Sigh of Relief for World Economy

 

Before President Hassan Rouhani took office, Iran’s economy had suffered serious damage due to weak management. The recent progress in Iran’s nuclear talks with world powers would definitely improve the country’s economy and would be conducive to encouraging business and investment in Iran.

Upgrading national production capacity and concomitant job creation are among objectives pursued by Iranian government and economic activists. That could happen quickly through attraction of foreign investment.

Meantime, the economy and market of Iran, which is rich in natural resources and enjoys an ideal geopolitical position, is an advantage coveted by big industrial and commercial companies in the world. Positive interaction between Iran and foreigners would be attractive and beneficial to both parties.

Some groups in Iran and in the US are opposed to a nuclear deal between Iran and world powers and some governments are stonewalling efforts for a nuclear deal on Iran’s nuclear program due to their political and economic interests. However, most believe that public opinion in Iran and the US would overcome opposition as ordinary Iranian and American citizens merely want peaceful coexistence.

Along with political will in both countries, big American and European companies could also convince US hawkish politicians to back down from their positions.

Even after a nuclear deal would be reached, it would take long for the sanctions to be lifted. But the US and the European Union (EU) would be happy to face an emerging market.

The primary effect of the removal of sanctions might be Iran’s oil exports hike. After Saudi Arabia invaded Yemen, oil prices touched $60 a barrel, but that was short-lived and the prices fell again.

Many analysts believe that the oil market would see oil prices drop significantly as soon as Iran and world powers reach final agreement. In their view, the removal of sanctions would mean that Iran’s petroleum industry would improve and it would attract foreign investment.

If the sanctions are annulled, Iran would be able to raise its oil production to 4 mb/d in a year. This amount of oil supply would bring petrodollars for Iran although oil prices may still remain low. Moreover, the removal of sanctions would let foreign companies invest in Iran’s oil, gas and petrochemical projects.

Iran with a population of 78 million has the 27^th gross national product (GNP) in the world. Iran’s GNP is derived from services (52%), oil (18%), industry and mine (13%), agriculture (12%) and construction (5%).

Many Western companies are willing to invest in Iran’s oil and industry sectors. Iran’s economic growth is predicted to reach 6% in 2017 provided that the sanctions are lifted.

Therefore, a final deal would deeply affect the geography of the region and let the world economy take a sigh of relief.

Oil Giants Eye Iran

 

The most significant and the most attractive point in remarks by Iran’s Minister of Petroleum Bijan Zangeneh on April 14, 2015 was definitely about development of Iran’s ties with world oil giants and the return of Iran’s production and exports level to the pre-sanctions level. This issue is inevitable in light of progress in Iran’s nuclear talks with six world powers and the adoption of an outline nuclear agreement in the Swiss city of Lausanne.

A potential nuclear deal between Iran and the global world powers and the ensuing lifting of sanctions and the Iranian petroleum minister’s view of maximum cooperation with foreign companies were reflected widely at international level. Oil giants like Royal Dutch Shell, France’s Total, Russia’s Lukoil, two Chinese companies and three Indian oil and gas companies voiced their readiness for investment in Iran.

Given the significant potentialities of Iran’s petroleum industry in the development of oil and gas fields, it is clear that oil companies would be very willing to invest in Iran. Iranian officials, particularly oil officials, have long insisted on this issue.

“Energy companies are clearly interested in Iran,” said Peter Harrell, a former top sanctions official at the US State Department and now a principal at consultancy Prospect Global Strategies LLC.

Some analysts say the return of Iran’s petroleum industry to the pre-sanctions level would take time, but Zangeneh said in his press conference with Iranian and foreign journalists that Iran’s crude oil production would increase within months in case the sanctions are fully lifted.

“Some international officials insist [on the point] that Iran would need 3 to 5 years to return to oil market. That’s not true because practical measures have been tested and carried out in different fields in the country in order to remove bottlenecks and enhance oil production capacity,” said the minister.

Regarding Iran’s oil policy vis-à-vis the Organization of the Petroleum Exporting Countries (OPEC) for the return of Iran’s oil to market, Zangeneh said: “Under the present circumstances, OPEC has definitely reached a sort of prudence and maturity and there should be planning so that the return of Iran’s oil to market would not harm prices.”

Noting that Iran is looking for interaction with OPEC member states, Zangeneh said: “Iran will by no means adopt an invasive approach vis-à-vis OPEC after lifting of the sanctions and one of Iran’s most important tools for haggling within OPEC would be to raise production and supplying surplus oil. The most conservative OPEC members do not believe either that more than 30 million barrels of oil should be produced by OPEC. That is the case, while we believe that 5% of this 30 million barrels should be deducted and the market share is not something we would ignore easily.”

“In the previous OPEC Conference, 8 countries favored output reduction and 4 opposed, but fortunately, the number of those favoring production cut, has increased and 2 or 3 more countries have joined pro-reduction [OPEC members]. Of course, within OPEC, decisions are made based on unanimity and even a single vote could veto any new decision,” said the minister.

Referring to Iraq’s firm position alongside Iran for OPEC oil production cut, Zangeneh said: “OPEC quota system has not been legally annulled because it depends on a resolution. But the 30-million-barrel production ceiling is just a press statement which could not replace it (the resolution). OPEC meetings are venues where political interactions and conflicts of countries are reflected and people do not decide only economically, but they also communicate the political position of their country and everyone knows what they want and nobody is sleeping to be woken up.”

 

Cooperation with China

 

Zangeneh recently led a delegation to China and met with energy officials there to discuss cooperation. Expansion of economic cooperation, development of energy ties and settlement of some problems were among the most important topics of talks between Iranian and Chinese officials.

The Chinese are apparently worried that Iran might no longer be willing to continue cooperation with them once sanctions are lifted and major oil companies could then return to Iran.

On this issue, Zangeneh said: “We will continue friendship and cooperation with the countries that cooperated with us during the period of sanctions. Moreover, China is a strategic partner for Iran under any circumstances because it has been and will be the biggest buyer of our oil and even now their oil demand is growing.”

Noting that China will remain a strategic partner for Iran even after sanctions are annulled, the minister said: “We will not give monopoly to the Chinese, but since they have been with us during sanctions, we may give them priority in some projects. We also try to use the potential of China’s finance.”

Zangeneh said China does not owe Iran any petrodollars, adding that Shell’s $2.8 billion debt to Iran would be restituted immediately after sanctions are lifted.

 

IPC

 

Since taking office in August 2013, Zangeneh reaffirmed support for domestic potentialities and focused on cooperation with international oil companies. To that effect, regardless of Iran’s nuclear talks with world powers for the lifting of sanctions, he called for the revision of the structure of Iran’s oil contracts in order to make them attractive to world companies.

“By September 2015, the structure of new oil contracts (Iran Petroleum Contract) will be officially presented to major international oil and gas companies,” he said, adding that a number of Iran’s oil projects are also expected to be presented to foreign companies as new opportunities for investment.

Zangeneh said the IPC lays the foundation for attracting investment and technology. “In this structure, it has been predicted that any foreign company willing to work in Iran should have a qualified domestic partner,” he said.

“Our new contracts for the development of fields will not be like production sharing contracts although this law authorizes us to apply them, but the government’s policy is not signing production sharing agreements,” he added.

 

Joint Fields; a Venue for Investment

 

Zangeneh said all important joint oil and gas fields are needed to have become active under Iran’s Sixth Five-Year Economic Development Plan.

“The priority is oil production from West Karoun fields (North Azadegan and South Azadegan, Yadavaran and Yaran) and we will be able to produce 700,000 b/d from these fields in three years. We are working on these fields which are shared [with Iraq],” he said.

Zangeneh said the necessary permit has been received for signing buyback deals for their development, adding that the projects would cost $20 billion.

 

Gas Output Up 200 mcm

 

Zangeneh said the most important activity of Ministry of Petroleum is enhancing Iran's gas production. He said that Iran was running short of 160 mcm/d of gas when he took office, adding that development phases of South Pars gas field provide a good change for more gas production.

The minister said 7 out of 17 phases of South Pars are prioritized based on their progress.

“This does not mean that we won’t work on other ten phases, but in terms of management and finance, we have focused on Phase 12 which is equivalent to three phases and phases 15&16 and 17&18 because the objective is gas production and merely pushing ahead the projects would be no remedy,” he said.

Zangeneh said it was difficult to increase gas production by 100 mcm last winter at a time the country was under sanctions. But, he added, Iran managed to increase gas production by 125 mcm/d.

Regarding plans by Ministry of Petroleum for the current year, Zangeneh said that production from Phases 15&16 is to be stabilized this year, Phase 17 would become operational and Phase 18 is under development. The minister said gas is to be carried onshore for phases 19, 20 and 21.

Zangeneh forecasted gas production to increase 40 to 50 mcm/d this year, adding that production from the seven prioritized phases would increase by 200 mcm/d in two years.

He also said that the finance for new South Pars projects would be provided through National Development Fund of Iran (NDFI).

“All plans spoken about are based on the assumption that the sanctions would be in effect. In case they are lifted, work will be done faster,” said Zangeneh.

 

Iran Ready to Supply Gas to Pakistan

 

Iran’s gas exports to Pakistan through a pipeline have yet to become operational as the Pakistani party has failed to honor its obligations.

“Pakistan says international sanctions are behind delaying the construction of its side of the gas pipeline to import natural gas from Iran. In our latest talks, I told the Pakistanis that they have to pay indemnity to Iran in case no gas is supplied. The Pakistanis demanded respite and Iran has accepted provided that some clauses in the contract signed between the two countries are amended,” said Zangeneh.

He said that Pakistani officials have not contacted Iranians after their first round of talks. “We hope that the international sanctions are lifted, because in case of full suspension of Iran sanctions, Pakistan would no longer have any pretext for delaying and time killing for importing gas from Iran.”

 

Gas Exports to Turkey

 

Zangeneh also touched on the latest gas talks between Iran and Turkey during a recent visit to Tehran of Turkish President Recep Tayyip Erdogan.

“Turkey has already filed two separate complaints with international arbitration bodies against its gas contract with Iran. The first complaint was about the low quality and volume of Iran’s gas supply to Turkey. It did not pay off and the court ruled in favor of Iran,” he said.

Zangeneh said Iran would have been obligated to cut its gas price by 30% had the court ruled in favor of Turkey.

“However, Turkey’s second complaint for alleged high price of Iran’s gas is under way and its final result is predicted to be issued in two months,” he said.

“The Turkish party was suggested to more than double its gas imports from Iran in return for reduction the price charged by Iran, but Turkey officially opposed this proposal,” he added.

Regarding gas exports to Europe, Zangeneh said: “Europe has always been one of Iran’s markets, but before the sanctions are lifted nothing serious would happen. We had better wait for the sanctions to be lifted; however, I have to note that our priority in gas exports is our neighbors.”   

Zangeneh also referred to domestic gas supply projects, saying gas delivery to Sistan Balouchestan province, which did not enjoy gas, started last year. This project, he said, would cost nearly $2 billion.

He added that this project would last around 2.5 years and the pipeline built for gas supply to Pakistan would carry gas to the province.

 

Gasoline Imports to Quit

 

At the press conference, the Iranian minister of petroleum also touched on the downstream sector which includes refining, distribution and petrochemical production.

Zangeneh expressed hope that the first terrain of Persian Gulf Star Refinery, with a capacity of 120,000 b/d, would start production in order to end Iran’s need for importing gasoline.

The minister said Iran would be exporting gasoil this year, adding: “Another important project that would soon start is the construction of 8 gas condensate refineries, each with capacity of 60,000 b/d, in Assaluyeh.

Zangeneh said these refineries have been ceded to the private sector and Social Security Organization. “If this project is finalized we would no longer have any gas condensate for exports and it will be fully consumed in the country and converted to petrochemical feedstock,” he added.

The minister expressed hope for the resolution of financial problems for a second refinery in Abadan.

“We will also make efforts to activate the construction project of Anahita refinery in Kermanshah province. It will be done if the sanctions are lifted,” he said.

 

Shale Oil Impact

 

Simultaneous with fall in global oil prices, many analysts said the objective is to drive shale oil and shale gas out of the market. That sounds right, given the high production costs of shale oil. However, Iran’s petroleum minister said that shale oil has not been so influential to affect supply and demand.

“Not raising the price of conventional oil would make shale oil uneconomical due to its higher price. Shale oil price varies from $40 to $90 in different fields. In light of the current price reduction, costlier oil will be pushed out of the market and production would be decelerated but will not stop,” he said.

“If oil price is $70 to $100, more shale oil will enter the market and if it is $60, less shale oil will flow into the market. But at the present prices, shale oil halt has not been such to affect supply and demand,” he added.

Zangeneh also referred to refining and petrochemicals, saying: “Given the development of new phases of South Pars, 1.5 million tons of ethane (one million tons from phases 15&16 and half a million tons from Phase 17) will be delivered to petrochemical plants this year.”

He said that petrochemical projects worth around $75 billion have been endorsed, adding: “Most of these projects are to be done with foreign finance, partly by China, but that’s not enough.”

 

Domestic Manufacturing

 

Zangeneh supported domestic manufacturing and development of technology, saying: “Major work has been done in these two sectors and that should continue very seriously. Even if sanctions are lifted we have to benefit from opportunities.”

“One of these instances was unprecedented cooperation with universities. We signed agreements with them in the upstream oil sector,” he said.

“This cooperation is with universities which offer upstream courses,” he said, adding that agreements have been signed with Sharif University of Technology, Amir Kabir University of Technology, University of Tehran, Shiraz University, Sahand University of Technology, Petroleum University of Technology and Recovery Enhancement Research Institute.

“We definitely envisage development of this method in the downstream sector too so that other universities would cooperate and we could become license holder,” said Zangeneh.

The minister said all widely used items of petroleum industry have been domestically manufactured.

“We have to take advantage of the opportunity of lifting of sanctions and benefit from the potentialities of credited foreign universities. In domestic manufacturing, we should also use owners of technology so that the manufactured items would be used internally and they could be exported,” he said.

 

Crude Oil at Energy Exchange

 

Regarding Iran Energy Exchange (IRENEX), Zangeneh said that necessary coordination has been made and permits for crude oil and petroleum products to be offered at IRENEX this year.

He said that selling crude oil at IRENEX would contribute to transparency and would also generate new business opportunities in favor of success of Iran’s petroleum industry.

Zangeneh also referred to fuel smuggling and noted that the main fuel being smuggled is gasoil.

He said that fuel smuggling through official channels should be blocked.

“If we can supply the needs of customers through official channels they would no longer resort to smuggling. We are currently following up on the issue in order to export [fuel] to Afghanistan in big volumes,” said Zangeneh.

Oil Giants Eye Iran

 

The most significant and the most attractive point in remarks by Iran’s Minister of Petroleum Bijan Zangeneh on April 14, 2015 was definitely about development of Iran’s ties with world oil giants and the return of Iran’s production and exports level to the pre-sanctions level. This issue is inevitable in light of progress in Iran’s nuclear talks with six world powers and the adoption of an outline nuclear agreement in the Swiss city of Lausanne.

A potential nuclear deal between Iran and the global world powers and the ensuing lifting of sanctions and the Iranian petroleum minister’s view of maximum cooperation with foreign companies were reflected widely at international level. Oil giants like Royal Dutch Shell, France’s Total, Russia’s Lukoil, two Chinese companies and three Indian oil and gas companies voiced their readiness for investment in Iran.

Given the significant potentialities of Iran’s petroleum industry in the development of oil and gas fields, it is clear that oil companies would be very willing to invest in Iran. Iranian officials, particularly oil officials, have long insisted on this issue.

“Energy companies are clearly interested in Iran,” said Peter Harrell, a former top sanctions official at the US State Department and now a principal at consultancy Prospect Global Strategies LLC.

Some analysts say the return of Iran’s petroleum industry to the pre-sanctions level would take time, but Zangeneh said in his press conference with Iranian and foreign journalists that Iran’s crude oil production would increase within months in case the sanctions are fully lifted.

“Some international officials insist [on the point] that Iran would need 3 to 5 years to return to oil market. That’s not true because practical measures have been tested and carried out in different fields in the country in order to remove bottlenecks and enhance oil production capacity,” said the minister.

Regarding Iran’s oil policy vis-à-vis the Organization of the Petroleum Exporting Countries (OPEC) for the return of Iran’s oil to market, Zangeneh said: “Under the present circumstances, OPEC has definitely reached a sort of prudence and maturity and there should be planning so that the return of Iran’s oil to market would not harm prices.”

Noting that Iran is looking for interaction with OPEC member states, Zangeneh said: “Iran will by no means adopt an invasive approach vis-à-vis OPEC after lifting of the sanctions and one of Iran’s most important tools for haggling within OPEC would be to raise production and supplying surplus oil. The most conservative OPEC members do not believe either that more than 30 million barrels of oil should be produced by OPEC. That is the case, while we believe that 5% of this 30 million barrels should be deducted and the market share is not something we would ignore easily.”

“In the previous OPEC Conference, 8 countries favored output reduction and 4 opposed, but fortunately, the number of those favoring production cut, has increased and 2 or 3 more countries have joined pro-reduction [OPEC members]. Of course, within OPEC, decisions are made based on unanimity and even a single vote could veto any new decision,” said the minister.

Referring to Iraq’s firm position alongside Iran for OPEC oil production cut, Zangeneh said: “OPEC quota system has not been legally annulled because it depends on a resolution. But the 30-million-barrel production ceiling is just a press statement which could not replace it (the resolution). OPEC meetings are venues where political interactions and conflicts of countries are reflected and people do not decide only economically, but they also communicate the political position of their country and everyone knows what they want and nobody is sleeping to be woken up.”

 

Cooperation with China

 

Zangeneh recently led a delegation to China and met with energy officials there to discuss cooperation. Expansion of economic cooperation, development of energy ties and settlement of some problems were among the most important topics of talks between Iranian and Chinese officials.

The Chinese are apparently worried that Iran might no longer be willing to continue cooperation with them once sanctions are lifted and major oil companies could then return to Iran.

On this issue, Zangeneh said: “We will continue friendship and cooperation with the countries that cooperated with us during the period of sanctions. Moreover, China is a strategic partner for Iran under any circumstances because it has been and will be the biggest buyer of our oil and even now their oil demand is growing.”

Noting that China will remain a strategic partner for Iran even after sanctions are annulled, the minister said: “We will not give monopoly to the Chinese, but since they have been with us during sanctions, we may give them priority in some projects. We also try to use the potential of China’s finance.”

Zangeneh said China does not owe Iran any petrodollars, adding that Shell’s $2.8 billion debt to Iran would be restituted immediately after sanctions are lifted.

 

IPC

 

Since taking office in August 2013, Zangeneh reaffirmed support for domestic potentialities and focused on cooperation with international oil companies. To that effect, regardless of Iran’s nuclear talks with world powers for the lifting of sanctions, he called for the revision of the structure of Iran’s oil contracts in order to make them attractive to world companies.

“By September 2015, the structure of new oil contracts (Iran Petroleum Contract) will be officially presented to major international oil and gas companies,” he said, adding that a number of Iran’s oil projects are also expected to be presented to foreign companies as new opportunities for investment.

Zangeneh said the IPC lays the foundation for attracting investment and technology. “In this structure, it has been predicted that any foreign company willing to work in Iran should have a qualified domestic partner,” he said.

“Our new contracts for the development of fields will not be like production sharing contracts although this law authorizes us to apply them, but the government’s policy is not signing production sharing agreements,” he added.

 

Joint Fields; a Venue for Investment

 

Zangeneh said all important joint oil and gas fields are needed to have become active under Iran’s Sixth Five-Year Economic Development Plan.

“The priority is oil production from West Karoun fields (North Azadegan and South Azadegan, Yadavaran and Yaran) and we will be able to produce 700,000 b/d from these fields in three years. We are working on these fields which are shared [with Iraq],” he said.

Zangeneh said the necessary permit has been received for signing buyback deals for their development, adding that the projects would cost $20 billion.

 

Gas Output Up 200 mcm

 

Zangeneh said the most important activity of Ministry of Petroleum is enhancing Iran's gas production. He said that Iran was running short of 160 mcm/d of gas when he took office, adding that development phases of South Pars gas field provide a good change for more gas production.

The minister said 7 out of 17 phases of South Pars are prioritized based on their progress.

“This does not mean that we won’t work on other ten phases, but in terms of management and finance, we have focused on Phase 12 which is equivalent to three phases and phases 15&16 and 17&18 because the objective is gas production and merely pushing ahead the projects would be no remedy,” he said.

Zangeneh said it was difficult to increase gas production by 100 mcm last winter at a time the country was under sanctions. But, he added, Iran managed to increase gas production by 125 mcm/d.

Regarding plans by Ministry of Petroleum for the current year, Zangeneh said that production from Phases 15&16 is to be stabilized this year, Phase 17 would become operational and Phase 18 is under development. The minister said gas is to be carried onshore for phases 19, 20 and 21.

Zangeneh forecasted gas production to increase 40 to 50 mcm/d this year, adding that production from the seven prioritized phases would increase by 200 mcm/d in two years.

He also said that the finance for new South Pars projects would be provided through National Development Fund of Iran (NDFI).

“All plans spoken about are based on the assumption that the sanctions would be in effect. In case they are lifted, work will be done faster,” said Zangeneh.

 

Iran Ready to Supply Gas to Pakistan

 

Iran’s gas exports to Pakistan through a pipeline have yet to become operational as the Pakistani party has failed to honor its obligations.

“Pakistan says international sanctions are behind delaying the construction of its side of the gas pipeline to import natural gas from Iran. In our latest talks, I told the Pakistanis that they have to pay indemnity to Iran in case no gas is supplied. The Pakistanis demanded respite and Iran has accepted provided that some clauses in the contract signed between the two countries are amended,” said Zangeneh.

He said that Pakistani officials have not contacted Iranians after their first round of talks. “We hope that the international sanctions are lifted, because in case of full suspension of Iran sanctions, Pakistan would no longer have any pretext for delaying and time killing for importing gas from Iran.”

 

Gas Exports to Turkey

 

Zangeneh also touched on the latest gas talks between Iran and Turkey during a recent visit to Tehran of Turkish President Recep Tayyip Erdogan.

“Turkey has already filed two separate complaints with international arbitration bodies against its gas contract with Iran. The first complaint was about the low quality and volume of Iran’s gas supply to Turkey. It did not pay off and the court ruled in favor of Iran,” he said.

Zangeneh said Iran would have been obligated to cut its gas price by 30% had the court ruled in favor of Turkey.

“However, Turkey’s second complaint for alleged high price of Iran’s gas is under way and its final result is predicted to be issued in two months,” he said.

“The Turkish party was suggested to more than double its gas imports from Iran in return for reduction the price charged by Iran, but Turkey officially opposed this proposal,” he added.

Regarding gas exports to Europe, Zangeneh said: “Europe has always been one of Iran’s markets, but before the sanctions are lifted nothing serious would happen. We had better wait for the sanctions to be lifted; however, I have to note that our priority in gas exports is our neighbors.”   

Zangeneh also referred to domestic gas supply projects, saying gas delivery to Sistan Balouchestan province, which did not enjoy gas, started last year. This project, he said, would cost nearly $2 billion.

He added that this project would last around 2.5 years and the pipeline built for gas supply to Pakistan would carry gas to the province.

 

Gasoline Imports to Quit

 

At the press conference, the Iranian minister of petroleum also touched on the downstream sector which includes refining, distribution and petrochemical production.

Zangeneh expressed hope that the first terrain of Persian Gulf Star Refinery, with a capacity of 120,000 b/d, would start production in order to end Iran’s need for importing gasoline.

The minister said Iran would be exporting gasoil this year, adding: “Another important project that would soon start is the construction of 8 gas condensate refineries, each with capacity of 60,000 b/d, in Assaluyeh.

Zangeneh said these refineries have been ceded to the private sector and Social Security Organization. “If this project is finalized we would no longer have any gas condensate for exports and it will be fully consumed in the country and converted to petrochemical feedstock,” he added.

The minister expressed hope for the resolution of financial problems for a second refinery in Abadan.

“We will also make efforts to activate the construction project of Anahita refinery in Kermanshah province. It will be done if the sanctions are lifted,” he said.

 

Shale Oil Impact

 

Simultaneous with fall in global oil prices, many analysts said the objective is to drive shale oil and shale gas out of the market. That sounds right, given the high production costs of shale oil. However, Iran’s petroleum minister said that shale oil has not been so influential to affect supply and demand.

“Not raising the price of conventional oil would make shale oil uneconomical due to its higher price. Shale oil price varies from $40 to $90 in different fields. In light of the current price reduction, costlier oil will be pushed out of the market and production would be decelerated but will not stop,” he said.

“If oil price is $70 to $100, more shale oil will enter the market and if it is $60, less shale oil will flow into the market. But at the present prices, shale oil halt has not been such to affect supply and demand,” he added.

Zangeneh also referred to refining and petrochemicals, saying: “Given the development of new phases of South Pars, 1.5 million tons of ethane (one million tons from phases 15&16 and half a million tons from Phase 17) will be delivered to petrochemical plants this year.”

He said that petrochemical projects worth around $75 billion have been endorsed, adding: “Most of these projects are to be done with foreign finance, partly by China, but that’s not enough.”

 

Domestic Manufacturing

 

Zangeneh supported domestic manufacturing and development of technology, saying: “Major work has been done in these two sectors and that should continue very seriously. Even if sanctions are lifted we have to benefit from opportunities.”

“One of these instances was unprecedented cooperation with universities. We signed agreements with them in the upstream oil sector,” he said.

“This cooperation is with universities which offer upstream courses,” he said, adding that agreements have been signed with Sharif University of Technology, Amir Kabir University of Technology, University of Tehran, Shiraz University, Sahand University of Technology, Petroleum University of Technology and Recovery Enhancement Research Institute.

“We definitely envisage development of this method in the downstream sector too so that other universities would cooperate and we could become license holder,” said Zangeneh.

The minister said all widely used items of petroleum industry have been domestically manufactured.

“We have to take advantage of the opportunity of lifting of sanctions and benefit from the potentialities of credited foreign universities. In domestic manufacturing, we should also use owners of technology so that the manufactured items would be used internally and they could be exported,” he said.

 

Crude Oil at Energy Exchange

 

Regarding Iran Energy Exchange (IRENEX), Zangeneh said that necessary coordination has been made and permits for crude oil and petroleum products to be offered at IRENEX this year.

He said that selling crude oil at IRENEX would contribute to transparency and would also generate new business opportunities in favor of success of Iran’s petroleum industry.

Zangeneh also referred to fuel smuggling and noted that the main fuel being smuggled is gasoil.

He said that fuel smuggling through official channels should be blocked.

“If we can supply the needs of customers through official channels they would no longer resort to smuggling. We are currently following up on the issue in order to export [fuel] to Afghanistan in big volumes,” said Zangeneh.

Post-Sanctions Iran Petroleum Industry

 

By Shuaib Bahman

 

Iran’s possible nuclear deal with six world powers is at the center of attention of oil market as such an agreement would result in the lifting of the sanctions barring investment in Iran’s oil sector. Leading oil companies have shown strong willingness for presence in Iran. Therefore, if a nuclear agreement is finalized between Iran and the six powers – the United States, Britain, France, Germany, China and Russia – Iran’s oil sector would benefit the most.

This article reviews the present conditions and the prospect of investment in Iran, once sanctions have been lifted.

 

Attractions

 

Oil sanctions on Iran are expected to be lifted once the outline agreement recently reached in Lausanne between Iran and six world powers is finalized. Analysts believe that Iran would be able to raise its oil production by 1 mb/d and become OPEC’s 2^nd largest producer shortly and after the sanctions are annulled. Saudi Arabia is currently OPEC’s top producer.

Iran’s petroleum minister, Bijan Zangeneh, announced on March 16 that Iran would immediately raise its oil production by 1mb/d to reach 3.8 mb/d within months after sanctions.

However, some believe that Iran’s return to oil market would take months since sanctions are to be lifted in phases and that 1mb/d extra production would require tens of billions of dollars in investment.

The International Energy Agency (IEA) said in a report that Iran would be producing 3.6 mb/d of oil three months after the lifting of sanctions. To that effect, Iran has made the necessary arrangements to bring its oil back onto the market.

Iran is making efforts to return its oil production to its pre-sanctions level and at the same time looking to add 1 mb/d to its oil production from border fields.

Iran enjoys great potential for boosting its oil production capacity and if conditions are prepared for foreign companies to invest in Iran, Tehran would be able to experience significant oil production growth.

Iran’s oil and gas sectors are so attractive that oil giants would be tempted. That is why these companies have already started talks with Iran’s Ministry of Petroleum and National Iranian Oil Company (NIOC).

A group of oil companies including British Petroleum (BP), Shell, Total and Lukoil have already voiced their readiness for cooperation with Iran’s petroleum industry. International oil companies’ negotiations with Iran started soon after the Geneva agreement was reached in November 2013. After that, foreign delegates visited Iran.

Despite tough sanctions, Iran’s petroleum industry has made great progress in recent years and the biggest phase of the giant offshore South Pars gas field became operational. Therefore, cooperation with international firms equipped with financial resources and sophisticated technology would speed up development of hydrocarbon fields shared by Iran and neighboring countries. There are currently tens of joint fields at western and southern borders and Iran’s Ministry of Petroleum plans to develop them.

Injection of fresh finance would accelerate development of all phases of South Pars. Besides gas layers, South Pars has a big oil layer which could attract international companies. South Pars is shared by Iran and Qatar in the Persian Gulf waters.

Iran shares big oil fields with Iraq at West Karoun region. North Azadegan, South Azadegan, Yadvaran, North Yaran, South Yaran and Azar are all jointly operated by Iran and Iraq. Their development would supply 1mb/d of oil. Azadegan and Yadavaran are prioritized for investment and they would contribute to more oil exports.

There are also 62 half-complete projects which need finance. There is a good chance for international companies to step in. Foreign investment in Iran’s petrochemical industry would also benefit both sides.

 

Post-Sanctions Era

 

Oil exports make up around 40% of Iran’s revenues. Since sanctions were tightened against Iran in 2012, Iran’s oil exports have been slashed by half. If a final agreement is signed between Iran and the West, Iran’s oil would return to world markets.

A lifting of the sanctions and ensuing flow of investment into Iran’s oil, gas and petrochemical industries would accelerate the growth of this industry.

Once sanctions have been lifted, the ground will be prepared for foreign oil companies to invest in Iran and technology could be transferred into Iran by multinational companies.

One should note that it would take long before the utility of easing of the sanctions would be felt. Even more than 6 months might be needed for the effects of eased sanctions to become known. But that would finally help the country’s petroleum industry know prosperity, accelerate half-complete projects waiting for finance and end in technological cooperation between domestic and foreign companies in favor of transfer of knowhow into the country.

In the first step, the lifting of sanctions may reduce oil prices in world markets, but that would benefit Iran in the long term because after the sanctions are lifted, oil production in the country would near the 5 mb/d target enshrined in Iran’s 2020 Vision Plan. That would strengthen Iran’s position in world oil markets.

Generally speaking, the lifting of sanctions would enhance Iran’s interaction with other countries and would also boost investment by big oil companies in Iran’s oil industry. Then, Iran’s oil production and exports would increase and countries like Saudi Arabia would not be the only determining factors in the energy pricing and they would no longer use oil as a weapon against others.

 

 

 

 

Powerful Return to World of Oil

 

Samira Farokhmanesh

 

“In the strict sense, there is no such thing as a ‘resource curse’. Socio-economic and political problems associated with natural resources are not created by supernatural forces. In fact, whether oil or other resources turn out to be beneficial or detrimental to a country’s socio-economic and political development depends on a fairly dynamic and complex interplay of a number of contextual variables. Otherwise a ‘miracle’ would be needed to explain why several resource rich countries have been spared partly or fully by the ‘curse’. It might only be due to overoptimistic expectations of a ‘blessing’ that resource abundance seems to be a ‘curse’.”  -- Matthias Basedau, lead research fellow at the German Institute of Global and Area Studies (GIGA), Hamburg.

 

Basedau rejects the idea that oil poses a challenge to rentier states and believes that this God-given blessing could turn out to be very profitable. He says the obvious effects of black gold on the economy of countries could not be ignored easily.

Iran, a leading oil power in the world, is instrumental in equations governing international energy markets. This significant role was further pushed to bold relief after a recent outline agreement between Iran and six world powers. Over recent years, the petroleum industry of Iran, a country rich in both oil and gas, has not been allowed to make itself known to the world. But a new opportunity has emerged for both Iran and other key players of the region and the international community as there are hopes of a final nuclear deal that would see the lifting of sanctions on Iran. This new opportunity which can change the atmosphere is indicative of new equations in production, export and pricing of oil and even the geopolitics of the region.

The imposition of sanctions on Iran caused some challenges to Iran’s oil exports and the world market experienced Iran’s influence less than before. A possible lifting of the sanctions would open new horizons to Iran’s oil relations and Iran’s petroleum industry will strongly return to the world of oil countries.

 

Long-Term Increase

 

It would take time to determine how a possible nuclear agreement and concomitant lifting of the sanctions would affect Iran; however, all analysts agree on the point that such an agreement would be beneficial to Iran, the United States and European countries. Such an agreement will benefit both Iran and the West. Economic benefits mainly in the oil sector would not happen overnight, but they will emerge after some time.

Saeed Mir-Torabi, a researcher in oil and political economy holds a positive view of circumstances surrounding Iran in terms oil production and sales following an agreement. He divides forecasts related to oil market to two categories: short-term and long-term.

Regarding future oil production and price, he says: “Generally speaking, production and exports will see positive conditions. Meantime, official positions indicate that we can produce as much as we supplied before the sanctions. Adoption of such a position is justified because the main reasons are Iran’s presence in OPEC and rivalry with other oil powers and higher quota. Therefore, based on the current position of the Ministry of Petroleum, 1 mb/d could be added to the current level of Iran’s oil exports and such a horizon is not unattainable.”

Meanwhile, the issues related to prices in the oil market stem from two factors: One group is fundamental factors of the market and another one is political factors. With regard to fundamental factors, an example is the US’s policy of increasing output and reducing consumption from 2008 to 2013. As a result of this strategy, the market faced a 6-million-barrel oversupply. The prices were disrupted because supply and demand directly affect the price. However, the important point is that oil price is related to the US capacity in production and trading. The reason is that the US oil is more expensive and the country has nearly halved its drilling rig count. These parameters affect fundamental factors and the result would probably be an oil price hike. It is even possible that these prices would reach $100 a barrel, but not in the short term. Therefore, a 1mb/d increase in Iran’s oil and its supply on the market will, due to psychological factors and certain rivalries, push prices down in the short term, but the market will see prices go up in the long-term.

Changes in oil prices in the oil-rich Middle East region and across the globe will be more affected by these fundamental factors rather than political events. Fundamental factors are not short-lived and they are determined based on long-term benefits or losses.

For instance, the rivalry of some Middle East countries with shale oil, mainly produced in the US or in some European countries, could be a motive for this purpose. The exit of such oil from the scene of economic rivalries would be beneficial for the players in the Middle East and could force shale holders to purchase oil from Saudi Arabia, Iraq or Iran.

According to 2014 estimates, production of each barrel of shale oil cost $75, an exorbitant figure compared with the $2 or $3 needed for the production of oil n Iran or Arab countries. Therefore, if oil prices keep falling, shale oil production will no longer be economical. Such an approach is considered as a long-term policy which is a fundamental plan in the country.

 

Financiers’ Green Light

 

Another point is to know what would happen to global markets after oil prices go up and Iran returns to market. Iran has lost some of its buyers over the past years. How will it deal with buyers if a new agreement is reached with the West?

In response to these questions, Mir-Torabi says there is nothing to worry about “because we are talking about a substance which is not largely available.”

“Generally speaking, when oil is produced at lower cost it is referred to as [conventional oil] and it faces more limitation. [The technical definition of conventional oil is different from the one expressed in this article.] Unconventional oil is produced at higher costs and it may cost $70 to $80,” he said. That is why unconventional oil may not face any obstacle for purchase, but that would not be appropriate for long-term plans and future investments. Therefore, producers of conventional oil will not face any problem in finding new customers because due to the shortage of this product, oil will not remain without buyer,” he added.

On the other hand, Mir-Torabi said, conventional oil produced by Iran and Arab countries in the Persian Gulf is technically reliable and has always won over customers.

“We have also to take into account another reality that under the present circumstances; production of 92 million barrels of oil (along with gas, liquid fuel and oil derivatives) is bandied about. Therefore, return of some 1 mb/d of oil to the market would not be shocking for the market. Furthermore, not much time has passed since Iran lost some of its customers,” he said.

Such forecasts about the future of Iran’s oil could be realistic, given the ongoing developments. Add to the readiness for investment in Iran by France’s Total, Russia’s Lukoil and Azerbaijan’s SOCAR the Iranian petroleum minister’s China visit or a travel to Iran of an Indian delegation.

China is among few buyers of Iran’s oil in recent years and a possible lifting of sanctions has worried this country. Some foreign media have speculated that Western companies would flock to Iran as soon as sanctions are lifted. Oil and gas giants are expected to be frontrunners in seeking investment opportunities in Iran. That indicates growing willingness by players of the international community for oil interaction with Iran.

In light of Iran’s outline nuclear agreement with world powers and Iran’s growing influence in the energy sector, the country can envisage a variety of strategies in the region and the world. One of these options is cooperation with Venezuela or Iraq that have not favored low oil prices. These countries can close ranks to overpower countries supporting price fall because most member states of the 12-member Organization of the Petroleum Exporting Countries (OPEC) like Libya, Algeria or Nigeria will incur losses from falling prices. Therefore, they can stand by Iran with regard to OPEC policy.

Iran, which has so far been under sanctions, can now attract more consumers and win new customers. Therefore, if an OPEC member state insists on preserving its customers it would disrupt the existing order and the negative consequences will affect the entire oil producer group. Therefore, in the beginning, the market may receive psychological shocks, but generally speaking, Iran will face no obstacle over return to oil markets and everything will be back to normal shortly. The countries that have taken the share of an influential OPEC member may face some problems after Iran’s return to the market.

An analysis of acts indicates that the global price and the amount of Iran’s oil production and exports are key factors. First, one should take into account the fact that any probable event may not be influential in the short-term.

However, what would happen in the short term is that the prices would fall due to lack of balance between supply and demand. Therefore, the conditions in the future would become more competitive and the prices are much likely to fall or remain unchanged.

The long-term perspective of Iran’s nuclear deal with the West would be the renovation of the damaged body of Iran’s oil industry. This reconstruction will be manifested in production hike, selling to traditional customers and winning new customers and attraction of foreign investment. But these objectives require planning and policymaking. What should not be forgotten are losses incurred on Iran in recent years in the technology sector. Therefore, making up for backwardness in technical and technological sectors should be a priority for Iran’s petroleum industry in the near future. Incomplete projects should be also completed. In other words, filling economic and technical gaps will be the first step for country intent on regaining its position in the regional and extra-regional oil markets in order to pave the way for benefiting from its potentialities. Iran’s oil potential would offer lucrative opportunities for world players and will heal the economic wounds of one of the top producers of oil in the world.

Powerful Return to World of Oil

 

Samira Farokhmanesh

 

“In the strict sense, there is no such thing as a ‘resource curse’. Socio-economic and political problems associated with natural resources are not created by supernatural forces. In fact, whether oil or other resources turn out to be beneficial or detrimental to a country’s socio-economic and political development depends on a fairly dynamic and complex interplay of a number of contextual variables. Otherwise a ‘miracle’ would be needed to explain why several resource rich countries have been spared partly or fully by the ‘curse’. It might only be due to overoptimistic expectations of a ‘blessing’ that resource abundance seems to be a ‘curse’.”  -- Matthias Basedau, lead research fellow at the German Institute of Global and Area Studies (GIGA), Hamburg.

 

Basedau rejects the idea that oil poses a challenge to rentier states and believes that this God-given blessing could turn out to be very profitable. He says the obvious effects of black gold on the economy of countries could not be ignored easily.

Iran, a leading oil power in the world, is instrumental in equations governing international energy markets. This significant role was further pushed to bold relief after a recent outline agreement between Iran and six world powers. Over recent years, the petroleum industry of Iran, a country rich in both oil and gas, has not been allowed to make itself known to the world. But a new opportunity has emerged for both Iran and other key players of the region and the international community as there are hopes of a final nuclear deal that would see the lifting of sanctions on Iran. This new opportunity which can change the atmosphere is indicative of new equations in production, export and pricing of oil and even the geopolitics of the region.

The imposition of sanctions on Iran caused some challenges to Iran’s oil exports and the world market experienced Iran’s influence less than before. A possible lifting of the sanctions would open new horizons to Iran’s oil relations and Iran’s petroleum industry will strongly return to the world of oil countries.

 

Long-Term Increase

 

It would take time to determine how a possible nuclear agreement and concomitant lifting of the sanctions would affect Iran; however, all analysts agree on the point that such an agreement would be beneficial to Iran, the United States and European countries. Such an agreement will benefit both Iran and the West. Economic benefits mainly in the oil sector would not happen overnight, but they will emerge after some time.

Saeed Mir-Torabi, a researcher in oil and political economy holds a positive view of circumstances surrounding Iran in terms oil production and sales following an agreement. He divides forecasts related to oil market to two categories: short-term and long-term.

Regarding future oil production and price, he says: “Generally speaking, production and exports will see positive conditions. Meantime, official positions indicate that we can produce as much as we supplied before the sanctions. Adoption of such a position is justified because the main reasons are Iran’s presence in OPEC and rivalry with other oil powers and higher quota. Therefore, based on the current position of the Ministry of Petroleum, 1 mb/d could be added to the current level of Iran’s oil exports and such a horizon is not unattainable.”

Meanwhile, the issues related to prices in the oil market stem from two factors: One group is fundamental factors of the market and another one is political factors. With regard to fundamental factors, an example is the US’s policy of increasing output and reducing consumption from 2008 to 2013. As a result of this strategy, the market faced a 6-million-barrel oversupply. The prices were disrupted because supply and demand directly affect the price. However, the important point is that oil price is related to the US capacity in production and trading. The reason is that the US oil is more expensive and the country has nearly halved its drilling rig count. These parameters affect fundamental factors and the result would probably be an oil price hike. It is even possible that these prices would reach $100 a barrel, but not in the short term. Therefore, a 1mb/d increase in Iran’s oil and its supply on the market will, due to psychological factors and certain rivalries, push prices down in the short term, but the market will see prices go up in the long-term.

Changes in oil prices in the oil-rich Middle East region and across the globe will be more affected by these fundamental factors rather than political events. Fundamental factors are not short-lived and they are determined based on long-term benefits or losses.

For instance, the rivalry of some Middle East countries with shale oil, mainly produced in the US or in some European countries, could be a motive for this purpose. The exit of such oil from the scene of economic rivalries would be beneficial for the players in the Middle East and could force shale holders to purchase oil from Saudi Arabia, Iraq or Iran.

According to 2014 estimates, production of each barrel of shale oil cost $75, an exorbitant figure compared with the $2 or $3 needed for the production of oil n Iran or Arab countries. Therefore, if oil prices keep falling, shale oil production will no longer be economical. Such an approach is considered as a long-term policy which is a fundamental plan in the country.

 

Financiers’ Green Light

 

Another point is to know what would happen to global markets after oil prices go up and Iran returns to market. Iran has lost some of its buyers over the past years. How will it deal with buyers if a new agreement is reached with the West?

In response to these questions, Mir-Torabi says there is nothing to worry about “because we are talking about a substance which is not largely available.”

“Generally speaking, when oil is produced at lower cost it is referred to as [conventional oil] and it faces more limitation. [The technical definition of conventional oil is different from the one expressed in this article.] Unconventional oil is produced at higher costs and it may cost $70 to $80,” he said. That is why unconventional oil may not face any obstacle for purchase, but that would not be appropriate for long-term plans and future investments. Therefore, producers of conventional oil will not face any problem in finding new customers because due to the shortage of this product, oil will not remain without buyer,” he added.

On the other hand, Mir-Torabi said, conventional oil produced by Iran and Arab countries in the Persian Gulf is technically reliable and has always won over customers.

“We have also to take into account another reality that under the present circumstances; production of 92 million barrels of oil (along with gas, liquid fuel and oil derivatives) is bandied about. Therefore, return of some 1 mb/d of oil to the market would not be shocking for the market. Furthermore, not much time has passed since Iran lost some of its customers,” he said.

Such forecasts about the future of Iran’s oil could be realistic, given the ongoing developments. Add to the readiness for investment in Iran by France’s Total, Russia’s Lukoil and Azerbaijan’s SOCAR the Iranian petroleum minister’s China visit or a travel to Iran of an Indian delegation.

China is among few buyers of Iran’s oil in recent years and a possible lifting of sanctions has worried this country. Some foreign media have speculated that Western companies would flock to Iran as soon as sanctions are lifted. Oil and gas giants are expected to be frontrunners in seeking investment opportunities in Iran. That indicates growing willingness by players of the international community for oil interaction with Iran.

In light of Iran’s outline nuclear agreement with world powers and Iran’s growing influence in the energy sector, the country can envisage a variety of strategies in the region and the world. One of these options is cooperation with Venezuela or Iraq that have not favored low oil prices. These countries can close ranks to overpower countries supporting price fall because most member states of the 12-member Organization of the Petroleum Exporting Countries (OPEC) like Libya, Algeria or Nigeria will incur losses from falling prices. Therefore, they can stand by Iran with regard to OPEC policy.

Iran, which has so far been under sanctions, can now attract more consumers and win new customers. Therefore, if an OPEC member state insists on preserving its customers it would disrupt the existing order and the negative consequences will affect the entire oil producer group. Therefore, in the beginning, the market may receive psychological shocks, but generally speaking, Iran will face no obstacle over return to oil markets and everything will be back to normal shortly. The countries that have taken the share of an influential OPEC member may face some problems after Iran’s return to the market.

An analysis of acts indicates that the global price and the amount of Iran’s oil production and exports are key factors. First, one should take into account the fact that any probable event may not be influential in the short-term.

However, what would happen in the short term is that the prices would fall due to lack of balance between supply and demand. Therefore, the conditions in the future would become more competitive and the prices are much likely to fall or remain unchanged.

The long-term perspective of Iran’s nuclear deal with the West would be the renovation of the damaged body of Iran’s oil industry. This reconstruction will be manifested in production hike, selling to traditional customers and winning new customers and attraction of foreign investment. But these objectives require planning and policymaking. What should not be forgotten are losses incurred on Iran in recent years in the technology sector. Therefore, making up for backwardness in technical and technological sectors should be a priority for Iran’s petroleum industry in the near future. Incomplete projects should be also completed. In other words, filling economic and technical gaps will be the first step for country intent on regaining its position in the regional and extra-regional oil markets in order to pave the way for benefiting from its potentialities. Iran’s oil potential would offer lucrative opportunities for world players and will heal the economic wounds of one of the top producers of oil in the world.

China to Build Pipeline from Iran to Pakistan

 

China has signed an initial agreement with Pakistan to construct a pipeline crucial for importing natural gas from Iran. The agreement was signed during the Chinese President Xi Jinping’s visit to Islamabad.

The pipeline will start from the southern port of Gwadar to Nawab Shah District in the southwest of Pakistan.It will be extended to the border with Iran after the US engineered sanctions against Iran are lifted.

This has now officially paved the grounds for the resumption of the project for exporting Iranian natural gas to Pakistan – a project that has been delayed for years. 

Known as the Peace Pipeline, the project is meant to transfer natural gas from Iran’s energy hub of Assaluyeh to Pakistan.  Iran has already taken the pipeline to the border with its eastern neighbor. However, Pakistan had so far failed to construct its share of the project due to what officials say has been a lack of funds.   

The pipeline from Iran will bring much-needed gas to Pakistan, which suffers from a crippling electricity deficit because of a shortage of fuel for its power-generation plants. Pakistan has been negotiating for months behind the scenes for China to build the Pakistani portion of the pipeline.

The gas pipeline deal was part of a package of economic agreements that President Xi signed with Pakistan's Prime Minister Nawaz Sharif on Monday. The total value of the package is reported to have been around $45 billion and is meant to create what is now known as the China-Pakistan Economic Corridor (CPEC).

The CPEC links China's far-western region to Pakistan's south-western Gwadar port on the Arabian Sea through Kashmir and is a massive project of road, rail, energy schemes, pipelines and investment parks.

 

Phase 11 Development Instructions Decided

 

The managing director of Pars Oil and Gas Company (POGC) has announced that the development of Phase 11 of South Pars gas field will go ahead seriously.

Ali-Akbar Shabanpour said the necessary technical documents have been drawn up for the development of this phase under 11A and 11B phases.

“In the first phase of this project, which includes building a jacket, a platform, an offshore pipeline and drilling, the gas produced offshore will be delivered to refinery installations in phases 6&8 of South Pars,” he said.

“Phase 11B development of South Pars is technically similar or Phase 11A and the gas produced from its platform will be delivered to refinery installations in Phase 12,” he added.

Shabanpour said the objective of gas delivery from Phase 11 of South Pars to phase 6&8 and Phase 12 of South Pars would be to benefit from the unused refining capacities of these phases and accelerate production.

He said that the gas produced from the offshore section of Phase 11 would be processed at Pars Special Economic Energy Zone (PSEEZ).

No contractor has been chosen for the offshore development of Phase 11 and National Iranian Oil Company (NIOC) is studying this issue.

 

Persian Gulf Star Refinery to Start Work

 

The first phase of Persian Gulf Star Refinery is expected to come on-stream this calendar year to March 2016. The facility would be producing octane-95 gasoline.

Ahmad Adib, manager of the project, said the first phase of the refinery would start producing 120,000 b/d of gas condensate.

“We are making efforts to meet this deadline even in the event of occurrence of unpredicted and undesired incidents,” he said.

He said that obstacles to the construction of the refinery have been removed under the aegis of support by the Iranian government, particularly Minister of Petroleum Bijan Zangeneh.

He said that refinery is now 81% complete.

The refinery is designed to produce 63 ml/d of gasoline, 41 ml/d of gasoil, 4 ml/d of liquefied petroleum gas (LPG), 3 ml/d of jet fuel and 130 tons a day of sulfur.

The storage capacity of oil products at the refinery would be around 11 million barrels.

An 838-kilometer pipeline has been laid out from Assaluyeh to this refinery for the delivery of gas condensate.  

 

Sixth Plan Urges Oil Industry Development

 

Iran’s sixth five-year economic development plan (2015-2020) calls for further development of the country’s petroleum industry, a top official at Ministry of Petroleum said.

“Promoting the petroleum industry into an excellent industry relying on domestic potentialities and international interactions is one of the major objectives of Ministry of Petroleum in the sixth development plan,” Saeed Qavampour, director of strategic planning at Ministry of Petroleum, said.

He added that enhancing hydrocarbon production with a view on generating sustainable wealth is another objective of the sixth development plan.

“Securing domestic supply of gas, oil products and petrochemicals, while respecting economic and environmental considerations, and optimal use of hydrocarbon potentialities for making Iran a key player in global energy markets are two other major objectives of the Ministry of Petroleum in the sixth development plan,” said Qavampour.

He said that reviewing the future of oil and gas markets and analyzing opportunities and threats pertaining to oil, gas and petrochemical industries under the sixth development plan are under way at the Ministry of Petroleum.

To that effect, he added, the major objectives for the oil, gas and petrochemical industries have been set.

 

Iraq to Receive Iran Gas Soon

 

A senior Iranian official has said that Iran would start pumping natural gas to Iraq before the end of the next month of the calendar year on May 21.

“Iran and Iraq are making efforts for the start of gas exports to Iraq as soon as possible,” Ali-Reza Kameli, managing director of National Iranian Gas Exports Company, said.

“Iran’s gas will flow into Iraq before 21May.

Kameli said Iran’s gas will go to the Iraqi cities of Baghdad and Basra. “Gas exports to Baghdad will start with a daily volume of 4 mcm which could increase to 35 mcm/d,” he said.

Kameli said Iran will also start supplying 5mcm/d of gas to Basra after a six-year deal is signed. The deal, which is to be signed next year, would require Iran to raise gas exports level to Basra to 30 mcm/d.

Gas delivery to Basra would come from Iran Gas Trunkline VI (IGAT 6) which transfers gas from the giant offshore South Pars gas field in southern Iran to the border province of Khuzestan.

Meanwhile, the head of National Iranian Gas Company said Iran is ready to deliver gas to Kuwait through Iraq.

“It is possible to export gas to Kuwait through Iraq and in case of signature of an agreement, Iran’s gas will go to Kuwait,” Hamid-Reza Araqi said.

Production tests have started on 50 kilometers of the Iranian section of a pipeline built to carry natural gas from southern Iran to neighboring Iraq.

Ali-Reza Gharibi, managing director of Iran Gas Engineering and Development Company, said pig running is expected to be done on this stretch of the pipeline.

He said the remaining 47 kilometers of the pipeline on Iran’s soil would be tested in the next phase. 

 

Low Oil Prices Harm Market

 

Iranian President Hassan Rouhani has said that the current falling oil prices will be harmful to producers and will threaten the stability of global market.

“Today's oil price is to the detriment of producers and the world market stability. We hope that coordinated efforts by oil exporters to bring balance back to the oil market would continue,” Rouhani said in a meeting with Venezuelan Foreign Minister Delcy Rodriguez in Tehran.

He added that "stability and balance" in the oil market will be beneficial to all, expressing hope that Venezuela’s efforts to restore balance to global oil market would lead to  establishment of balance in the price of oil.

Iran and Venezuela are member states in the Organization of the Petroleum Exporting Countries (OPEC).

The Iranian president further said Tehran is keen to improve ties with Caracas, particularly in the economic sector.

“The Iranian nation and government’s will is [based on] expansion of friendly relations and cooperation with Venezuela in all fields,” Rouhani said.

He noted that the era of super powers’ interference in internal affairs of countries is coming to a close and said Iran regards as “unacceptable” the meddling of some powers in domestic affairs of independent countries including Venezuela.

The Venezuelan foreign minister, for her part, underlined the importance of bolstering Tehran-Caracas ties.

Tehran is a strategic partner for Caracas and the Venezuelan government and nation would always stand by the Iranian people, Rodriguez said.

In a separate meeting with the Venezuelan foreign minister and oil minister, Iran’s Minister of Petroleum Bijan Zangeneh said Iran expects the OPEC to create enough space for its planned production enhancement after sanctions are lifted.

Indian Businessmen Eye Iran Petchem

 

Deputy managing director of the National Petrochemical Company (NPC), Mohammad Hassan Payvandi, met with an Indian trade delegation headed by the Indian ambassador to Iran Shri Niraj Srivastava.

During the meeting the two sides discussed economic cooperation, specifically the great potential for India’s investment in Iran’s petrochemical sector.

NPC’s deputy head said that Iran’s shores of Oman Sea are more attractive in comparison to other places in the country for Indian investors mainly due to being closer to Indian territory and subsequently lower transport costs.

Payvandi said that fixing the price of gas as feedstock is very important for facilitating India investment in Iran’s petrochemical projects, adding, “Unfortunately we lack a long term price formula for feedstock”, which is sold at 13 cents now for delivery to domestic petrochemical plants.

According to Payvandi, crude oil, LPG and urea are the main items of bilateral trade between the two countries.

He added that India is one of the biggest consumers of fertilizers in the world willing to make investments in the area.

Meanwhile, Indian ambassador to Iran said that lacking a specified formula for pricing feedstock in the long term is one of the main obstacles on the way of Indian investors’ presence in Iran’s petrochemical projects.

Srivastava also said Indian investors prefer investment in Chabahar free zone due to its proximity to India.

Expressing willingness to boost investment in petrochemical projects including urea plants, he said striking a final deal for investment in petrochemical sector could result in significant changes in bilateral economic relations.

Petchem Industry Ready for Change

 

The head of National Petrochemical Company (NPC) has reaffirmed will of NPC to bring about major developments in the petrochemical industry in collaboration with the private sector.

Abbas Sha’ri-Moqaddam said 62 incomplete petrochemical projects are open to domestic and foreign investment.

He said Iran and six world powers are likely to reach agreement by July 1 for the removal of sanctions on the Islamic Republic. “After that date, foreign investors are expected to flood to Iran and particularly the oil and petrochemical industries, and undoubtedly we have to prepare ourselves from now,” he said.

Sha’ri-Moqaddam said the 62 incomplete projects could increase Iran’s petrochemical production capacity by 60 million tons if only $8 billion a year is spent for them.

Regarding challenges to foreign investment, he said: “There are two types of foreign investment; one is foreign director investment and the other is investment through getting foreign loan.”

He said that Arya-Sasol polymer project is a successful example of foreign direct investment.

“What we currently expect to happen is foreign direct investment. In other words, investors would come to Iran, contribute to investment in projects and sell their products,” he said.

Sha’ri-Moqaddam added that under this method, products guarantee investment.

He said the second unit of Kavian Petrochemical Plant, Shohada Petrochemical Plant in the city of Mashhad, Lorestan Petrochemical Plant, Kurdestan Petrochemical Plant, Mahabad Petrochemical Plant, Pardis III Petrochemical Plant, Takht-e Jamshid Petrochemical Plant, Hegmataneh Petrochemical Plant, Karoun Petrochemical Plant, Morvarid Petrochemical Plant and Entekhab &Dalahoo Polystyrene Plant are to come online in the current calendar year.

He said these projects would contribute 6 million tons to Iran’s petrochemical output.

Iran produced 44.4 million tons of petrochemicals in the last calendar year which ended on March 20.

Sha’ri-Moqaddam expressed hope that Iran’s petrochemical production would increase more than 2 million tons this year.

Zangeneh’s Positive China Visit

 

Iran’s Minister of Petroleum Bijan Zangeneh led a high-ranking delegation to China to meet with senior energy officials there. The Iranian delegates discussed opportunities for China’s investment in Iran and the necessity of deeper energy ties between Tehran and Beijing. Both sides have given positive assessment of their meetings.

Zangeneh said China is one of the biggest and also the most significant trading partners of Iran in the oil sector. He said China remained a big buyer of Iran’s oil even when Tehran was under the toughest sanctions.

Zangeneh said Iran intends to continue cooperation with China even after sanctions against the Islamic Republic are lifted.

The Iranian minister also said that given the willingness of Chinese companies for operating projects in Iran, cooperation with China in oil recovery and development projects will enter a new phase.

During his China visit, Zangeneh met with the manager of China National Petroleum Corporation (CNPC), head of China’s National Energy Commission and also director of China Petroleum & Chemical Corporation (Sinopec).

Expansion of economic cooperation, broadening ties in the energy sector and settlement of some disputes were among the major points discussed in the meetings.

Zangeneh said CNPC should fulfill its obligations regarding projects it is operating in Iran.

Iran and China held fruitful talks about further cooperation in oil projects.

The Chinese party in the talks expressed happiness about a recent outline agreement reached between Iran and six world powers about Iran’s nuclear program. The Chinese officials called for the full lifting of sanctions on Iran so that they would be able to cooperate further with Iran.

Another point of discussion was Iran’s crude oil exports to China, development of Iranian fields by Chinese companies and cooperation in oil and gas equipment supply.

Both sides agreed on the point that Iran-China cooperation would continue even after sanctions are lifted on Iran. They said that Iran-China cooperation could grow faster after the removal of sanctions.

 

Phases 15&16 of South Pars, Most Iranian Phases

 

Iran’s petroleum industry is currently concentrating on developing the remaining phases of South Pars gas field, the giant offshore reservoir jointly operated by Iran and Qatar.

Not only in the petroleum industry, but in other sectors, decision-makers are determined to contribute the fast development of the remaining phases of South Pars which has become the red line of Iran’s industrial projects.

Qatar is currently extracting gas twice Iran’s production rate. Some estimates show that South Pars gas sales could give Iran up to $4.4 trillion. If this gas is converted into valuable products, this figure would double. Iran’s share of South Pars holds 14.2 tcm of gas and 19 billion barrels of gas condensate. That equals 8% of the world’s total gas reserves and 47% of Iran’s gas reserves.

Iran is incurring $100 million in losses for every single day of delay in developing South Pars. The country has to invest $1 billion in South Pars every month in order to realize its development goals. Based on contracts signed for the development of South Pars, $43 billion has to be spent for the development of this field. So far $34 billion has been paid for that purpose.

Over the past one year, more than 100 mcm/d of gas has been added to South Pars output and at least 100 mcm/d is projected to be added in the current year.

Phases 15&16 of South Pars would account for more than 50 mcm/d to that effect. The start of development of Phases 15&16 coincided with the toughening of sanctions against Iran. Therefore, experts described them as the most Iranian phases of South Pars. Minister of Petroleum Bijan Zangeneh recently announced that Phases 15&16 are to be inaugurated in June by President Hassan Rouhani. Revenues from Phases 15&16 are estimated to exceed $5 billion. Development of Phases 15&16 of South Pars is among the oldest projects in this gas field. These phases are being developed to produce 50 mcm/d of gas, 75,000 b/d of gas condensate, 400 tons a day of sulfur, one million tons a day of ethane and 1.1 million tons a day of liquefied gas. Phases 15&16 are being run by a consortium comprising Arya Naft Shahab, Iranian Offshore Engineering and Construction Company (IOEC), Iran Shipbuilding & Offshore Industries Complex Co (ISOICO) and Dana Kish Drilling Company.

After the end of imposed War (1980-1988), Iran’s petroleum industry underwent reconstruction. But until late 1990s, manufacturing of equipment and commodities was ignored. Until recently, most petroleum industry needs in equipment were supplied by foreign companies. But tough international sanctions against Iran’s oil sector called a halt to entry of equipment and commodities into Iran. These restrictions are still in effect, but Iranian specialists have made great achievements.

Several hundred billion dollars in investment is estimated to be made in the petroleum industry over the coming decades. Fifty to seventy percent of this amount would be spent for the purchase of equipment. Development of Phases 15&16 of South Pars is a manifestation of domestic manufacturing in Iran. These phases are in their final stage and more than 30% of design, engineering and equipment manufacturing have been done by Iranians. Germany holds an 18% share in this project. Laying 55 million meters of cable, pouring 315,000 cubic meters of concrete, installing 33,000 tons of equipment and installing 46,000 tons of metal structure are among activities done in the refinery of these phases. In the offshore section, construction, installation and operation of two jackets and two processing platforms, construction of two offshore pipelines, 105 kilometers long and drilling of 22 wells are among activities.

Iranian companies managed to break the record for commissioning the platforms as well as producing and exporting gas in these phases. Norwegian Statoil had set a 6.5-month gas-out record, but Iranian companies slashed it to five months plus ten days.

Supply of 50 mcm/d of gas by Phases 15&16 and a concomitant positive gas balance would reduce consumption of petroleum products and save hard currency.

Gas has become the most favorable energy commodity in Iran, which sits on the second largest natural gas reserves. Other petroleum products could be replaced with gas and that would bring the country significant economic benefits.

Using 1 mcm of gas instead of one liter of liquid fuel would save more than $1.5 billion in energy consumption. Therefore, further gas production is a positive step in line with the Economy of Resistance promulgated by Supreme Leader Ayatollah Seyed Ali Khamenei.                  

 

NISOC-Run Zones, Iran Oil Hub

 

Zones administered by National Iranian South Oil Company (NISOC) are Iran’s oil production hub. NISOC is administering more than 400,000 square kilometers of land in Khuzestan province, as well as some swaths of land in Kohguiluyeh Boyer Ahmad, Fars, Bushehr and Ilam provinces.

NISOC produces 83% of Iran’s crude oil and 16% of Iran’s gas. More than 45 hydrocarbon reservoirs, in different sizes, are under NISOC authority.

NISOC feeds all petrochemical plants in Khuzestan province and most refineries in the country.

Bijan Alipour, managing director of NISOC, said the regions run by the company can produce 3 mb/d of oil. He added that this amount of output could increase, should the ground be prepared.

In the current calendar year, NISOC focuses on implementation of projects related to oil, gas and condensate production. To that effect, new processing units are to be launched for enhanced recovery. For that purpose, 47 work-over/development wells and 15 coiled tubes are to be used.

Alipour said NISOC’s production hike is to pick up speed in line with National Iranian Oil Company (NIOC)’s directive.

Last calendar year, NISOC and its subsidiaries had a positive note and more than 100% of its programs were realized. The company’s directors hope that production objectives would be realized this year, as well.

Alipour said the main mission assigned to NISOC is oil, gas and condensate production.

The Incorporate Management Directorate of NISOC is classifying projects based on their priorities, and plans to conduct desalting and gas injection projects in order to enhance recovery.

In the management sector, the main plans envisaged by this company include exporting technical services, manufacturing, infrastructure and equipment, logistics and commodity affairs, communications, improvement of processes, human resources, research and technology, and health, safety and environment (HSE).

 

Geology Projects

 

Among other plans under way by this company is the execution of eight geology projects in the regions under its management. These projects include petrography, studies on sedimentary environment, electrofacies of Asmari reservoir in Kupal field and changes in facies.

Farrokh Naseri Karimvand, deputy head of NISOC for geology, said sequential stratigraphy, bio-stratigraphy and sedimentology in Asmari and Bangestan reservoirs are among other projects operated by NISOC.

He referred to geo-mechanical studies in Bangestan oil center of Mansouri field, hydraulic fracturing in Asmari reservoir of Kupal field and fortification of walls among other geology projects.

Studies on asphaltene at Bangestan oil center by modeling of oil systems, 3D modeling of oil systems of Maroun and Kupal fields and casing failure occurrence are among other projects under way in this region.

 

Geological Studies on 5 Fields

 

Last March, geological studies were conducted on five hydrocarbon reservoirs run by NISOC. These studies were conducted in Kupal, Mansourabad, Ramshir and Golkhari fields.

Supervision on geology has been also conducted. These operations have been conducted on six appraisal/development wells, 21 development and 14 work-over wells.

Modeling of reservoirs by using RMS software is another geological activity conducted in this region. To that effect, modeling in Mansourabad and Jahrom fields were conducted in March. Moreover, 10 appraisal, development and work-over wells were completed.

 

5,000 Items Manufacturing

 

In light of growing need for equipment and items for oil production, NISOC is manufacturing 5,600 items for the petroleum industry. So far, 2,500 items have been manufactured by Iranian companies. Some of these items have been manufactured for the first time in Iran.

Last year, NISOC signed two contracts, worth IRR 10,000 billion, with Iranian manufacturers for strategic equipment.

 

Public Services

 

In addition to oil exploration and production, NISOC is a leading company in providing public services to people. NISOC spent more than IRR 3,000 billion on road building and construction of sports complexes from 1997 to 2010.

With a 5,000-billion-rial credit, a road has been built extending from Omidieh to Mahshahr, a way from Saranjam to Omidieh and entries into Haftkel and Ahvaz cities.

He said that public interest projects are among social responsibilities of NISOC, adding that five specialized polyclinics are currently under construction in Ahvaz.

Alipour said dredging Karoun River, contribution to the finance of a coastal road, reconstruction of entry into Ahvaz and beautification of Ahvaz are among public benefit projects by NISOC.

He said that the problems regarding the detailed design of the city of Masjed Soleyman were also resolved.

Alipour said NISOC, the NIOC Board of Directors as well as Iran’s petroleum minister Bijan Zangeneh pay special attention to the development of oil-rich regions.

 

Environment

 

Alipour said NISOC has been active in protecting the environment, adding that this company envisaged planting one million saplings around Karoun, Maroun, Masjed Soleyman, Gachsaran and Aghajari oil facilities fifty years ago. It has so far planted 700,000 saplings.

Regarding plans to combat desertification and do mulching in Khuzestan province, he said that the project has been earmarked IRR 4,780 billion for 120,000 ha of land.

The allocated budget has been given totally to the Department of the Environment (DOE) and the project is being implemented under supervision of Agriculture and Natural Resources Organization.

 

107-Year Record in Oil Extraction

 

Oil exploration in southern oil-rich regions of Iran dates back to 1908. In that year, the first well in the Middle East was drilled and oil gushed out at the depth of 338 meters. Production from this well started at 500 b/d. That is considered as the starting point of petroleum industry in Iran.

After oil was found in Masjed Soleyman, operations continued for the discovery of other reservoirs and Haftkel, Aghajari, Ahvaz, Binak, Bibi Hakimieh, Maroun and Karanj and Parsi and Rag Sefid were discovered in the following decades.

All these fields, along with their facilities, plants, pipelines for production, processing and transmission to refineries and export terminals, constitute the bulk of facilities in NISOC-run areas.

Up to the 1970s, all activities related to exploration and production was handed by Exploration Extraction Joint Stock Company. This company was tasked with plans for the finance and recovery from the reservoirs, as well as development of fields and construction of technical facilities.

In the early 1970s, oil and gas production as well as exploration and drilling operations were accelerated. Iran Oil Services Company was established as the contractor to conduct all exploration operations, drilling, installation of pipelines, studying fields, enhancing recovery, developing fields and estimating budget for projects.

Along with this company, Non-Industrial Operations Company handed all non-industrial activities related to production.

Following the victory of the Islamic Revolution in 1979 and the expropriation of foreign contractors, all exploration, drilling and production operations were assigned to Iranian employees and managers. Strategic centers for logistics activities were moved from Abadan to Ahvaz.

Throughout these changes, more than 85% of production of oil, 100% production of gas and condensate, feedstock supply to refineries and National Iranian Gas Company as well as hydrocarbon feedstock delivery to petrochemical plants were assigned to NISOC.

NISOC faced a big test following the Islamic Revolution as imposed war broke out. Scattered and unprotected facilities which had been set up for peacetime and location of facilities and export terminals at the warfronts made oil terminals and facilities as strategic targets for Saddam aerial and ground strikes. However, during eight years of imposed war, oil production and exports were never halted and NISOC further came to limelight.

A glance at the growing number of production units, gas and liquefied gas plants, desalting units, liquefied gas refineries and particularly gas gathering and injection units in oil fields indicate that NISOC is not only capable of carrying out technical and specialized plans, but also it has been successful in developing such plans to meet domestic needs following the 1979 Islamic Revolution.

NISOC structure was reconsidered in 2000 as part of Ministry of Petroleum’s plans to define activities for its subsidiaries. NISOC now has a central headquarters and nine subsidiaries.

NISOC-Run Zones, Iran Oil Hub

 

Zones administered by National Iranian South Oil Company (NISOC) are Iran’s oil production hub. NISOC is administering more than 400,000 square kilometers of land in Khuzestan province, as well as some swaths of land in Kohguiluyeh Boyer Ahmad, Fars, Bushehr and Ilam provinces.

NISOC produces 83% of Iran’s crude oil and 16% of Iran’s gas. More than 45 hydrocarbon reservoirs, in different sizes, are under NISOC authority.

NISOC feeds all petrochemical plants in Khuzestan province and most refineries in the country.

Bijan Alipour, managing director of NISOC, said the regions run by the company can produce 3 mb/d of oil. He added that this amount of output could increase, should the ground be prepared.

In the current calendar year, NISOC focuses on implementation of projects related to oil, gas and condensate production. To that effect, new processing units are to be launched for enhanced recovery. For that purpose, 47 work-over/development wells and 15 coiled tubes are to be used.

Alipour said NISOC’s production hike is to pick up speed in line with National Iranian Oil Company (NIOC)’s directive.

Last calendar year, NISOC and its subsidiaries had a positive note and more than 100% of its programs were realized. The company’s directors hope that production objectives would be realized this year, as well.

Alipour said the main mission assigned to NISOC is oil, gas and condensate production.

The Incorporate Management Directorate of NISOC is classifying projects based on their priorities, and plans to conduct desalting and gas injection projects in order to enhance recovery.

In the management sector, the main plans envisaged by this company include exporting technical services, manufacturing, infrastructure and equipment, logistics and commodity affairs, communications, improvement of processes, human resources, research and technology, and health, safety and environment (HSE).

 

Geology Projects

 

Among other plans under way by this company is the execution of eight geology projects in the regions under its management. These projects include petrography, studies on sedimentary environment, electrofacies of Asmari reservoir in Kupal field and changes in facies.

Farrokh Naseri Karimvand, deputy head of NISOC for geology, said sequential stratigraphy, bio-stratigraphy and sedimentology in Asmari and Bangestan reservoirs are among other projects operated by NISOC.

He referred to geo-mechanical studies in Bangestan oil center of Mansouri field, hydraulic fracturing in Asmari reservoir of Kupal field and fortification of walls among other geology projects.

Studies on asphaltene at Bangestan oil center by modeling of oil systems, 3D modeling of oil systems of Maroun and Kupal fields and casing failure occurrence are among other projects under way in this region.

 

Geological Studies on 5 Fields

 

Last March, geological studies were conducted on five hydrocarbon reservoirs run by NISOC. These studies were conducted in Kupal, Mansourabad, Ramshir and Golkhari fields.

Supervision on geology has been also conducted. These operations have been conducted on six appraisal/development wells, 21 development and 14 work-over wells.

Modeling of reservoirs by using RMS software is another geological activity conducted in this region. To that effect, modeling in Mansourabad and Jahrom fields were conducted in March. Moreover, 10 appraisal, development and work-over wells were completed.

 

5,000 Items Manufacturing

 

In light of growing need for equipment and items for oil production, NISOC is manufacturing 5,600 items for the petroleum industry. So far, 2,500 items have been manufactured by Iranian companies. Some of these items have been manufactured for the first time in Iran.

Last year, NISOC signed two contracts, worth IRR 10,000 billion, with Iranian manufacturers for strategic equipment.

 

Public Services

 

In addition to oil exploration and production, NISOC is a leading company in providing public services to people. NISOC spent more than IRR 3,000 billion on road building and construction of sports complexes from 1997 to 2010.

With a 5,000-billion-rial credit, a road has been built extending from Omidieh to Mahshahr, a way from Saranjam to Omidieh and entries into Haftkel and Ahvaz cities.

He said that public interest projects are among social responsibilities of NISOC, adding that five specialized polyclinics are currently under construction in Ahvaz.

Alipour said dredging Karoun River, contribution to the finance of a coastal road, reconstruction of entry into Ahvaz and beautification of Ahvaz are among public benefit projects by NISOC.

He said that the problems regarding the detailed design of the city of Masjed Soleyman were also resolved.

Alipour said NISOC, the NIOC Board of Directors as well as Iran’s petroleum minister Bijan Zangeneh pay special attention to the development of oil-rich regions.

 

Environment

 

Alipour said NISOC has been active in protecting the environment, adding that this company envisaged planting one million saplings around Karoun, Maroun, Masjed Soleyman, Gachsaran and Aghajari oil facilities fifty years ago. It has so far planted 700,000 saplings.

Regarding plans to combat desertification and do mulching in Khuzestan province, he said that the project has been earmarked IRR 4,780 billion for 120,000 ha of land.

The allocated budget has been given totally to the Department of the Environment (DOE) and the project is being implemented under supervision of Agriculture and Natural Resources Organization.

 

107-Year Record in Oil Extraction

 

Oil exploration in southern oil-rich regions of Iran dates back to 1908. In that year, the first well in the Middle East was drilled and oil gushed out at the depth of 338 meters. Production from this well started at 500 b/d. That is considered as the starting point of petroleum industry in Iran.

After oil was found in Masjed Soleyman, operations continued for the discovery of other reservoirs and Haftkel, Aghajari, Ahvaz, Binak, Bibi Hakimieh, Maroun and Karanj and Parsi and Rag Sefid were discovered in the following decades.

All these fields, along with their facilities, plants, pipelines for production, processing and transmission to refineries and export terminals, constitute the bulk of facilities in NISOC-run areas.

Up to the 1970s, all activities related to exploration and production was handed by Exploration Extraction Joint Stock Company. This company was tasked with plans for the finance and recovery from the reservoirs, as well as development of fields and construction of technical facilities.

In the early 1970s, oil and gas production as well as exploration and drilling operations were accelerated. Iran Oil Services Company was established as the contractor to conduct all exploration operations, drilling, installation of pipelines, studying fields, enhancing recovery, developing fields and estimating budget for projects.

Along with this company, Non-Industrial Operations Company handed all non-industrial activities related to production.

Following the victory of the Islamic Revolution in 1979 and the expropriation of foreign contractors, all exploration, drilling and production operations were assigned to Iranian employees and managers. Strategic centers for logistics activities were moved from Abadan to Ahvaz.

Throughout these changes, more than 85% of production of oil, 100% production of gas and condensate, feedstock supply to refineries and National Iranian Gas Company as well as hydrocarbon feedstock delivery to petrochemical plants were assigned to NISOC.

NISOC faced a big test following the Islamic Revolution as imposed war broke out. Scattered and unprotected facilities which had been set up for peacetime and location of facilities and export terminals at the warfronts made oil terminals and facilities as strategic targets for Saddam aerial and ground strikes. However, during eight years of imposed war, oil production and exports were never halted and NISOC further came to limelight.

A glance at the growing number of production units, gas and liquefied gas plants, desalting units, liquefied gas refineries and particularly gas gathering and injection units in oil fields indicate that NISOC is not only capable of carrying out technical and specialized plans, but also it has been successful in developing such plans to meet domestic needs following the 1979 Islamic Revolution.

NISOC structure was reconsidered in 2000 as part of Ministry of Petroleum’s plans to define activities for its subsidiaries. NISOC now has a central headquarters and nine subsidiaries.

Opex Exports at $50b

 

Iran Oil, Gas and Petrochemical Products Exporters’ Association (OPEX), an active private entity, was launched in 2003 in order to make efforts for arranging export and re-export of oil products from Iran, improve the quality of service-providing by members, gathering data about supply and demand, price and consumer market as well as production of petroleum products, build contracts with banks and credit corporations as well as international monetary and financial institutes for providing financial services to members.

After some time, this association expanded its activities and managed to reach an acceptable status in exports. As a major economic body in the country, OPEX has been instrumental in economic growth and enhancing the country’s revenues.

In order to get familiar with the activities of OPEX, Iran Petroleum has conducted an interview with Hassan Khosrojerdi, the director of OPEX.

 

Q: Would you please tell us about the number of OPEX members?

A: OPEX is currently working with 311 members (much higher than 54 in 2003), 90 of which are fully private companies and the rest are semi-private companies. All of them are involved in upstream, midstream and downstream sectors. I have to note that OPEX members are more involved in upstream and midstream than in downstream sectors.

 

Q: Would you please brief us about the activities and objectives of OPEX?

A: Like in the past years, OPEX, as one of the largest economic entities in Iran, does its activities with regard to exports and dealing with the problems of producers and exporters through domestic committees like petrochemicals committee, oil committee, bitumen committee, paraffin committee, bunkering committee, swapping committee, etc. Removal of impediments ahead of export and production, planning to enhance exports, interacting with the government, identifying new markets and paving the ground for the presence of OPEX member states in these markets, offering new ideals for a better business environment, improving the quality of service-providing by members, gathering data on supply and demand, price and consumer markets, and making products available, communicating with banks and credit institutes as well as international financial and monetary bodies in order to provide banking facilities for member states are chief among activities, plans and objectives of this association.

 

Q: Let’s go into details of the activities of this association. Would you please tell us about OPEX’s oil and non-oil exports in the last calendar year?

A: It is necessary to remind that the bulk of our export products are known to be as derivates of oil, but they are classified under non-oil products and they are mainly petrochemicals. Based on this, the amount of non-oil products’ export exceeded $50 billion in the last calendar year, 60% of which was for oil, gas, refining and petrochemical industries. It is important to note that non-oil exports last year were 20% higher from the year before. That is a very good jump, given sanctions and restrictions. Now I break down the figure: Gas condensate exports crossed $14 billion last year, 36% higher than $10 billion the year before. Petrochemical exports in the last calendar year reached $14 billion versus $10 billion the preceding year. As for the oil products, we had only 5% growth. We exported $2.373 billion last year and $2.265 billion the year before. We registered good growth in liquefied propane and our exports reached $2.279 billion last year, 83% more than the year before. We saw 37% growth in methanol exports. Our exports rose to $1.477 billion last year, while it was around $1 billion a year before. Our butane exports reached $1.468 billion last year, versus $1.14 billion the preceding year. We had a 49% growth in polyethylene exports. We earned $1.468 billion last year, 49% higher than the $953 million a year before. And finally for bitumen, we had no significant growth rate. Last year, our bitumen exports reached $1.354 billion, not much above the $1.153 billion a year earlier.

 

Q: Which countries are the main markets for the OPEX products?

A: China, Iraq, United Arab Emirates (UAE), India, Afghanistan, Pakistan, some African and Southeast Asian countries including Indonesia are among the most important and the main markets for our exports.

 

Q: Do you also export to Europe?

A: We have some exports to Europe, mainly to East Europe. Meanwhile, a portion of petrochemical products are exported to West Europe. I have to note that exports to Europe are facing obstacles like the buyers’ habits. Some buyers are not willing to purchase from other markets unless we offer our products at prices lower than international rates. But that would not be economical. Sanctions have been also important in this regard, particularly for vendors who had to export their products through a foreign importer.

 

Q: Have Geneva agreement and the Lausanne statement had any impact on OPEX's business?

A: Yes, but rather psychologically. In practice, it has not been as much effective. Some positive outcomes of these agreements are that foreign countries, particularly Europeans, became more optimistic about reestablishing ties with Iran and they entered talks with Iran directly and without fear [of penalties]. But I have to note that even if an agreement is finalized and the sanctions are lifted, a return to the pre-sanctions period will need time. Therefore, we continue as before and we are optimistic about the future.

 

Q: The private sector in Iran has achieved significant capabilities over the past years, including in the construction of mini-refineries. What do you think?

A: To that effect, I highlight the establishment of a consortium of private companies for the construction of mini-refineries in six African and three Asian countries in the past years, and the construction of Siraf Refining Park comprising eight gas condensate refineries each with capacity of 60,000 b/d in Pars Special Economic Energy Zone.

Russia and Kazakhstan have already built such mini-refineries and Iran has had a share in this regard through its 11 mini-refineries in Tabriz, Qom, Yazd, Ahvaz, etc.

In the past, the private sector only ran the downstream sector, but in recent years, due to the reintegration of veteran managers into the private sector, the scientific level of the private sector has improved and this sector has recruited experts from the oil, gas and petrochemical sectors to benefit from their potential. However, we still need support from the government and the Ministry of Petroleum because the criteria for most tenders are financial capacity and not scientific and technical aspects. Due to its financial shortcomings, the private sector cannot show off as it should. We know that the government is also facing financial problems, but under certain circumstances, scientific and technical criteria of the private sector are preferable and the government sector should help the private sector overcome its financial shortcomings.

Lausanne Gift for Iran Stock Market

 

A potential final nuclear deal between Iran and six world powers would be good news for stockholders and capital market in Iran. Along with other factors, it would open bright and prosperous horizons for the stock market and shareholders.

A look at transactions at capital market since the beginning of the year shows that the indices have been positive.

However, some issues like government and parliament decisions about factors affecting the profitability of companies, including petrochemical feedstock price, royalties, undecided nuclear talks, global drop in the price of some commodities, sharp fall in oil prices, high banking interest rates and emotion behaviors by stockholders, have in certain cases driven stock prices down.

The recent outline agreement reached between Iran and the world powers – the US, Britain, France, Germany, Russia and China – and growing hopes for the lifting of sanctions has sent positive signals into the capital market ,and new investors have stepped into the market. Thanks to stagnation in rival markets, money supply is moving towards capital market.

The positive signs of this important development in the capital market could be seen in long lines of potential shareholders, particularly banking and auto manufacturing groups which have been affected by the sanctions.

Only five days after the signature of the outline agreement and growing hopes for the lifting of sanctions on Iran, IRR 18,664 billion worth of shares were traded. The all-share index of Tehran Stock Market rallied.

However, some stock market analysts believe that the long lines for buying shares following the announcement of the Lausanne agreement was not exclusively related to the nuclear issue and that other factors were also involved in the growth of stock market index and prices. They say that in addition to optimism about a final nuclear accord for sanctions relief, developments at stock market have to be taken into consideration.

It is clear that positive influential factors have to be viewed in the short, mid and long-term. These factors are about political, economic, cultural and social issues which directly or indirectly affect the performance of stock markets. A combination of all these factors gives a bright prospect of the capital market and more investment.

However, one of the key elements in the prosperity of stock market in the new calendar year is the Lausanne agreement and possible lifting of sanctions. Other factors including better international interaction, removal of trade restrictions, entry of foreign investment, drop in the cost price of manufacturing enterprises, higher profitability of companies, drop in the inflation rate, fall in banking interest rate, higher transparency in the capital market and removal of legal restrictions on transactions could open bright and prosperous horizons for the capital market and stockholders.

Petrochemical companies are operating under the title of petrochemical industry which is today the largest industry in the stock market. Petrochemical industry makes the highest contribution to the privatization of its subsidiaries under Article 44 of the Constitution. So far, some 99% of petrochemical companies have been privatized; therefore, this industry has become greater in the stock market. The current value of this industry in the stock market currently stands at IRR 406,260 billion. This industry makes up around 19.49% of the total value of the stock market. Moreover, the average daily value of transactions of this industry makes up 215 of the total daily value of exchanges at stock market. In terms of profitability, the petrochemical industry comes second after sugar industry. Over the past four years, petrochemical industry has seen its efficiency grow 14 times. Over the past two years, emergence of positive news about Iran’s nuclear talks with six world powers has largely affected the stock market and the stocks of Iranian petrochemical companies. As negotiations were under way, an important issue in the capital market was the effect of possible success or failure of the talks on this market. This issue largely motivated capital market activists after each round of talks.

Iran Farabourse Organization recently released a report analyzing the effects of news of Iran’s nuclear talks with six world powers on the all-share index of Tehran Stock Exchange and the company itself.

“In order to analyze the impacts of success or failure in the nuclear talks, we have first to analyze the content of negotiations so that the benefits for the parties to a potential agreement would be laid bare,” the report said.

To that effect, the preliminary agreement reached in November 2013 and the interviews given by Iranian nuclear negotiators indicate that the important issue being discussed with world powers is the full removal of sanctions targeting mainly the country’s banking sector and Iran’s petrodollars, the report said.

It said any benefit or loss for the Iranian party following an agreement or no-agreement would be viewed from two aspects. The first one would be inflationary expectations and the second one would be the lifting of banking restrictions barring transfer of hard currency into the country.

If a final nuclear deal is reached, the government’s main pledge would be delivered and expectations of banking activists would be realized. In that case, the inflation rate would be cut, but possible impacts on the capital market should be scrutinized regardless of the systematic factors affecting this market. If the talks fail, inflation will pick up speed and consumer prices would not cease to grow until the government takes fresh action to curb it. Removal or non-removal of sanctions on the banking network and transfer of hard currency revenues would directly or indirectly affect the inflation rate.

If the nuclear talks reach conclusion, it would become possible for Iranian companies to export their products to world markets. These companies would also see their profits grow and they would meet their profitability expectations. Such an effect would end in the growth of value of transactions in the capital market and if no agreement is reached, the result would be contrary. On the other hand, removal or non-removal of sanctions on the banking network and transfer of hard currency revenues would indirectly facilitate the flow of hard currency into the country.

In case the sanctions are removed, the flow of foreign currency would strengthen the Iranian rial against major hard currencies. If not, the rial would slide again. A drop in foreign exchange rate would have different impacts on the profitability of enterprises. If an enterprise exports products, a fall in the forex rate may cut its profitability because it has already paid much higher for foreign currency.

If an enterprise depends on importing, a fall in forex rate would boost its profitability.

Another indirect but significant effect of removal or non-removal of banking sanctions would be a change in the money basis. A flow of hard currency into the country would change the total of assets of Central Bank of Iran (CBI) and then the money basis will change. In case the banking sanctions are removed, the CBI will see its role become more important in optimal, balanced and cautious allocation of hard currency resources within the framework of monetary policies.

Resolution of this issue with a transparent and strategy-oriented approach would be the most important challenge to the country’s monetary authority in case a final deal is reached. Should the CBI fail to direct resources to production transparently and in a disciplined manner, this change in the money basis would drive inflation up. There is currently evidence of growing money supply and accumulated banking loans. The enterprises active in the capital market are enjoying a transparent flow of money transfer. Certainly, if the transfer of resources is done through transparent channels, the effects of financial development in Iran’s economy will become clear more than ever.

A glance at the previous performance of the capital market would help make an assessment of the success or filature of negotiations and the impact of any outcome on the all-share index of Tehran Stock Exchange and Iran Farabourse Company. Although no agreement has been finalized on the nuclear issue, the risk of impact of sanctions has been blunted following the recent outline agreement in Lausanne. Promising news about Iran’s nuclear program has created positive conditions in the market.

In case the sanctions are lifted in June, the stock market will continue with its positive trend in the current year and the profitability of the market would become clear next year. A removal of sanctions will boost domestic production and facilitate flow of foreign investment and state-of-the-art technology into the country. All this would bring about prosperity in production, enterprises and national economy.

Persian Gulf Holding Eyes 6m-Euro Investment

 

Iran’s petrochemical industry is a holding industry due to diversity in its products. Its importance in Iran’s economy stems from its high profitability and job creation.

Investment in the petrochemical sector is economically and technically justified because analysts believe that petrochemicals and plastics would be important elements in the future.

Like many other countries, Iran has shifted its attention to this sector and its development. Rich gas reserves in Iran, particularly in South Pars gas field, have encouraged administrations in the Islamic Republic to focus on the development of petrochemical industry.

Over the last decade and with the start of privatization in Iran, development of petrochemical industry came to a halt. The former administration decided to privatize tens of petrochemical companies together, a move described as immature by analysts.

To that effect, Bandar Imam Petrochemical Company, Iranian Petrochemical Investment Group, Shahid Tondgouyan Petrochemical Company, Pars, Mobin, Nouri, Fajr, Bou Ali Sina, Arvand, Khuzestan, Petrochemical Commercial, NPC International, Pazargad Non-Industrial Operations, Petrochemical Industries Development Management and Rah Avaran Fonoun Petroshimi were among companies that merged under Persian Gulf Holding Company.

Persian Gulf Holding currently holds an 11% share in the stock market and has directly or indirectly invested in more than 80 companies active in petrochemical projects. Diversity of activity in the Holding’s subsidiaries and its hidden potential in sharing stocks are competitive advantage for the company.

Persian Gulf Holding is currently the largest company listed in the stock exchange and can affect this market.              

Adel Nejad-Salim, managing director of Persian Gulf Holding Company, told Iran Petroleum that it would invest more than 6 billion Euros in its existing and new units over the coming four years. He said that one billion Euros is planned to be invested in petrochemical projects this year.

In the last calendar year, Nejad-Salim said, Persian Gulf Holding produced at 76% of its capacity. He added that this amount was more than 8% higher than in the previous year.

Nejad-Salim said the company’s production reached 18.5 million tons of petrochemicals last calendar year.

He added that the company has devised a strategic plan to bring its production capacity to maximum by March 2019.

Regarding challenges to petrochemical production this year, he said Persian Gulf Holding is to produce 20 million tons (82%) this year.

He also pointed to the startup of polyethylene unit at Ilam Petrochemical Plant, saying the olefin unit of this facility is expected to come on-stream next year.

Nejad-Salim said the LNG 3200 project, operated by Persian Gulf Holding, will remove feedstock challenges at Bandar Imam Petrochemical Plant. He said the LNG project is to become operational in two years.

He said more than $2.5 billion has been invested in Bidboland-II refinery project of Persian Gulf Holding, adding that the first phase of this project is expected to come online in two years.

In the calendar year to March 2014, Persian Gulf Holding supplied 15.5 million tons of products onto domestic and foreign markets. The rated capacity of this company is currently 22 million tons a year.

 

$9b Exports

 

Nejad-Salim said a recent study shows that 35% of reductions in the Persian Gulf Holding’s production capacity is due to feedstock shortages.

He said Persian Gulf Holding currently comprises 60 companies, up from 15 before. The subsidiaries export $8b to $9b of products a year. According to official figures released for the calendar year to March 2014, Persian Gulf Holding was the second largest exporter of petrochemicals in the Middle East by exporting $8.2b of petrochemicals.

Nejad-Salim said Persian Gulf Holding ranked the first in IMI ranking in terms of value-added generation due to its high profitability. It was also the third among 500 companies in terms of sales index.

Underscoring the completion of the value chain and development of petrochemical industries, he said that the necessary ground has been prepared for investment in the downstream industries.

Nejad-Salim said all links in the value chain have to be taken into consideration for the development of every industry. This objective could be realized within a short period of time.

Effective interaction for synergy and more competitiveness in benefitting from market opportunities, to push Iran into global markets, will be realized through completion of the value chain. Development of Iran’s petrochemical industry should be done in both upstream and downstream sectors.

Nejad-Salim said lack of development of downstream industries, including petrochemicals, in recent years has resulted in increased sale of raw substances.

“We are making efforts to minimize raw sales,” he said, adding that reducing raw sales is a strategic policy of the government.

Nejad-Salim said development of downstream petrochemical industries through completion of the value chain of upstream industries’ products is one of the most important strategies for preventing crude oil and gas sales.

“The private sector should be supported for the development of downstream petrochemical industries,” he said.

 

NIOEC’s Billion-Dollar Investment

 

Mohammad Afshin

 

National Iranian Oil Engineering and Construction Company (NIOEC) has more than five decades of experience in designing and building refineries, oil pipelines and petroleum products, jetties and oil storage facilities. It carries out its projects – including designing and building refineries – in compliance with international standards.

NIOEC is a subsidiary of National Iranian Oil Refining and Distribution Company (NIORDC). It has so far implemented many refinery and pipeline projects and it has also some projects under way.

Mir Ali Ashgar Sajedi, managing director of NIOEC, says four pipeline projects and 11 refining installations were conducted by the company last year.

“One of the most important projects NIOEC has so far done has been capacity enhancement and quality improvement at Shazand refinery. This is one of the biggest refinery projects in the Middle East,” he told Iran Petroleum in an interview.

“In the past, Shazand refinery produced more than 4 ml/d of gasoline. After construction of new gasoline production units in it, this amount has reached 16 ml/d. Most gasoline produced in this refinery is premium gasoline with octane number above 90, in compliance with euro-4 standards. This project has so far made more than 98% of physical progress,” he said.

 

Projects under Way

 

Regarding projects envisaged in the current calendar year by NIOEC, Sajedi said: “One of these projects is the construction of 222-kilometer long Farashband-Shiraz pipeline with 8-inch pipes. This pipeline will carry gas condensate from Farashband gas refinery to Shiraz refinery. This project is close to being commissioned and it will be fully done this year.”

He said that Sari-Moghanak balanced storage project is also under way, adding that a number of storage tanks are to be added to Sari and Moghanak pumping facilities this year.

“Rey-Kan pipeline which carries products from Tehran refinery to Kan storage facility has been temporarily delivered and it will be fully delivered this year. Bandar Abbas-Isfahan pipeline needs to undergo some complementary measures that top the NIOEC agenda this year,” he said.

Sajedi said most units in the product quality improvement project at Tehran refinery are complete, but there are some shortcomings. He added that a GET generator should be incorporated in the refinery this year.

Sajedi said some complementary facilities should be also established at Shazand refinery.

The official said gasoline output hike at Bandar Abbas refinery is currently under implementation, adding that the refinery would see its production grow 4 ml/d.

He said all products from this refinery, including gasoline and gasoil, should comply with euro-5 standards. This project, now 91% complete, will become operational this year.

Sajedi touched another project at Mahshahr Port for organizing this port, saying the port is located 100 kilometers from Abadan refinery. The port is supposed to export products of the refinery to certain destinations.

At Mahshahr Port, 12 depots (4 for gasoil and 8 for fuel), each with a capacity of 40,000 mcm, are to be constructed in three months.

Sajedi also said that the 7-kilometer Abadan-Mahshahr pipeline is in its final stage and will be ready this year.

He said construction of a 468-kilometer pipeline stretching from Bandar Abbas to Rafsanjan, while cutting through Sirjan began last year and will be ready next year. This pipeline would carry products from Persian Gulf Star Refinery to the center and north of the country.

The construction of Naein-Kashan-Rey pipeline started two years ago, said Sajedi, adding that the pipeline, which is 60% completed, will become operational next year.

A 222-kilometer pipeline linking Tabriz to Urmia, while crossing Khoi is also to be finished by next year. Construction of this pipeline started last year.

 

New Projects

 

Sajedi said NIOEC will be operating new projects this year. He cited the construction of Sabzab-Rey sour oil pipeline, Abadan-Rey petroleum products pipeline, new sulfur jetty in Mahshahr and seven pumping facilities in Abadan.

Sajedi said contractors for all these projects have already been chosen and the projects are starting.

He said that developing Abadan refinery is among these projects, adding that detailed engineering operations started a year ago to that effect. Under this project, older units of the refinery will be disabled and the refinery would produce euro-5 gasoline and gasoil.

Sajedi said strengthening projects, which started six years ago at Ministry of Petroleum, will go ahead. All relevant studies have been conducted by NIOEC.

He said NIOEC envisages investments totaling IRR 200,000 billion; IRR 58,000 billion will be spent for projects in the current year.

 

Domestic Manufacturing

 

Sajedi said NIOEC mainly uses domestically manufactured equipment for refineries. He said that more than 45% of equipment used in Shazand refinery was supplied by Iranian manufacturers.

“In pipeline projects, the main role is for the pipe manufacturer,” he said.

Sajedi added that the pipes are mainly manufactured by Ahvaz, Safa and Mahshahr pipe mills.

He said only highly-standardized pipelines are purchased from abroad.

“In pumping facilities, most equipment is procured by domestic companies and highly powerful pumps are supplied from abroad,” said Sajedi.

“In electricity cable, we can say that we are 100% self-sufficient and all electricity cables and instruments, except for specific cables, are procured domestically,” said Sajedi.

Nearly 80% of equipment for transformers and electricity enclosures are purchased from Iranian companies.

 

Overseas Projects

 

Sajedi said NIOEC plans to operate refinery projects in neighboring countries like Iraq, Turkmenistan and Afghanistan.

“NIOEC has record of cooperation with foreign countries. Several years ago, it operated a pipeline and a gasoline production project in Turkmenistan,” he said.

“Currently, a number of pipeline and refinery projects have been defined in Iraq. Negotiations about them are under way between Iran’s Ministry of Petroleum and Iraqi Energy Ministry. NIOEC is to be either directly or indirectly involved in these projects. Two oil and products pipelines are being designed to stretch from Abadan to Basra,” he added.

 

Nuclear Deal

 

Sajedi said NIOEC used to carry out its refinery projects in collaboration with European, Japanese and Chinese companies up to 2009 and bought its equipment from Italy, France, Germany and Japan.

“Since 2009 onwards, imposition of sanctions on Iran’s petroleum industry cut NIOEC’s relations with foreign companies and this company had to meet its needs through domestic manufacturing companies,” he said.

“If a nuclear agreement is reached and the sanctions against Iran’s petroleum industry are lifted, NIOEC will still continue to purchase its required equipment from Iranian companies, because competent domestic companies have emerged in recent years,” he said.

Sajedi said that NIOEC may have to purchase from foreign companies in cases a specific technology might be needed.

He said that Iran’s petroleum industry has been instructed to prefer Iranian domestic manufacturers to foreign ones.

But if there is equipment which is impossible to be manufactured in Iran, foreign products could be purchased, said Sajedi.

“The Iranian government has raised tax tariffs levied on imported equipment so that the necessary items would be procured domestically,” he said.

“Therefore, domestic companies should not worry about the lifting of sanctions and they should manufacture equipment for the petroleum industry as much as they could. But in technical knowhow and license, the potentialities of foreign companies will be used,” he added.

 

Presence at Oil Show

 

Sajedi said Tehran’s annual Oil and Gas Show is largely expected to be warmly welcomed this year by domestic and foreign companies.

“Every year, NIOEC attends Tehran’s International Oil, Gas, Refining, Distribution and Petrochemical Exhibition along with NIORDC,” he said, adding that the company will showcase its achievements this year to Iranian and foreign visitors this year, too.

Sajedi said that NIOEC will also hold talks with Iranian and foreign companies about projects up for investment.

Europeans Rush to Tehran Oil Show

 

Tehran’s 20^th Oil and Gas Show, known under the title of International Oil, Gas, Refining and Petrochemical Exhibition, is being held this year at a time certain hopeful signs are emerging.

Today, an important tool for boosting exports is holding international exhibitions. Such events are of special significance as they provide a chance for showing off products, technical and engineering services, technical knowhow and technological savvy.

Iran’s petroleum industry has always attached great importance to the annual oil show in the capital and has always sought to take maximum advantage from this event.

Over recent years, Iran’s petroleum industry has been under international sanctions on the pretext of Iran's nuclear program. The impacts of sanctions were obvious in the annual oil show.

But this year, due to recent progress in the talks between Iran and six world powers and the issuance of a joint statement as well as the inauguration of Phase 12 of the supergiant offshore South Pars gas field are expected to result in a different oil show. Add to this the opportunities for investment in West Karoun hydrocarbon fields.

The 20^th oil show, scheduled for May 6-9, is one of the highest-profile industrial exhibitions in Iran.

According to petroleum industry officials, more than 1,700 Iranian and foreign companies have signed up to attend. The space allotted to 607 foreign companies is 11,000 square meters, 20% higher than last year.

 

10% More Europeans Attending

 

A significant point with the 20^th exhibition is a 10% increase in the number of European companies planning to attend. Some of these European companies are taking part for the first time, while some others are coming after a several-year break due to international sanctions. Furthermore, 90% of European companies were represented at the exhibition last year, but 50% of them are to participate directly this year. Some of them are from Norway, Italy, Germany and England. Russian companies are also taking part massively this year.

Fabio Casiraghi, Chief Executive of FCE, said Italian companies would be present in a pavilion as they have participated in previous years.

FCE is an Italian marketing company which has been providing services to Italian companies for more than two decades.

Casiraghi said FCE attended Tehran Oil Show for the first time last year, adding that the number of Italian companies willing to be present at the pavilion has doubled from a year ago.

He said the number of Italian companies would increase again in case the participants achieve their objectives this year.

Casiraghi said the Italian companies will try their best to give a good image of their activities and their technologies.

He said that the recent outline agreement between Iran and six world powers has encouraged more companies to take part in the exhibition.

Casiraghi said Tehran Oil Show is one of the biggest ones in the world. Highlighting Iran’s huge oil and gas reserves, he said that participation in this exhibition would let a foreign company explore opportunities for presence in Iran’s market and rivalry with other companies.

He also said that foreign companies are willing to be present in Iran’s market after sanctions are lifted.

Casiraghi predicted that Iran would be flooded with such suggestions in case the sanctions are lifted.

Akbar Nematollahi, director of public relations of Ministry of Petroleum and head of the policymaking council for the 20^th oil show, said the exhibition is expected to strengthen domestic potentialities within the framework of Iran’s economic policies.

“The ground is prepared for contribution to the petroleum industry and related industries and foreign companies can seek opportunities for investment and operate development projects for the oil, gas, refining and petrochemical industries and benefit from the new model of oil contracts,” he said.

Iran is adopting a new model of contracts, known as Iran Petroleum Contract, to replace buybacks which are no longer attractive.

He said that Tehran Oil Show is the main oil event in Iran, adding: “Last year, this exhibition hosted 1,400 domestic and 600 foreign companies from 32 countries under conditions of international sanctions. Their presence on more than 50,000 square meters of land prepared the ground for technical and research cooperation.”

 

Pavilions

 

Nematollahi said France, Turkey, Germany, China and Malaysia are to set up pavilions at the exhibition.

He added that the necessary plans for these pavilions were made as of last summer.

“Every day, one of directors of the main subsidiaries of Iran's Petroleum Ministry meets with industrialists in the country in order to get familiar with their challenges,” said Nematollahi.

He said that senior officials, including MPs, as well as foreign diplomats stationed in Tehran will be attending the inauguration of the exhibition.

“The ground is prepared for the presence of different managers and officials so that all of them would get familiar with each other’s capabilities and take action to lift financial and legal obstacles to growth and development of the country,” he added.

 

International Interaction

 

Asked if the current positive political atmosphere has had any effect on the exhibition, Nematollahi said: “At a macro level, the petroleum industry enjoys a special position in preparing the ground for global cooperation because it is the driver of the country’s economy and industry. In many cases, the petroleum industry has strengthened the country’s security under the aegis of long-term export and industrial contracts.”

“The position of Iran, as a supplier of energy to the world and a holder of huge oil and gas reserves and proprietor of scientific and industrial capabilities has long been at the center stage for investors and industrialists. The safety of Iran route for the transfer of energy has been acknowledged even by rivals of this country,” he said.

Nematollahi expressed hope that the obstacles of the previous years would be removed as soon as possible, so that the country’s petroleum industry, economy and politics would experience useful days.

The 20^th oil show, like in the past, will welcome small and big companies active in the petroleum industry. Iranian and foreign companies will have a chance to put on display their progress in manufacturing equipment for the petroleum industry, sophisticated equipment for drilling, well logging, exploration, software for measurement and turbines, compressors and pumps.

Due to the recent outline agreement between Iran and global powers, the presence of leading foreign companies in Iran would mean a lot.

The companies participating in the 20^th show are classified under four categories: Manufacturers of petroleum industry equipment, contractor companies, commercial and investment companies and knowledge-based companies.

Germany, Russia, South Korea, Canada, China, United Arab Emirates and India are among countries attending the exhibition this year.

More information about the exhibition, as well as news regarding the event when it gets under way would be available at iran-oilshow.ir.

Iran sits on 11% of the world’s total oil and 18% of its total gas reserves. Every year, Tehran hosts the oil and gas show which is among the most important industrial events in the world.

Saudi Dangerous Game with Oil Price

 

By Shuaib Bahman

 

Crude oil production in Saudi Arabia reached 10.3 mb/d in March 2015, the 13-year highs. Saudi oil output hike came against the backdrop of falling oil prices due to global supply glut and weak demand for black gold. That was why Saudi Arabia’s increased oil recovery elicited criticism from fellow member states of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producers. Regardless of criticisms, Saudi Arabia sticks to its production level and insists on raising its output. Analysts maintain that the politically-motivated oil price decline by Saudis will finally cause them trouble.

This article will study the objectives and intentions pursued by Saudi Arabia in oil price cut to discuss challenges lying ahead for this country.

Saudi Arabia has long been engaged in politically-motivated oil dumping. For example, in the final years of the imposed war (1980-1988), Saudi Arabia adopted its so-called free marketing strategy to raise production and cut prices. Once more, Saudi Arabia seems to be moving ahead with price cut in the interest of its political objectives. Although Saudi Arabia claims that its opposition to a cut in the OPEC output ceiling has no political motivation, one can easily see Riyadh’s political intentions in the price issue. At least four factors are involved:

 

Pressuring Iran

 

Oil market analysts are of the view that Saudi Arabia has pushed oil prices down in an attempt to undermine Iran with a view on ramping up political pressure on Tehran. The main objective pursued by Saudi Arabia is to steamroll Iran into compromising in the nuclear issue and deprive Iran of a major source of revenue for supporting the government of President Bashar Assad in Syria. The Saudis are hopeful that they would influence Iran’s policies in the Middle East region through reducing oil prices. By cutting oil prices, Saudi Arabia is seeking to harm Iran’s economy, military power and foreign policy across the region.

 

Changing Russia’s Mideast Policy

 

Saudi Arabia’s efforts for oil price cut could also increase economic pressure on Russia. Riyadh hopes that more pressure on Moscow would dissuade Russia from meddling with the affairs in the Middle East, particularly in Syria. For Saudis, since Russia is busy with the Ukraine crisis, Russia would have to shift its attention to Ukraine in case its revenues fall. The Saudis imagine that Russia would then abandon President Assad to his own fate. Moscow’s switch from Damascus to Kiev would change the equation in favor of pro-Saudi forces in Syria. Meantime, low oil prices would serve as a bargaining chip in the Saudi hands in its haggling with Russia.

 

Countering Shale Oil

 

Saudi Arabia’s discontent with shale oil production by the United States could be also a reason for Riyadh’s efforts to cut oil prices. Shale oil recovery is often costly. When oil prices grow in the world markets, shale oil production becomes cost-effective. But when oil prices fall, investment in oil sands become uneconomical. Therefore, rivalry with extraction from unconventional reservoirs (shale oil) in the US and Canada could have also motivated Saudi Arabia to slash oil prices.

Furthermore, oil price slump may be rooted in the Saudis’ discontent with the policies followed by US President Barack Obama and Democrats in the Middle East region.

Given Democrat President Obama’s efforts to settle the standoff over Iran’s nuclear program, it seems that Saudi Arabia is pressuring Democrats so that shale oil production would be halted in the US and Washington would further depend on Riyadh for oil, and Saudi Arabia could win US support in its policies.

 

Production Monopoly

 

Saudi Arabia has designed its oil policy so as to keep a grip on the entire world market. To that effect, while most oil producer countries are trying to benefit from state-of-the-art technology in oil and gas extraction, oil price fall becomes a headache as it dissuades big oil companies from investing in this sector.

Therefore, Saudi Arabia has started a long-term game and hopes that leading oil companies would lower their investment in North America due to the current wakened market and then oil production in that region would fall. For example, Saudi Arabia hopes that oil price fall would dissuade financiers from investing in fellow OPEC member Venezuela. That would allow Saudi Arabia to remain the unrivalled largest producer of oil in the world.

 

Miscalculation and Reverse Results

 

Although it seems that Saudi Arabia is considering only its national interests in cutting oil prices and does not care for other countries that would pose challenges to the Saudis in the long term. If oil prices remain low for a long time the economy of Saudi Arabia and other countries depending on oil production and exports would face collapse. Saudi Arabia is currently incurring several billion dollars in losses over low oil prices in an attempt to pursue its political interests. But in the future, it would have to reconsider its oil policy. The Saudis are well aware that in case oil prices remain low for a long time their monocultural economy, which heavily depends on oil revenues, would become troublesome.

Saudi Arabia is estimated to own USD 750 billion in hard currency reserves. That would be enough for Saudi Arabia to resist low oil price for two years. In September 2014, the International Monetary Fund (IMF) warned that Saudi Arabia would face a 1.4% budget deficit in 2015. This prediction seems realistic given growing infrastructural projects in Saudi Arabia and foreign assistance to this country. Saudi Arabia drew up its 2015 budget, including $190 billion revenue and $130 billion costs, with oil price set at $75-$80. Even if Saudi Arabia set oil prices at $75 a barrel in its annual budget it would again face a $40 billion deficit which would require Riyadh to dip into its sovereign wealth fund or get loans.

Given the fact that Saudi Arabia depends on oil sales for 90% of its revenues, it would need $90 oil price to keep its budget balanced. Therefore, if oil prices fall below the level envisaged in the budget, Saudi Arabia would have to draw more from its fund. According to Saudi Council of Ministers, this country is estimated to earn more than 715 billion Saudi riyals in 2015, while its spending is anticipated to exceed 860 billion riyals. Therefore, the Saudis would be grappling with a 145-billion-riyal deficit.

There are also other challenges causing problems for Saudi Arabia’s oil policy. For example, if Iran and six world powers reach a final agreement on the Islamic Republic’s nuclear program and the sanctions are lifted on Iran, the Islamic Republic would be able to attract enough investment to enhance its oil production. That would mean Iran would become a more influential player in oil market and Saudi Arabia would no longer be the unrivalled power in the market. Moreover, Saudi Arabia’s policy of targeting Iran’s regional policies in Syria, Lebanon, Iraq and Yemen would founder.

Russia has constantly shown that it is ready to undergo economic hardships without bowing to foreign pressure to change its policies. The sanctions imposed by the US and Western governments against Moscow have failed to force Russia to reconsider its policy vis-à-vis Ukraine. Saudi Arabia’s oil policy is also unlikely to make Russia think twice about its support for the embattled Syrian government.

By cutting oil prices, Saudi Arabia is pursuing the strategy of making US shale oil production uneconomical. Since shale oil producers in the US are rapidly cutting their production costs, shale oil production is unlikely to be affected by sharp oil price. That means that Saudi Arabia’s low-price oil would fail to force shale oil producers out of global markets.

Saudi Arabia’s actions against oil price are unlikely to continue for long because lower oil price would result in less petrodollars for crude oil producers. In that case, allies of Saudi Arabia like the United Arab Emirates, Qatar and Kuwait would face budget deficit after some time and Riyadh would no longer be able to win their support just for its own political objectives.

Oil price fall would also weaken demand from industrialized countries in the long term. Even now, signs are emerging of falling economic growth rate in Germany, Russia, Argentina, England, Japan and China. When petrodollars-dependent economies are wakened, the US economy will also suffer because these countries are the main trading partners of Washington. Hence, Saudi Arabia could not oversupply the market for the long term and it will have to revise its policy.

Saudi Arabia’s oil policies would backfire because this country has self-imposed a big budget deficit without managing to overrun its oil and political rivals. Add to this future opposition from other oil producer and industrialized countries.

Saudi Dangerous Game with Oil Price

 

By Shuaib Bahman

 

Crude oil production in Saudi Arabia reached 10.3 mb/d in March 2015, the 13-year highs. Saudi oil output hike came against the backdrop of falling oil prices due to global supply glut and weak demand for black gold. That was why Saudi Arabia’s increased oil recovery elicited criticism from fellow member states of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producers. Regardless of criticisms, Saudi Arabia sticks to its production level and insists on raising its output. Analysts maintain that the politically-motivated oil price decline by Saudis will finally cause them trouble.

This article will study the objectives and intentions pursued by Saudi Arabia in oil price cut to discuss challenges lying ahead for this country.

Saudi Arabia has long been engaged in politically-motivated oil dumping. For example, in the final years of the imposed war (1980-1988), Saudi Arabia adopted its so-called free marketing strategy to raise production and cut prices. Once more, Saudi Arabia seems to be moving ahead with price cut in the interest of its political objectives. Although Saudi Arabia claims that its opposition to a cut in the OPEC output ceiling has no political motivation, one can easily see Riyadh’s political intentions in the price issue. At least four factors are involved:

 

Pressuring Iran

 

Oil market analysts are of the view that Saudi Arabia has pushed oil prices down in an attempt to undermine Iran with a view on ramping up political pressure on Tehran. The main objective pursued by Saudi Arabia is to steamroll Iran into compromising in the nuclear issue and deprive Iran of a major source of revenue for supporting the government of President Bashar Assad in Syria. The Saudis are hopeful that they would influence Iran’s policies in the Middle East region through reducing oil prices. By cutting oil prices, Saudi Arabia is seeking to harm Iran’s economy, military power and foreign policy across the region.

 

Changing Russia’s Mideast Policy

 

Saudi Arabia’s efforts for oil price cut could also increase economic pressure on Russia. Riyadh hopes that more pressure on Moscow would dissuade Russia from meddling with the affairs in the Middle East, particularly in Syria. For Saudis, since Russia is busy with the Ukraine crisis, Russia would have to shift its attention to Ukraine in case its revenues fall. The Saudis imagine that Russia would then abandon President Assad to his own fate. Moscow’s switch from Damascus to Kiev would change the equation in favor of pro-Saudi forces in Syria. Meantime, low oil prices would serve as a bargaining chip in the Saudi hands in its haggling with Russia.

 

Countering Shale Oil

 

Saudi Arabia’s discontent with shale oil production by the United States could be also a reason for Riyadh’s efforts to cut oil prices. Shale oil recovery is often costly. When oil prices grow in the world markets, shale oil production becomes cost-effective. But when oil prices fall, investment in oil sands become uneconomical. Therefore, rivalry with extraction from unconventional reservoirs (shale oil) in the US and Canada could have also motivated Saudi Arabia to slash oil prices.

Furthermore, oil price slump may be rooted in the Saudis’ discontent with the policies followed by US President Barack Obama and Democrats in the Middle East region.

Given Democrat President Obama’s efforts to settle the standoff over Iran’s nuclear program, it seems that Saudi Arabia is pressuring Democrats so that shale oil production would be halted in the US and Washington would further depend on Riyadh for oil, and Saudi Arabia could win US support in its policies.

 

Production Monopoly

 

Saudi Arabia has designed its oil policy so as to keep a grip on the entire world market. To that effect, while most oil producer countries are trying to benefit from state-of-the-art technology in oil and gas extraction, oil price fall becomes a headache as it dissuades big oil companies from investing in this sector.

Therefore, Saudi Arabia has started a long-term game and hopes that leading oil companies would lower their investment in North America due to the current wakened market and then oil production in that region would fall. For example, Saudi Arabia hopes that oil price fall would dissuade financiers from investing in fellow OPEC member Venezuela. That would allow Saudi Arabia to remain the unrivalled largest producer of oil in the world.

 

Miscalculation and Reverse Results

 

Although it seems that Saudi Arabia is considering only its national interests in cutting oil prices and does not care for other countries that would pose challenges to the Saudis in the long term. If oil prices remain low for a long time the economy of Saudi Arabia and other countries depending on oil production and exports would face collapse. Saudi Arabia is currently incurring several billion dollars in losses over low oil prices in an attempt to pursue its political interests. But in the future, it would have to reconsider its oil policy. The Saudis are well aware that in case oil prices remain low for a long time their monocultural economy, which heavily depends on oil revenues, would become troublesome.

Saudi Arabia is estimated to own USD 750 billion in hard currency reserves. That would be enough for Saudi Arabia to resist low oil price for two years. In September 2014, the International Monetary Fund (IMF) warned that Saudi Arabia would face a 1.4% budget deficit in 2015. This prediction seems realistic given growing infrastructural projects in Saudi Arabia and foreign assistance to this country. Saudi Arabia drew up its 2015 budget, including $190 billion revenue and $130 billion costs, with oil price set at $75-$80. Even if Saudi Arabia set oil prices at $75 a barrel in its annual budget it would again face a $40 billion deficit which would require Riyadh to dip into its sovereign wealth fund or get loans.

Given the fact that Saudi Arabia depends on oil sales for 90% of its revenues, it would need $90 oil price to keep its budget balanced. Therefore, if oil prices fall below the level envisaged in the budget, Saudi Arabia would have to draw more from its fund. According to Saudi Council of Ministers, this country is estimated to earn more than 715 billion Saudi riyals in 2015, while its spending is anticipated to exceed 860 billion riyals. Therefore, the Saudis would be grappling with a 145-billion-riyal deficit.

There are also other challenges causing problems for Saudi Arabia’s oil policy. For example, if Iran and six world powers reach a final agreement on the Islamic Republic’s nuclear program and the sanctions are lifted on Iran, the Islamic Republic would be able to attract enough investment to enhance its oil production. That would mean Iran would become a more influential player in oil market and Saudi Arabia would no longer be the unrivalled power in the market. Moreover, Saudi Arabia’s policy of targeting Iran’s regional policies in Syria, Lebanon, Iraq and Yemen would founder.

Russia has constantly shown that it is ready to undergo economic hardships without bowing to foreign pressure to change its policies. The sanctions imposed by the US and Western governments against Moscow have failed to force Russia to reconsider its policy vis-à-vis Ukraine. Saudi Arabia’s oil policy is also unlikely to make Russia think twice about its support for the embattled Syrian government.

By cutting oil prices, Saudi Arabia is pursuing the strategy of making US shale oil production uneconomical. Since shale oil producers in the US are rapidly cutting their production costs, shale oil production is unlikely to be affected by sharp oil price. That means that Saudi Arabia’s low-price oil would fail to force shale oil producers out of global markets.

Saudi Arabia’s actions against oil price are unlikely to continue for long because lower oil price would result in less petrodollars for crude oil producers. In that case, allies of Saudi Arabia like the United Arab Emirates, Qatar and Kuwait would face budget deficit after some time and Riyadh would no longer be able to win their support just for its own political objectives.

Oil price fall would also weaken demand from industrialized countries in the long term. Even now, signs are emerging of falling economic growth rate in Germany, Russia, Argentina, England, Japan and China. When petrodollars-dependent economies are wakened, the US economy will also suffer because these countries are the main trading partners of Washington. Hence, Saudi Arabia could not oversupply the market for the long term and it will have to revise its policy.

Saudi Arabia’s oil policies would backfire because this country has self-imposed a big budget deficit without managing to overrun its oil and political rivals. Add to this future opposition from other oil producer and industrialized countries.

Perla Platforms to Be Installed Offshore Venezuela

 

The Cardon IV joint venture of Eni and Repsol has contracted Seaway Heavy Lifting to install the gas production platforms for the Perla project offshore Venezuela.

Water depth at the Perla field is 70 m (229 ft). The three platforms will export gas to the shore through a 30-in. pipeline making landfall near Punto Fijo.

Seaway Heavy Lifting’s scope includes transportation of the platforms to the offshore location followed by installation and tie-in to various inter-field pipelines that have already been installed.

Cardon IV S.A. is a joint operating company currently owned by Eni (50%) and Repsol (50%). Petróleos de Venezuela will have a 35% share in the operation of this block, including the Rafael Urdaneta gas project.

Oil Flows From New Well in Gabon

 

First production has been achieved from Etame 12-H, a development well drilled from the Etame platform offshore Gabon.

Operator VAALCO Energy Inc. says that Etame 12-H was drilled to a measured depth of approximately 3,450 m (1,131 ft), targeting the recently discovered, untapped lower lobe of the Gamba reservoir. Following completion operations, the well was brought online at the rate of approximately 2,000 b/d on a gross basis with no indication of H2S. 

The well is currently being temporarily constrained at the above production level, while it is being optimized for efficiency.

Norway Launches New Exploration Round

 

Norway has launched its oil and gas licensing round for mature areas including blocks near recently discovered reservoirs.

Norway’s Ministry of Petroleum and Energy started the offers in the hope of gaining additional resources to make developments more profitable in the future.

The biggest energy producer in Western Europe is offering license for the development of new blocks near Statoil's Aasta Hansteen gas field, Lundin Petroleum's Alta and Gohta finds as well as blocks near the smaller Pil and Bue discoveries.

Norway offers blocks that either were not taken in previous rounds or handed back.

In its last year’s licensing round for mature areas, Norway handed out 54 licenses to 42 companies. Despite crashing oil prices, demand from explorers remained high in 2014, thanks to government subsidies for exploration.

Depleted Tapti Field to Shut Offshore India

 

BG Group has issued an update on its activities offshore India and Thailand in its annual report.

The Tapti gas field offshore western India will likely cease production soon and will then move into the decommissioning phase, with possible handover of certain Tapti facilities to ONGC, in accordance with the production-sharing contract.

Drilling continues at the Panna/Mukta fields just south of Tapti, located 95-100 km (59-62 mi) northwest of Mumbai. BG received government approvals for the Mukta B phase of development at the PMT fields.

Chevron Plans Offshore Australia Decommissioning

 

Chevron is planning to decommission several installations offshore Australia following production declines at the Saladin, Cowle, Yammaderry, Crest, Roller, and Skate fields.

Beyond the onshore production plant, decommissioning should include platforms at Saladin and shallow-water monopods at Roller, Skate, Yammaderry, and Cowle. Subsea flowlines from the fields to the onshore installation are included in the decommissioning plans.

Saudi-Kuwait Oil Fields to Close on May 9

 

A Chevron Corp. unit will start on May 9 to shut oil fields, Saudi Arabia is developing jointly with Kuwait after parties failed to resolve differences to keep the project running, according to two people with knowledge of the matter.

Saudi Arabian Chevron sent a letter to Kuwaiti officials setting the date for employees at the Wafra onshore fields on Kuwait’s side of the border with Saudi Arabia to begin shutting down facilities and withdrawing, said the people, who asked not to be identified because the information is confidential. The project has been hampered by a lack of staff and adequate imports of equipment after the Kuwaiti government stopped issuing or renewing permits last year, they said.

“Current difficulties in securing work permits and materials may impact the company’s ability to safely continue production. Efforts continue with all appropriate parties to resolve the issue,” Sally Jones, Chevron spokeswoman in London, said by e-mail. “It is not Chevron’s policy to comment on industry speculation,” she said, regarding the May 9 date for the start of shutdown. Officials at state-run Kuwait Petroleum Co. didn’t answer phone calls for comment.

Chevron’s plan to shut down the onshore fields at Wafra follows Saudi Arabia’s Oct. 16 halt in operations at the Khafji offshore deposits, which also lie in the shared Saudi-Kuwaiti border zone, on environmental concerns.

Canada Crude Output Growth Seen Falls 59%

Canada’s crude output growth will slow to 17,000 barrels a day by next year after oil lost half of its value, according to the Canadian Energy Research Institute (CERI).

Growth in production will slow from 41,000 barrels a day this year amid declining conventional oil output, CERI President Emeritus Peter Howard said in a presentation at a conference in Calgary. The slowdown delays by two years Canada’s need for one of four major oil export pipelines planned, Howard said.

Oil fell to a six-year low near $42 a barrel in March from last year’s high of about $108 in June as the Organization of Petroleum Exporting Countries refrained from reducing production amid a shale boom in the US. The drop prompted conventional drillers to cut output, with Canadian rigs seeking oil falling to 18 last month, from more than 400 in February 2014, according to data from Baker Hughes Inc.

“We are not going to be in trouble until 2018,” Howard said in an interview at a conference in Calgary. “We will need a pipeline post 2018 for sure.”

"Oil Price Rebound" Unlikely Soon

 

Robert Dudley, CEO of oil and gas giant BP, has said current oil price is unlikely to change significantly soon.

There are no reasons for "oil price rebound," Dudley told the annual international conference IHS Energy CERAWeek in Houston. Production continues to grow everywhere, including in Russia despite Western sanctions, while Chinese demand has stagnated and Iranian oil could soon return to the world market as part of nuclear deal between Tehran and Sextet of international mediators, Dudley noted.

"Lower for longer if the way you’d describe our view," he said.

BP will postpone some of its exploration projects, while oil prices remain at the current level, Dudley noted. However, the company will continue drilling in the Gulf of Mexico, developing a major gas project in Egypt and an Alaska LNG project. Dudley also said he does not rule out new investment in Russia’s energy sector.

All projects have to be "super competitive" amid capital reductions made in response to lower oil prices, Dudley said.

Norway Makes New Oil Find

 

Norwegian oil firm Det norske found oil in two appraisal wells drilled on the Ivar Aasen field in the North Sea, providing data for the field's development, the Norwegian Petroleum Directorate said.

One of the wells encountered a total oil column of 54 meters, of which 25 meters were of good to very good reservoir quality, while the other well encountered a total oil column of 41 meters and a 4-metre gas column, of which a total of 29 meters was of very good reservoir quality.

Prior to the wells, the field was thought to contain about 150 million barrels of recoverable oil, 4.5 billion cubic meters of gas and 1 million cubic meters of condensate.

The oil directorate did not give a new resource estimate based on the appraisal wells but said they would provide information on the location of the injection wells on the field, which is expected to start-up in the fourth quarter 2016.

Oil Boosts Turkmen Oil Output

 

Dragon Oil Plc produced 23% more oil in Turkmenistan in first-quarter 2015 than in first-quarter 2014, the company said April 21.  The first quarter ended March 31.

Average gross production in the Cheleken contract area was about 88,700 bbl/d the first quarter. This was a 23% increase over the corresponding 2014 level. March production in the contract area averaged 89,600 bbl/d, and April production averaged about 93 Mbbl/d.

CAPEX for infrastructure, drilling and exploration assets totaled about US$153 million in this year’s first quarter, the company added.

Gross field production during the quarter totaled about 88,700 bbl/d, compared with first-quarter 2014’s 72,300 bbl/d. This is a 23% increase. New development wells with strong flow rates were put into production, Dragon added.

Since December 2014, Dragon completed and tested the following wells in the Dzheitune (Lam) field.

Iraq's 2015 Oil Output Seen Flat

 

Iraq's oil output in 2015 is likely to remain flat as Baghdad struggles to cope with a slump in crude prices that has slashed government revenue and forced the OPEC producer to renegotiate its service contracts with oil majors.

A boost in crude production next year will prove to be even more challenging if oil prices remain low and Baghdad fails to repay oil companies or approve field development plans on time, oil executives and market experts say.

Industry sources say approvals by Baghdad for tenders to build new crude-processing facilities have already been delayed for up to six months in some of the main southern fields.

Baghdad has asked foreign oil companies such as BP, Royal Dutch Shell, ExxonMobil, Eni and Lukoil to revise their oilfield development plans by considering postponing new projects and delaying already committed undertakings.That could lead to slower production than initially anticipated, oil executives say.

"The priority now is to maintain steady production. You will not be seeing any incremental increases in 2015 or even 2016," an oil executive working in southern Iraq told Reuters.

"From where? Certainly not from the south, so who will increase?"

Baghdad's aim is to hit 4 million barrels per day (bpd) by the end of December, including crude output from the northern Kurdish region.

Central Asia Becomes Gas-to-Liquids Test Case

 

Former Soviet Central Asia is emerging as a focus for developers of the next generation of small-scale gas-to-liquids projects, as hopes of a North American GTL boom fade.

The past few weeks have seen two new projects advance, with UK company Compact GTL, chaired by ex-BP chief Tony Hayward, unveiling plans for a plant in Kazakhstan's northwestern region of Aktobe, and an agreement on a project in Turkmenistan involving South Korea's Hyundai Engineering and Construction and LG International.

The announcements follow another GTL project already under development in Turkmenistan that brings together Japan's Kawasaki Heavy Industries, Turkish building company Ronesans and Danish engineering and petrochemical company Haldor Topsoe.

In addition, South Africa's Sasol remains formally committed to a larger, 38,000 b/d GTL project in Uzbekistan, although progress has been slow.

The projects are advancements on GTL technology first developed in 1920s Germany and taken up in the post-war period by Apartheid-era South Africa.

Until recently a number of companies were talking about using cheap shale gas to build the next generation of GTL projects in North America.

Shell was enthused by its 140,000 b/d Pearl GTL project in Qatar, which reached full production in late-2012, but in January 2014 dropped plans for another such plant on the US Gulf Coast.

It cited high costs and uncertainty about gas prices in the long term.

Sasol said this January it was delaying a proposed 96,000 b/d GTL plant planned in Louisiana due to the collapse in oil prices.

Compact GTL chief executive Edmund Buckley says the fall in North American transport fuel prices has added to doubts about GTL projects there.

By contrast in Kazakhstan, a vast, resource-rich country with a weak refining and fuel distribution system, conditions are right for small-scale plants that meet local needs, he says.

Central Asia may not score highly in rankings of places to do business, but in certain contexts gas can be obtained almost for free.

Petronas to Deliver LNG Cargoes in Q1 2016

 

The world's first floating liquefied natural gas (LNG) project, built by Petronas, is expected to supply its first cargoes in the first quarter of 2016, senior officials from the Malaysian state-oil firm said.

The 365-meter (1,200 ft) long Petronas Floating LNG 1 (PFLNG1), with a capacity of 1.2 million tons per annum, would be completed by March next year, the firm's Vice President and Venture Director LNG Projects (Domestic) Abdullah Karim told reporters.

"We expect the first cargo of LNG to be available in the first quarter of 2016," Abdullah said, adding that the gas supplies will likely be used for domestic consumption.

Abdullah did not reveal the total investment value of the facility nor the LNG price assumption used during the final investment decision (FID) in March 2012, but said the project was currently still profitable.

"We are still optimistic about this. Our projection number is not for oil prices at $110. Even today with prices at $62 or so, it's still viable for Petronas," he said.

Oil has climbed around 15 percent this month, fuelled by concerns over the conflict in Yemen, southern neighbor to oil-rich Saudi Arabia.

"At the current oil prices, it is challenging. But if oil prices rise to $70 a barrel, we can get double-digit internal rate of return," said Colin Wong the Senior Vice President of Petronas' Technology and Engineering unit.

Industry players have raised questions over whether it is more cost-efficient to build land-based or floating LNG facilities.

Royal Dutch Shell is building its own floating facility in Australia, named Prelude. The project is anticipated to be the world's biggest maritime vessel and is set to start up in 2017.

BP Agrees UK Gas Pipeline Stake Sale

 

BP has agreed to sell its stake in one of Europe's biggest gas pipelines to Antin Infrastructure Partners for 324 million pounds ($486 million), giving the fund near full ownership of the asset after it bought out BG last year.

The sale of the Central Area Transmission System, which is expected to conclude before the end of the year, is a next step in BP's $10 billion 2014-2015 disposal program.

CATS is a combination of pipeline and processing facilities that transport gas from a cluster of North Sea fields to an onshore receiving terminal in Britain's Teesside.

It can handle more than 48 million cubic meters of gas per day, transporting over 10 percent of Britain's annual gas production and making it one of the largest in Europe.

BP said the sale would not impact its rights to capacity use on the system.

Last year, gas producer BG sold its own stake in CATS to Antin Infrastructure Partners for nearly $1 billion. Once the acquisition of BP's equity completes, the fund will own 99 percent of CATS and become its operator.

"We have exciting plans to grow and develop CATS through additional investment," said Mark Crosbie, managing partner of Antin Infrastructure Partners.

The fund also said it had recruited BP's vice president of commercial operations in the North Sea, Andy Hessell, to lead the Antin CATS management team.

Saudi Arabia Caps Crude Supply to Asian Refiners

 

Saudi Arabia has imposed limits on supply volumes since March for Asian buyers who have been flocking to the kingdom for more oil after it cut official selling prices to record lows, several industry sources said.

While the cuts to OSPs have had the desired effect of driving up demand for Saudi oil, the move suggests the kingdom may have underestimated Asia's appetite.

Alongside the volume restrictions that came into force last month, the kingdom has also boosted production to over 10 million barrels/day since March as it strives to meet demand.

Refiners in China, Japan, Taiwan and Thailand said they were not able to maximize purchases from Saudi Arabia because of restrictions on the use of flexible operational tolerance that is typical in term contracts, while some said they had to absorb slightly lower volumes within the negative tolerance limits.

"[For us it's] not negative, I guess because [there would be] a lot of dead freight, so we need to fight hard but we definitely won't be able to get positive," said a trader with a North Asian refiner, referring to the operational tolerance limits that can be 10% above or below contracted volumes.

Traders said the restrictions were likely limited to particular grades including Arab Heavy and Arab Extra Light as demand for these rose in recent weeks on the back of strong fuel oil and naphtha cracks.

Supplies of Arab Light were seen to be normal, traders said.

The tightening began in March when demand for Saudi oil surged on record low OSPs. Saudi's March OSP differentials for Arab Extra Light and Arab Light were the lowest since at least 1989, according to Platts data, while Arab Medium was priced at its lowest level since mid-2008. By March, a steep contango market structure in Dubai crude was already driving up demand from companies looking to store oil in the hopes of selling it later at a higher price.

"In January, everyone wanted to take a position because of the contango, March-loading spot was tight and if they considered price, Saudi looked cheap," said a second trader with another North Asian refiner.

Global oil and Asian product market, April

 

Asian Crude and Products Prices (bl/d)
	Dubai	Gasoline	Naphtha	Gasoil	Jet fuel	Fuel Oil 180 cst	Fuel Oil 380 cst
JAN- 2015	45.57	57.42	45.23	62.67	63.66	43.02	41.94
FEB- 2015	55.44	70.46	57.39	71.14	73.25	53.28	51.43
MAR- 2015	54.66	73.84	57.38	70.75	70.01	50.40	48.66
APR- 2015	57.24	73.34	58.40	71.14	70.86	52.42	50.50

 

The mean of crude prices rose in April compared to March. OPEC production rose by 1,214 barrels per day to 31,488 kb/d in March (see table). Non-OPEC supply as well as OPEC crude oil production rose and caused the rise in global oil output. Despite this additional supply volumes, crude were stronger on April. The strength may be mostly  originated from demand factor. Ending maintenance season, refineries came back from maintenance and absorbed more crude. Moreover, economic growth in Europe enhanced bullish sentiments about oil demand growth in the industrial OECD club.

Looking at the market geopolitically, tension in Yemen was a bullish factor in the market. However, after the recent agreement between Iran and the 5+1 group will increase its market share.

OPEC Crude Production kb/d
	FEB 2015	MAR 2015	MAR/ FEB
Algeria	1,131	1,125	-6.0
Angola	1,79	1,748	-42
Ecuador	533	553	19.6
Iran	3,010	3,020	10
Iraq	2,783	3,339	556
Kuwait	2,850	2,850	0
Libya	341	525	183.8
Nigeria	1,802	1,689	-112.7
Qatar	676	708	32.4
Saudi Arabia	9,636	10,294	658.8
UAE	2,980	2,907	-72.4
Venezuela	2,742	2,729	-13.2
Total	30,273	31,488	1,214

 

Asian Product Markets

The mean for most Asian products prices rose in tandem with crude prices (see graph 1). Gasoline market fundamentals were strong to the extent that its price decreased unlike the crude price trend.

Generally, lower crude prices cause refinery operating rates to rise. Rising crude runs boosted products output, depressing products margins (see graph 2). Looking ahead, Asian products fundamentals will gradually weaken in the coming month due to high crude runs and ending season demand for some products.

 

Products market fundamentals in brief

March 2015	Light Distillates		Middle Distillates		Heavy Products
	Gasoline	Naphtha	Gasoil	Jet Fuel	Fuel Oil 180 & 380 cst
	↓	↓	↓	↓	↓

(Upward arrow: strength, downward arrow: weakness)

Light Distillates (gasoline, naphtha)

Singapore gasoline crack- Singapore gasoline price against Dubai price- decreased sharply. Rebounding US production, heavy volumes from Europe and heavy exports from North Asian countries caused higher gasoline stocks. However, it is expected to see supporting demand from Indonesia, Sri Lanka and India in the region. Malaysia is set to switch fuel specifications for RON 97 gasoline in September from Euro II to Euro IV emission standards.

 

Naphtha market weakened on the back of softening demand and more supply. Due to lower demand from European gasoline blenders, Western naphtha arrivals to Asia rebounded and this caused to have plentiful amount of naphtha in the region. On the demand side, seasonally naphtha demand waned. Asian LPG prices fell and petrochemicals started to switch from naphtha to LPG as feedstock. Furthermore, start of heavy cracker maintenance in Q2 2015 caused the weakness in naphtha demand.

 

 

Middle Distillates (gasoil, jet fuel)

Singapore Gasoil performed weak during April. Supplies out of new Middle Eastern refineries, as well as weak demand from Indonesia pressured the market. Moreover, there was a lot of US cargoes sending to Europe which made Asian Gasoil arbitrage to Europe non-economic. Looking forward, it is expected that higher import requirements from Australia due to the closure of BP’s 102,000 b/d Bulwer refinery in May help to support the market.

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. More pressure was seen in the market with the new cargoes offering from new UAE refinery Ruwais.

Fuel Oil

Fuel oil market in both grades weakened, but still strong compared to the average of the year 2014. The weakness was mostly due to fuel oil abundance in  the region. The arbitrage volumes from Europe into Asia were at two month high in April and is expected to be high in the coming period. Moreover, the exportable cargoes from Ruwais refinery in UAE is estimated to be 50,000 b/d until mid-2015. Since then, with startup Ruwais secondary units, market pressure from supply side will be lessen. 

In bunker market, new emission standards in the ECAs, which went into effect in January 2015, have led Singapore suppliers to sell more marine gas oil in the region (+18,000 b/d y-o-y), with higher sulfur fuel oil sales taking somewhat of a beating in the same period.

PIHO Compliant with Int’l Standards

 

Countries and big industrial companies have always been concerned with offering healthcare services. The way these services are provided to citizens and employees affects the level of their satisfaction.

As a leading industry, Iran’s petroleum industry is active in different sports across the country. It provides a wide range of healthcare services to its employees and has always taken effective steps for that purpose.

Currently, 9,500 people are working with the Petroleum Industry Health Organization (PIHO). According to official data, 60% of PIHO staff are involved in healthcare services and the rest in logistics. In general, PIHO is serving petroleum industry staff in 19 regions, 9 of which have exclusive hospitals. Furthermore, PIHO has contracts with 2,545 healthcare centers and 300 hospitals across the country. More than 350,000 petroleum industry employees and their family members, 200,000 petroleum industries retired staff and more than 200,000 residents of oil-rich zones are under coverage of PIHO health services. They constitute the bulk of the total 900,000 people enjoying PIHO services.

In order to get familiar with the activities of this organization, Iran Petroleum has interviewed Dr. Habibollah Samie, managing director of PIHO.

 

Q: Iran’s petroleum minister, Bijan Zangeneh, attaches significant importance to PIHO plans and has called for the reinforcement of its position. How well are PIHO’s plans in harmony with the minister’s views?

A: The plans worked out by this organization are classified under three categories as follows: manpower, medical equipment and physical structure. In the wake of our follow-up measures, the 13% per capita healthcare shares, which used to be paid directly to PIHO every year, will directly go to the Petroleum Industry Pension Fund, and insurance affairs would be administered by PIHO Board of Directors.

The important point in the petroleum industry health sector is preventive check-up and missions assigned to PIHO for preventive measures. But insurance agencies do not agree.

On the other hand, the preventive and health-oriented sectors constitute a major element at PIHO. This organization is bolstering these sections in order to fully implement preventive check-up.

According to official figures, the challenge to today’s world is not infectious and contagious diseases. The problem is that this civilized and industrial world is grappling with non-contagious diseases like diabetes, blood pressure, obesity, etc. As the administrator of health affairs of petroleum industry employees, PIHO feels obliged to make cultural and guidance planning.

The more we issue warnings to the families of petroleum industry staff and the more we develop sports patterns with the help of sports affairs and logistics units, the more appropriate conditions would be prepared.

In the current calendar year, PIHO is pursuing its preventive and health programs more seriously.

 

Q: What has PIHO done in view of providing better services?

A: Healthcare services are important and no effort is acceptable in this regard. Errors in other sectors may be justified, but in this case, any error could be life-threatening. The same is for equipment. CT scan, radiology and widely used equipment like prostheses are examples of vital equipment. Generally speaking, laws governing healthcare are very strict and they firmly deal with such errors. For commercial purposes, no substandard equipment would be allowed into the country. That is a mission assigned to Ministry of Health.

It is absolutely impossible that we use a substandard apparatus. It would be by no means acceptable. Ministry of Health is very sensitive to these standards and seriously controls them.

Besides Ministry of Health, Ministry of Petroleum has its own criteria for healthcare and any equipment destined for PIHO have to be double-checked by the petroleum ministry, too.

All equipment used by PIHO, ranging from an echocardiograph to sophisticated equipment, is examined by different expert committees. Only after winning approval by these committees, could they be used.

The medical equipment is purchased based on needs. For instance, the best model of echocardiograph is chosen for CCU ward. But when we need equipment to be used for outpatient treatment like common cold there would not be so many options. In one word, I can say that PIHO complies with international standards in providing healthcare services to petroleum industry staff and its focus is on offering better services.

Hospitals with subspecialty services have long been in use at the petroleum industry. Reviewing the history of petroleum industry hospitals, one can see that all standardization actions were first done in these hospitals. Masjed Soleyman Hospital, the first in Iran’s petroleum industry and Abadan Hospital have always been high-profile in providing healthcare services.

Fifteen to twenty years ago, angiography apparatus was first used in Iran at a PIHO hospital. Angiography or arteriography is a medical imaging technique used to visualize the inside, or lumen, of blood vessels and organs of the body, with particular interest in the arteries, veins, and the heart chambers. One of the most common angiograms performed is to visualize the blood in the coronary arteries. A long, thin, flexible tube called a catheter is used to administer the X-ray contrast agent at the desired area to be visualized.

The first endosonography ward in Iran was at petroleum industry hospital and Dr Malekzadeh, now deputy minister of health, organized the first workshop on endosonography at the petroleum industry hospital because nowhere in the country there was such a possibility. Removal of tumors by waves was also first done at the petroleum industry hospital in 2005 and 2006. These hospitals offer significant services which may not be available in any other healthcare facility in the country. As its organizational charter necessitates, PIHO will continue to provide such effective healthcare services.

 

Q: A major threat to petroleum industry’s employees working in operational zones is psychological diseases. What has PIHO done in dealing with this scourge? 

A: Some preventive measures target psychological complications for the employees and their families. These families need spiritual and psychological support and neurologists often give pieces of advice to them. PIHO has been counseling centers in different operational zones and has so far provided effective services. It has 35 counseling centers and preventive measures are a must, particularly in the regions with a high rate of addiction to cigarette. In this regard, counseling services have been of great help to us and these cases are long-term. If for whatsoever reason anyone is separated from family, some problems would arise, but these conditions are specific to the industry.

The undeniable fact is that the employees working under hazardous conditions, as well as their families need psychological support. Expansion of sports premises in these zones and other recreational facilities could be of great help. Such centers are also available in Tehran and a university recently decided to strengthen this sector. Three expert-level meetings have so far been held for that purpose.

The policy of providing mental and psychological support for these employees and their families will continue.

 

Q: Among the plans of PIHO is the expansion of Tehran’s petroleum industry hospital. What has been done in this respect?

A: To that effect, incomplete development projects are planned to be finished and then we will start building a subspecialty hospital for petroleum industry in Tehran. In the meantime, we will supply the necessary equipment to match the needs of every region and so far we have received pledges of finance. We plan to update the equipment in hospitals and healthcare centers so that we could provide much better services to the staff. These plans are to become operational in the current calendar year.

PIHO is working under competitive circumstances alongside state-run and private centers. Since we are likely to lose our clients, the heads of hospitals are motivated to provide better services and respect customer relationship management rules. We have to facilitate conditions for the admission of patients and provide better services to them in order to win more clients. We can be the sole choice of the families of petroleum industry employees and even retired staff on the long-term.

PIHO remains the first choice of retired staff; therefore, we have to improve the quality of our services and render better services.

PIHO has also contracts with other healthcare centers and in a city like Tehran, the petroleum industry employees are not expected to necessarily refer to this organization.

It has started at the level of hospitals and in the first step; a contract has been signed with Noor subspecialty hospital for ophthalmology services. That would expand to other hospitals.

 

Q: Does PIHO render remote medical services?

A: Yes, telemedicine is an option. PIHO is the first organ to have ever applied telemedicine across the country.

In collaboration with Iran Oil Pipeline and Telecommunications Company, PIHO has been in contact with many regions over the past six years and we have managed to reduce the number of referrals.

 

Q: How is this scheme being implemented?

A: Based on this scheme, doctors are in contact with different regions based on specific schedule. It is possible for patients to discuss their problem with general practitioners present there. If there is any suspicious symptom the problem would be discussed. The prescription for the patient will then be faxed. IT infrastructure is needed for expanding this system.

Tele ICU and tele-hospitals are currently common across the world. In many cases, the patient does not receive specialized services and a doctor may decide based on information given to him about the patient.

These activities are currently done in developed countries and one necessary infrastructure for such schemes is IT and informatics.

In case PIHO is provided with an appropriate informatics structure, real-time monitoring of patients will be possible.

 

Q: Do you also use air emergency services?

A: Yes, of course. Healthcare services are available for patients in South Pars zone. But it is possible to airlift them to equipped hospitals if need be. Besides Assaluyeh which is Iran’s energy capital, other places with similar conditions would be provided with the same facilities. Air emergency costs IRR 70 million a day, while IRR 40 million per hour is charged for service providing.

HSE at Iran’s Gas Capital

 

The necessity of paying attention to environmental indices in industrial projects is a general exigency. Given the extent of petroleum industry projects, this issue has to be taken into account more seriously. South Pars is the main center of Iran’s oil activities and naturally petrochemical plants and refineries would cause pollution. More than 70,000 people are working at this giant gas field and a number of cities and villages are located nearby. The refineries of South Pars are under construction and the administration of President Hassan Rouhani has shown firm determination for improving environmental indices in the Pars Special Economic Energy Zone (PSEEZ) where South Pars gas field is located.

Besides manpower, the protected Gulf of Nayband, which houses flora and fauna, has obliged Iran’s Ministry of Petroleum to seriously collaborate with the Department of the Environment (DOE) for a cleaner environment in the energy capital of Iran.

Iran has defined plans for improving the life standard in its gas capital. South Pars, which is shared by Iran and Qatar, currently supplies more than 50% of Iran’s gas needs.

 

Flare Gas Sales

 

Gas refineries in the world are supposed to operate while burning flare gases to the minimum level possible. Flaring associated gases would harm national interests from two aspects. One the one hand that would be loss of energy which could serve the petroleum industry in different fields and on the other, it would significantly threaten the environment.

President Rouhani’s administration plans to use flare gases for power generation. To that effect, National Iranian Oil Company (NIOC) has asked the private sector to purchase 20 mcm of flare gases to be sold under a tender bid.

Such amount of flare gas would let the private sector to generate 3,000 megawatts of power and export electricity. Iran is already exporting 1,000 megawatts of power.

Iran’s Ministry of Petroleum recently put on tender the sales of flare gases in order to prevent the burning of flare gases to generate value-added and reduce pollution.

A working group is expected to be established in order to handle the project of elimination of associated gases. The mission assigned to this working group will be running 200 to 300 no-flaring projects over five years. These projects would be operated across the country simultaneously. South Pars would provide flare gases for this purpose.

 

Better Environment Indices

 

Currently creating greenbelt particularly around petrochemical plants where pollution is high tops the agenda of PSEEZ which is responsible for the infrastructure in this region. Seventeen years after the start of the development of South Pars gas field, there is only 700 ha of greenbelt and plans under way for adding 1,000 ha to PSEEZ greenbelts.

Wastes treatment in PSEEZ is also another plan seriously under way by Iran’s petroleum industry in order to protect the environment against degradation. Chief among the most important plans Iran envisages for the environment in PSEEZ are structural reform of the executive management of Assaluyeh environment, integration of activities through regulating organizational chart and promulgating directives in order to coordinate health, safety and environment (HSE) affairs at gas refineries and petrochemical plants. Such coordination of activities will definitely head off threats to the environment and health of citizens and employees in PSEEZ.

 

Parsi Sol Technology

 

One of the main units in gas refineries is sweetening facility which generally uses amine solvents. Using solvents with higher efficiency, lower energy consumption and less operational problem have always been among the main concerns of refining industrialists. That is why big oil companies in the world have moved to develop formulated solvents in order to meet their requirements.

To that effect, the RIPI, in collaboration with the Research and Technology Directorate of National Iranian Gas Company, focused on the development of technical knowledge and creation of the necessary research infrastructure in 2006.

The Parsi Sol technology is in fact purification of natural gas. It involves formulation of sweetening solvents, designing a sweetening facility, management of solvents and marketing of solvents currently in use.

This technology is the outcome of a research project which is aimed at indigenizing technical knowledge for formulation of solvents needed for the purification of natural gas and establishment of the necessary infrastructure for designing sweetening facilities, defining methods of quantitative and qualitative analysis of amine solvents used in the oil, gas and petrochemical industries, as well as development of methods for marketing solvents.

The technical knowhow developed for this formulation has been registered as Parsi Sol. This solvent is under field test at Masjed Soleyman oil refinery at industrial scale.

The effectiveness of this solvent has been proven and it works much better than a previous solvent developed by a Canadian company.

Currently, the Research Institute of Petroleum Industry (RIPI) is applying standardized analysis method to conduct all tests which were previously done by foreign companies. The RIPI’s tests are of high precision and accuracy.

 

Mechanized Sulfur Depot

 

Since the very beginning of development of South Pars in the 1990s, sulfur produced by refineries of different phases has been stored in open depots before being carried to vessels in trucks. Sulfur storage in open air would also result in the spread of sulfur by monsoon winds and air poisoning.

NIOC recently built mechanized and roofed depots for millions of dollars in order to resolve this problem. This mechanized depot, which is to come on-stream in the near future, is to allay environmental concerns and accelerate sulfur exports.  This depot would save time and sulfur transport costs. After the inauguration of this depot, sulfur exports would be done in the mechanized way.

Eliminating pollutants in South Pars has always been a priority for Ministry of Petroleum and NIOC. To that effect, Minister of Petroleum Bijan Zangeneh has ordered the establishment of a working group committee to define and implement comprehensive environmental plans.

That was why the construction of mechanized sulfur depot sped up under the new management of PSEEZ. The depot is now in the pre-startup phase and its inauguration in the near future would minimize air pollution emanating from the spread of sulfur in the environment.

There are two depots sprawling on 25,000 square meters. Each facility can store 40,000 tons of granulated sulfur a year.

Each phase of South Pars is producing 200 tons a day of sulfur for exports. Sulfur loading capacity has been programmed at 1,000 tons per hour. Extensive plan has been also made for enhancing sulfur exports from PSEEZ and reducing the volume of sulfur storage in depots.

Enhancing storage capacity and mechanized sulfur exports are among the most important objectives of this project. By inaugurating the mechanized sulfur depot, there would be no need for open depots and transportation trucks. Vessels could load sulfur in two days, which would be much shorter than the 12-15 days spent on loading.

The depots have been designed and constructed by Iranian technicians. Vessels could load 1,000 tons per hour of sulfur after docking at Pars Ports Complex. The mechanized depot comprises three facilities, each having the storage capacity of 40,000 tons.

 

Mitigating Environment Pollution by Half

 

Iranian petroleum engineers have worked round the clock in a bid to conduct reforms in the flare network of the refineries 1-5, set up demercaptanization unit in refinery 1, set up gas desalting nits in refineries 3 and 5, regulate the process of desalting in the ethane units of the refineries 3 and 5 of South Pars. All this was done to reduce flaring rate significantly. As a result of these projects, flaring in this zone has fallen from 171 mcm to 8.24 mcm a week. Analysts believe that such a cut in flaring would cut environment pollution by half. Meantime, NIOC and the Assaluyeh Department of the Environment have been reviving mangrove trees in order to safeguard the environment. Revival of Mangrove Park started in 2011.

All these measures promise a bright future for a better environment at PSEEZ in the near future.

Microbe Powder Savvy Mastered

 

In many crude oil related processes like exploration, extraction, transportation, refining and storage, a large amount of pollutants are produced. These pollutants pose a serious threat to the sea environment, particularly in coastal zones. Physicochemical methods for dealing with these contaminants may be effective in reducing the negative impacts of oil compounds on ecosystems to some extent, but they could never eliminate oil compounds from the environment completely. On the other hand, using such substances as oil sludge dispersant (OSD) which cause oil sludge to deposit , cause certain environmental problems in water environments and seabed habitats because they are not used against solid phase contaminants.

To resolve this problem, Iran Oil Terminals Company (IOTC) has in collaboration with the Research and Technology Directorate of National Iranian Oil Company (NIOC) and Shahid Beheshti University implemented for the first time in Iran a research project for designing and developing microbe power to remove oil pollution. The achievement of this project has been semi-industrial production of microbe power for removing oil contaminants off soil.

Ali Sardar, head of HSE and Defense at IOTC, told Iran Petroleum that oil contaminants are bio-degraded by indigenous microorganisms. “Environmentally speaking, this method is fully environment-friendly and a few countries in the world are able to produce this product,” he said.

Sardar added that using microbe power to treat oil-contaminant soil is a bioremediation method applied to soils with 5% to 10% pollution. He said that this method requires environment-friendly technologies for removing oil contaminants.

He said that the microbe power used for that purpose is a mixture of several microbial strains, biosurfactant and mineral nutritive substances. This mixture, he said, is degraded by microbial consortiums comprised of oil microorganisms.

 

Efficacy Assessment

    

Mehdi Hassani, director of R&D at IOTC, said the field test on the project was carried out at Kharg oil terminal after it passed lab phases. He said the field test at Kharg terminal was aimed at evaluating the efficacy of the power in the biological analysis of hydrocarbon compounds existing in hydrocarbon-contaminated soils.

“In the beginning, the location for the test was selected and operations for testing the sample taken from oil-degrading bacteria were conducted. Then, the samples were analyzed and the data were evaluated. Based on analyses conducted on the soil and the use of microbe powder in removing hydrocarbon contaminants, the amount of oil contamination in the soil was tested and compared with reference values. The results are in table below:

 

Test Time	TPH in Tested Soil (mg/g)	TPH in Reference Soil (mg/g)
Day 1	82	82
Day 2	26	74

 

Referring to results, Hassani said: “By reviewing the findings, it came out that bioremediation of oil-contaminated soil by using oil-degrading bacteria power reduces TPH. Therefore, the microbial powder was tested in Kharg so that its efficacy would be measured.”

“During a 16-day period of time, the analysis of hydrocarbon compounds by sludge dispersant bacteria. The rate of oil contamination in soil was initially 30%, but it was reduced by 70%. In the end, due to the successfulness of the field test conducted on the sample, the semi-industrial pilot production of the powder (300 kg) was done,” he said.

 

Achievements

 

Sardar said semi-industrial production of microbial powder for the removal of oil contaminants from soil, acquiring technical knowledge for the production of microbial products for the removal of oil contaminants, self-sufficiency in the production of this product and independence of foreign products are among the achievements of this project.

“This project was simultaneously tested with success in other subsidiaries of National Iranian Oil Company (NIOC) and won huge satisfaction,” he said.

Sardar said 50 tons of oil-contaminated soil is to be treated by biological powder in Kharg.

The project was awarded by Iran’s Ministry of Petroleum at the Festival of Research and Technology.

 

Industrial-Scale Cleaning

 

Hassani said: “Given the existence of oil-contaminated soil due to renovation and descaling of storage facilities, the facilities were provided for cleaning around 50 tons of oil-contaminated soil at Kharg oil terminal by this powder last November.”

He added that 250 kg of powder was used for cleaning the contaminated soil. The operation was monitored by the HSE department of Kharg oil terminal.

“First, samples were taken from the contaminated soil and its TPH was measured. Then, the level of mixture of oil without and with contamination was measured and the final TPH was optimized according to instructions for using powders. By locating the spot for cleaning soils, contamination-free soil and oil-contaminated soil were blended and transferred to a place near the Kharg oil terminal’s storage tanks,” he said.

Hassani said 250 kg of powder was poured on the oil-contaminated soil and then the optimum humidity for creating the appropriate conditions for microorganisms was determined. A barrier was also erected around the place the project was under way. A specific perimeter was also allotted to reference sample calculations.

 

Objectives

 

Sardar said one of the most important objectives of the project is to implement the petroleum minister’s instructions for upgrading the Environmental Management of Petroleum Industries (EMPI) in the Persian Gulf and coastal zones.

EMPI is a project under way by HSE of Ministry of Petroleum and organs working under its authority and Japan International Cooperation Agency (JICA).

After the end of these studies, seven action plans have been promulgated. One of them is aimed at cleaning and remedying oil-contaminated soils in Kharg Island.

“Implementation of the aforementioned project was pursued as a research project at IOTC. The field tests have been conducted by the R& D Department of IOTC. The operational phase of this project was done in collaboration with HSE department of IOTC,” Hassani said.

Gas Contribution to Iran Industries

 

Iran’s Ministry of Petroleum managed to enhance production capacity of South Pars gas reservoir last calendar year which ended on March 20. The startup of Phase 12 of the giant offshore gas field allowed the ministry to manage gas supply and demand in different industrial sectors and power plants.

To that effect, National Iranian Gas Company (NIGC) managed to supply more gas to the power plants besides meeting household, industrial and commercial sectors’ needs.

Gas supply to the power plants came at a time more than 22 million households were enjoying natural gas, including one million connected to national gas trunklines last year.

Minister of Petroleum Bijan Zangeneh recently said that 27 billion liters of liquid fuel, worth $18 billion, was consumed at power plants and industrial plants in the calendar year to March 2014. But, he added, production hike from South Pars and more gas delivery to power plants helped save liquid fuel and money.

Hamid-Reza Araqi, managing director of NIGC said more than 50 bcm of gas was delivered to the power plants in the last calendar year, up 15 bcm from the year before.

He said that the delivery of gas to power plants has saved liquid fuel and $6 billion in spending; noting that air pollution has been also reduced.

According to official data from National Iranian Oil Products Distribution Company (NIOPDC), nearly 50 bcm of liquid fuel was consumed last year, nearly 7 bcm lower than the year before. The reduction in liquid fuel consumption by power plants was natural gas delivery to the facilities.

In the last calendar year, more than 6.8 bcm of compressed natural gas (CNG) was burnt by vehicles, saving gasoline consumption which had already grown 2.5% year-on-year.

 

More Gas Delivery to Industries

 

Throughout the last calendar year, 89.4 mcm/d was delivered on average to industries which totally consumed 32.6 bcm of gas.

According to NIGC figures, gas delivery to industries grew 9% year-on-year in the last calendar year.

The country’s industries have received more gas at a time production hike, due to low gas price, has directly affected the cost price of products of this sector.

 

More Clean Days

 

According to the Department of the Environment (DOE), the country experienced 44 more clean days last calendar year compared with the preceding year.

More gas delivery to the power plants and industries and replacement of gasoline with CNG are among factors contributing to clean air in big cities.

Clean air is a key necessity for human health. Among the harmful impacts of polluted air are low quality of water and soil, destruction of historic monuments and low visibility.

Low visibility and relevant impacts due to air pollution, will bring about unpleasant impacts on human body, stop growth of plants and spread diseases among plants.

At the inauguration ceremony of Phase 12 of South Pars gas field, Iranian President Hassan Rouhani said Iran experienced clean air last calendar year because power plants consumed more natural gas. He said that boosting the quality of gasoline and gasoil is another measure taken in favor of the environment.

Regarding the importance of environmental issues in industrial projects, the president said: “After these phases are inaugurated, safeguarding the environment for people living in nearby regions is tough and necessary, and is demanded by the government. Many steps have been taken to that effect in collaboration with Ministry of Petroleum.”

 

Gas Injection

 

Gas injection to oil reservoirs is a method for enhanced recovery. As Iran’s gas production capacity has increased, more injection has been done.

According to official data, gas injection to oil reservoirs in the last calendar year increased more than 1 bcm year-on-year.

 

Gas Export

 

Increase in gas production helped supply domestic needs in addition to raising exports and contributing to sustainable delivery. Gas exports were more than 8% higher last year than the preceding year.

Moreover, gas exports were 2.5 bcm higher than imports, showing that Iran’s gas exports balance has been positive.

Under a 25-year contract, Turkey imports 30 mcm/d of gas from Iran. Last year, Turkey received more than 9.7 bcm of Iran’s gas.

 

Gas Exports to Iraq

 

According to 2024 vision plan, Iran should account for 10% of global gas trade. To that effect, Iran plans signing new contracts while increasing gas exports to its traditional buyers.

Iran plans to start pumping gas to Iraq soon. It will start by delivering 5 mcm/d to 7 mcm/d of gas, which could rise to 30 mcm/d.

All Iranian households will have access to gas supply in three years and then NIGC will focus on gas exports and delivery to industries. Petrochemical plants and other energy-consuming industries will be connected to national gas trunkline so that extra gas production will be channeled to them.

Iran is expected to see gas production capacity in South Pars gas field increase this year, as phases 15&16 and 17&18 are to come on-stream.

In light of gas production hike, more gas would be delivered to power plants and industries. More than 7 bcm is to be delivered to power plants in the current calendar year.

Sitting on 37 tcm of gas, Iran is the second largest holder of gas reserves in the world. By inaugurating new phases of South Pars, Iran can play a significant role in replacing other fuels with this clean fuel.

Phase 12 of South Pars is producing 81 mcm/d of sweet gas, 120,000 b/d of gas condensate and 75,000 tons a year of sulfur.

The prioritized phases of South Pars are currently accounting for more than 125 mcm/d of gas, 75 mcm/d of which is supplied by Phase 12. Phases 15&16 would account for 38 mcm/d and Phase 17 for 15 mcm/d.

Iran Oil, Bridge of Victory for Allies

 

Since the outbreak of World War II (WWII) for two years, Iran’s petroleum industry ran into serious trouble. Due to the rapid deployment of German forces in Europe, Iran lost its European oil markets and its exports were limited to Eastern markets.

In 1940, after Italy joined the big war, the Mediterranean turned into a battlefield and maritime shipment of oil hit snags. The sinking of oil tankers in the Mediterranean brought a halt to Iran’s oil exports.

Under those circumstances, every country was trying to supply its oil needs from the closest and the most secure spot.

Due to these problems, oil extraction in Iran kept falling until it reached 6.5 million tons in 1941.

At the start of the WWII, the Iranian government told the Anglo-Iranian Oil Company (AIOC) to make up for shortages in oil revenues. The British government and AIOC managers felt the danger and sought a remedy. Several months after the start of WWII, Lord Cadman, chairman of AIOC, made his last trip to Tehran and suggested that the Iranian government receive a fixed amount during the war so that oil extraction would not fall. The Iranian government accepted the proposal, but negotiations got under way between the government and the company to reach agreement. Finally, they agreed on 4 million liras a year, which was higher than maximum revenues the government had gained during the pre-war years. From 1940 to 1944, AIOC paid 4 million liras a year to the government. The company had also agreed to pay more if more revenues are gained.

The time between the start of WWII and the Allies’ invasion of Iran in September 1941 provided a very good opportunity for Iran to convince the AIOC to accept its views. Historians say the government could make up for its past mistakes and at least introduce modifications into concessions had it not focused its attention only on accumulating revenues. The government missed this golden opportunity.

The Allies’ invasion of Iran was initially aimed at finding a route for the delivery of ammunition to Russia. However, the undeniable fact is that safeguarding Iran’s petroleum industry was also important for the invasive Allies. The significance of this issue is highlighted by Winston Churchill in his “Memoirs of the Second World War.”

Churchill writes that the necessity of supply of warfare to the Soviet Union required full communications with Russia via Iran. In his view, Iran’s oil reservoirs were considered as an element of war.

Churchill says he was initially a bit worried about working with the Iranian government. On July 11, 1941, joint military cooperation with the Soviet troops in Iran was ordered to be studied. Talks were held with the Iranian government regarding the expulsion of Germans who had been recruited in the country. On July 18, the negotiators said they would stand serious and firm vis-à-vis the Iranian government. General Sir Archibald Wavell had cabled a message to Churchill, saying that the Germans had to be expelled from Iran as part of efforts for protecting India. He warned that any negligence of this issue would repeat the Iraq scenario which could not be dealt with on time.

The general said that should the Iranian government refuse to cooperate it should be replaced.

On July 21, Churchill cabled a message to General Wavell telling him that the Iran case would be studied the day after. He said he favored an ultimatum to be issued to Iran by Britain and Russia regarding the expulsion of Germans. He said that Iran should be warned of consequences should it refuse to expel the Germans.

On July 22, Churchill received view of his Foreign Secretary and Deputy Prime Minister, Anthony Eden that forces should be concentrated in Iraq so that Iran’s oil reservoirs would be protected.

Churchill says the shah of Iran was well aware of covetous eyes on the country’s oil reserves. According to his book, Iran was unlikely to take any step in case it realized that there was a dispute under way.

Iran had deployed troops along Russia and Iraq borders where oil reservoirs abound.

Britain was determined to strengthen its forces positioned in Iraq before the Russians were defeated. Churchill believed that deployment of forces in Iraq would let the Allies impose their will on Iran.

Churchill also maintained that Britain should not hesitate to occupy Iran’s oil reserves in case of Russia’s defeat, noting that the Germans would pressure Iran to expel the Britons.

A review of Churchill’s memoirs makes clear the high significance of Iran’s oil during the years of war and explains why foreign troops were trying to occupy Iran.

After Japan joined the war, conditions changed for Iran’s oil because the Japanese managed to capture Indonesian islands and Burma – both important oil resources for Allies – shortly. Then, Iran’s oil was the only source of supply for the Allied troops.

Meanwhile, war operations in North Africa picked up speed in 1942 and Allied forces launched a campaign to capture North Africa. Iran’s oil was a key factor in their advances.

Not long before the start of WWII, AIOC had set up a jet fuel production plant in Abadan. The plant started work in 1940, but it could no longer supply needs in 1942. Two years later, Abadan was able to produce one million tons a year of jet fuel. This amount of jet fuel production let Britain and US air forces in the Middle East and Far East get their jet fuel from Abadan. At the same time, Abadan supplied jet fuel to Russia too.

In 1942, the Allies invaded Sicily Island and occupied it. The Mediterranean maritime channel was opened to the Allies and oil products supplied by Iran were very instrumental in the final phases of the war. The Allies’ dependence on Iran’s oil products kept rising on a daily basis from the third year of the war. In 1944, extraction of oil exceeded 13 million tons in Iran. In 1945, it reached 17 million tons and a year later it reached 19 million tons.

At the beginning of the war, AIOC operated 93 oil tankers. Nearly half of these tankers were drowned during the war although oil revenues were high. In the early years of war, oil extraction dropped significantly in Iran and all development projects were stopped. AIOC was concerned with protecting Abadan refinery and oil reservoirs. As defensive measures, razor wire was erected around pumping stations and metal fences were put up at wells. Security checks were done on people entering and leaving the Abadan refinery.

Certain measures were also undertaken for destroying the wells quickly in case they were seized by Germans.

After the Bahrain refinery was invaded in 1940, the lights were totally switched off at Abadan during night and the entire city was in dark.

Two actions during the first years of war were of great help to the development of the petroleum industry. One was the installation of a plant to produce jet fuel in Abadan and another one was the construction of a 264-kilometer pipeline between Gachsaran oil mine and Abadan. This reservoir pumped 2 million tons a year of oil to Abadan.

After the Russian and British troops invaded Iran in August 1941 and occupied different spots, precautionary measures around the mines and particularly in Abadan were stepped up. The refinery was covered with certain substances and materials were prepared around the refinery to cover it if need be. A bit farther, a fake refinery with flares was built in order to mislead the enemy. Anti-artillery guns were installed everywhere and warplanes were ready to take off at airport. Any defense measure was predicted.

In order to carry a large amount of jet fuel to Russia, a tinplate manufacturing plant in Abadan was developed rapidly and its output doubled. Extra oil and gasoline storage facilities were built in northern Iran so that everything would be at the disposal of Allies across Iran. A pipeline was laid out to carry gasoline from Ahvaz to Andimeshk.

In the second year of the war, became known that AIOC had to procure a large amount of oil products to Allies. The company started its development operations and the British and American governments decided to provide Iran with the necessary materials. The first action was mining operations in Aghajari. A pipeline, of 3.5 cm in diameter, was laid out from Aghajari to Abadan. The pipeline was ready in 1944. The following year, an oil field started production and a pipeline was laid between the oil reservoir and a spot between Ahvaz and Shoushtar to carry oil to Masjed Soleyman-Abadan pipeline.

In Abadan, new apparatuses were prepared for producing jet fuel and other products. The volume of Abadan refinery, which was 10 million tons a year before the war, reached 17 million tons in 1945.

There was growing need for jet fuel to feed warplanes. In 1942, one of AIOC directors travelled to the US to purchase the necessary apparatuses. After all these apparatuses were brought into Iran they were drowned in the Atlantic Ocean. It happened two more times. But the fourth time, everything arrived in Abadan.

These development operations required recruitment of new employees. During the war, specialized manpower could not be found easily. The AIOC had to recruit manpower from Czechoslovakia, Denmark, Greece, Switzerland and Palestine. The war programs were done quickly. At the same time, more employees were recruited by AIOC.

At the beginning of war, AIOC had halted its plans including construction of houses for its employees. As more people were employed by AIOC, the Abadan population started rising. Housing and welfare became serious challenges there. The Iranian employees were unhappy with those conditions and they finally decided to go on strike.

Historians have said that Iran was the “Bridge of Victory” for Allies during WWII. They cite such reasons as Iran’s transit route for the delivery of ammunition to the Soviet Union. However, rarely have historians underscored the significance of Iran’s oil at WWII. Foreign historians may have ignored the issue on purpose while Iranians have not bothered themselves to write about the advantages of oil at that time.

Last but not least, one can say that the value of Iran’s oil for Allies may not have been higher than that of the bridge of victory, but it was not less important either.

Qazvin, City of Gates

 

Qazvin in the ancient writings of Europe has been referred to as the old city "Arsas" or "Arsasia" and in Greek histories "Razhya" and during the era of Ashkanian Dynasty on its founder "Ardepa".

Sasanian called it "Kashvin", it means the land that shouldn’t be ignored, some people called it "Qasvin" or the city where people are strong and firm and some historians called it "Caspian".

Qazvin is located at an altitude of 1,278 meters. It was the capital of Iran under Safavid Dynasty and that is why most historical monuments there date back to that period. Qazvin is credited with different titles including the City of Gates and the Capital of Iran’s Calligraphy.

Historic evidence indicates that Qazvin region was first civilized under the Medes in the 9^th century BC. Archeological discoveries in Boein Zahra, south of Qazvin Desert, show that humans lived there in the 4^th and 5^th millennia BC.

The foundation of the city of Qazvin is attributed to Shapur II the Great of Sassanid Dynasty. Shapur founded the city and fortified it against enemy attacks. As Shapur expanded its military base, the city of Qazvin took shape.

The most important monuments in Qazvin are Qajar Bath, 40-Column Palace, a mausoleum and an old street.

 

40-Column Edifice (Kiosk)

 

Safavid Garden, which houses Saadatabad Garden, Qazvin Cultural Park and Savafid government center, are among the most important monuments in the city of Qazvin. They all date back to the Safavid Dynasty.

Safavid Garden sprawls on more than 6 ha of land and offers visitors a view of remnants of Safavid, Afsharid, Zand and Qajar dynasties.

The 40-column edifice or kiosk is the main monument in the Safavid Garden. In the face of threats by Ottoman Turks, Shah Tahmasb Safavid decided to move his capital from Tabriz to Qazvin in 951 AH. In the same year, he bought Zangi Abad lands from Mirza Sharaf Jahan, a then famous figure, for constructing royal buildings upon. Shah Tahmasb then instructed a group of architects to build a square-shape garden in the middle of the purchased land and erect towering buildings, verandas and pools.

The original plan was designed by a Turkish architect. The kiosk and a façade are the only monuments remaining from the gardens of Savafid period in Qazvin. This kiosk was damaged and restored during different periods.

When Shah Abbas moved his capital from Qazvin to Isfahan, he ordered the construction of Naqsh-e Jahan Square, Ali Qapou Edifice and a 40-column palace in Isfahan based on the monuments in Qazvin.

 

Aminiha Hosseiniyeh

 

Built in 1858, it comprises 16 interconnected structures, constructed by a merchant called, Haj Mohammad Reza Amini. The public mourning area or Hosseinieh consists of three parallel halls running in an east to west direction with wooden sash windows that are inter linked with each other.

The southern halls boast of 9 latticed worked sash windows with colored panes. Its ceiling is adorned with painting and mirror works. The center hall has rounded alcoves adorned with ornate mirror and plasterwork. This hall is connected to the northern and southern halls by two sets of five doors. On the semi-circular segment over the doors leading to the northern porch fine emblems in connection with the twelve months (of the year) can be noted. The ceiling of this hall is adorned with plaster and mirror, in addition to paintings on wood.

The section under the halls comprises sectors such as the cellar, basement, store room, and kitchen which have access to the northern and southern courtyard. The north facing wall of the southern courtyard is made of stone with innumerable embossments.

 

Jame Mosque

 

Qazvin’s Jame Mosque is one of the oldest buildings in Iran. This mosque is used for congregational prayers, particularly for weekly Friday Prayers. The oldest part of the mosque is said to have been constructed by the orders of Harun al-Rashid in 807.

Other structures were then added with the last being during the final years of the Safavid rule. The double layered main dome of the mosque is from the Seljuk era, and is locked to the public. It houses some precious examples of relief calligraphy from medieval times. Renovations have also been carried out on many sections of the mosque.

The interesting point is that the foundation of the mosque is laid on a fire temple used by Zoroastrians.

The verandas built during Safavid era were all reconstructed under Qajar Dynasty.

Despite the devastating invasion by Mongols, the mosque still stands in full glory. Some parts have been restored. There are five rows of inscriptions in ancient handwriting in the mosque.

 

Qajar Bath & Museum

 

Qajar Bath is one of the largest and one of the most ancient baths in Qazvin. It was built in 1057 AH under the order of Shah Abbas Safavid. Amir Gouneh Khan Qajar Qazvini, a top general of Shah Abbas, built the bath. It was initially known as Royal Bath, but it was then renamed Qajar Bath.

Sprawling on 1,045 square meters, the bath has separate rooms for men and women. The architecture inside the bath is fantastic.

This historic monument has turned into a museum of anthropology and its difference with other such baths is that it puts on display social customs of Qazvin.

 

Tehran Gate

 

As mentioned above, Qazvin is the city of gates. In the past, the city had eight gates, known as Rasht, Bagh Shah, Darb Koushk, Tabriz, Tehran, Sheikh Abad, Imamzadeh Hossein and Khandaq Bar. Only two of them – Tehran and Darb Koushk – have survived.

The Tehran Gate, one of the most renowned, was used to protect the city against attacks and looting by other cities. This gate was built outside the city, but due to the expansion of Qazvin and demographic growth, it lies now inside the city.

Tehran Gate, dating back to the Qajar Dynasty, was restored in 1968.

Qazvin, City of Gates

 

Qazvin in the ancient writings of Europe has been referred to as the old city "Arsas" or "Arsasia" and in Greek histories "Razhya" and during the era of Ashkanian Dynasty on its founder "Ardepa".

Sasanian called it "Kashvin", it means the land that shouldn’t be ignored, some people called it "Qasvin" or the city where people are strong and firm and some historians called it "Caspian".

Qazvin is located at an altitude of 1,278 meters. It was the capital of Iran under Safavid Dynasty and that is why most historical monuments there date back to that period. Qazvin is credited with different titles including the City of Gates and the Capital of Iran’s Calligraphy.

Historic evidence indicates that Qazvin region was first civilized under the Medes in the 9^th century BC. Archeological discoveries in Boein Zahra, south of Qazvin Desert, show that humans lived there in the 4^th and 5^th millennia BC.

The foundation of the city of Qazvin is attributed to Shapur II the Great of Sassanid Dynasty. Shapur founded the city and fortified it against enemy attacks. As Shapur expanded its military base, the city of Qazvin took shape.

The most important monuments in Qazvin are Qajar Bath, 40-Column Palace, a mausoleum and an old street.

 

40-Column Edifice (Kiosk)

 

Safavid Garden, which houses Saadatabad Garden, Qazvin Cultural Park and Savafid government center, are among the most important monuments in the city of Qazvin. They all date back to the Safavid Dynasty.

Safavid Garden sprawls on more than 6 ha of land and offers visitors a view of remnants of Safavid, Afsharid, Zand and Qajar dynasties.

The 40-column edifice or kiosk is the main monument in the Safavid Garden. In the face of threats by Ottoman Turks, Shah Tahmasb Safavid decided to move his capital from Tabriz to Qazvin in 951 AH. In the same year, he bought Zangi Abad lands from Mirza Sharaf Jahan, a then famous figure, for constructing royal buildings upon. Shah Tahmasb then instructed a group of architects to build a square-shape garden in the middle of the purchased land and erect towering buildings, verandas and pools.

The original plan was designed by a Turkish architect. The kiosk and a façade are the only monuments remaining from the gardens of Savafid period in Qazvin. This kiosk was damaged and restored during different periods.

When Shah Abbas moved his capital from Qazvin to Isfahan, he ordered the construction of Naqsh-e Jahan Square, Ali Qapou Edifice and a 40-column palace in Isfahan based on the monuments in Qazvin.

 

Aminiha Hosseiniyeh

 

Built in 1858, it comprises 16 interconnected structures, constructed by a merchant called, Haj Mohammad Reza Amini. The public mourning area or Hosseinieh consists of three parallel halls running in an east to west direction with wooden sash windows that are inter linked with each other.

The southern halls boast of 9 latticed worked sash windows with colored panes. Its ceiling is adorned with painting and mirror works. The center hall has rounded alcoves adorned with ornate mirror and plasterwork. This hall is connected to the northern and southern halls by two sets of five doors. On the semi-circular segment over the doors leading to the northern porch fine emblems in connection with the twelve months (of the year) can be noted. The ceiling of this hall is adorned with plaster and mirror, in addition to paintings on wood.

The section under the halls comprises sectors such as the cellar, basement, store room, and kitchen which have access to the northern and southern courtyard. The north facing wall of the southern courtyard is made of stone with innumerable embossments.

 

Jame Mosque

 

Qazvin’s Jame Mosque is one of the oldest buildings in Iran. This mosque is used for congregational prayers, particularly for weekly Friday Prayers. The oldest part of the mosque is said to have been constructed by the orders of Harun al-Rashid in 807.

Other structures were then added with the last being during the final years of the Safavid rule. The double layered main dome of the mosque is from the Seljuk era, and is locked to the public. It houses some precious examples of relief calligraphy from medieval times. Renovations have also been carried out on many sections of the mosque.

The interesting point is that the foundation of the mosque is laid on a fire temple used by Zoroastrians.

The verandas built during Safavid era were all reconstructed under Qajar Dynasty.

Despite the devastating invasion by Mongols, the mosque still stands in full glory. Some parts have been restored. There are five rows of inscriptions in ancient handwriting in the mosque.

 

Qajar Bath & Museum

 

Qajar Bath is one of the largest and one of the most ancient baths in Qazvin. It was built in 1057 AH under the order of Shah Abbas Safavid. Amir Gouneh Khan Qajar Qazvini, a top general of Shah Abbas, built the bath. It was initially known as Royal Bath, but it was then renamed Qajar Bath.

Sprawling on 1,045 square meters, the bath has separate rooms for men and women. The architecture inside the bath is fantastic.

This historic monument has turned into a museum of anthropology and its difference with other such baths is that it puts on display social customs of Qazvin.

 

Tehran Gate

 

As mentioned above, Qazvin is the city of gates. In the past, the city had eight gates, known as Rasht, Bagh Shah, Darb Koushk, Tabriz, Tehran, Sheikh Abad, Imamzadeh Hossein and Khandaq Bar. Only two of them – Tehran and Darb Koushk – have survived.

The Tehran Gate, one of the most renowned, was used to protect the city against attacks and looting by other cities. This gate was built outside the city, but due to the expansion of Qazvin and demographic growth, it lies now inside the city.

Tehran Gate, dating back to the Qajar Dynasty, was restored in 1968.

 

Qazvin, City of Gates

 

Qazvin in the ancient writings of Europe has been referred to as the old city "Arsas" or "Arsasia" and in Greek histories "Razhya" and during the era of Ashkanian Dynasty on its founder "Ardepa".

Sasanian called it "Kashvin", it means the land that shouldn’t be ignored, some people called it "Qasvin" or the city where people are strong and firm and some historians called it "Caspian".

Qazvin is located at an altitude of 1,278 meters. It was the capital of Iran under Safavid Dynasty and that is why most historical monuments there date back to that period. Qazvin is credited with different titles including the City of Gates and the Capital of Iran’s Calligraphy.

Historic evidence indicates that Qazvin region was first civilized under the Medes in the 9^th century BC. Archeological discoveries in Boein Zahra, south of Qazvin Desert, show that humans lived there in the 4^th and 5^th millennia BC.

The foundation of the city of Qazvin is attributed to Shapur II the Great of Sassanid Dynasty. Shapur founded the city and fortified it against enemy attacks. As Shapur expanded its military base, the city of Qazvin took shape.

The most important monuments in Qazvin are Qajar Bath, 40-Column Palace, a mausoleum and an old street.

 

40-Column Edifice (Kiosk)

 

Safavid Garden, which houses Saadatabad Garden, Qazvin Cultural Park and Savafid government center, are among the most important monuments in the city of Qazvin. They all date back to the Safavid Dynasty.

Safavid Garden sprawls on more than 6 ha of land and offers visitors a view of remnants of Safavid, Afsharid, Zand and Qajar dynasties.

The 40-column edifice or kiosk is the main monument in the Safavid Garden. In the face of threats by Ottoman Turks, Shah Tahmasb Safavid decided to move his capital from Tabriz to Qazvin in 951 AH. In the same year, he bought Zangi Abad lands from Mirza Sharaf Jahan, a then famous figure, for constructing royal buildings upon. Shah Tahmasb then instructed a group of architects to build a square-shape garden in the middle of the purchased land and erect towering buildings, verandas and pools.

The original plan was designed by a Turkish architect. The kiosk and a façade are the only monuments remaining from the gardens of Savafid period in Qazvin. This kiosk was damaged and restored during different periods.

When Shah Abbas moved his capital from Qazvin to Isfahan, he ordered the construction of Naqsh-e Jahan Square, Ali Qapou Edifice and a 40-column palace in Isfahan based on the monuments in Qazvin.

 

Aminiha Hosseiniyeh

 

Built in 1858, it comprises 16 interconnected structures, constructed by a merchant called, Haj Mohammad Reza Amini. The public mourning area or Hosseinieh consists of three parallel halls running in an east to west direction with wooden sash windows that are inter linked with each other.

The southern halls boast of 9 latticed worked sash windows with colored panes. Its ceiling is adorned with painting and mirror works. The center hall has rounded alcoves adorned with ornate mirror and plasterwork. This hall is connected to the northern and southern halls by two sets of five doors. On the semi-circular segment over the doors leading to the northern porch fine emblems in connection with the twelve months (of the year) can be noted. The ceiling of this hall is adorned with plaster and mirror, in addition to paintings on wood.

The section under the halls comprises sectors such as the cellar, basement, store room, and kitchen which have access to the northern and southern courtyard. The north facing wall of the southern courtyard is made of stone with innumerable embossments.

 

Jame Mosque

 

Qazvin’s Jame Mosque is one of the oldest buildings in Iran. This mosque is used for congregational prayers, particularly for weekly Friday Prayers. The oldest part of the mosque is said to have been constructed by the orders of Harun al-Rashid in 807.

Other structures were then added with the last being during the final years of the Safavid rule. The double layered main dome of the mosque is from the Seljuk era, and is locked to the public. It houses some precious examples of relief calligraphy from medieval times. Renovations have also been carried out on many sections of the mosque.

The interesting point is that the foundation of the mosque is laid on a fire temple used by Zoroastrians.

The verandas built during Safavid era were all reconstructed under Qajar Dynasty.

Despite the devastating invasion by Mongols, the mosque still stands in full glory. Some parts have been restored. There are five rows of inscriptions in ancient handwriting in the mosque.

 

Qajar Bath & Museum

 

Qajar Bath is one of the largest and one of the most ancient baths in Qazvin. It was built in 1057 AH under the order of Shah Abbas Safavid. Amir Gouneh Khan Qajar Qazvini, a top general of Shah Abbas, built the bath. It was initially known as Royal Bath, but it was then renamed Qajar Bath.

Sprawling on 1,045 square meters, the bath has separate rooms for men and women. The architecture inside the bath is fantastic.

This historic monument has turned into a museum of anthropology and its difference with other such baths is that it puts on display social customs of Qazvin.

 

Tehran Gate

 

As mentioned above, Qazvin is the city of gates. In the past, the city had eight gates, known as Rasht, Bagh Shah, Darb Koushk, Tabriz, Tehran, Sheikh Abad, Imamzadeh Hossein and Khandaq Bar. Only two of them – Tehran and Darb Koushk – have survived.

The Tehran Gate, one of the most renowned, was used to protect the city against attacks and looting by other cities. This gate was built outside the city, but due to the expansion of Qazvin and demographic growth, it lies now inside the city.

Tehran Gate, dating back to the Qajar Dynasty, was restored in 1968.

 

 

Oil Products Distribution in Qazvin

 

Due to its geographically strategic position, Qazvin provides way for reaching eight provinces. Therefore, fuel supply to cars travelling through this province requires precise management. Qazvin is crisscrossed by roads connecting Tehran to the northern city of Rasht and the northwestern city of Ardabil, and also to the city of Zanjan.

A new road is under construction to connect Qazvin to the northern Mazandaran province. After the construction of this new road, Qazvin would be crisscrossed by more travelling cars.

Hossein Adeli-Anzabi, director of the Qazvin branch of National Iranian Oil Products Distribution Company (NIOPDC), said Qazvin province comprises four districts in terms of petroleum products distribution.

He said 4 to 5 million liters a day of petroleum products – gasoline, gasoil and kerosene – is handed in this province.

He said the nominal storage capacity in Qazvin is 126 million liters. It is mainly supplied by products from Tehran oil refinery.

Regarding gasoline consumption, Adeli said that the average petrol consumption is 1 ml/d. “But during holidays, the number of passengers rises and since Qazvin lies on a freeway, gasoline consumption reaches 1.6 to 1.8 ml/d,” he said.

There are currently 75 stations distributing oil products and compressed natural gas (CNG) in Qazvin province, 34 of which are dual purpose ones. In total, there are 56 CNG stations in Qazvin and three more are under construction.

Another important activity of the Qazvin branch of NIOPDC is fuel supply to Shahid Rajaei power plant, which accounts for 6% of Iran’s electricity generation. This power plant mainly consumes gas, but it is fed with fuel oil and gasoil in autumn and winter when gas consumption reaches the peak in the country. The necessary fuel is delivered to this power plant from tankers coming from Mahshahr, Arak and Shiraz.

Due to certain problems, the power plant received in some days 10 ml of oil products in the calendar year to March 2014. That was 2.5 times the daily consumption of the entire province.

In addition to Shahid Rajaei power plant, Shahid Beheshti power plant is also fed by the Qazvin branch of NIOPDC in certain months of the year.

Qazvin province is one of the leading provinces in combating fuel smuggling.

In case the necessary inspection is not done in central provinces, they would become depots for smuggled fuel to be delivered to border provinces and be smuggled out of the country.

Adeli said Qazvin province is a leading province in strictly controlling fuel transportation.

“The figures given for the past 30 months indicate that this region has been successful in confronting and preventing petroleum products smuggling in Qazvin province,” he said.

The policymaking for preventing fuel smuggling in power plants starts from Shahid Rajaei power plant.

Consumption at Shahid Rajaei reaches 10 ml/d on some days; while this power plant did not until recently has any control systems. But the Qazvin branch of NIOPDC intervened and established the customary storage system in the power plant.

In the current calendar year which started on March 21, fuel oil consumption in power plants is to decline. As gas production capacity is increasing in the country, fuel oil consumption would reach 20 to 10 percent in two years.