rate and oil export level?

A: Iran’s crude oil production started falling in 2012 following the imposition of international sanctions on crude oil sales. It continued into 2013. Over this period of time, Iran’s oil production fell by 20%. But the country’s oil production has been growing in the past year and it has increased 8%. The focus has been on further crude oil production from joint hydrocarbon fields, particularly West Karoun fields and reconsidering conditions for contractors (one contractor was expelled from South Azadegan field, contracts were drawn up with other contractors and drilling rig count rose from 3 to 16).

Moreover, revising the terms of oil contracts in order to make them more attractive, focus on crude oil by National Iranian Oil Company (NIOC), transparency in crude oil and gas condensate trading and eliminating intermediaries are among other policies.

 

Q: You referred to gas condensate. Would you please tell us about the production of petroleum products?

A: In the calendar year 1393 [ending on March 20], clean fuel production [in compliance with international standards] grew at Imam Khomeini Refinery in Shazand, Tondguyan refinery of Tehran and Tabriz refinery. Over the past one year, gas oil production at Imam Khomeini of Shazand and Shahid Tondguyan of Tehran oil refineries have increased. Meantime, fuel oil production fell from 77.6 ml/d in the year 1392 to 70 ml/d in the first half of 1393. Hence, the index of share of light products supplied by oil refineries in the country increased from 66% in 1392 to 67.3% in the first half of 1393. That shows the growing share of oil products of high value. Meanwhile, Siraf refining park project, entailing 8 independent gas condensate refineries with capacity of 60,000 b/d each, is in the preliminary stage in Pars Special Economic Energy Zone (PSEEZ). The final winners of the tender bid for the project have been named and eight companies selected for the project are in the stage of completing documents to continue work. Construction of these refineries will increase petroleum products supply in the country.

 

Q: Has 1394 budget’s dependence on oil declined?

A: The government’s budget revenues depend on capital and financial assets, taxes and oil. Crude oil and gas condensate have been a major source of income for the country. The dependence of government-drafted budget on oil revenues stands at 44%. Given the fixed volume of subsidies paid for the implementation of subsidy reform plan, the government’s dependence on petrodollars declines as oil prices fall.

 

Q: Setting price for petrochemical plants' feedstock has always posed a challenge to the petroleum industry. What are your plans for that purpose?

A: Setting a fixed and long-term price for feedstock is customary nowhere in the world and the prices fluctuate depending on developments in domestic and international markets. Setting a formula for petrochemical plants' feedstock is upon the government, and Ministry of Petroleum will do the job. The price of gas and petrochemical plants' feedstock is set based on a variety of criteria. Consistency with the price of gas or liquid fuel delivered for domestic consumption, consistency with the price of gas exports, consistency with the price of petrochemicals for safeguarding the competitiveness of products in international markets and improvement of macro-economic variables, motivating attraction of domestic and foreign investment and giving discount to enterprises in underdeveloped regions are among criteria for price setting.

 

Q: Given the enhancement of Iran’s gas production capacity, what are your plans for gas exports?

A: The measures taken so far to that effect include extensive talks, coordination at the highest levels with destination countries in order to enhance crude oil exports, revising oil and gas contracts to become more attractive, negotiations with international companies for investment and transfer of technology into domestic companies after the lifting of sanctions. We are also seriously following up on the project for exporting gas to Iraq, Pakistan, Oman and other countries in southern Persian Gulf.

I have to note that Iran’s natural gas exports rose from 25.4 mcm/d in 1392 to 26.9 mcm/d during the first ten months of 1393. Natural gas imports fell from 14.7 mcm/d in 1392 to 18.1 mcm/d during the ten months of 1393.

 

Q: Would you please update us about the development of South Pars gas field?

A: Focus on the development of South Pars gas field and using up capacities for boosting rich gas production from this joint gas field are on the agenda. Meantime, development of South Pars, particularly phases 12, 15 &16 and 17&18 are the ministry’s priorities.

The latest data about South Pars development is as follows:    

 

Phase	Progress in Sept 2013 (percent)	Progress in March 2013	Progress in December 2014
Old Development Projects
12	90.6	94.7	96.5
15&16	91.1	92.3	94.4
17&18	77.8	81	88.5
New Development Projects
13	63.8	66.8	71.7
14	50.6	53.8	57
19	65.3	74.1	83.5
20 &21	50.2	59.4	69.6
22, 23&24	63.4	67.5	73.2

 

 The latest achievements with regard to the development of South Pars, by January are as follows:

Ten gas refineries, each with capacity of 14 mcm/d and five offshore platforms each with capacity of 1 bcf/d of gas and a 500 mcf platform have become operational in phases 12, 15&16 and 17&18. Two more refineries are expected to become operational soon.

The prioritized phases of South Pars for next year have been determined. They are expected to raise Iran’s gas output by 100 mcm/d. Rich gas production started in Phase 12 of South Pars in January 2013 (3 mcm/d on average) and it has now reached 3.3 mcm/d.

 

Q: Would you please brief us about the major measures Iran’s Ministry of Petroleum has undertaken under President Rouhani?

A: Stabilizing petroleum industry management and 20% increase in rich gas production from 634 mcm/d to 750 mcm/d are the most highlighted achievements. Another important measure was prioritizing the completion and operation of Persian Gulf Star Refinery to treat gas condensate, structural reforms in this project in terms of finance, management and composition of stakeholders as well as acceleration of this project for faster production. The point is that this project was 69.5% complete by October 2013, while now it is 83% complete. Another measure was a significant growth in gas delivery to power plants for saving liquid fuel and generating more value-added and safeguarding the environment. Natural gas delivery to power plants during the first ten months of 1393 grew 34% year-on-year. A decline in the share of liquid fuel in the power plants’ fuel mix from 46% in 2013 to 30% in 2014, paved the ground for supply of gas to petrochemical plants and other industries, formulation and execution of bunkering plan in the Persian Gulf and the Sea of Oman are among other measures to that effect.

 

Q:  How do you evaluate Iran’s petroleum industry instrumental role in pushing the objectives of Iran’s Five-Year Economic Development Plan?

A: Iran’s Ministry of Petroleum is focusing on mid-term and long-term strategies and policies within the framework of the sixth development plan while taking into consideration international conditions and financial restrictions. Under the sixth development plan (2016-2020), key challenges of petroleum industry are to be removed, while the development of this industry will continue on the right path, revenues of Petroleum Ministry will grow and the ministry will take steps for upgrading the country’s international status. To that effect, the general economic policies of Iran, major objectives and main strategies for the development of petroleum industry in collaboration with different industrial sectors and energy bodies are being drawn up. The strategies defined for the development of petroleum industry in the sixth development plan include expansion of exploration activities in order to enhance oil and gas production and development, enhancing production from joint oil and gas fields, enhancing oil and gas condensate refining capacity by revising and/or adjusting the country’s refining model, increasing the country’s petrochemical production by completing the value chain, boosting the country’s natural gas refining capacity, upgrading the quality of products in the oil, gas and petrochemical industry, enhancing sustainability of gas supply system and increasing the safety coefficient of the country’s refining capacity, optimal development of natural gas, oil products and petrochemicals’ supply infrastructure, minimizing the harmful environmental impacts of oil, gas, refining and petrochemical industries, transforming Iran into a strategic corridor for oil, gas and petrochemical trade in the region by benefitting from the country’s geopolitical position, enhancing Iran’s share of oil, gas and petrochemical industries in global oil and gas markets, strengthening Iran’s effective role and  active presence in international energy fora, creating an environment for healthy competition, attracting domestic and foreign investors, benefitting from modern financing methods, upgrading human resources with focus on health, skill and motivation, acquiring state-of-the-art technologies and their indigenization and commercialization for oil, gas, refining and petrochemical industries and boosting the capacities of contractors, manufacturers, consultants and suppliers in compliance with international standards.

 

Q: In case Iran and six world powers reach a permanent nuclear agreement, which prospect do you predict for foreign investors coming to Iran?

A: Given Iran’s potential and practical advantages in terms of natural resources including oil, gas, mines, human resources as well as geo-economics and geopolitical advantages, it is predicted that the business environment for economic activities would get much better after an agreement has been reached.

Under such pro-investment circumstances, new investment will flow into Iran. Given the conditions prevailing over Iran’s economy, following the imposition of sanctions by the UN Security Council, the US and the European Union in recent years, if a nuclear accord is reached, foreign investment in Iran is forecasted to grow significantly.

Assaluyeh to Raise Iran Petchem Output by 40mt

 

Since it came into existence five decades ago, Iran’s petrochemical industry has seen ups and downs. Petrochemical industry started work in Iran after the establishment of a chemical fertilizer in the southern city of Shiraz. Today, Iran is home to more than 70 plants with a total capacity of 60 million tons a year.

Iranian petrochemical officials say the output capacity could be brought to 180 million tons to earn the country more than $70 billion a year, should proper conditions are provided for the implementation of a roadmap for the development of this industry.

Currently, 45 production units with a capacity of around 60 million tons make up 36% of total non-oil exports and 45% of the country’s industrial exports. Iran’s petrochemical exports were valued at $12 billion in the calendar year to March 2013.

Iran holds a 24% share in the Middle East’s petrochemical production capacity and a 4.2% share in the world’s petrochemical capacity. Once some 60 petrochemical projects, which are all legacy of the former administrations, come on-stream, Iran would bring its petrochemical production capacity to 120 million tons a year. Furthermore, implementation of 36 new projects needs $41 billion in investment to bring the country’s annual production capacity to above 180 million tons a year.

The main petrochemical plants which would make great contribution to Iran’s petrochemical output capacity are Kavian, Damavand, Marjan, Di-Polymer Aryan, Morvarid and Bushehr petrochemical plants located in Assaluyeh in southern Iran.

Mohammad-Hassan Peyvandi, deputy head of National Petrochemical Company (NPC), has underscored the significance of contribution of these petrochemical plants to the country’s production and revenues, saying: “By launching the plants in the second phase [of Assaluyeh], 40 million tons would be added to the country’s petrochemical production capacity, 33 million tons of which would be exportable.”

He said that privatization is currently under way in petrochemical projects in the second phase of Assaluyeh, adding that 33 million tons of petrochemicals are expected to be sold from this phase.

Peyvandi said one ton of these products would be valued at more than $400.

 

Kavian, Symbol of Self-Sufficiency

 

Kavian Petrochemical Company is tasked with supplying feedstock to the companies run by Bakhtar Petrochemical Company. These companies will be fed through the West Ethylene Pipeline.

The Kavian plant is producing two million tons a year of ethylene in its two olefin units.

The first development phase of this plant came on-stream in 2012 and its second phase is expected to become operational soon.

Ramezan Owladi, managing director of Kavian Petrochemical Plant, said this facility is currently facing feedstock shortage. He said the startup of new phases of the giant offshore South Pars gas field will resolve this problem.

The construction and operation of this project started exactly at a time Western governments imposed sanctions against Iran. “In terms of weight, 65% of the equipment and items used in this plant have been supplied by Iranian manufacturers,” he said.

Kavian’s output is projected to reach two million tons, as soon as ethane is planned to be supplied from phases 15-18 of South Pars.

 

Large MEG Plant

 

Morvarid Petrochemical Plant is another facility in Assaluyeh. Mono-ethylene glycol (MEG) is planned to be produced here. That would be one of the world’s largest MEG production units with an annual production capacity of 500,000 tons of MEG, 50,000 tons of di-ethylene glycol and 3,400 tons of tri-ethylene glycol. The project is expected to come on-stream later this year.

Gholam-Reza Jokar, managing director of Morvarid Petrochemical Plant, said the project is initially estimated to give more than 227 million Euros in revenues. He said that the technology used in this project belongs to Royal/Dutch Shell.

 

Turbines

 

Damavand Petrochemical Plant is among other projects under way in the second phase of Assaluyeh. Its mission is to provide utility for all plants in this phase.

Peyvandi said equipment is currently being installed in the units of this plant, adding that the manufacturing of 12 turbines for the power plant of Damavand Petrochemical Plant is forecast to be over by March 2019. He said the number of turbines in this power plant will reach 4 by March 2017.

He said the NPC prefers that China would finance this project.

 

7^th Methanol Project

 

Equipment is being installed in Marjan Petrochemical Company, another plant in Assaluyeh, for an annual production capacity of 1.65 million tons. The project is initially estimated to cost 341 million Euros plus IRR 4.22 trillion.

Near Marjan Petrochemical Plant stands Aryan Di-Polymer Company, which is being built by domestic contractors using German technology. Aryan’s annual production capacity is 1.65 million tons. Estimated to cost 220 million Euros plus IRR 2 trillion, the Aryan plant is forecast to become operational in 2017.

 

Largest Project under Way

 

Bushehr Petrochemical Plant is the largest petrochemical project under way in Iran in the second phase of Assaluyeh. Bushehr Petrochemical Plant, the largest petrochemical plant under way in Iran, has been defined in three phases. The first phase, which involves ethane and methanol production, and the second phase which involves production of ethylene, MEG and high-density polyethylene (HDPE) are under way with equipment being installed.

According to managers of this plant, the project is estimated to cost 1.9 billion Euros, plus IRR 2.5 billion. So far, 400 million Euros has been spent on this project.

Peyvandi said Iran’s Minister of Petroleum Bijan Namdar Zangeneh has called for the doubling of the country’s revenues from petrochemicals to $40 billion, adding that the plants in Phase 2 of Assaluyeh make great contribution to that effect.

Peyvandi said that petrochemical industry has effectively served Iran’s economy over the past five decades.

Referring to reliance on domestic manufacturing in petrochemical project, he said that generators and distillation towers in the new petrochemical plants are being built by the private sector.

Peyvandi said petrochemical plants have a 5-7% share in hydrocarbons produced in the country. He added that 43 million tons of petrochemical products make up around 40% of Iran’s non-oil exports. He said the remaining 95% of hydrocarbons produced in the country are either burnt or exported directly.

“Iran’s petrochemical plants are producing 20 million tons below their capacity for a variety of reasons including shortage of feedstock, technology and equipment. It is predicted that further ethane production in South Pars phases would make up for eight million tons by March 2016,” Peyvandi said.

He also referred to a pilot project in Mahshahr for converting methanol to propylene, saying Iranian petrochemical engineers have managed to raise the purity of propylene in this pilot to over 95%.

Countdown for Gasoline Self-Sufficiency

 

In recent years, shifting from selling crude substances to generating value-added from crude oil and improving the quality of petroleum products in line with environmental requirements have constituted the macro policies of Iran’s petroleum industry. To that effect, numerous projects have been implemented in Iranian refineries to raise gasoline production. These projects were aimed at clearing the way for self-sufficiency in the country and boost the quality of petroleum products to international standards in order to minimize harmful impacts on the environment. These projects have so far received $4.5 billion to $5 billion in investment. The required technical savvy has already been purchased from foreign companies and more than 70% of equipment has been manufactured domestically. Iran is currently facing surplus production in most oil products, but not gasoline. Iran is importing nearly 5 ml/d of euro-4 gasoline. According to plans, Iran is expected to become self-sufficient in gasoline production by next March and then it will stop importing fuel.

After startup of major projects like Persian Gulf Star Refinery, Iran will be even able to export gasoline.

Gasoline production projects are administered by National Iranian Oil Refining and Distribution Company (NIORDC).

 

Production Hike Projects

 

Saeed Mahjoubi, director of coordination and supervision on production at NIORDC, told Iran Petroleum that plans for further gasoline production and boosting fuel quality started in 2004.

“Currently, there are also plans under way for boosting the quality of gasoil and kerosene and reducing fuel oil production. These projects have all made significant progress,” he said.

He said that gasoline projects have either become operational at Tehran, Tabriz, Lavan and Isfahan refineries. He said that Lavan and Isfahan refineries are expected to start producing euro-4 gasoline later this year.

Following the implementation of a project for improving the quality of gasoline at Tehran refinery, this facility is currently producing gasoline close to euro-4 standards. The gasoline produced at Tehran refinery is of high quality in terms of content of aromatics, olefin and sulfur and the only fault is its high benzene content. Once the level of its benzene is reduced to standard level, this refinery would be producing euro-4 gasoline.

Mahjoubi said the gasoline production plant at Bandar Abbas refinery is more than 90% complete.

He said that phase 3 development of Abadan refinery involves catalytic cracking, isomerization and alkylation units.

“The catalytic cracking unit of this refinery is already in service and its isomerization and alkylation units are close to coming on-stream. However, they have been put on hold due to operating problems in the acid unit,” he said.

Mahjoubi added that the gasoline desulfurization section of the catalytic cracking unit is expected to come online by June.

He said the 360,000-barrel Persian Gulf Star gas condensate project is more than 60% complete, adding that the first phase of this project is to come on-stream later this year with a capacity of 120,000 b/d.

 

Quality Improvement

 

Referring to measures undertaken for boosting the quality of Iranian refinery products, Mahjoubi said: “At Abadan refinery, the amount of benzene considered to be a pollutant of the environment, was below 2.5% until last year. Now, it has reached 1.1%. At Imam Khomeini refinery of Shazand, the aromatic level has fallen from 35% to 30%, benzene from 1.5% to 1% and sulfur has dropped below 50 ppm. At Isfahan refinery, the level of benzene has fallen from 1.8% to 1% and sulfur to below 50 ppm.”

He said that the benzene level has fallen from 3.5% to 3% at Bandar Abbas refinery and the amount of sulfur has gone from 400 to 300 ppm.

According to Mahjoubi, the benzene level at Tabriz refinery has been cut from 2% to 0.8% and sulfur content is now below 10 ppm.

At Tehran refinery, the benzene level has fallen below 1.6% and sulfur to below 5ppm and at Lavan refinery, the sulfur content is below 10 ppm.

 

Gasoline Production Capacity

 

Mahjoubi said the surplus naphtha and feedstock from other refineries will be supplied to Isfahan refinery for the production of around 3.5 ml of gasoline. He said that the gasoline production capacity at Isfahan refinery currently stands at 14 ml/d, 2 ml/d of which is euro-4 gasoline and the rest is regular and premium gas.

“Abadan refinery is producing 10.5 ml/d of gasoline and new units would add 1.5 ml/d to this amount. Also, with the startup of catalytic cracking and RFC units at Arak refinery, 16 million liters of euro-4 gasoline will be produced in this refinery to be distributed in the cities of Arak, Tehran and Karaj,” he said.

Mahjoubi said 14-25 ml/d of euro-4 gasoil and 20 ml/d of euro-4 gasoline is currently produced in Iran and distributed in big cities. He said Tehran refinery accounts for nearly 12 ml/d of euro-4 gasoil and Shazand refinery for 12 ml/d.

The official said Bandar Abbas refinery is also expected to start producing euro-4 gasoil later this year.

 

Oil Products

 

Mahjoubi said Iran produced 5,000 tons a day of liquefied gas, 58 ml/d of gasoline, 9.5 ml/d of kerosene, 96 ml/d of gasoil and 70 ml/d of fuel oil during the first three quarters of the current calendar year which ends on March 20.

He said the average production of feedstock was 375,000 b/d at Abadan refinery, 250,000 b/d at Imam Khomeini refinery, 365,000 b/d at Isfahan refinery, 320,000 b/d at Bandar Abbas refinery, 106,000 b/d at Tabriz refinery, 245,000 b/d at Tehran refinery, 54,000 b/d at Shiraz refinery, 21,000 b/d at Kermanshah refinery and 60,000 b/d at Lavan refinery.

Mahjoubi said currently 30 ml/d of gasoil and 20-25 ml/d of fuel oil is being supplied to power plants. He added that more natural gas delivery to the power plants would leave more gasoil and fuel oil for exports.

 

Catalyst at Isomerization Unit

 

Mahjoubi said a catalyst was desperately needed to be made at the isomerization unit at two gasoline production projects. He said that foreign companies refused to sell this catalyst to Iran due to international sanctions imposed on the Islamic Republic.

“Thanks to efforts made to that effect, we are fortunately developing this catalyst which only three companies in the world are capable of building. This catalyst was recently tested successfully and its industrial pilot, which can rival foreign prototypes, has been made. This catalyst is expected to be used at Isfahan refinery soon,” he said.

 

Equipment

 

Mahjoubi said Iran moved to domestically manufacture much-needed equipment as the country came under tough sanctions. He said that Iranian companies are currently able to manufacture more than 70% of equipment needed by refineries in the country.

“Earlier, some equipment like pumps could not be provided, but now necessary planning has been made in domestic companies for that purpose,” he said.

He added that pumps, reactors, towers and valves are currently being produced in the country and plans are under way for the manufacturing of turbines and compressors.

Iran, Key Player in Persian Gulf Bunkering

By Mahnaz Mohammadi

 

Unique advantages for Iran in bunkering industry have pushed Iran to bold relief in the Persian Gulf region, distinguishing Iran from other littoral states.

Vessels sailing in the Persian Gulf will see their routes cut by 40 nautical miles, compared with Fujairah Port in the United Arab Emirates. Choosing Iran route will also dispense the need for changing direction for refueling. Moreover, the quality of Iran’s fuel oil, used in bunkering, is higher than that supplied in Fujairah Port. These are only some of advantages Iran enjoys in the bunkering industry, compared with Fujairah Port of the UAE.

Bunkering comprises operations of supplying fuel to vessels for their own use. That could be done in two ways: either offshore fuel supply with specific refueling vessels or mooring of vessels in specific spots. Both methods are currently in use, but the second method is most common. Bunkering requires processing of heavy refinery products to be used as fuel for vessels.

In addition to fuel supply, provision of food, drinking water and other routine services to vessels lie within the framework of bunkering and that could generate revenues.

Bunkering operations generate revenues for the country providing such services, but at the same time, they have other advantages like boosting the political and economic standing for that country in the region as well as direct and indirect job creation.

According to official data, roughly 200 million tons of fuel oil is sold to vessels annually across the globe. This volume is forecasted to double in 2030.

Currently, 10 important ports in the world handle around 80% of bunkering operations. Fujairah, Singapore and Rotterdam ports account for 32%.

Fujairah Port in the UAE, which buys 80% of its needed fuel from Iran, earns more than $10 billion in revenue from bunkering services.

Iran does not have a long history of involvement in bunkering and it is viewed as a newcomer in this industry. Therefore, precise planning, provision of facilities and effective marketing could help Iran enjoy a good position in the world bunkering industry in the future and raise its share of Persian Gulf bunkering to a level which it merits.

 

Advantages

 

The advantages of Iran’s involvement in the bunkering industry include the strengthening of Iran’s political and economic sovereignty in the Persian Gulf and the Sea of Oman, generation of revenues, job creation, development of ports and infrastructure as well as a better international status for the country. The important factor for a vessel is fuel supply at minimum costs and maximum quality. Therefore, the price of fuel, diversion in route for reaching the fuelling spot and rapidity are key factors in selecting refueling spots. Iran meets the necessary requirements for that purpose.

 

History

 

Bunkering in Iran started in 1998 at Qeshm Island. The facilities for this purpose, including bunker vessels, were provided by Singapore’s Global Energy International Ltd. The project was halted due to losses in the first months due to unhealthy competition and obstruction by rival bunkering companies at Fujairah Port. The project was relaunched two years later, but it came to a halt again after six months for the same reasons. In late 2006, bunkering was launched in Bandar Abbas and before 2007 Iran had no effective role in supplying fuel to vessels passing through the Persian Gulf. But Iran brought its bunkering capacity to 2 million tons by March 2009.

Nasser Sajjadi, managing-director of National Iranian Oil Products Distribution Company (NIOPDC), has said that more than 10 million liters of fuel oil was supplied to vessels in the Iranian calendar year which ended on March 20.

He said that fuel oil sales were up 30% in the last Iranian calendar year from the year before.

Given its position in the Persian Gulf region, Iran plans to increase its bunkering services to vessels by 20% in the current calendar year which started on March 21.

 

50% of World Bunkering at Persian Gulf

 

Persian Gulf is a key transit route for oil supply onto world markets. Every year, a large number of very large crude carriers cross the Persian Gulf. Around 30,000 vessels sail through the Persian Gulf every year, 3,000 of which are refueled by Iranian companies based in southern ports. Officially, 50% of the world bunkering industry is handled in the Persian Gulf.

Iran, with 1,800 kilometers of water borders in the Persian Gulf and the Sea of Oman, lies on the route of oil tankers sailing through the strategic Strait of Hormuz. That gives Iran big geographical potential to provide bunkering services. Given the existing capacity for bunkering in the Persian Gulf and the Sea of Oman, Iran can gain revenues from bunkering activities.

 

Iran Share of Bunkering

 

Afshin Karami, the head of bunkering at NIOPDC, said the objectives set for the country within the framework of bunkering are expected to be realized. He said Iran’s share of bunkering is forecast to rise significantly in coming years as the country has made plans for fuel oil and gas soil selling.

Karami said the “future of bunkering in the Persian Gulf belongs to Iran.”

“Supplying fuel to bunkering companies on time, discount based on regional and international market conditions within the framework of instructions of Ministry of Petroleum and charging fuel costs in rials and other currencies are among strategies facilitating achievement of these objectives,” he added.

Karami said NIOPDC launched bunkering with the help of the private sector in Bandar Abbas in 2006 and has since expanded it to Kharg, Qeshm, Assaluyeh and Chabahar ports.

“Every year, thousands of oceangoing ships enter the Persian Gulf, making this region as one of the most congested sea zones in the world,” he said.

 

Strong Points

 

Iran’s high potential in fuel oil production, the possibility of high-quality fuel oil production in refineries in the country, the proximity of Iranian ports like Larak, Bandar Abbas, Abu Mussa and Qeshm to international shipping waterway, compared with Fujairah Port, and the existence of Abadan and Bandar Abbas refineries in southern coasts are among Iran’s strong points in the Persian Gulf bunkering industry.

 

Opportunities

 

The passage of so many oil tankers, ships and vessels through the Persian Gulf and the Sea of Oman, the 40-mile distance between Iran’s rival and the international shipping lane and the UAE’s dependence on liquid fuel imports are among opportunities for Iran in this industry.

Given objectives envisaged in Iran’s development plans, the plans specifically defined for bunkering (fuel oil and gas oil sales) are expected to be implemented in coming years.

Mohammad-Reza Mazloumi, director for trading at NIOPDC, said Iran is very close to realizing its objectives for bunkering eservices as the number of vessels carrying oil has increased.

He said that seven companies are currently supplying fuel to vessels at sea with the biggest volume of bunkering belonging to Bandar Abbas and Bushehr.

 

Amir-Abad Bunkering

 

Amir-Abad Port in northern Iran is also providing bunkering services. Hossein-Ali Talebi, director of the NIOPCD branch of Mazandaran province, said fuel selling to foreign vessels during the first 10 months of the past calendar year stood at 900,000 liters.

Amir-Abad Port is located north of the city of Behshahr in the Mazandaran province. A special economic zone is located in this port.

Amir-Abad is a strategic port in Iran. As Iran continues to broaden ties with the littoral Caspian states, Central Asia and Caucasus, the development of the bunkering infrastructure there will give Iran a significant share in bunkering services.

Iran, Key Player in Persian Gulf Bunkering

By Mahnaz Mohammadi

 

Unique advantages for Iran in bunkering industry have pushed Iran to bold relief in the Persian Gulf region, distinguishing Iran from other littoral states.

Vessels sailing in the Persian Gulf will see their routes cut by 40 nautical miles, compared with Fujairah Port in the United Arab Emirates. Choosing Iran route will also dispense the need for changing direction for refueling. Moreover, the quality of Iran’s fuel oil, used in bunkering, is higher than that supplied in Fujairah Port. These are only some of advantages Iran enjoys in the bunkering industry, compared with Fujairah Port of the UAE.

Bunkering comprises operations of supplying fuel to vessels for their own use. That could be done in two ways: either offshore fuel supply with specific refueling vessels or mooring of vessels in specific spots. Both methods are currently in use, but the second method is most common. Bunkering requires processing of heavy refinery products to be used as fuel for vessels.

In addition to fuel supply, provision of food, drinking water and other routine services to vessels lie within the framework of bunkering and that could generate revenues.

Bunkering operations generate revenues for the country providing such services, but at the same time, they have other advantages like boosting the political and economic standing for that country in the region as well as direct and indirect job creation.

According to official data, roughly 200 million tons of fuel oil is sold to vessels annually across the globe. This volume is forecasted to double in 2030.

Currently, 10 important ports in the world handle around 80% of bunkering operations. Fujairah, Singapore and Rotterdam ports account for 32%.

Fujairah Port in the UAE, which buys 80% of its needed fuel from Iran, earns more than $10 billion in revenue from bunkering services.

Iran does not have a long history of involvement in bunkering and it is viewed as a newcomer in this industry. Therefore, precise planning, provision of facilities and effective marketing could help Iran enjoy a good position in the world bunkering industry in the future and raise its share of Persian Gulf bunkering to a level which it merits.

 

Advantages

 

The advantages of Iran’s involvement in the bunkering industry include the strengthening of Iran’s political and economic sovereignty in the Persian Gulf and the Sea of Oman, generation of revenues, job creation, development of ports and infrastructure as well as a better international status for the country. The important factor for a vessel is fuel supply at minimum costs and maximum quality. Therefore, the price of fuel, diversion in route for reaching the fuelling spot and rapidity are key factors in selecting refueling spots. Iran meets the necessary requirements for that purpose.

 

History

 

Bunkering in Iran started in 1998 at Qeshm Island. The facilities for this purpose, including bunker vessels, were provided by Singapore’s Global Energy International Ltd. The project was halted due to losses in the first months due to unhealthy competition and obstruction by rival bunkering companies at Fujairah Port. The project was relaunched two years later, but it came to a halt again after six months for the same reasons. In late 2006, bunkering was launched in Bandar Abbas and before 2007 Iran had no effective role in supplying fuel to vessels passing through the Persian Gulf. But Iran brought its bunkering capacity to 2 million tons by March 2009.

Nasser Sajjadi, managing-director of National Iranian Oil Products Distribution Company (NIOPDC), has said that more than 10 million liters of fuel oil was supplied to vessels in the Iranian calendar year which ended on March 20.

He said that fuel oil sales were up 30% in the last Iranian calendar year from the year before.

Given its position in the Persian Gulf region, Iran plans to increase its bunkering services to vessels by 20% in the current calendar year which started on March 21.

 

50% of World Bunkering at Persian Gulf

 

Persian Gulf is a key transit route for oil supply onto world markets. Every year, a large number of very large crude carriers cross the Persian Gulf. Around 30,000 vessels sail through the Persian Gulf every year, 3,000 of which are refueled by Iranian companies based in southern ports. Officially, 50% of the world bunkering industry is handled in the Persian Gulf.

Iran, with 1,800 kilometers of water borders in the Persian Gulf and the Sea of Oman, lies on the route of oil tankers sailing through the strategic Strait of Hormuz. That gives Iran big geographical potential to provide bunkering services. Given the existing capacity for bunkering in the Persian Gulf and the Sea of Oman, Iran can gain revenues from bunkering activities.

 

Iran Share of Bunkering

 

Afshin Karami, the head of bunkering at NIOPDC, said the objectives set for the country within the framework of bunkering are expected to be realized. He said Iran’s share of bunkering is forecast to rise significantly in coming years as the country has made plans for fuel oil and gas soil selling.

Karami said the “future of bunkering in the Persian Gulf belongs to Iran.”

“Supplying fuel to bunkering companies on time, discount based on regional and international market conditions within the framework of instructions of Ministry of Petroleum and charging fuel costs in rials and other currencies are among strategies facilitating achievement of these objectives,” he added.

Karami said NIOPDC launched bunkering with the help of the private sector in Bandar Abbas in 2006 and has since expanded it to Kharg, Qeshm, Assaluyeh and Chabahar ports.

“Every year, thousands of oceangoing ships enter the Persian Gulf, making this region as one of the most congested sea zones in the world,” he said.

 

Strong Points

 

Iran’s high potential in fuel oil production, the possibility of high-quality fuel oil production in refineries in the country, the proximity of Iranian ports like Larak, Bandar Abbas, Abu Mussa and Qeshm to international shipping waterway, compared with Fujairah Port, and the existence of Abadan and Bandar Abbas refineries in southern coasts are among Iran’s strong points in the Persian Gulf bunkering industry.

 

Opportunities

 

The passage of so many oil tankers, ships and vessels through the Persian Gulf and the Sea of Oman, the 40-mile distance between Iran’s rival and the international shipping lane and the UAE’s dependence on liquid fuel imports are among opportunities for Iran in this industry.

Given objectives envisaged in Iran’s development plans, the plans specifically defined for bunkering (fuel oil and gas oil sales) are expected to be implemented in coming years.

Mohammad-Reza Mazloumi, director for trading at NIOPDC, said Iran is very close to realizing its objectives for bunkering eservices as the number of vessels carrying oil has increased.

He said that seven companies are currently supplying fuel to vessels at sea with the biggest volume of bunkering belonging to Bandar Abbas and Bushehr.

 

Amir-Abad Bunkering

 

Amir-Abad Port in northern Iran is also providing bunkering services. Hossein-Ali Talebi, director of the NIOPCD branch of Mazandaran province, said fuel selling to foreign vessels during the first 10 months of the past calendar year stood at 900,000 liters.

Amir-Abad Port is located north of the city of Behshahr in the Mazandaran province. A special economic zone is located in this port.

Amir-Abad is a strategic port in Iran. As Iran continues to broaden ties with the littoral Caspian states, Central Asia and Caucasus, the development of the bunkering infrastructure there will give Iran a significant share in bunkering services.

US, Instigator or Victim of Oil Price Fall?

 

By Shuaib Bahman

 

The falling trend of oil prices, which started last summer, has elicited conflicting speculation. Analysts have been studying factors behind the slump in the prices on the one hand, and have been concentrating on the winners and losers of this fluctuation on the other.

A variety of reasons have been bandied about with regard to the sharp fall in oil prices. Some of them are recession in the euro zone, China’s slow economic growth, accumulation of debts on world’s traumatized financial system, shale oil production in the US and Saudi Arabia’s refusal to close ranks with fellow members of the Organization of the Petroleum Exporting Countries (OPEC).

There has also been speculation about the winners and losers of oil price game. Most oil producing countries were known to have lost while consumers were said to have emerged winner.

For a variety of reasons, as far as oil prices are concerned, the US is instrumental. The United States is not only one of the leading consumers of oil in the world, but also it hopes to stabilize its position as a key oil producer by extracting shale oil.

In order to more effectively analyze the impact of oil price fall on the US, here we review different viewpoints about the relationship between the US and oil price fall, examine speculation about the US politics, profits and losses for the US from the oil price fall and finally the US position in the global oil market and the prospect of oil prices.

 

Political Predictions Come Untrue

 

When oil prices first dropped significantly, most observes and experts laid the blame on political issues. Some of them even argued that the US has increased its shale oil production in order to cause a slump in oil prices as part of its attempts to break Saudi Arabia’s control on oil prices. Some others rejected this hypothesis and said Saudi Arabia has cut the oil prices in order to target the US and other inefficient oil producers. Shale oil extraction is much higher than crude oil extraction and oil price decline could grind a halt to shale production. A third group of analysts spoke of a behind-the-scenes deal between the US and Saudi Arabia on oil prices.

Most observers believed that two factors are behind falling oil prices. One was Saudi Arabia’s refusal to cut production as demanded by fellow OPEC members and the other was the US’s increased oil production. The US is the largest importer of oil in the world and it shares political interests with the Saudis to that effect.

There is insufficient evidence to prove this speculation, but the fact is that the US could have benefited from the oil price fall on several political fronts, to some of which the Saudis are also beneficiary. The most significant objective followed by the US with regard to the oil price fall could be attributed to Iran and Russia. Here are some of advantages the Americans sought to gain in this regard:

 

1. Undermining Russia and curtailing Moscow’s ambitions: Russia’s geopolitical advance in Ukraine came at a time the Americans failed to stop Moscow by imposing sanctions which they hoped to bear fruits. In this regard, the fall in oil prices could strike a serious blow to Russia’s energy-dependent economy.
2. Forcing Iran to accept a nuclear deal: While the US, France, Britain, China, Russia and Germany were in talks with Iran, oil price fall could ratchet up economic pressure on the Iranian government and convince political officials in Tehran to accept a political agreement with Western governments.
3. Undermining pro-Syrian fronts: A decline in oil prices could largely influence Iranian and Russian policies vis-à-vis Syria. At a time Tehran and Moscow were supporting the legal government of Syrian President Bashar Assad, oil price slump and the ensuing economic pressure could reduce economic and military aid delivery to Damascus.

 

Therefore, from analysts viewpoint, Russia’s geopolitical ambitions in East Europe, Iran’s commitment to its redlines with regard to uranium enrichment and full nuclear fuel cycle as well as Tehran-Moscow close cooperation on Middle East issues particularly the crisis in Syria are among reasons that could have brought together the US and Saudi Arabia to target both Iran and Russia through reducing oil prices. What happened in practice was in stark contrast with the US estimates because oil price fall did not force Russia to back down from its position on Ukraine, nor did it influence Iran’s nuclear dossier.

 

Economic Advantages and Disadvantages

 

The US failed to achieve its political objectives following oil price decline, but it seems that it benefited economically. The US is one of the largest importers of crude oil the world, purchasing 17 mb/d of crude oil. The fall in oil prices has reduced imports costs for this country and that is in the US interest. Moreover, the oil price fall has reduced the price of such petroleum products as gasoline in the US and that has been welcomed by Americans. However, the US is now facing a major economic challenge because the amount of money saved by the American citizens thanks to price cuts is deposited instead of serving market and production. That would increase money supply and stir inflation in the future.

The US Energy Information Administration (EIA) announced in its monthly report for January that the country’s oil production would increase 730,000 b/d to reach 9.3 mb/d this year, but falling oil prices in world markets has raised speculation about rollover of the US oil production in the middle of the year. For instance, Ian Taylor, Chief Executive and President of top global oil trader Vitol, announced that US oil production growth will probably flatten by the middle of the year as a result of a decline in oil prices.

"As yet, production in the US is still going up. We expect the trend to stop around the middle of the year," he said.

The US oil production is expected to keep growing in the first half of 2015 to reach 9.26 mb/d in the first quarter and to 9.41 mb/d in the second quarter. But it would shrink in the second half. Oil production in the US will fall to 9.23 mb/d in the third quarter but will rise slightly to 9.32 mb/d in the fourth quarter. The US oil production will keep growing in the first half under the effect of the previous investments. But then, signs of reduced investment are seen. The fact is that oil price slump could reduce drilling operations in some US oil centers with lower oil output. What strengthens this speculation is a record 32% fall in the US rig count from October 2014 to March 2015. With the fall in rig count, the number of drilled wells and exploration of new reservoirs will decline and therefore oil production drops.

Meanwhile, the lower drilling rig count and capex have failed to stop oil stock build up in the US and most American companies have demanded that restrictions on US oil exports be lifted. Growing pressure by US producers for the reversal of the ban on crude oil exports stems from the fact that such a measure would help create jobs. Currently, a 50% fall in oil prices and less activity by some companies are slowing down activities in the US petroleum industry and raising unemployment rate.

According to the February report of the US Department of Labor, the number of mining sector workers, including oil and gas service workers, has fallen 9,300 to 844,500 due to the decline in oil and gas drilling activities. That was in addition to 5,800 workers who were laid off in January. Job opportunities in the oil extraction sector, including drilling rig workers, were down 1,100 to 198,300. In January, 1,800 workers of this sector had lost their jobs. The number of mining logistics workers was also down 7,400. It indicates that oil price fall has increased unemployment in the US oil and gas industry and has left this sector’s activists more dissatisfied. Most oil companies demand that the oil export ban be lifted so that they could pay for their financial losses and compensate laid-off workers. However, the US refiners continue to oppose the lifting of bans on the US oil exports and believe that such a measure would make access to crude oil for refineries more difficult and their revenues will fall.

The important point is that in addition to oil companies, US Republicans are opposed to the lifting of oil export ban. The main reason is that oil companies are mainly run by Republicans, but this issue could degenerate into a serious challenge between Democrats and Republicans in the US.

Therefore, the oil price fall does not end in merely economic consequences and it could turn into a political bickering in the US. Given the fact that the Republicans dominate the US Congress, this issue could pose numerous challenges to President Barack Obama’s administration.

 

Future Prospect

 

Concurrent with the oil price fall from $115 to $50 since last June, oil market observers focused on the US shale oil production and blamed shale oil production as a reason for the price falls, but it seems that the US role as an oil producer will not last long because oil production in this country will first grow and then decline in the coming decade.

Therefore, the US could never become a large exporter of oil like Saudi Arabia although its need for imports is falling. In other words, the US oil production growth is appropriate for causing diversity in the market, but it would not resolve the world’s oil problem.

Therefore, one should not exaggerate about the US shale oil and its impacts on international markets. These sources of energy could at best meet the US demand. But other major consumers like China, India, Japan and European countries would still need crude oil.

Of course, a brief review of the US energy strategy shows that the most important objective by the US is to break its dependence on oil imports. Therefore, it seems that even if US shale oil extraction proves to be uneconomical due to the price falls, the Americans will safeguard this industry through paying subsidies and applying tax exemptions. Therefore, despite the survival of shale oil extraction industry, this oil could only meet US domestic needs and could not meet global needs or have significant impacts on world markets in the long term.

The Americans have realized that a change in alternative energy prices will cause more fluctuations in the oil prices in the future. Therefore, it seems that the US would focus its policies further on the development of natural gas and coal to feed power plants and produce more petrochemicals from gas.

In brief, despite the US initial estimates, the fall in oil prices have not resulted in desired political and economic outcomes for Washington and that could seriously damage the US economy and dollar-dependent bodies and regimes.

Anyway, the global economic recession has significantly affected demand for oil in world markets and would pose numerous challenges to the US in the long-term.

 

US, Instigator or Victim of Oil Price Fall?

 

By Shuaib Bahman

 

The falling trend of oil prices, which started last summer, has elicited conflicting speculation. Analysts have been studying factors behind the slump in the prices on the one hand, and have been concentrating on the winners and losers of this fluctuation on the other.

A variety of reasons have been bandied about with regard to the sharp fall in oil prices. Some of them are recession in the euro zone, China’s slow economic growth, accumulation of debts on world’s traumatized financial system, shale oil production in the US and Saudi Arabia’s refusal to close ranks with fellow members of the Organization of the Petroleum Exporting Countries (OPEC).

There has also been speculation about the winners and losers of oil price game. Most oil producing countries were known to have lost while consumers were said to have emerged winner.

For a variety of reasons, as far as oil prices are concerned, the US is instrumental. The United States is not only one of the leading consumers of oil in the world, but also it hopes to stabilize its position as a key oil producer by extracting shale oil.

In order to more effectively analyze the impact of oil price fall on the US, here we review different viewpoints about the relationship between the US and oil price fall, examine speculation about the US politics, profits and losses for the US from the oil price fall and finally the US position in the global oil market and the prospect of oil prices.

 

Political Predictions Come Untrue

 

When oil prices first dropped significantly, most observes and experts laid the blame on political issues. Some of them even argued that the US has increased its shale oil production in order to cause a slump in oil prices as part of its attempts to break Saudi Arabia’s control on oil prices. Some others rejected this hypothesis and said Saudi Arabia has cut the oil prices in order to target the US and other inefficient oil producers. Shale oil extraction is much higher than crude oil extraction and oil price decline could grind a halt to shale production. A third group of analysts spoke of a behind-the-scenes deal between the US and Saudi Arabia on oil prices.

Most observers believed that two factors are behind falling oil prices. One was Saudi Arabia’s refusal to cut production as demanded by fellow OPEC members and the other was the US’s increased oil production. The US is the largest importer of oil in the world and it shares political interests with the Saudis to that effect.

There is insufficient evidence to prove this speculation, but the fact is that the US could have benefited from the oil price fall on several political fronts, to some of which the Saudis are also beneficiary. The most significant objective followed by the US with regard to the oil price fall could be attributed to Iran and Russia. Here are some of advantages the Americans sought to gain in this regard:

 

1. Undermining Russia and curtailing Moscow’s ambitions: Russia’s geopolitical advance in Ukraine came at a time the Americans failed to stop Moscow by imposing sanctions which they hoped to bear fruits. In this regard, the fall in oil prices could strike a serious blow to Russia’s energy-dependent economy.
2. Forcing Iran to accept a nuclear deal: While the US, France, Britain, China, Russia and Germany were in talks with Iran, oil price fall could ratchet up economic pressure on the Iranian government and convince political officials in Tehran to accept a political agreement with Western governments.
3. Undermining pro-Syrian fronts: A decline in oil prices could largely influence Iranian and Russian policies vis-à-vis Syria. At a time Tehran and Moscow were supporting the legal government of Syrian President Bashar Assad, oil price slump and the ensuing economic pressure could reduce economic and military aid delivery to Damascus.

 

Therefore, from analysts viewpoint, Russia’s geopolitical ambitions in East Europe, Iran’s commitment to its redlines with regard to uranium enrichment and full nuclear fuel cycle as well as Tehran-Moscow close cooperation on Middle East issues particularly the crisis in Syria are among reasons that could have brought together the US and Saudi Arabia to target both Iran and Russia through reducing oil prices. What happened in practice was in stark contrast with the US estimates because oil price fall did not force Russia to back down from its position on Ukraine, nor did it influence Iran’s nuclear dossier.

 

Economic Advantages and Disadvantages

 

The US failed to achieve its political objectives following oil price decline, but it seems that it benefited economically. The US is one of the largest importers of crude oil the world, purchasing 17 mb/d of crude oil. The fall in oil prices has reduced imports costs for this country and that is in the US interest. Moreover, the oil price fall has reduced the price of such petroleum products as gasoline in the US and that has been welcomed by Americans. However, the US is now facing a major economic challenge because the amount of money saved by the American citizens thanks to price cuts is deposited instead of serving market and production. That would increase money supply and stir inflation in the future.

The US Energy Information Administration (EIA) announced in its monthly report for January that the country’s oil production would increase 730,000 b/d to reach 9.3 mb/d this year, but falling oil prices in world markets has raised speculation about rollover of the US oil production in the middle of the year. For instance, Ian Taylor, Chief Executive and President of top global oil trader Vitol, announced that US oil production growth will probably flatten by the middle of the year as a result of a decline in oil prices.

"As yet, production in the US is still going up. We expect the trend to stop around the middle of the year," he said.

The US oil production is expected to keep growing in the first half of 2015 to reach 9.26 mb/d in the first quarter and to 9.41 mb/d in the second quarter. But it would shrink in the second half. Oil production in the US will fall to 9.23 mb/d in the third quarter but will rise slightly to 9.32 mb/d in the fourth quarter. The US oil production will keep growing in the first half under the effect of the previous investments. But then, signs of reduced investment are seen. The fact is that oil price slump could reduce drilling operations in some US oil centers with lower oil output. What strengthens this speculation is a record 32% fall in the US rig count from October 2014 to March 2015. With the fall in rig count, the number of drilled wells and exploration of new reservoirs will decline and therefore oil production drops.

Meanwhile, the lower drilling rig count and capex have failed to stop oil stock build up in the US and most American companies have demanded that restrictions on US oil exports be lifted. Growing pressure by US producers for the reversal of the ban on crude oil exports stems from the fact that such a measure would help create jobs. Currently, a 50% fall in oil prices and less activity by some companies are slowing down activities in the US petroleum industry and raising unemployment rate.

According to the February report of the US Department of Labor, the number of mining sector workers, including oil and gas service workers, has fallen 9,300 to 844,500 due to the decline in oil and gas drilling activities. That was in addition to 5,800 workers who were laid off in January. Job opportunities in the oil extraction sector, including drilling rig workers, were down 1,100 to 198,300. In January, 1,800 workers of this sector had lost their jobs. The number of mining logistics workers was also down 7,400. It indicates that oil price fall has increased unemployment in the US oil and gas industry and has left this sector’s activists more dissatisfied. Most oil companies demand that the oil export ban be lifted so that they could pay for their financial losses and compensate laid-off workers. However, the US refiners continue to oppose the lifting of bans on the US oil exports and believe that such a measure would make access to crude oil for refineries more difficult and their revenues will fall.

The important point is that in addition to oil companies, US Republicans are opposed to the lifting of oil export ban. The main reason is that oil companies are mainly run by Republicans, but this issue could degenerate into a serious challenge between Democrats and Republicans in the US.

Therefore, the oil price fall does not end in merely economic consequences and it could turn into a political bickering in the US. Given the fact that the Republicans dominate the US Congress, this issue could pose numerous challenges to President Barack Obama’s administration.

 

Future Prospect

 

Concurrent with the oil price fall from $115 to $50 since last June, oil market observers focused on the US shale oil production and blamed shale oil production as a reason for the price falls, but it seems that the US role as an oil producer will not last long because oil production in this country will first grow and then decline in the coming decade.

Therefore, the US could never become a large exporter of oil like Saudi Arabia although its need for imports is falling. In other words, the US oil production growth is appropriate for causing diversity in the market, but it would not resolve the world’s oil problem.

Therefore, one should not exaggerate about the US shale oil and its impacts on international markets. These sources of energy could at best meet the US demand. But other major consumers like China, India, Japan and European countries would still need crude oil.

Of course, a brief review of the US energy strategy shows that the most important objective by the US is to break its dependence on oil imports. Therefore, it seems that even if US shale oil extraction proves to be uneconomical due to the price falls, the Americans will safeguard this industry through paying subsidies and applying tax exemptions. Therefore, despite the survival of shale oil extraction industry, this oil could only meet US domestic needs and could not meet global needs or have significant impacts on world markets in the long term.

The Americans have realized that a change in alternative energy prices will cause more fluctuations in the oil prices in the future. Therefore, it seems that the US would focus its policies further on the development of natural gas and coal to feed power plants and produce more petrochemicals from gas.

In brief, despite the US initial estimates, the fall in oil prices have not resulted in desired political and economic outcomes for Washington and that could seriously damage the US economy and dollar-dependent bodies and regimes.

Anyway, the global economic recession has significantly affected demand for oil in world markets and would pose numerous challenges to the US in the long-term.

 

Petrobras Updates Appraisal Well Data

 

Petrobras and its partners have completed drilling of extension well 3-RJS-735/735A in the central part of the Libra block in the Santos basin.

Results confirmed the presence of a 200-m (656-ft) deep hydrocarbon column in reservoirs with good permeability and porosity characteristics.

The well, informally known as C1, was drilled around 220 km (137 mi) offshore Rio de Janeiro in a water depth of 2,160 m (7,086 ft). Final depth was 5,780 m (18,963 ft).

The location was 18 km (11 mi) from the first Libra well 3-RJS-731.

Petrobras says the consortium plan further wells to evaluate the 1,550-sq km (598-sq mi) Libra area.

New Gas Discovery in Tanzania

 

Statoil’s Mdalasini-1 exploration well has resulted in a new natural gas discovery in block 2 offshore Tanzania.

The Mdalasini-1 discovery is located at a 2,296-m (7,534-ft) water depth at the southernmost edge of the block. The new gas discovery was made in Tertiary and Cretaceous sandstones.

The discovery of an additional 1.0-1.8 tcf of natural gas in place in the Mdalasini-1 well brings the total of in-place volumes up to approximately 22 tcf in block 2.

Nick Maden, senior vice president for Statoil’s exploration activities in the Western Hemisphere, said: “The Mdalasini-1 discovery marks the completion of the first phase of an efficient and successful multi-well exploration program offshore Tanzania.

Statoil Makes Deepwater Gas Discovery

 

Statoil and its partners have made a gas discovery in the Snefrid Nord prospect in the Norwegian sector of the North Sea.

Drilled by the Transocean Spitsbergen semisubmersible, the discovery well 6706/12-2 proved a 105-m (344-ft) gas column in the Nise formation in PL218. Statoil estimates that the volumes in the gas accumulation to be in the range of 31-57 MMboe. Snefrid Nord will be further evaluated for future tie-in to the Aasta Hansteen infrastructure.

Snefrid Nord is situated in the deepwater Voring area near the three gas discoveries, compromising the Aasta Hansteen field development: Luva, Haklang, and Snefrid South. Production start-up of Aasta Hansteen is expected in 2017.

 “The Snefrid Nord discovery increases the resource base for the Aasta Hansteen field development project by around 15%,” said Irene Rummelhoff, senior vice president exploration Norway in Statoil.

Myanmar Awards Offshore Tracts

 

Reliance Industries Ltd. and Myanmar Oil & Gas Enterprise have signed production-sharing contracts for offshore Republic of the Union of Myanmar blocks M17 and M18.

RIL will be the operator with 96% participating interest. United National Resources Development Services Co. Ltd. has the remaining interest.

Both the blocks are offshore in the Tanintharyi basin in water as deep as 3,000 ft (914 m) and together encompass total area of 27,600 sq km (10,656 sq mi).

Eni also has signed two production-sharing contracts for offshore blocks MD-02 and MD-04. The joint venture is between Eni, the operator with an 80% participating interest through Eni Myanmar B.V. and Petrovietnam Exploration Production Corp. Ltd. (20%).

Geological Survey at Bass Strait

 

Carnarvon Hibiscus Pty. Ltd. (CHPL) has contracted Benthic for an offshore geotechnical investigation in the Sea Lion field offshore southeastern Australia in the Bass Strait.

Operating from a client-issued vessel, Benthic’s portable remotely operated drill PROD1 will perform rotary drilling and piston coring, and in situ testing using a piezo-cone penetrometer. The aim is to identify the prospect’s seabed ground conditions for a well to be drilled by a jackup.

 

Belarus Suspends Oil Products Shipment to Russia

                                  

Belarus has suspended the shipment of oil products to Russia until the prices are favorable, BelTA learned from Deputy Prime Minister of Belarus Vladimir Semashko on 3 April.

Speaking about supplies of oil products to Russia, the Deputy Prime Minister said that there are still some minor issues caused by the reduction of the exchange rate of the Russian ruble. “Russia stays dedicated to its pricing policy. Prices are not raised, including prices for fuel. Gasoline used to cost as much as $0.90 per liter, now it costs $0.50-0.54 depending on the grade of gasoline,” he said.

“In this situation we lose roughly $100 per ton on some varieties of gasoline when we sell it to Russia. We cannot afford it; this is why we have used the clause specified by the Eurasian Economic Union foundation treaty. If the price for oil products is lower than the price we can get in other markets, we have the right to temporarily suspend deliveries of such products,” noted Vladimir Semashko. He added that the Russian side was sympathetic about it.

“Once the situation changes and prices go up, then we will deliver,” stressed the Deputy Prime Minister.

Vladimir Semashko said that the balance for delivering oil and oil products in Q2 2015 had been signed already. Belarusian oil refineries will get 100% of the oil they need.

African Oil Producers Seek to Limit Global Glut

 

African crude-exporting countries will lobby the world's oil producers to reduce output in order to boost prices that have fallen to levels that threaten to spark social unrest, the African Petroleum Producers Association (APPA) said.

Brent has crashed from 2014 peaks above $115 and US crude tumbled from above $107 in a selloff in oil, which began in June 2014. It accelerated in November after Saudi Arabia persuaded the broader group within the Organization of the Petroleum Exporting Countries to stick to its output and defend market share.

"The council expresses its deep concern faced with this situation of falling crude prices, which hurts the economies of members and non-members of OPEC with the risk of social crisis if they continue," APPA spokesman Ousmane Doukoure said.

Oil ministers from APPA, which represents 18 African oil producers, agreed at a meeting in Ivory Coast to establish a platform that would allow the association to carry on a dialogue with other producers on output levels.

Gazprom Delays China Gas Pipeline

 

Russia's top natural gas producer Gazprom plans to complete construction of the Power of Siberia gas pipeline to China in 2022, the company said, indicating a likely delay in the project.

Gazprom previously planned to start selling gas to China via the pipeline in 2019.

However, sources told Reuters last month the Power of Siberia may be put off until Moscow completes a separate, less ambitious project to send gas from existing fields to China through a pipeline thousands of kilometers further west.

In revealing details of its 840 billion ruble ($14.8 billion) investment plans for 2015, Gazprom said it aims to spend over 30 billion rubles on the Power of Siberia pipeline this year.

The largest portion of the 2015 spending plans is 278 billion rubles earmarked for expansion of a domestic gas pipeline network for the South Stream project, scrapped by Russia last year due to the European Union objections.

Moscow is now pushing ahead with an alternative project instead, an undersea pipeline to Turkey.

World Bank Estimates Oil at $53

 

The World Bank predicted that the average price of oil during the current year of $53 a barrel, and the price of crude climbs over the next year slightly by 4 dollars a barrel.

According to the updated reports to the bank that OPEC refrain from pursuing any policy to manage supply in the markets, and that the economic situation will deteriorate in the year, in addition to the decline in geopolitical tensions in the world that could affect the supply rate of crude oil.

It also touched on the report to the prices of other energy resources, where it is pointed out that the recent decline in oil prices will affect the energy markets, especially the natural gas market in Europe and Asia, where the report pointed out that the European natural gas benchmark price will fall by 15% in 2015.

At the present time, still the oil markets are looking for a balance between supply and demand, prices, and witnessing the market competition between producers inside and outside the OPEC that defends on market shares.

Brazil Feb Oil, Gas Output Over 3mb/d

 

Brazil produced more than 3 million barrels of oil and equivalent natural gas in February, the third time and third straight month that it has surpassed that mark, the country's oil regulator ANP said in a statement.

Forty-seven companies had a combined average output of 3.013 million barrels of oil and equivalent natural gas a day (boepd) for the month, 16 percent more than a year earlier and 1.5 percent less than in January, ANP said.

State-run Petroleo Brasileiro SA, or Petrobras, which produces on its own and in partnership with other companies, owned an average 2.538 million boepd of that output, or 84 percent of the total.

Petrobras' share of total output was unchanged from January.

Pertamina Plans to Import 11mb Gasoline

 

Indonesia's state-owned Pertamina is expected to import around 11 million barrels of gasoline in April, up 2.15 million barrels from March, traders said.

The rise in gasoline imports was attributed to increased demand for the higher RON gasoline.

The imports would comprise around 9.1 million barrels of 88 RON gasoline, 1.4 million barrels of high-octane mogas component 92 RON gasoline and 500,000 barrels of finished grade 92 RON gasoline.

Earlier estimates for April imports were 9.16 million barrels of 88 RON gasoline, 400,000 barrels of HOMC 92 RON gasoline but no finished grade 92 RON gasoline.

"Demand for 92 RON is higher. Usually when the retail price difference between 88 RON and 92 RON is small, demand for higher RON increases," an industry source said.

Another source suggested that the higher imports for April could be due to Pertamina rebuilding its inventory.

For March, Pertamina's imports were said to comprise 8.15 million barrels of 88 RON gasoline, 200,000 barrels of HOMC 92 RON gasoline and 500,000 barrels of finished grade 92 RON gasoline.

Imports by Pertamina, Asia's largest gasoline importer, in the first quarter averaged 8 million-9 million barrels/month, down from 11 million barrels/month in Q4 2014.

Nigeria Oil Output Faces Challenges

 

Nigeria’s peaceful election removed one key risk from the country’s ambition to boost its oil production, but it still faces major challenges.

The state-run Nigerian National Petroleum Corp. (NNPC) aims to double production in the next five years – a goal that many analysts see as unachievable, particularly since global oil prices have slumped so badly over the past nine months. Since last June, when it commanded $115 (US), a barrel of crude has fallen by more than 50 per cent to $55.

Compounding the price crash is the fact that Nigeria is also struggling with the loss of its biggest export customer, the United States. Squeezed out of the market by growing US domestic production, it has seen its exports to America plummet to a mere 51,000 barrels a day (in January). That is almost one-tenth of the nearly 500,000 barrels shipped just two years ago, which in turn was about half  of the one million barrels a day recorded in January, 2011.

Meanwhile, the country’s overall production has fallen to 1.9 million barrels a day from a peak of 2.4 million just last October, and the NNPC is often forced to accept steep discounts from benchmark prices.

The depressed global price now threatens to derail investment in the country’s offshore crude production. The national oil company has slashed its capital budget by 40 per cent; it typically does joint ventures with international oil companies in projects. So the spending cuts will either force the foreign partners to increase their share – unlikely, with the entire industry in retreat – or delay projects.

Companies such as ExxonMobil Corp. and Royal Dutch Shell were planning eight projects in Nigerian waters that would produce 540,000 barrels a day. But Rhidoy Rashid, an analyst with the London-based consulting firm Energy Aspect, says most will be delayed, if not cancelled outright.

So, while the goal may be to double the current output in five years, he says, “we don’t see Nigerian production exceeding even two million [barrels a day by then] – that’s just very unlikely.”

Rosneft Litigation to Cease

 

Russia's state-controlled oil giant Rosneft has settled all legal disputes with subsidiary companies of the now defunct Russian oil producer Yukos, with all parties agreeing not to enter such disputes in the future.

The agreement, which follows more than 10 years of legal wrangling over the demise of Yukos, will be seen as positive for Rosneft and enable it to operate with more financial security than was the case while so much litigation against it was pending.

It comes as Rosneft remains under international sanctions due to Russia's role in the Ukraine crisis, which has made it more difficult for the company to raise western financing for its operations.

"According to the conditions of the agreement, the sides withdraw all mutual claims and stop all legal and other disputes, and are obliged not to lay claims on each other in the future due to the bankruptcy and the dissolution of Yukos," Rosneft said in the statement.

Neither Rosneft nor its subsidiaries are expected to make any payments to the Yukos shareholders, the company said.

The companies involved on the Yukos side include Yukos Finance, Yukos Capital, Stichting Administratiekantoor Yukos International, Stichting Administratiekantoor Financial Performance Holdings, Consolidated Nile, LP, General Nile, LLC, Yukos International (UK), Luxtona, Financial Performance Holdings, Yukos Hydrocarbons Investments, and CN & GN (PTC).

Yukos spokeswoman Claire Davidson confirmed the settlement had been reached and that all litigation in all jurisdictions would cease.

Former Yukos shareholders have been trying to recover the value of assets they claimed were expropriated by the Russian government in 2006 and then sold on to Rosneft.

Under the agreement, the Yukos subsidiaries are expected to retain full control of their assets.

US Needs to Cut, Not OPEC

 

The onus for restoring the oil price back to equilibrium lies squarely on the shoulders of countries like the US and not on the Organization of the Petroleum Exporting Countries (OPEC), a top Goldman Sachs analyst told CNBC.

Michele Della Vigna, head of European energy research at Goldman Sachs, said non-OPEC oil producers had created the oversupply in the market which has weighed on prices.

"I think the market has realized that where we need to find the adjustment is onshore US and that is where the market is focused," he told CNBC.

"The adjustment is starting to happen there. Clearly an OPEC cut would help getting to the equilibrium faster, but at the end of the day, it is non-OPEC that needs to sort out the oversupply that it has created."

Weak global demand and booming US shale oil production are seen as two key reasons behind oil price plunge, which has fallen around 50 percent since mid-June last year. OPEC's reluctance to cut its output at its last meeting in November has also weighed on the commodity.

OPEC, a group of 12 major oil producers, which accounts for 40 percent of the world's crude oil output, has continually iterated that the organization has no intention to meet again until June. But Della Vigna said he believes a cut in production at this meeting is even less likely than at November's talks.

OPEC countries are able to extract oil from the ground at a cheaper cost than US shale firms, and there has been speculation that the two industries could be playing a "game of chicken" before cutting back to ease oversupply.

So far, the US has bared the brunt of the cut in production, with data from the EIA (Energy Information Administration) showing a fall in rig count that are in operation and a drop in US output for the first time since late December.

Global oil and Asian product market, March

By Zakiye Bahrami

Since August 2014, crude prices were on downward trend and drastically fell. however, prices rose significantly in February 2015 and some improvements were seen in the market. Oil prices decreased over February 2015 after which prices fell slightly in March (see graph 1). During March, crude prices in all three region reduced month-on-month from one to the maximum of around three dollars per barrel on average. In fact, this is not slight amount in the market means while it is slight compared to the recent drop in oil market. The key framing factors of oil prices are mentioned below.

• Total crude inventories in three regions are 120mn bl higher than a year ago and close to four-year highs. US crude inventories are the highest since the end of 1930, but European and Japanese stocks have fallen this year (Argus Report). Due to this fact, WTI fell more in comparison to Dubai and Brent prices (graph 1).
• Refining margins were robust January and February 2015, leading to high crude runs. Starting March, prices fell on the back of low global crude runs which was due to refinery turnarounds.
• Crude market is well supplied and Global plentiful crude has caused prices to drop more.

Looking ahead, Geneva agreement between Iran and P5+1 group may cause crude prices to fell. But the more realistic market frame will be presented late June, since when Iran would be able to increase crude exports. On the other hand, consecutive low crude prices will likely result in slowing US crude output growth.

 

Asian Product Markets

In Singapore products market- leader product market in Asia- the mean fell slightly in tandem with crude prices (see graph 2).

Some of the changes in product prices are because of 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. Products market at the top of the barrel including gasoline and naphtha performed strong during March. Gasoline was the strongest product due to some shut downs in supply resources. Moreover at the middle of the barrel, gasoil and jet fuel differently. Gasoil was fundamentally strong while jet fuel market performed weak. Fuel oil in both grades were infirm after strong performance in February, but it is still considerably strong compared to March 2014. (see graph 3)

 

 

 

Products market fundamentals in brief

March 2015	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)

Singapore gasoline crack- Singapore gasoline price against Dubai price- increased  in an unprecedented way during March (see graph 3). This was mostly a matter of supply. A refinery shut down in Taiwan, pressured the market. More shortage was happened in Asia because of US demand. The shutdown of a unit in California pulled gasoline and blending components to the US from Asia-Pacific. Looking ahead, it is not expected to have more strength in gasoline market. US supply side matter will be fading in the coming periods. On the other hand, seasonally gasoline demand in Q2 will be decreased.

Naphtha market had a slight improvement during March. Naphtha improvement was mostly due to cold season. Every year during the winter season, LPG prices go up and hence naphtha is used as a substitute for LPG. By the start of March and passing winter, naphtha was losing its strength. More support in naphtha market was due to high run rates in cracker units. With low naphtha outright prices, cracker units were running at high rates during February and March. Looking ahead, more arbitrage volumes from Europe to Asia, fresh supplies from Middle East (ADNOC Ruwais refinery), cracker maintenance in Asia and end of cold season will cause the naphtha market to lose the ground in the coming period.

 

Middle Distillates (gasoil, jet fuel)

Singapore Gasoil performed strong during march. The key factors to shape this strong market was a mixture of supply and demand. Some cargoes were sent to Europe from East, limiting gasoil in Asia. Following a tax cut in Vietnam, the country has increased its gasoil imports. In the coming period, it is expected to have supply shortage because of the refineries which are planned to go offline.   

Jet fuel supplies in Asia were abundant. It was somehow due to the closed arbitrage from Asia to Northwest Europe. North Asia demand was seasonally weak and there was no sign of improvements in the coming period.

Fuel Oil

Fuel oil market in both grades weakened, but still strong compared to the average of the year 2014. Fuel oil market in Q1 2015 was strong in comparison with 2014 because of bunker demand (see graph 3). Vessels calling at Singapore rose 4% year-on-year. While the recent weakness  in fuel oil market was a supply side matter. The market is well supplied. ADNOC’s Ruwais refinery offered some cargoes in the market While part of the supply increase stems from ADNOC’s Ruwais refinery, it is not anticipated to continue for much longer. The refinery is currently at the start-up phase, with fuel oil exports expected to last only until secondary units are fully operational. Moreover, Western arbitrage arrivals to Asia is likely to be increased during April and more bearish movements in the market is expected.    

Tehran Oil Show, a Platform for Interaction

 

International exhibitions are important tools for boosting exports of equipment and services. Such events are of high significance because they provide a chance for the introduction of products, technical and engineering services and technical savvy and transfer of technology.

Specialized exhibitions, like energy shows, could play an effective role in the development of oil and non-oil interactions.

Since the victory of the Islamic Revolution in 1979, Iran’s petroleum industry has always been under sanctions. But experience has shown that the attractiveness of existence of huge oil and gas reserves as well as geographically and politically strategic position of Iran has persuaded major oil companies to resist political pressures and safeguard their long-term interests through active presence in Iran’s energy sector.

Business activists involved in oil and gas are well aware that losing a market could not be compensated in the short-term and that is why international companies have left no stones unturned to remain present in Iran’s energy market. To that effect, the positive environment prevailing over Iran’s nuclear talks with P 5+1 heralds a bright future for international oil companies to operate development projects in Iran.

Iran’s petroleum industry needs to attract billions of dollars in investment every year in order to maintain its position within the Organization of the Petroleum Exporting Countries (OPEC), increase its share of gas trade market, indigenize technical knowhow and expand service-providing activities at international level.

In order to realize these objectives, international shows will give a comprehensive image of Iran’s petroleum industry to foreign participants and create opportunities for the attraction of foreign investment.

Iran is holding its 20^th annual Oil Show May 6-9. The International Oil, Gas, Petrochemical and Refining Exhibition enjoys good reputation in the world.

Iran’s Minister of Petroleum Bijan Namdar Zangeneh has assigned National Iranian Oil Company (NIOC) to organize the exhibition.

Mohammad Nasseri, manager of public relations at NIOC, said more than 1700 Iranian and foreign companies are to attend the Oil Show.

“The space demanded by 607 foreign companies attending this international exhibition is 10937m²,” Nasseri told Iran Petroleum.

He said that domestic and foreign companies registered to take part in the upcoming Oil Show are classified under four main categories as follows: Manufacturers of petroleum industry equipment, contracting companies, investment and trade companies and knowledge-based companies (universities and research centers).

Nasseri said some countries possessing energy technologies, including Italy, Britain, Germany, Russia, France, South Korea, Canada, China, United Arab Emirates and India, have expressed their willingness to attend this year’s exhibition.

He said some foreign companies have demanded more allotment, and some others want to occupy a pavilion.

Given the prospect of a nuclear accord between Iran and P 5+1, some European companies are attending Oil Show for the first time, said Nasseri.

 

Request for More Allotment

 

Nasseri said Tehran International Permanent Fairgrounds has been flooded by requests for more space. “Most international exhibitions look for clients in order to fill the envisaged space, but at Tehran Oil Show, that is exactly different. The space requested by both domestic and foreign companies is more than the room we have allotted to them,” he said.

Nasseri said an effective management is required to be exercised in the face of growing demand for more space. “We initially determined a ceiling for space allotment and the maximum space is 150 square meters. We also tried to choose the companies more carefully and only companies directly involved in the oil sector have been selected,” he said. He added that efforts have been made to facilitate the presence of as many foreign companies as possible.

Nasseri said a permanent secretariat is planned to be set up for Oil Show in order to facilitate communications in coming years.

“In response to the petroleum minister’s instructions and in compliance with the policy of the 20^th Oil Show for allotment of more room to private domestic and foreign companies, the subsidiaries of Iran’s Ministry of Petroleum are given more limited room,” he said.

Nasseri said that http://iran-oilshow.ir provides details in both Persian and English about the upcoming event. He said this website would be also of great help to those who may fail to physically take part in the exhibition.

 

Among Top Five

 

Nasseri said Tehran Oil Show is among top five oil shows in the world, adding that this exhibition has become the mostly visited one in the country.

He said that Tehran Oil Show has been held annually over the past 20 years. Nasseri said foreign companies apply for participation in Tehran Oil Show seven months before it is held. “All this, shows the significance and position of this exhibition in Iran and the region,” he said.

Referring to Iran’s potentialities in the development of projects, provision of services and manufacturing of equipment, he highlighted the operation of new phases of South Pars gas field by domestic companies like Petropars and Iranian Offshore Engineering and Construction Company (IOEC).

“These are issues which could win the interest of foreign companies and countries. Meantime, given gas production hike in Iran with the inauguration of new phases of South Pars and Iran’s enhanced capacity for exports, Iran’s gas exports could become an issue to be discussed on the fringes of the 20^th Oil Show and we predict that MOUs would be signed in this sector and other sectors like manufacturing of equipment and operation of gas refineries,” Nasseri said.

He said that three or four useful and substantive panel discussions are planned to be held in the exhibition. “We are not after quantity, and our objective is quality so that the outcome of meetings would be effective.”

 

Oil Diplomacy

 

Iran, which holds 11% of world’s oil and 18% of its gas reserves, hosts every year major international oil, gas, petrochemical and refining exhibition. It is among the most important oil and gas shows in the world in terms of the number of participants and diversity.

The presence of renowned international companies from different countries as well as domestic manufacturers and industrialists provide a good chance for mutual cooperation, attraction of investment and signature of contracts.

The display of the state-of-the-art technology in the oil and gas sectors, expansion of interaction with other countries and competition with similar oil companies across the globe, boosting domestic manufacturing through exchange of technical data, attraction of investment, transfer of the state-of-the-art technology, interaction with advanced industry, familiarity with oil, gas and petrochemical industrialists and the latest achievements in the oil industry, signature of contracts for exchanging commodities, services and technical data, creation of jobs in the oil, gas and petrochemical industries, presence of international businessmen and industrialists from across the globe to help promote export of Iranian-made products, helping create new markets outside the Islamic Republic with a view to developing destination markets and holding seminars for facilitating realization of objectives are among objectives pursued by this exhibition.

The focus of decision-making managers for achieving the objectives of Fifth Five-Year Economic Development Plan and the country’s 20-Year Vision Plan in the oil, gas, refining and petrochemical sectors, creating motivation for the expansion of investment by the private sector, cooperatives and state sector as well as domestic and foreign investment in the oil and gas industries, creation of national self-confidence and self-reliance in specialized forces, managers and domestic financiers for conducing more research and studies on exploration, extraction, processing, distribution and export of products are among objectives that could be achieved through  holding Tehran Oil and Gas Show.

The 20^th Tehran Oil and Gas Show is set to be held at a time Iran is broadening its international interactions and Ministry of Petroleum is making efforts to clear the way for more international cooperation in the economic and industrial sectors.

Hopefully, the existing environment would pave the ground for growth, development and economic prosperity so that big industries could achieve more production and productivity and that development of regional and global cooperation would provide a more extended market in light of Iran’s scientific and technical potential.

Tehran Oil Show, a Platform for Interaction

 

International exhibitions are important tools for boosting exports of equipment and services. Such events are of high significance because they provide a chance for the introduction of products, technical and engineering services and technical savvy and transfer of technology.

Specialized exhibitions, like energy shows, could play an effective role in the development of oil and non-oil interactions.

Since the victory of the Islamic Revolution in 1979, Iran’s petroleum industry has always been under sanctions. But experience has shown that the attractiveness of existence of huge oil and gas reserves as well as geographically and politically strategic position of Iran has persuaded major oil companies to resist political pressures and safeguard their long-term interests through active presence in Iran’s energy sector.

Business activists involved in oil and gas are well aware that losing a market could not be compensated in the short-term and that is why international companies have left no stones unturned to remain present in Iran’s energy market. To that effect, the positive environment prevailing over Iran’s nuclear talks with P 5+1 heralds a bright future for international oil companies to operate development projects in Iran.

Iran’s petroleum industry needs to attract billions of dollars in investment every year in order to maintain its position within the Organization of the Petroleum Exporting Countries (OPEC), increase its share of gas trade market, indigenize technical knowhow and expand service-providing activities at international level.

In order to realize these objectives, international shows will give a comprehensive image of Iran’s petroleum industry to foreign participants and create opportunities for the attraction of foreign investment.

Iran is holding its 20^th annual Oil Show May 6-9. The International Oil, Gas, Petrochemical and Refining Exhibition enjoys good reputation in the world.

Iran’s Minister of Petroleum Bijan Namdar Zangeneh has assigned National Iranian Oil Company (NIOC) to organize the exhibition.

Mohammad Nasseri, manager of public relations at NIOC, said more than 1700 Iranian and foreign companies are to attend the Oil Show.

“The space demanded by 607 foreign companies attending this international exhibition is 10937m²,” Nasseri told Iran Petroleum.

He said that domestic and foreign companies registered to take part in the upcoming Oil Show are classified under four main categories as follows: Manufacturers of petroleum industry equipment, contracting companies, investment and trade companies and knowledge-based companies (universities and research centers).

Nasseri said some countries possessing energy technologies, including Italy, Britain, Germany, Russia, France, South Korea, Canada, China, United Arab Emirates and India, have expressed their willingness to attend this year’s exhibition.

He said some foreign companies have demanded more allotment, and some others want to occupy a pavilion.

Given the prospect of a nuclear accord between Iran and P 5+1, some European companies are attending Oil Show for the first time, said Nasseri.

 

Request for More Allotment

 

Nasseri said Tehran International Permanent Fairgrounds has been flooded by requests for more space. “Most international exhibitions look for clients in order to fill the envisaged space, but at Tehran Oil Show, that is exactly different. The space requested by both domestic and foreign companies is more than the room we have allotted to them,” he said.

Nasseri said an effective management is required to be exercised in the face of growing demand for more space. “We initially determined a ceiling for space allotment and the maximum space is 150 square meters. We also tried to choose the companies more carefully and only companies directly involved in the oil sector have been selected,” he said. He added that efforts have been made to facilitate the presence of as many foreign companies as possible.

Nasseri said a permanent secretariat is planned to be set up for Oil Show in order to facilitate communications in coming years.

“In response to the petroleum minister’s instructions and in compliance with the policy of the 20^th Oil Show for allotment of more room to private domestic and foreign companies, the subsidiaries of Iran’s Ministry of Petroleum are given more limited room,” he said.

Nasseri said that http://iran-oilshow.ir provides details in both Persian and English about the upcoming event. He said this website would be also of great help to those who may fail to physically take part in the exhibition.

 

Among Top Five

 

Nasseri said Tehran Oil Show is among top five oil shows in the world, adding that this exhibition has become the mostly visited one in the country.

He said that Tehran Oil Show has been held annually over the past 20 years. Nasseri said foreign companies apply for participation in Tehran Oil Show seven months before it is held. “All this, shows the significance and position of this exhibition in Iran and the region,” he said.

Referring to Iran’s potentialities in the development of projects, provision of services and manufacturing of equipment, he highlighted the operation of new phases of South Pars gas field by domestic companies like Petropars and Iranian Offshore Engineering and Construction Company (IOEC).

“These are issues which could win the interest of foreign companies and countries. Meantime, given gas production hike in Iran with the inauguration of new phases of South Pars and Iran’s enhanced capacity for exports, Iran’s gas exports could become an issue to be discussed on the fringes of the 20^th Oil Show and we predict that MOUs would be signed in this sector and other sectors like manufacturing of equipment and operation of gas refineries,” Nasseri said.

He said that three or four useful and substantive panel discussions are planned to be held in the exhibition. “We are not after quantity, and our objective is quality so that the outcome of meetings would be effective.”

 

Oil Diplomacy

 

Iran, which holds 11% of world’s oil and 18% of its gas reserves, hosts every year major international oil, gas, petrochemical and refining exhibition. It is among the most important oil and gas shows in the world in terms of the number of participants and diversity.

The presence of renowned international companies from different countries as well as domestic manufacturers and industrialists provide a good chance for mutual cooperation, attraction of investment and signature of contracts.

The display of the state-of-the-art technology in the oil and gas sectors, expansion of interaction with other countries and competition with similar oil companies across the globe, boosting domestic manufacturing through exchange of technical data, attraction of investment, transfer of the state-of-the-art technology, interaction with advanced industry, familiarity with oil, gas and petrochemical industrialists and the latest achievements in the oil industry, signature of contracts for exchanging commodities, services and technical data, creation of jobs in the oil, gas and petrochemical industries, presence of international businessmen and industrialists from across the globe to help promote export of Iranian-made products, helping create new markets outside the Islamic Republic with a view to developing destination markets and holding seminars for facilitating realization of objectives are among objectives pursued by this exhibition.

The focus of decision-making managers for achieving the objectives of Fifth Five-Year Economic Development Plan and the country’s 20-Year Vision Plan in the oil, gas, refining and petrochemical sectors, creating motivation for the expansion of investment by the private sector, cooperatives and state sector as well as domestic and foreign investment in the oil and gas industries, creation of national self-confidence and self-reliance in specialized forces, managers and domestic financiers for conducing more research and studies on exploration, extraction, processing, distribution and export of products are among objectives that could be achieved through  holding Tehran Oil and Gas Show.

The 20^th Tehran Oil and Gas Show is set to be held at a time Iran is broadening its international interactions and Ministry of Petroleum is making efforts to clear the way for more international cooperation in the economic and industrial sectors.

Hopefully, the existing environment would pave the ground for growth, development and economic prosperity so that big industries could achieve more production and productivity and that development of regional and global cooperation would provide a more extended market in light of Iran’s scientific and technical potential.

IPC and Iranian Manufacturers

 

Indigenization and acquisition of state-of-the-art technologies have always been a major cause of concern for Iran’s petroleum industry. This issue has come further to the limelight as Iranian petroleum managers have sought to make maxim benefit from domestic potentialities. Domestic manufacturing of equipment for the petroleum industry has saved Iran hard currency.

Identifying approaches to deal with risks, removing obstacles to commercialization and building confidence with potential financiers have been the major objectives pursued by Iranian petroleum managers in recent years.

A simple estimate indicates that several hundred billion dollars in investment is to be made in the petroleum industry in the coming decades with 50-70% of these sums going to the purchase of equipment. Since petroleum industry is a strategic sector, its dependence on foreign countries might be used as a pressure lever against our country. That is why from the standpoint of national security and influence in political haggling, independence in the petroleum industry is of high significance. Every year, Iran’s petroleum industry is breaking the monopoly of big companies on technologies. Iran has been revising the terms of oil contracts in the past two years in an attempt to make them more attractive for big international companies, but domestic companies and manufacturers have been empowered by tough sanctions against the country.

Reza Padidar, head of the Society of Iranian Petroleum Industries Equipment Manufacturers (SIPIEM), says the new model of contracts, Iran Petroleum Contract (IPC), considers an acceptable share for domestic companies. Padidar shares his views with Iran Petroleum in an exclusive interview.

 

Q: The private sector contributed to the revision of oil contracts and you were directly involved in the revision procedure. How do you assess the outcome?

A: The issue of new oil contracts and planning for attraction of foreign investment in the petroleum industry started two years ago. At stake was Iran’s national interests and safeguarding oil reservoirs. Although foreign companies and financiers are poised to operate Iran’s projects, we should not easily ignore domestic manufacturing companies that have been so active and capable over the past decade.

The new oil contracts require foreign companies to coordinate their affairs with Iran economically, culturally, socially and industrially. Transfer of technological knowhow should be also taken into consideration.

Given the emergence of new economic conditions in Iran and the world, the new administration [of President Hassan Rouhani] set up a committee comprising the most skilled and most qualified oil officials to reconsider oil contracts and devise a new model. This working committee has come up with a new formula for Iranian and foreign private sector’s contribution to investment in oil fields. In the first phase, such a contribution would be made only in joint and independent oil fields.

According to IPC, a joint oil field whose data has been finalized would be given to the foreign party to be financed and provided by manpower, commodity and equipment. Then under a timeframe, the process of development will start. When the field starts production, the foreign party would receive its principal fund and rate of return on investment under an agreed coefficient varying between 15% and 20% from each barrel of oil sold. We hope that this formula would be accepted by big oil companies.

 

Q: What is the difference between this contract and the contracts signed in neighboring countries like Iraq?

A: In the contracts signed in Iraq, foreign investment companies develop an oil field and then receive the sum of investment and rate of return from the sale of products. After that, the field is given back to the government. But under IPC, the Iranian government is in charge of selling oil or gas, but the principal sum of investment and its rate of return would be paid to foreign investor per barrel of oil produced from the field. Moreover, management of production and sale will be in the hands of the Iranian petroleum industry.

Based on the new contracts, investment companies are required to meet at least 25% of their technical and engineering needs domestically through manufacturers, contractors and consultants of the private sector. Currently, 70% of the equipment required by Iran’s petroleum industry is supplied domestically while complying with international standards.

The IPC is expected to be unveiled in the near future in the presence of more than 130 international companies in London. Iranian consultants and manufacturers, particularly SIPIEM which can be instrumental in supplying products to foreign companies, has been invited to attend the ceremony.

 

Q: Is the 25% share of Iranian manufacturers and consultants in new oil contracts legally binding?

A: Sure! The new oil contracts have been drafted such that the foreign company would need endorsement of Iran’s petroleum ministry to be compensated. This endorsement will be granted only to companies that respect the 25% share.

To this end, SIPIEM along with other manufacturers have formed a big alliance to supply commodities for oil field development projects. This alliance is aimed at coordination with the petroleum ministry.

 

Q: For major oil companies, time, quality and price of commodities and equipment are very significant. How can Iranian manufacturing companies meet these criteria?

A: A large number of Iranian manufacturers have already experienced cooperation with big oil companies; therefore, they are familiar with their literature. Today, barely can one find faults with Iranian products in terms of quality and standards. Moreover, the prices proposed by Iranian companies are often below those suggested by foreign companies due to lack of such expenses as customs duties, transportation, insurance and taxation. Therefore, these prices are competitive. Iranian companies that sign agreements with foreign companies should despot securities with that company.

 

Q: How do foreign investors choose Iranian manufacturers?

A: The SIPIEM has provided a list of Iranian manufacturers and classified them in terms of quantity, quality and category of activity. This list of high diversity has been confirmed by Iran’s Ministry of Petroleum and it will be submitted to oil companies after the signature of contract.

 

Q: Do these contracts envisage any mechanisms for the technology transfer?

A: An objective pursued by the oil contracts revision committee is to upgrade the private sector in Iran’s petroleum industry. Based on IPC, foreign companies are obligated to transfer technical savvy into Iran. But details of this obligation have to be interpreted further.

 

Q: Has the 70% potential of domestic manufacturing of petroleum industry equipment become practical?

A: Yes, of course. Great achievements have been made in recent years. For instance, the number of SIPIEM members is 700 now.

 

Q: Have any plans been envisaged for resolving the financial problems of Iranian manufacturers?

A: A proposal has been submitted to Iran’s petroleum minister for the creation of a fund to support domestic manufacturing. It has won green light from the government and parliament.

The government has authorized the Iranian petroleum ministry to supply 60% of this fund through its 14.5% share of oil sales. The remaining 40% will be provided by manufacturing companies in terms of payment of membership fees.

 

Q: What do you think of the presence of Iranian manufacturers in international markets?

A: Iranian companies and manufacturers have so far exported commodities to Persian Gulf littoral states and North Africa and they are planning to penetrate into more markets.

A Brief History of Health in Petroleum Industry

 

Like other valuable histories, the history of health and treatment in the petroleum industry in Iran owes to men and women's efforts who thought of nothing but development of their homeland.

The towering buildings housing healthcare facilities for oil service workers, sophisticated specialized equipment, operation rooms fitted with the state-of-the-art technology and other technological breakthroughs in Iran, are valuable assets and heritage which have remained from the past. But undoubtedly, the secret to the survival of this organization does not lie in the stones and adobes piled up to build the hospital, nor in the steel used for the manufacturing of equipment. It stems from sense of accountability, courage, dignity and relentless efforts by doctors and staff. One century on, this facility is serving oil sector employees and their families.

Here is a brief review of establishment of healthcare facilities for Iran’s petroleum industry.

 

Dr Young, First Doctor for Oil Workers

 

Not long time after geologists and drilling crew led by William Knox D’Arcy started work in Iran in search of oil, British oil service workers realized that special weather conditions in oil-rich regions in southern Iran would give rise to a variety of diseases. Exhausting heat, no clean potable water, absence of health centers and insects threatened their health and life.

This issue prompted the British engineers to focus on medical facilities. After the issue became serious and drilling reached an operational stage, the directors of Burma Oil Company, a British oil company, decided to dispatch an experienced physician to Masjed Soleyman. An advertisement was printed in London newspapers in 1907. A veteran physician, identified as Dr M. Y. Young, was hired by the British company. He was sent to Iran to deal with healthcare affairs of drilling workers.

Dr Young, who abandoned his studies in Scotland in ophthalmology, arrived from Glasgow in 1907. He became the leading representative between the company and the Bakhtiari tribe. Following the departure of British engineers, he sought to mend relations with the Bakhtiari tribe and proved to be indispensable to the Anglo-Persian Oil Company. Among the Bakhtiari tribe, Young earned the reputation of a trusted doctor, overcoming the distrust of the tribesmen and their women and their just fears of surgical operations performed by European doctors, of whom they had little or no experience. Young also became exceedingly competent in the Persian language and familiar with the local dialects, leading him to become the company’s most effective representative to the local tribes.

During his tenure, Dr Young did not limit his work to oil service workers who fell ill. He also provided assistance to local people who were mainly poor. This highly praised method, which is by no means economical, is still in practice in the petroleum industry’s healthcare organization despite being century-old.

During his three decades of stay in Iran, Dr Young rendered lots of services in improving healthcare services and treating diseases in southern Iran. He set up numerous healthcare centers including one in Masjed Soleyman and one in Abadan. The hospital built in Masjed Soleyman was the first of kind in the Middle East.

 

1^st Oil Hospital

 

Given the development and expansion of oil exploration and refining operations, the number of workers living in the vicinity of refineries grew on a daily basis. Therefore, petroleum industry officials considered this issue since the very years of establishment of this industry in Iran.

The first oil hospital in the Middle East was set up by Dr Young in Masjed Soleyman in 1914. It was considered the only hospital in oil-rich regions for long years and it provided healthcare services to Ahvaz, Aghajari, Haftgol, Naft Sefid, Gachsaran and Mahshahr cities.

Over the past hundred years, this hospital has served petroleum industry employees of any race and nationality and it has even helped Iranian Ministry of Health and Medical Treatment on numerous occasions. The Masjed Soleyman hospital and other healthcare centers built in other oil-rich cities were of great help during eight years of Iraq-Iran war (1980-1988).

 

Occupational Medicine

 

After D’Arcy dispatched oil service workers to Iran and extraction started, he realized that petroleum industry workers were exposed to threats from diseases, as well as oil and gas pollutants. When George Reynolds was drilling the first oil well in Masjed Soleyman he came across dead fox, hyena, owl and even domestic animal bodies several kilometers away from the location of the drilling rig. The animals had died from asphyxiation. In certain cases, the leakage of poisonous gas was such that some drillers had to be transported out because of asphyxiation.

Later, the Britons imported gas masks in order to save workers from asphyxiation and they also designed “escape capsule” which was installed at the top of the drilling rig. As soon as the drilling workers felt they were close to asphyxiation, they jumped into the capsule in order to come down the derrick quickly.

These conditions continued until nationalization of petroleum industry in Iran. After nationalization, Iran’s oil sector had become an industry; therefore, relevant officials decided to establish centers for occupational medicine. In 1958, National Iranian Oil Company (NIOC) established the first center for occupational medicine in Masjed Soleyman. This center was expanded later on and commissioned numerous branches across the country. A center based in Tehran was tasked with coordinating affairs. Occupational medicine in the petroleum industry is half a century old in Iran.

 

Petroleum Industry Health

 

After nationalization of oil industry, the task of monitoring health affairs of oil officials was assigned to NIOC. The first Iranian physician who was appointed to head the NIOC healthcare center was Rostam Sarfeh. In the beginning, NIOC activities were mainly in regions far from cities and there were extremely poor health conditions.

When oil industry was nationalized, there were only 10 healthcare centers in Abadan. The figure rose to 18 in 1967. At that time, there were only two hospitals, with a total of 500 beds, in Abadan. Masjed Soleyman had a 160-bed hospital and nine healthcare centers, Aghajari had a single 60-bed hospital and Gachsaran had a small healthcare facility.

Construction of healthcare centers and hospitals was accelerated in oil-rich zones. In 1971, NIOC had 8 hospitals with a total of 960 beds, 52 healthcare facilities, 10 public health centers and 8 occupational medicine centers. These centers were equipped with 2,314 staffers who provided healthcare services to employees and their families.

 

Healthcare in Tehran

 

The expansion of activities of NIOC in the country and establishment of numerous oil refineries in non-oil-rich regions and expansion of activities of National Petrochemical Company (NPC) and National Iranian Oil Refining and Distribution Company (NIOPDC) and the transfer of NIOC head office from oil-rich regions to Tehran prompted officials to envisage construction of healthcare centers in the cities of Tehran, Shiraz, Isfahan, Tabriz, Mashhad and Mazandaran.

According to official data, the number of those benefitting from NIOC occupational medicine services rose from 38,800 to 64,447 during seven years (1965-1972). That finally resulted in the construction of Tehran Oil Hospital in 1955 and construction of more healthcare centers across the city. The mastermind of this project was Ratius Karapetian, a surgeon at Abadan hospital. The Tehran hospital was built at the residence of the last manager of Anglo-Persian Oil Company in Tehran. The activities of healthcare facilities in Tehran were gradually expanded.

Evergreen Golestan

 

Golestan province is located in green areas of northern Iran. It attracts a large number of visitors during different seasons of the year. Located southeast of the Caspian Sea, this province sprawls on more than 20,000 square kilometers. It borders Turkmenistan to the north, Semnan province to the south, North Khorasan province to the east and Mazandaran province to the west. There are 29 cities and 60 villages in this province.

The provincial capital, Gorgan, is an important center of Persian civilization with seven millennia of history. There are more than 2,500 historic, cultural and natural monuments in this province, 720 of which have been registered as national heritage. Some of the most important monuments are the tallest brick tower in Gonbad Qabous, Gorgan fortress, Kiaram Cave, Kaboudvall Waterfall, old schools, tombs of renowned figures, hills, forests and lagoons.

Golestan is the birthplace of different ethnicities ranging from Turks to Turkmen, Kazakh, Balouch and Persian.

The most popular handicraft in this province is carpet weaving, practiced mainly by Turkmen women.

Golestan is a hub of rugs, carpets and felts.

Some of monuments/tourist attractions in Golestan province are as follows:

 

Gonbad-e Qabus

 

Gonbad-e Qabus tower is a monument in Gonbad-e Qabus, Iran, and a UNESCO World Heritage Site since 2012.

The tower in the central part of the city reaches 72 meters.

The baked-brick-built tower is an enormous decagon building with a conic roof, which forms the golden ratio Phi that is approximately equal 1.618. The decagon with its 3 meter-thick wall, divided into 10 sides, has a diameter of 17 meters. The Tower was built on such a scientific and architectural design that at the front of the Tower, at an external circle, one can hear one's echo.

The tower was built in 1006 AD on the orders of the Ziyarid Amir Shams ol-Ma'ali Qabus ibn Wushmgir. It is located 3 km north of the ancient city of Jorjan, from where the Ziyarid dynasty ruled. The tower is over 1000 years old.

A Kufic inscription at the bottom of the tower reads in Arabic:

 

 

"This tall palace for the prince Shams ul-Ma'ali, Amir Qabus ibn Wushmgir ordered to build during his life, in the year 397 the lunar Hegira, and the year 375 the solar Hegira"

Robert Byron, the British travel writer and architectural critic, wrote that it was a photograph of the tower that motivated him to visit Persia. Seeing the tower, he maintained his high opinion of its qualities, writing in The Road to Oxiana, that 'the Gumbad-i-Kambus ranks with the great buildings of the world.'

During the World War II, the Germans used this tower overlooking the city as a military base.

 

Kaboudval Waterfall

 

Kaboudval Waterfall is located five kilometers south of Aliabad Katoul city in the middle of woods at the foothill of Mount Alborz. The water falling there is totally clean and its sound gives a sense of serenity to anyone walking in the forest.

This waterfall is largely visited. One should take a long way from the forest to reach the waterfall.

 

Gorgan Jomeh Mosque

 

The original structure of this mosque is located in the "Na'l Bandan" locality of the city. Most probably, the construction of which coincides with that of the brick minaret of Seljukid period. It was expanded, ornamented and renovated later.

 The mosque covers an area of 1,600 sqm and comprises of a large courtyard, eastern and western porches, nocturnal areas, north and south facing entrances, minarets of the Saljukid era, epigraphs, cuneiform inscriptions worked on brick and adornments of brick are some of the historical affects noted on the premises.

Besides which there is the carved wooden pulpit, and engraved decrees of the Safavid and Afshar eras. The ancient engraved door of the mosque, together with some archaic epigraphs, and endowment documents are currently in the museum. These are the remnants of the Safavid and Qajar period.

 

Gorgan Palace Museum

 

A palace in Gorgan has turned into a museum. Built in 1938 at the order of Reza Shah Pahlavi, the European-style monument was registered as a museum in 1964. Next to this museum stand a group of administrative buildings. It was the first museum in the north of Iran.

The ground floor of this palace houses figurines of celebrities who lived in Gorgan. The first floor puts on exhibit vessels and decorative accessories brought in during the second Pahlavi period from France, Italy, Germany and then Czechoslovakia.

 

Emadieh School

 

Emadieh School dates back to Safavid era. The two-storey building, which has a courtyard, was active until 20 years ago. The school lost its reputation after Imam Khomeini Seminary started work.

The main material used in the construction of Emadieh School is wood and bricks.

Emadieh School is built near Jomeh Mosque.

 

Nour Mausoleum

 

A mausoleum where Is’haq bin Musa bin Jaafar is laid to rest was built in Gorgan under Seljukids. This mausoleum is located in the center of Gorgan.        

There have been contradictory views about the background of this monument. Some say it was built in 9^th century AH and some others say it was built in the centuries before.

The monument, decorated with bricks, has a gypsum-covered altar, two old doors and a priceless wooden box installed on the tomb.

Verses from the holy Quran have been inscribed in Kufic script on the box.

 

Evergreen Golestan

 

Golestan province is located in green areas of northern Iran. It attracts a large number of visitors during different seasons of the year. Located southeast of the Caspian Sea, this province sprawls on more than 20,000 square kilometers. It borders Turkmenistan to the north, Semnan province to the south, North Khorasan province to the east and Mazandaran province to the west. There are 29 cities and 60 villages in this province.

The provincial capital, Gorgan, is an important center of Persian civilization with seven millennia of history. There are more than 2,500 historic, cultural and natural monuments in this province, 720 of which have been registered as national heritage. Some of the most important monuments are the tallest brick tower in Gonbad Qabous, Gorgan fortress, Kiaram Cave, Kaboudvall Waterfall, old schools, tombs of renowned figures, hills, forests and lagoons.

Golestan is the birthplace of different ethnicities ranging from Turks to Turkmen, Kazakh, Balouch and Persian.

The most popular handicraft in this province is carpet weaving, practiced mainly by Turkmen women.

Golestan is a hub of rugs, carpets and felts.

Some of monuments/tourist attractions in Golestan province are as follows:

 

Gonbad-e Qabus

 

Gonbad-e Qabus tower is a monument in Gonbad-e Qabus, Iran, and a UNESCO World Heritage Site since 2012.

The tower in the central part of the city reaches 72 meters.

The baked-brick-built tower is an enormous decagon building with a conic roof, which forms the golden ratio Phi that is approximately equal 1.618. The decagon with its 3 meter-thick wall, divided into 10 sides, has a diameter of 17 meters. The Tower was built on such a scientific and architectural design that at the front of the Tower, at an external circle, one can hear one's echo.

The tower was built in 1006 AD on the orders of the Ziyarid Amir Shams ol-Ma'ali Qabus ibn Wushmgir. It is located 3 km north of the ancient city of Jorjan, from where the Ziyarid dynasty ruled. The tower is over 1000 years old.

A Kufic inscription at the bottom of the tower reads in Arabic:

 

 

"This tall palace for the prince Shams ul-Ma'ali, Amir Qabus ibn Wushmgir ordered to build during his life, in the year 397 the lunar Hegira, and the year 375 the solar Hegira"

Robert Byron, the British travel writer and architectural critic, wrote that it was a photograph of the tower that motivated him to visit Persia. Seeing the tower, he maintained his high opinion of its qualities, writing in The Road to Oxiana, that 'the Gumbad-i-Kambus ranks with the great buildings of the world.'

During the World War II, the Germans used this tower overlooking the city as a military base.

 

Kaboudval Waterfall

 

Kaboudval Waterfall is located five kilometers south of Aliabad Katoul city in the middle of woods at the foothill of Mount Alborz. The water falling there is totally clean and its sound gives a sense of serenity to anyone walking in the forest.

This waterfall is largely visited. One should take a long way from the forest to reach the waterfall.

 

Gorgan Jomeh Mosque

 

The original structure of this mosque is located in the "Na'l Bandan" locality of the city. Most probably, the construction of which coincides with that of the brick minaret of Seljukid period. It was expanded, ornamented and renovated later.

 The mosque covers an area of 1,600 sqm and comprises of a large courtyard, eastern and western porches, nocturnal areas, north and south facing entrances, minarets of the Saljukid era, epigraphs, cuneiform inscriptions worked on brick and adornments of brick are some of the historical affects noted on the premises.

Besides which there is the carved wooden pulpit, and engraved decrees of the Safavid and Afshar eras. The ancient engraved door of the mosque, together with some archaic epigraphs, and endowment documents are currently in the museum. These are the remnants of the Safavid and Qajar period.

 

Gorgan Palace Museum

 

A palace in Gorgan has turned into a museum. Built in 1938 at the order of Reza Shah Pahlavi, the European-style monument was registered as a museum in 1964. Next to this museum stand a group of administrative buildings. It was the first museum in the north of Iran.

The ground floor of this palace houses figurines of celebrities who lived in Gorgan. The first floor puts on exhibit vessels and decorative accessories brought in during the second Pahlavi period from France, Italy, Germany and then Czechoslovakia.

 

Emadieh School

 

Emadieh School dates back to Safavid era. The two-storey building, which has a courtyard, was active until 20 years ago. The school lost its reputation after Imam Khomeini Seminary started work.

The main material used in the construction of Emadieh School is wood and bricks.

Emadieh School is built near Jomeh Mosque.

 

Nour Mausoleum

 

A mausoleum where Is’haq bin Musa bin Jaafar is laid to rest was built in Gorgan under Seljukids. This mausoleum is located in the center of Gorgan.        

There have been contradictory views about the background of this monument. Some say it was built in 9^th century AH and some others say it was built in the centuries before.

The monument, decorated with bricks, has a gypsum-covered altar, two old doors and a priceless wooden box installed on the tomb.

Verses from the holy Quran have been inscribed in Kufic script on the box.

 

Evergreen Golestan

 

Golestan province is located in green areas of northern Iran. It attracts a large number of visitors during different seasons of the year. Located southeast of the Caspian Sea, this province sprawls on more than 20,000 square kilometers. It borders Turkmenistan to the north, Semnan province to the south, North Khorasan province to the east and Mazandaran province to the west. There are 29 cities and 60 villages in this province.

The provincial capital, Gorgan, is an important center of Persian civilization with seven millennia of history. There are more than 2,500 historic, cultural and natural monuments in this province, 720 of which have been registered as national heritage. Some of the most important monuments are the tallest brick tower in Gonbad Qabous, Gorgan fortress, Kiaram Cave, Kaboudvall Waterfall, old schools, tombs of renowned figures, hills, forests and lagoons.

Golestan is the birthplace of different ethnicities ranging from Turks to Turkmen, Kazakh, Balouch and Persian.

The most popular handicraft in this province is carpet weaving, practiced mainly by Turkmen women.

Golestan is a hub of rugs, carpets and felts.

Some of monuments/tourist attractions in Golestan province are as follows:

 

Gonbad-e Qabus

 

Gonbad-e Qabus tower is a monument in Gonbad-e Qabus, Iran, and a UNESCO World Heritage Site since 2012.

The tower in the central part of the city reaches 72 meters.

The baked-brick-built tower is an enormous decagon building with a conic roof, which forms the golden ratio Phi that is approximately equal 1.618. The decagon with its 3 meter-thick wall, divided into 10 sides, has a diameter of 17 meters. The Tower was built on such a scientific and architectural design that at the front of the Tower, at an external circle, one can hear one's echo.

The tower was built in 1006 AD on the orders of the Ziyarid Amir Shams ol-Ma'ali Qabus ibn Wushmgir. It is located 3 km north of the ancient city of Jorjan, from where the Ziyarid dynasty ruled. The tower is over 1000 years old.

A Kufic inscription at the bottom of the tower reads in Arabic:

 

 

"This tall palace for the prince Shams ul-Ma'ali, Amir Qabus ibn Wushmgir ordered to build during his life, in the year 397 the lunar Hegira, and the year 375 the solar Hegira"

Robert Byron, the British travel writer and architectural critic, wrote that it was a photograph of the tower that motivated him to visit Persia. Seeing the tower, he maintained his high opinion of its qualities, writing in The Road to Oxiana, that 'the Gumbad-i-Kambus ranks with the great buildings of the world.'

During the World War II, the Germans used this tower overlooking the city as a military base.

 

Kaboudval Waterfall

 

Kaboudval Waterfall is located five kilometers south of Aliabad Katoul city in the middle of woods at the foothill of Mount Alborz. The water falling there is totally clean and its sound gives a sense of serenity to anyone walking in the forest.

This waterfall is largely visited. One should take a long way from the forest to reach the waterfall.

 

Gorgan Jomeh Mosque

 

The original structure of this mosque is located in the "Na'l Bandan" locality of the city. Most probably, the construction of which coincides with that of the brick minaret of Seljukid period. It was expanded, ornamented and renovated later.

 The mosque covers an area of 1,600 sqm and comprises of a large courtyard, eastern and western porches, nocturnal areas, north and south facing entrances, minarets of the Saljukid era, epigraphs, cuneiform inscriptions worked on brick and adornments of brick are some of the historical affects noted on the premises.

Besides which there is the carved wooden pulpit, and engraved decrees of the Safavid and Afshar eras. The ancient engraved door of the mosque, together with some archaic epigraphs, and endowment documents are currently in the museum. These are the remnants of the Safavid and Qajar period.

 

Gorgan Palace Museum

 

A palace in Gorgan has turned into a museum. Built in 1938 at the order of Reza Shah Pahlavi, the European-style monument was registered as a museum in 1964. Next to this museum stand a group of administrative buildings. It was the first museum in the north of Iran.

The ground floor of this palace houses figurines of celebrities who lived in Gorgan. The first floor puts on exhibit vessels and decorative accessories brought in during the second Pahlavi period from France, Italy, Germany and then Czechoslovakia.

 

Emadieh School

 

Emadieh School dates back to Safavid era. The two-storey building, which has a courtyard, was active until 20 years ago. The school lost its reputation after Imam Khomeini Seminary started work.

The main material used in the construction of Emadieh School is wood and bricks.

Emadieh School is built near Jomeh Mosque.

 

Nour Mausoleum

 

A mausoleum where Is’haq bin Musa bin Jaafar is laid to rest was built in Gorgan under Seljukids. This mausoleum is located in the center of Gorgan.        

There have been contradictory views about the background of this monument. Some say it was built in 9^th century AH and some others say it was built in the centuries before.

The monument, decorated with bricks, has a gypsum-covered altar, two old doors and a priceless wooden box installed on the tomb.

Verses from the holy Quran have been inscribed in Kufic script on the box.

 

Gasoline Distribution in Golestan

 

Given its tourist attractions and proximity to northern borders, Golestan province is crowded by visitors particularly during holidays. Fuel distribution is a crucial task as many cars travel to this province, particularly during Persian New Year holidays.

Amir Bani-Karimi, manager of oil products distribution zone in Golestan, told Iran Petroleum that Gorgan and Gonbad oil storage facilities hold 220 million liters of products. He said 93 million liters is stored in Gorgan and 127 million liters in Gonbad depot.

Bani-Karimi said 110 oil tankers, an airplane refueling center with a storage capacity of 380,000 liters, 64 liquid fuel distribution centers and 64 CNG distribution stations are active in NIOPDC zone in Golestan province.

“Golestan province, the hub of agriculture in the country, grows more than 70 types of products. The agricultural sector consumes 2 million liters of kerosene a year,” he said.

 

Crucial Railway

 

Bani-Karimi said the operation of Inche Boroun-Turkmenistan-Kazakhstan railroad has been a significant development in Golestan province. He said this railway has greatly increased energy exchanges with the Commonwealth of Independent States (CIS).

“At present, Turkmenistan and Kyrgyzstan enjoy the best conditions for swap,” he said, adding that National Iranian Oil Products Distribution Company (NIOPDC) welcomes financiers willing to invest in swap projects.

He said oil products could be swapped following connection of Gorgan railway to an oil storage facility in the city.

He, however, said no foreign investor has so far expressed readiness for involvement in this project.

Bani-Karimi said the jet fuel storage capacity in Gorgan is to increase from 380,000 to 1 million liters.

He said big planes are expected to touch down at Gorgan airport soon, adding that the storage capacity enhancement project will be put into action soon.

 

Oil Products Consumption

 

Regarding consumption of oil products in Golestan, Bani-Karimi said during the first 11 months of the current calendar year (started on March 21, 2014), 1.36 million liters a day of gasoline was consumed on average, down 3.3% year-on-year. He said kerosene distribution was down 10.5% to 200,000 l/d, gasoil fell 7.3% to 1.15 ml/d, fuel oil dropped 67%, liquid petroleum gas(LPG) consumption was up 1.3% to 150,000 l/d ,while CNG daily distribution rose 1% to 570,000 mcm.

 

Border Supply

 

Bani-Karimi said no fuel supply is being done at borders, but “we are to control car fuel tanks to measure their capacity.” He said that a plan is under way for control of car fuel tanks in order to avoid smuggling of fuel out of the country.

“We are making efforts so that points of sale would sell at the same amount,” he said.

“We are to start fuel distribution in Inche Boroun and we have got permission to that effect,” he said.

Bani-Kairmi said the necessary coordination has been already done in South Khorasan and South Khorasan provinces.

He said that four CNG stations and four liquid fuel distribution centers became operational in the current calendar year.

He added that 10 oil products distribution centers are also being planned and that half of them are hoped to come on-stream in the next calendar year.