Oil Technology and Foreign Investment Impasse

Over recent years, energy organism has experienced not happy days due to mismanagement in the country as well as numerous economic problems stemming from the consequences of international sanctions imposed on the Islamic Republic. Add to this the high longevity of energy producing industries particularly petroleum industry and oil fields.

However, one cannot conclude downright that Iran’s energy industry has reached the end of its life.

Sitting atop 157 billion barrels of crude oil and 34 tcm of natural gas, Iran is the top holders of hydrocarbon reserves in the world. Furthermore, Iran has 62 operating onshore and 16 operating offshore fields. That is why energy recovery in Iran is economically justified.

These figures are just the tip of the iceberg in Iran’s hydrocarbon potential which has conquered the minds and hearts of international investors.

In the wake of Iran’s landmark nuclear deal with six world powers and the expected lifting of international sanctions, foreign investors are turning their eyes to Iran. That has inevitably revived hopes for Iran’s economy and the country’s energy sector in particularly.

But that’s not all. As Iranian oil managers are bracing for foreign investment, there is concern that only production, development and exploration would be covered while longtime shortcomings would continue to exist in the petroleum industry. However, these concerns are of a different nature and they are more similar to a plan seeking to analyze existing strategies for dealing with the petroleum industry. Therefore, that could not be ignored easily.

Iran’s petroleum industry and even the Middle East petroleum sector are in conditions which require technology, knowledge and wisdom more than anything else in order to protect national wealth.

Just for making up for its oil, gas and electricity depreciations, the Middle East region will need more than $5.1 trillion in investment by 2030. Experts highlight this figure in a bid to underscore the necessity of indigenization of technology because national technology and knowhow will be the only element capable of putting into action strategies designed for protecting natural resources. If not, one may conclude that the activity of foreign investors will leave unhelpful and inefficient remnants from the energy sector, whose overhaul will be impossible.

The wave of depreciation striking the Middle East is so strong that developing cutting edge technology will make Iran the top exporter of technology.

It is a matter of great pleasure that Iran’s new model of oil contracts, Iran Petroleum Contract (IPC), entail transfer of technology.

Therefore, it is necessary for development planners in Iran to put this principle top on the agenda and keep in mind that without transfer of technology, investment could not produce the desired results in the future.       

Iran Oil Diplomacy Racing Ahead

Following Iran’s historic nuclear deal P 5+1 group, senior government officials from across the globe started travelling to Tehran in a bid to resume political, economic and trade relations. Top on the agenda of foreign dignitaries was meeting with Iran’s petroleum minister Bijan Zangeneh and talks about joint cooperation in this important industry.

Over the past one month, delegations from Germany, Spain, Austria, Oman and Mexico met with Zangeneh.

A business delegation from the German state of Baden-Württemberg travelled to Tehran amid European countries’ interest in resuming ties with Iran. The delegates met with Iranian economic officials including Zangeneh.

Zangeneh met with Nils Schmidt, Deputy Minister-President and Minister of Finance and Economics of Baden-Württemberg, behind closed doors. They stressed the need for more talks in order to pave the way for the presence of German companies in post-sanctions Iran.

After the meeting, Zangeneh told reporters: “Iranian and German companies start negotiations about grounds for joint cooperation before the lifting of sanctions and immediately after the removal of sanctions, contracts will be signed and joint activities will start.”

“Given its industrial and business opportunities in Iran, the German delegation [said it] is interested in cooperation with Iran in different sectors and fortunately there are different grounds for cooperation with them. Of course, German companies should choose an Iranian partner for presence in Iran’s market, as required by new law,” he added.

Zangeneh said ways of investment in Iran under Article 44 of the Iranian Constitution have been explained to the German companies, adding: “Iran’s capacities and potential in different sectors were notified to German companies.”

He said Iran has already cooperated with companies from Baden-Württemberg state and is now ready for further cooperation with companies from this German state.

Referring to the willingness of both parties to cooperate in energy efficiency projects, Zangeneh said: “Given the fact that the energy intensity in Iran stands high and Baden-Württemberg state is among the best German states in terms of machinery in general and car manufacturing, the two countries can cooperate in this sector.”

“According to joint planning, it was decided that the German companies would not wait for the lifting of the sanctions. Talks will start between companies from the two countries and in case of agreement, the signing of contracts would be postponed to after the removal of sanctions,” he said.

Cooperation in Equipment, Machinery Manufacturing

Schmidt confirmed Zangeneh’s remarks, saying German companies can cooperate with Iran’s petroleum industry, particularly in technology assessment of machinery.

He said Germany believes that Iran’s market is big enough and added: “On this route, transparency is important and we have to go ahead based on mutual trust.”

The delegation from Baden-Württemberg in fact set the beginning for more business visits from Germany.

Amir-Hossein Zamani-Nia, deputy minister of petroleum for international affairs and trading, said two economic delegations from two other German states are expected to visit Iran soon.

“One of objectives of these states’ to Iran is to introduce their industries and capabilities,” he said.

Companies in Baden-Württemberg state specialize in manufacturing machinery and equipment. They are expected to manufacture 10 items needed by Iran’s petroleum industry.

The 68-member delegation from Baden-Württemberg state also met with Iran’s energy minister, Hamid Chitchian; governor of Central Bank of Iran, Valiollah Seif, and deputy minister of industry, mine and trade, Mojtaba Khosrowtaj.

The German delegates also travelled to the historical city of Isfahan and visited tourist attractions there.

Baden-Württemberg is Germany’s third largest state in terms of size and population, with an area of 35,742 square kilometers (13,800 sq mi) and 10.7 million inhabitants located in the southwest, east of the Upper Rhine. It is the state capital and largest city is Stuttgart, one of Germany’s most important cities.       

In the wake of Iran’s July deal with world powers, Germany was the first country to send a high-ranking delegation led by Sigmar Gabriel, the vice-chancellor and the minister of economy, to Tehran to discuss post-sanctions cooperation. Gabriel was accompanied by representatives from Linde, Siemens, Mercedes, Daimler, Basef, Volkswagen, GIZ and tens of other German companies.

Following that visit during which Zangeneh and Gabriel met, it was agreed that Iran-Germany Business Council holds a meeting later this year.

Germany is Iran’s top trading partner in the downstream sector, equipment, petrochemicals, refinery and turbine manufacturing.

Iran-Spain Cooperation

Spain followed in the footsteps of fellow European states Germany, France, Italy, Britain and Austria. On September 8, a Spanish delegation came to Tehran and met with top Iranian officials. Given Spain’s interest in presence in Iran’s petroleum industry, the Spanish minister of industry, energy and tourism, José Manuel Soria, met with Zangeneh for intensive talks.

After talks with Soria, Zangeneh told reporters that Spain is ready to let Iran use its liquefied natural gas (LNG) terminals to enter the European market. “Iran-Spain negotiations will continue to that effect.”

“Iran and Spain have expressed interest in resuming relations that had been troubled due to sanctions,” said Zangeneh. “In this meeting, I explained about Iran’s plans for the development of oil, gas, petrochemical and refining industries, equipment manufacturing as well as energy efficiency and the Spanish side expressed willingness for cooperation in this sector.”

He said the two countries insist that Iranian and Spanish companies continue their cooperation, adding: “It was decided that the Spanish government prepares the ground the presence of this country’s companies in Iran.”

“In this meeting, structural changes in Iran’s industries and change in petrochemical industry policies were explained and it was reiterated that the Iranian government welcomes investment by Spanish companies in Iran’s petrochemical sector,” said Zangeneh.

“The Spanish companies were proposed to manufacture petroleum industry equipment in Iran and as we announced in previous meetings with foreign parties, it was announced to the Spanish companies that they should not only look at Iran’s market for presence in Iran, but their objective should be the entire regional market for exporting commodities and equipment,” he added.   

  Joint Manufacturing

Soria said Iran and Spain used to have good economic relations in the past, adding: “This cooperation hit snags due to the sanctions, but now the Spanish companies are willing to cooperate with Iranian companies for joint manufacturing and presence in the Middle East market.”

“Despite sanctions in recent years, the Spanish companies continued their cooperation with Iran in the sectors not targeted by sanctions and now we hope that after the removal of the sanctions, Spanish companies will be able to have a more active and more outstanding presence in Iran’s economic, industrial and energy sectors,” he said.

Soria said he and Zangeneh called for more cooperation between the two countries.

Underscoring the significance of Iran’s market and its position as the springboard to markets in the region, the Spanish minister said: “The representatives of companies in the Spanish delegation included oil, gas, engineering, industrial and renewable energy sectors.”

“Iran and Spain reached agreement for future cooperation in all these sectors and intend to start fundamental talks for the start of cooperation,” said Soria.

“Spanish companies are willing to cooperate with Iranian companies in exploration and refining sectors as well as enhancing refining capacities,” he added.

“Spanish companies can also cooperate with Iranian companies in transfer of technology, export of commodities and equipment related to oil and gas industries,” Soria said. “We hope to be able to prepare the issue of interest for bilateral cooperation within the framework of an agreement and send to Iran’s Ministry of Petroleum after we return to Spain.”

200,000b/d Oil Exports

Mohsen Qamsari, director for international affairs of National Iranian Oil Company (NIOC), said negotiations have started for Iran’s oil sales to Spain.

“So far, no specific figure has been decided for oil exports to this country, but efforts will be made for Iran’s exports to Spain to reach the pre-sanctions level, i.e. 200,000 b/d,” he said.

Qamsari said: “The amount of oil exports to Spain after the lifting of sanctions depends on the conditions, but the pre-sanctions figure is likely to be realized.”

Asked about Iran’s priorities for oil exports after sanctions relief, he said: “We are trying to diversify oil exports and as Europeans were among Iran’s oil buyers before the sanctions that will be the same after the sanctions too.”

“With a 500,000b/d increase in Iran’s oil production, this amount of oil will be divided between European and Asian markets for exports,” said Qamsari.

Iran-Spain trade totaled 4.7 billion Euros in 2011, the highest ever. According to figures released by Tehran Chamber of Commerce, Industry and Mine, Iran-Spain trade transactions were $321 million in the calendar year 1393 which ended on 20 March 2015. That figure included $146 million of Spain’s exports to Iran and $175 million of Iran’s exports to Spain.

Last year, Spain announced the discovery of two significant offshore deposits, and prospects for fracking in many areas. That triggered a black-gold rush, with demand for exploration permits up 35% since 2012.

Spain’s oil industry could create 250,000 jobs and constitute 4.3% of GDP by 2065.  It is based on an estimate of 2 billion barrels of oil and 2.5 bcm of gas.

The oil companies estimate that the deposits in a series of oilfields off the Canaries, the latest of which was confirmed last week, amount to 500m barrels of crude.

Spain could become a gas exporter by 2031 while producing 20% of the oil it consumes.

With 6 million people unemployed and an economy that shows only feeble signs of recovery, the Spanish government seems ready to brush aside environmental concerns and give the green light to the oil companies. These are led by the Aberdeen-based oil and gas exploration company Cairn Energy and the Anglo-Turkish firm Genel Energy, headed by the former BP boss Tony Hayward. So far, 70 licenses have been granted to explore both shale gas and conventional resources.

The main offshore deposits lie between Lanzarote, in the Canary Islands, and Morocco, and in the Bay of Valencia, close to Ibiza. As both the Canaries and Ibiza are places of great natural beauty whose principal industry is tourism, there is intense opposition to the plans.

Revival of Ties with Mexico Firms

Mexican Secretary of Labor and Social Welfare Alfonso Navarrete Prida also visited Tehran and discussed cooperation in his meetings with Iranian government officials. Navarrete Prida also met with Zangeneh in his capacity as a member of Mexico’s Petroleum Council.

After their meeting, Zangeneh told reporters that Iran and Mexico have many things in common in the oil sector and that both have powerful national oil companies.

“Mexican companies’ activities in deep waters are good and they have made valuable progress in this sector,” he said.

Zangeneh said Iran’s petroleum industry is willing to revive its relations with Mexican companies, whose window had opened before the sanctions were imposed.

“We had no contract with Mexico, but we had held talks with this country in exploration, communications and technology and we had signed memorandums of understanding,” he added.

Zangeneh said Mexico, as a top non-OPEC oil producer, has always cooperated with OPEC, adding: “They expressed readiness that if OPEC enters the issue of market management Mexico is also ready to cooperate with and help OPEC.”

Regarding plans for enhanced oil and gas recovery from Iran’s hydrocarbon fields, he said: “There are plans for oil and gas production from all these fields, particularly for boosting gas production, planning for which has been done on a monthly basis.”

Zangeneh said cooperation with Iran’s private sector for manufacturing petroleum industry equipment is one of important issues often highlighted in talks with foreign companies.

“It took too much time to explain this issue to foreign companies and this issue is going ahead satisfactorily,” said the minister.

Energy Efficiency

For his part, the Mexican labor minister welcomed broader cooperation with Iran's oil and gas sectors after the removal of sanctions.

He said: “Activity in energy efficiency sector can be a ground for cooperation between the two sides.”

Navarrete Prida said in his meeting with Zangeneh they discussed preparations for meeting and negotiations between Iranian and Mexican officials in the oil sector after the removal of sanctions.

“Mexico has already embarked on many programs to boost energy efficiency and upgrade different sectors of petroleum industry and it welcomes cooperation and collaboration with other countries in this sector. Therefore, Tehran and Mexico City could have favorable cooperation in this field,” he said.

About the background of oil cooperation between Iran and Mexico, Navarrete Prida said: “Before the sanctions, Iran and Mexico cooperated and exchanged views in the oil sector, particularly during the imposed war on Iran, Mexico and Belgium cooperated with Iran’s petroleum industry.”

The petroleum industry in Mexico makes Mexico the ninth largest oil producer in the world and the eleventh largest in terms of net exports. It is the third largest oil producer in the Western Hemisphere behind the United States and Canada. Mexico has the eighteenth largest oil reserves in the world, and fourth largest reserves in the Western Hemisphere behind Venezuela, Canada, and the United States. However, like the United States and Canada, Mexico is not a member of the Organization of Petroleum Exporting Countries OPEC or any petroleum production related organizations, but since 1994 it is a member of the North American Free Trade Agreement.

The petroleum sector is crucial to the Mexican economy; while its oil production has fallen in recent years, oil revenues still account for over 10% of Mexico's export earnings.

High taxes on the revenues of the state oil monopoly Pemex provide about a third of all the tax revenues collected by the Mexican government.

Iran-Oman Gas Pipeline

On September 21, Iran’s Petroleum Minister Zangeneh met with Omani Oil Minister Mohammad bin Hamad al-Rumhy in Tehran. The main issue of discussion was Iran’s gas exports to Oman.

After the meeting, Zangeneh told reporters that he and his Omani counterpart had discussed the manner of accelerating the construction of Iran’s gas pipeline to Oman and its financing.

“Moreover, Omani companies are willing to cooperate with Iran in selling petroleum and petrochemical products,” he said.

Zangeneh said studies have started on constructing Iran-Oman pipeline, adding: “In parallel to studies on this project, ways of accelerating the construction of pipeline for exporting Iran’s gas to Oman as well as financing of this pipeline were considered.”

Noting that Oman is willing to cooperate with Iran in developing its oil and gas projects, he said: “Iran welcomes this proposal and hopes that cooperation with Omani companies will expand. We agreed to seriously follow up on the negotiations between the two countries in this regard.”

For his part, al-Rumhy said there are grounds for cooperation between Iran and Oman in the oil and gas sectors.

He expressed hope that cooperation between the two countries will lead to joint investment and creation of jobs.

Al-Rumhy said Oman’s demand for gas is growing, adding that his country is not planning to limit its cooperation with Iran to gas. “We intend to have good cooperation with Iran in different oil, gas, refining and petrochemical industries in the future,” he said.

Al-Rumhy highlighted Tehran-Muscat consensus on the stability of crude oil market in the world, saying: “In addition to supporting crude oil consumers, the interests of producers should be also taken into consideration.”

“The conditions of world crude oil markets and the current prices of this strategic commodity are a complicated issue. World crude oil markets are influenced by many factors and unfortunately crude oil prices are currently influenced by political issues,” he said.

The Omani minister said negotiations on the current condition of oil markets in the world should support consumers and also pursue the interests of producers.

During al-Rumhy’s stay in Tehran, Iran and Oman signed an agreement on studying an undersea gas pipeline across the Persian Gulf in a project worth $60 billion.

Two separate agreements were signed for studies in the offshore and onshore sections.

The offshore deal was signed between the Iranian Offshore Engineering and Construction Company (IOEC) and Oman’s Oil Ministry. For the onshore section, an agreement was signed between the Pars Consulting Engineering Company and the Omani side.

The offshore section envisages building a pipeline for 200 kilometers from Kuh-e Mubarak in Iran to Oman’s Sohar port in five months. The onshore section of the pipeline in Iran will be built for another 200 km from Rudan to Kuh-e Mubarak in six months.

The $60 billion deal was concluded during President Hassan Rouhani’s visit to Muscat in 2013 to ship 28 million cubic meters per day of the Iranian gas to Oman for a period of 15 years.

 The two countries signed another deal in 2007 to build a liquefied natural gas (LNG) plant in Oman to process the Iranian gas.      

Iranian government welcomes investment by Spanish companies in Iran’s petrochemical sector,” said Zangeneh.

“The Spanish companies were proposed to manufacture petroleum industry equipment in Iran and as we announced in previous meetings with foreign parties, it was announced to the Spanish companies that they should not only look at Iran’s market for presence in Iran, but their objective should be the entire regional market for exporting commodities and equipment,” he added.   

  Joint Manufacturing

Soria said Iran and Spain used to have good economic relations in the past, adding: “This cooperation hit snags due to the sanctions, but now the Spanish companies are willing to cooperate with Iranian companies for joint manufacturing and presence in the Middle East market.”

“Despite sanctions in recent years, the Spanish companies continued their cooperation with Iran in the sectors not targeted by sanctions and now we hope that after the removal of the sanctions, Spanish companies will be able to have a more active and more outstanding presence in Iran’s economic, industrial and energy sectors,” he said.

Soria said he and Zangeneh called for more cooperation between the two countries.

Underscoring the significance of Iran’s market and its position as the springboard to markets in the region, the Spanish minister said: “The representatives of companies in the Spanish delegation included oil, gas, engineering, industrial and renewable energy sectors.”

“Iran and Spain reached agreement for future cooperation in all these sectors and intend to start fundamental talks for the start of cooperation,” said Soria.

“Spanish companies are willing to cooperate with Iranian companies in exploration and refining sectors as well as enhancing refining capacities,” he added.

“Spanish companies can also cooperate with Iranian companies in transfer of technology, export of commodities and equipment related to oil and gas industries,” Soria said. “We hope to be able to prepare the issue of interest for bilateral cooperation within the framework of an agreement and send to Iran’s Ministry of Petroleum after we return to Spain.”

200,000b/d Oil Exports

Mohsen Qamsari, director for international affairs of National Iranian Oil Company (NIOC), said negotiations have started for Iran’s oil sales to Spain.

“So far, no specific figure has been decided for oil exports to this country, but efforts will be made for Iran’s exports to Spain to reach the pre-sanctions level, i.e. 200,000 b/d,” he said.

Qamsari said: “The amount of oil exports to Spain after the lifting of sanctions depends on the conditions, but the pre-sanctions figure is likely to be realized.”

Asked about Iran’s priorities for oil exports after sanctions relief, he said: “We are trying to diversify oil exports and as Europeans were among Iran’s oil buyers before the sanctions that will be the same after the sanctions too.”

“With a 500,000b/d increase in Iran’s oil production, this amount of oil will be divided between European and Asian markets for exports,” said Qamsari.

Iran-Spain trade totaled 4.7 billion Euros in 2011, the highest ever. According to figures released by Tehran Chamber of Commerce, Industry and Mine, Iran-Spain trade transactions were $321 million in the calendar year 1393 which ended on 20 March 2015. That figure included $146 million of Spain’s exports to Iran and $175 million of Iran’s exports to Spain.

Last year, Spain announced the discovery of two significant offshore deposits, and prospects for fracking in many areas. That triggered a black-gold rush, with demand for exploration permits up 35% since 2012.

Spain’s oil industry could create 250,000 jobs and constitute 4.3% of GDP by 2065.  It is based on an estimate of 2 billion barrels of oil and 2.5 bcm of gas.

The oil companies estimate that the deposits in a series of oilfields off the Canaries, the latest of which was confirmed last week, amount to 500m barrels of crude.

Spain could become a gas exporter by 2031 while producing 20% of the oil it consumes.

With 6 million people unemployed and an economy that shows only feeble signs of recovery, the Spanish government seems ready to brush aside environmental concerns and give the green light to the oil companies. These are led by the Aberdeen-based oil and gas exploration company Cairn Energy and the Anglo-Turkish firm Genel Energy, headed by the former BP boss Tony Hayward. So far, 70 licenses have been granted to explore both shale gas and conventional resources.

The main offshore deposits lie between Lanzarote, in the Canary Islands, and Morocco, and in the Bay of Valencia, close to Ibiza. As both the Canaries and Ibiza are places of great natural beauty whose principal industry is tourism, there is intense opposition to the plans.

Revival of Ties with Mexico Firms

Mexican Secretary of Labor and Social Welfare Alfonso Navarrete Prida also visited Tehran and discussed cooperation in his meetings with Iranian government officials. Navarrete Prida also met with Zangeneh in his capacity as a member of Mexico’s Petroleum Council.

After their meeting, Zangeneh told reporters that Iran and Mexico have many things in common in the oil sector and that both have powerful national oil companies.

“Mexican companies’ activities in deep waters are good and they have made valuable progress in this sector,” he said.

Zangeneh said Iran’s petroleum industry is willing to revive its relations with Mexican companies, whose window had opened before the sanctions were imposed.

“We had no contract with Mexico, but we had held talks with this country in exploration, communications and technology and we had signed memorandums of understanding,” he added.

Zangeneh said Mexico, as a top non-OPEC oil producer, has always cooperated with OPEC, adding: “They expressed readiness that if OPEC enters the issue of market management Mexico is also ready to cooperate with and help OPEC.”

Regarding plans for enhanced oil and gas recovery from Iran’s hydrocarbon fields, he said: “There are plans for oil and gas production from all these fields, particularly for boosting gas production, planning for which has been done on a monthly basis.”

Zangeneh said cooperation with Iran’s private sector for manufacturing petroleum industry equipment is one of important issues often highlighted in talks with foreign companies.

“It took too much time to explain this issue to foreign companies and this issue is going ahead satisfactorily,” said the minister.

Energy Efficiency

For his part, the Mexican labor minister welcomed broader cooperation with Iran's oil and gas sectors after the removal of sanctions.

He said: “Activity in energy efficiency sector can be a ground for cooperation between the two sides.”

Navarrete Prida said in his meeting with Zangeneh they discussed preparations for meeting and negotiations between Iranian and Mexican officials in the oil sector after the removal of sanctions.

“Mexico has already embarked on many programs to boost energy efficiency and upgrade different sectors of petroleum industry and it welcomes cooperation and collaboration with other countries in this sector. Therefore, Tehran and Mexico City could have favorable cooperation in this field,” he said.

About the background of oil cooperation between Iran and Mexico, Navarrete Prida said: “Before the sanctions, Iran and Mexico cooperated and exchanged views in the oil sector, particularly during the imposed war on Iran, Mexico and Belgium cooperated with Iran’s petroleum industry.”

The petroleum industry in Mexico makes Mexico the ninth largest oil producer in the world and the eleventh largest in terms of net exports. It is the third largest oil producer in the Western Hemisphere behind the United States and Canada. Mexico has the eighteenth largest oil reserves in the world, and fourth largest reserves in the Western Hemisphere behind Venezuela, Canada, and the United States. However, like the United States and Canada, Mexico is not a member of the Organization of Petroleum Exporting Countries OPEC or any petroleum production related organizations, but since 1994 it is a member of the North American Free Trade Agreement.

The petroleum sector is crucial to the Mexican economy; while its oil production has fallen in recent years, oil revenues still account for over 10% of Mexico's export earnings.

High taxes on the revenues of the state oil monopoly Pemex provide about a third of all the tax revenues collected by the Mexican government.

Iran-Oman Gas Pipeline

On September 21, Iran’s Petroleum Minister Zangeneh met with Omani Oil Minister Mohammad bin Hamad al-Rumhy in Tehran. The main issue of discussion was Iran’s gas exports to Oman.

After the meeting, Zangeneh told reporters that he and his Omani counterpart had discussed the manner of accelerating the construction of Iran’s gas pipeline to Oman and its financing.

“Moreover, Omani companies are willing to cooperate with Iran in selling petroleum and petrochemical products,” he said.

Zangeneh said studies have started on constructing Iran-Oman pipeline, adding: “In parallel to studies on this project, ways of accelerating the construction of pipeline for exporting Iran’s gas to Oman as well as financing of this pipeline were considered.”

Noting that Oman is willing to cooperate with Iran in developing its oil and gas projects, he said: “Iran welcomes this proposal and hopes that cooperation with Omani companies will expand. We agreed to seriously follow up on the negotiations between the two countries in this regard.”

For his part, al-Rumhy said there are grounds for cooperation between Iran and Oman in the oil and gas sectors.

He expressed hope that cooperation between the two countries will lead to joint investment and creation of jobs.

Al-Rumhy said Oman’s demand for gas is growing, adding that his country is not planning to limit its cooperation with Iran to gas. “We intend to have good cooperation with Iran in different oil, gas, refining and petrochemical industries in the future,” he said.

Al-Rumhy highlighted Tehran-Muscat consensus on the stability of crude oil market in the world, saying: “In addition to supporting crude oil consumers, the interests of producers should be also taken into consideration.”

“The conditions of world crude oil markets and the current prices of this strategic commodity are a complicated issue. World crude oil markets are influenced by many factors and unfortunately crude oil prices are currently influenced by political issues,” he said.

The Omani minister said negotiations on the current condition of oil markets in the world should support consumers and also pursue the interests of producers.

During al-Rumhy’s stay in Tehran, Iran and Oman signed an agreement on studying an undersea gas pipeline across the Persian Gulf in a project worth $60 billion.

Two separate agreements were signed for studies in the offshore and onshore sections.

The offshore deal was signed between the Iranian Offshore Engineering and Construction Company (IOEC) and Oman’s Oil Ministry. For the onshore section, an agreement was signed between the Pars Consulting Engineering Company and the Omani side.

The offshore section envisages building a pipeline for 200 kilometers from Kuh-e Mubarak in Iran to Oman’s Sohar port in five months. The onshore section of the pipeline in Iran will be built for another 200 km from Rudan to Kuh-e Mubarak in six months.

The $60 billion deal was concluded during President Hassan Rouhani’s visit to Muscat in 2013 to ship 28 million cubic meters per day of the Iranian gas to Oman for a period of 15 years.

 The two countries signed another deal in 2007 to build a liquefied natural gas (LNG) plant in Oman to process the Iranian gas.      

1st Coking Unit Starts in Iran

Simultaneous with the inauguration of first Iranian technology for oil coke, the first semi-industrial coke production unit was launched in the country.

In cooperation with Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO), the Research Institute of Petroleum Industry (RIPI) inaugurated on September 22 Iran’s first semi-industrial coke production unit. The main feedstock for coke production units is the residue of vacuum distillation towers of refineries. Before this unit was launched, no coke production facility had been built in Iran and the country had to import all its coke needs.

The project assigned to RIPI in March 2013 has been financed by IMIDRO.

One of missions assigned to RIPI is to develop technologies for upgrading high-density and low-value products. To that effect, converting oil residues to products of high value like middle distillate products and coke is highly significant.

Acquiring experimental data and producing and testing products required the construction of an industrial unit. Therefore, after the lab phases were finished, the engineering team of RIPI moved to design a unit with a capacity of two barrels a day of feedstock. After the required equipment was purchased and installed, this unit is now ready for operation.

South Korea Doubles Iran Oil Imports

South Korea imported 4,054 tons of crude oil from Iran in August, almost double compared to July’s figure of 2,068 tons, data from state-run Korea National Oil Corp showed.

Iran was the fifth biggest supplier of crude oil to South Korea in August, next to Saudi Arabia, Kuwait, the United Arab Emirates, and Qatar.

However, imports fell 2.7 percent in August from a year earlier.

From January to August Iran exported 27,727 tons of oil to South Korea, down from 30,766 tons during the same period a year ago.

The Korean data also showed that South Korea imported 88.7 million barrels of oil in August, up 3.5% m-o-m.

Saudi Arabia was the largest supplier of oil to South Korea in August, exporting 21,760 tons of crude oil to the Asian country. But Saudi oil exports to South Korea in August were much lower than the 28,356 tons recorded in July.

Saudi Arabia’s August oil exports to South Korea were also down y-o-y. In August 2014, South Korea bought 25,596 tons of oil from Saudi Arabia.

South Korea Doubles Iran Oil Imports

South Korea imported 4,054 tons of crude oil from Iran in August, almost double compared to July’s figure of 2,068 tons, data from state-run Korea National Oil Corp showed.

Iran was the fifth biggest supplier of crude oil to South Korea in August, next to Saudi Arabia, Kuwait, the United Arab Emirates, and Qatar.

However, imports fell 2.7 percent in August from a year earlier.

From January to August Iran exported 27,727 tons of oil to South Korea, down from 30,766 tons during the same period a year ago.

The Korean data also showed that South Korea imported 88.7 million barrels of oil in August, up 3.5% m-o-m.

Saudi Arabia was the largest supplier of oil to South Korea in August, exporting 21,760 tons of crude oil to the Asian country. But Saudi oil exports to South Korea in August were much lower than the 28,356 tons recorded in July.

Saudi Arabia’s August oil exports to South Korea were also down y-o-y. In August 2014, South Korea bought 25,596 tons of oil from Saudi Arabia.

Iran Open to France’s Total

National Iranian Oil Company (NIOC) is ready to improve the level of cooperation with France’s energy giant Total, NIOC chief said.

“NIOC welcomes expansion of cooperation with Total,” Rokneddin Javadi said in a meeting with Arnaud Breuillac, Total’s head of exploration and production, in Tehran.

He said that Total has expressed readiness for cooperation with Iran in Iran’s new oil contracts which are to be introduced after international sanctions are lifted.

“After unveiling the new contracts, new opportunities as well as exploration, development, preservation, production and enhanced recovery projects will be introduced under the new framework and foreign companies could cooperate in this field,” said Javadi.

Iran is set to unveil Iran Petroleum Contract (IPC), a new model to replace buyback deals.

Breuillac expressed Total’s readiness for cooperation with Iran in different sectors including exploration, enhanced recovery, oil purchase, production and marketing of liquefied natural gas (LNG) and petrochemical production and marketing.

The Total director also met with Iran’s petroleum minister Bijan Zangeneh and head of Oil Contracts Restructuring Committee Mehdi Hosseini.

Breuillac was among a high-ranking business delegation that visited Iran in September

Europe Petchem Incentives for Iran

The CEO of Sadaf Assaluyeh Chemical Company has said that European countries are offering new incentives for presence in Iran’s petrochemical market.

Ahmad Jazayeri said a basic and detailed engineering agreement for the development of his company, as the first producer of emulsion styrene butadiene rubber (eSBR) in the Middle East, has been signed between an Iranian company and Italy’s Tecnimont.

He referred to the release of a credit line for the construction of this petrochemical company, adding: “After the opening of financial resources, the basic engineering agreement has been signed with the Iranian-Italian consortium. European polymer company Versalis has also agreed to provide technical knowhow.”

Noting that the design and construction of Sadaf petrochemical company is aimed at producing 136,000 tons a year of eSBR, Jazayeri said: “Currently, in no other Middle East countries including Qatar and Saudi Arabia it is possible to produce eSBR in compliance with international and environmental standards.”

He said that the startup of this new plant would make Iran the first producer of eSBR in the Middle East region.

Jazayeri also announced the signature of two separate contracts for designing and building the processing installations of Sadaf petrochemical plant in cooperation with a Swiss and an Italian company.

“All contracts have been signed with leading European companies and even some European manufacturers have agreed to give some concessions like guaranteeing, after-sales services and sending specialists for construction, installation and startup of processing facilities,” he said.

Jazayeri said some intermediaries have been eliminated from the process of agreement, adding: “The elimination of intermediaries has so far saved 10 to 12 billion Euros for petrochemical projects.”

Germany Linde Plods Into Race for Iran LNG

Germany’s industrial gas maker Linde AG has waded into the race for multibillion-dollar petrochemical projects in Iran.

Wolfgang Büchele, CEO of Linde AG, recently visited Tehran where he said his company will “definitely” transfer technology to Iran to carry out petrochemical projects once sanctions are lifted on the country.

“We know that Iran’s Ministry of Petroleum is about to make big investments to develop the petrochemical sector. For our part, we are definitely seeking to cooperate with Iranian companies on transfer of technology after the annulment of sanctions,” he said.

He said he expected the sanctions to be lifted on Iran in the early 2016.

Buchele reminded that Linde is “one of the biggest players in the global market” in the LNG industry, saying the company is ready to resume its “legitimate presence in Iran as soon as Western sanctions are lifted.”

LNG is more viable than piped gas for exports for which Iran needs to build a 4,000-km pipeline, requiring massive investment and time.

Buchele, however, said building pipelines was a non-issue.

“Establishing pipelines has never been a problem. It is rather convincing the countries involved which usually takes a lot of time.”

Linde’s chief executive said the price and accessibility of gas are the two key factors in the market which Iran is credited with both.

Germany Linde Plods Into Race for Iran LNG

Germany’s industrial gas maker Linde AG has waded into the race for multibillion-dollar petrochemical projects in Iran.

Wolfgang Büchele, CEO of Linde AG, recently visited Tehran where he said his company will “definitely” transfer technology to Iran to carry out petrochemical projects once sanctions are lifted on the country.

“We know that Iran’s Ministry of Petroleum is about to make big investments to develop the petrochemical sector. For our part, we are definitely seeking to cooperate with Iranian companies on transfer of technology after the annulment of sanctions,” he said.

He said he expected the sanctions to be lifted on Iran in the early 2016.

Buchele reminded that Linde is “one of the biggest players in the global market” in the LNG industry, saying the company is ready to resume its “legitimate presence in Iran as soon as Western sanctions are lifted.”

LNG is more viable than piped gas for exports for which Iran needs to build a 4,000-km pipeline, requiring massive investment and time.

Buchele, however, said building pipelines was a non-issue.

“Establishing pipelines has never been a problem. It is rather convincing the countries involved which usually takes a lot of time.”

Linde’s chief executive said the price and accessibility of gas are the two key factors in the market which Iran is credited with both.

Signs Emerge of Iran Regaining Oil Market Share

Iran will push for regaining its share at the global oil markets in the post-sanctions era, a senior lawmaker said.

Ali Marvi, head of the Energy Committee in Iran’s parliament (Majlis), said an increasing number of visiting foreign delegations are expressing their interest in Iran’s oil and energy industry.

He said foreign delegates are visiting Iran in rapid succession following Iran’s historic nuclear agreement with P 5+1 group.

“Most of consultations are centering around expansion of ties in energy particularly oil, gas, and petrochemical areas. Many of delegations are applying to buy Iran’s crude oil,” said Marvi.

He noted that mechanisms for investment in Iran’s oil sector have changed, saying: “Therefore the potential investors and/or contractors should accept Iran’s conditions because Iran’s conditions are different from the past. They are now negotiating and trading with a country that despite all sanctions, has managed to keep developing.”

Marvi acknowledged that the sanctions have caused Iran hardship, saying: “Due to some of these restrictions, Iran’s share of global oil market declined, but under the current conditions we have to regain our share of the market.”

“Only through enhanced production and export can we have more influence in OPEC,” Marvi said, adding, “Iran will win back its share in global oil competition and it will not have a remarkable impact on oil price fluctuations

Iran, South Africa Sign Oil Sales Protocol

Iran and South Africa have signed an initial document for crude oil sales, pending the lifting of sanctions on Tehran for exports to resume, a senior Iranian oil official has said.

Director for international affairs of the National Iranian Oil Company (NIOC) Mohsen Qamsari said South Africa was ahead among the countries in negotiations to resume oil sales from Iran.

“An initial document was signed by the two sides but given that South Africa’s crude oil import terminals belong to international companies such as Shell, exports are not possible for now because of sanctions,” he said.

Qamsari said South Africa is most probably on course to receive the first shipments of Iranian crude oil after the sanctions are removed.

South Africa relied on Iran as the biggest supplier of oil before sanctions on Tehran in 2012 dried up exports of about 380,000 barrels per day to the black continent’s second largest crude importer.

Qamsari said Iran could not deliver oil to South Africa before international sanctions are lifted, citing the administration of South Africa’s oil terminals by international companies like Shell.

He said South Africa will most probably be the first non-traditional customer to purchase oil from Iran after the sanctions are lifted.

Qamsari said Iran’s traditional customers are Turkey, South Korea, China and Indonesia. 

Energy Minister of South Africa Tina Joemat-Pettersson visited Tehran in April and discussed purchases of crude oil, oil products, gas, and petrochemicals from Iran as well as participation in the country’s energy projects.

Qamsari also said that all foreign delegates who have visited Tehran have expressed willingness to purchase crude oil and gas condensate from Iran.

“Most countries that used to have oil contracts with Iran are willing to re-enforce the past contracts, and some new companies are also ready to sign deal for buying oil after the sanctions are lifted,” he said

Iran Ups South Pars Output

One of Iran’s main objectives in the international arena has been to acquire a high trade balance in global gas markets through encouraging investment in gas projects and signing gas contracts. The final objective will be to achieve a favorable gas export balance as Iran sits atop the world’s second largest gas reserves.

Over the past two years, in the light of positive international developments, we have witnessed efforts by Iranian government officials for realizing this objective. Thanks to its huge gas reserves and in the light of the recently struck historic nuclear agreement with six world powers, Iran is seriously pursuing its gas export projects.

According to policies adopted by Iran’s Ministry of Petroleum, the priority for Iran’s exports is its neighboring countries. Then, Iran will get more shares of markets by developing its liquefied natural gas (LNG) industry. Under the aegis of these plans, Iran will continue to enhance its gas production rate over the coming three years. In 2019, Iran’s gas production is planned to reach 1 bcm/d and the conditions will be ripe for Iran to export portions from its production.

According to available figures, Iran has negotiated with representatives of more than 170 domestic and foreign companies for gas exports in an attempt to prepare the ground for improving the level of cooperation and interaction about gas trade with other counties and major international companies. The issue of Iran’s gas delivery to some neighbors including Iraq, Oman and Pakistan has entered a new phase. Iran’s gas clients are well aware that over the coming two years, gas production in Iran will pick up speed as new phases of the supergiant South Pars gas field would come on-stream.

Rokneddin Javadi, managing director of National Iranian Oil Company, has said Phases 15-21 of South Pars are to be fully commissioned by the end of the current calendar year in March 2016. Like last calendar year, the development phases of South Pars are to yield 100 mcm/d more of gas. Phases 17&18 of South Pars are expected to produce 30 mcm/d of offshore gas. Along with Phases 6-8 of South Pars, the two phases will be producing 50 mcm/d of gas in winter. Therefore, these phases of the joint gas field are a source of hope for Iran’s petroleum industry to increase its gas production in winter.

Production from South Pars, which is jointly operated by Iran and Qatar, has increased by more than 100 mcm/d over the past one year. This output is forecast to increase by 100 mcm/d again. Phases 17&18 of South Pars are to account for around 50mcm/d of gas. Iran’s petroleum minister Bijan Zangeneh has said that these two phases are expected to be inaugurated in the presence of President Hassan Rouhani late this year. Revenue from these two phases is estimated at more than $5 billion.

Development of Phases 17&18 of South Pars is among the old projects in South Pars. They are being developed to produce 50 mcm/d of natural gas, 80,000 b/d of gas condensate, 400 tons a day of sulfur as well as one million tons a year of ethane and 1.05 million tons a year of liquefied gas.

Onshore and offshore development of this project is under way by a consortium of Iranian companies. The contractors involved in the development of Phases 17&18 of South Pars are Iran’s Industrial Development and Renovation Organization (IDRO), Iranian Offshore Engineering and Construction Company (IOEC), Oil Industries Engineering and Construction Company (OIEC) and Iran Marine Industrial Company.

Two terrains of the refinery of these phases are processing sour and dry gas supplied by Phases 6 to8 of South Pars. Moreover, two main offshore platforms of this phase are ready to deliver gas onshore. Therefore, it seems that more concentration on the refining sector could help realize petroleum industry plans in this phase.

Hassan Bovayri, manager of Phases 17&18 of South Pars, said plans have been made for the processing of 28 mcm/d of offshore and 20 mcm/d of onshore gas in the refinery of these phases.

He highlighted the readiness for gas production in the offshore platforms of Phases 17&18, saying: “This year, our concentration is on fulfilling obligations of IDRO, which is the main contractor for the onshore sector for launching the second part of this refinery.”

Referring to the completion of work on the platforms of Phase 18, he said: “Transfer of gas produced from this reservoir through pipeline depends on the implementation of the remaining phases of the refinery of this phase. To that effect, Industrial Project Management of Iran (IPMI) and Iranian general contractors (IGC) are tasked with fulfilling their obligations to the Ministry of Petroleum at the pace and quality agreed upon.”

So far, two terrains of gas sweetening facilities at the refinery of Phases 17&18 have been started up by OIEC. IDRO is in the process of supplying commodities and equipment for the launch of the project and integrating gas receiving and processing facilities. After the refinery of Phases 17&18 becomes 95% complete, preparations will get under way at the refinery to receive gas from the platforms of these phases in the coming months.

Due to their specific features, Phases 17&18 of South Pars require myriads of specialties. The specific structure of these phases requires the involvement of a group of technical and specialized operations with regard to engineering studies, large-scale financing, elucidation of model of cooperation with a large number of domestic and foreign manufacturing companies and contractors, professional identification of production spots, registration of commodity and equipment order and supply, onshore and offshore integrated management of project and monitoring implementation process. The requirements for steering the development of this joint field have left valuable experiences behind for Iran’s petroleum industry.

Construction and launch of an extensive chain of upstream offshore and onshore activities (by applying cutting-edge engineering operations and building structures with high technology) as well as integrated management of executive procedures (from designing equipment to their installation and operation) are among pivotal achievements of the development of these phases.

Higher Output Eyed

Given a 65% progress in the construction of satellite platforms in Phases 17&18 of South Pars and the failure of these platforms to reach production, platforms of Phase 14 are making better progress. Phase 14 will help complete the production capacity of Phases 17&18.

According to plans by Iran Industrial Marine Company, the main contactor constructing these satellite platforms, the project was expected to be over last June.

Undoubtedly, production of around 50 mcm/d of gas from Phases 17&18 of South Pars in the current calendar year and the ensuing positive gas balance will significantly avoid import of petroleum products and save the country a big chunk of foreign currency. That is a major element of Iran’s economic macro-policy in the gas sector in the best possible manner.

Sitting atop the second largest natural gas reserves has turned this energy commodity into Iran’s most privileged source of energy. Moreover, replacing petroleum products with this energy carrier is technically possible and will be economical for the country. Substituting one liter of oil products with one cubic meter or gas – which has the same thermal value – will save more than $1.5 billion in energy costs. Therefore, increasing gas production rate is a positive step towards applying the Economy of Resistance, instructed by Supreme Leader Ayatollah Seyed Ali Khamenei.

Iran Wants OPEC Quota Back

An Iranian deputy petroleum minister has said that Iran hopes to regain its previous 14% quota in the Organization of the Petroleum Exporting Countries (OPEC) after sanctions are lifted.

“This is Iran’s inalienable right. As soon as sanctions are lifted, Iran will return to the market and will enjoy a 14% share in oil extraction within OPEC,” Mansour Moazzami, deputy minister for planning and supervision on hydrocarbon resources, told Frankfurter Allgemeine Zeitung newspaper in an interview.

The European Union (EU) stopped buying oil from Iran in 2012 after the 28-nation bloc imposed embargo on the Islamic Republic. Asian countries had to restrict their oil imports from Iran under pressure from the US.

Moazzami said Iran has launched talks with its traditional oil buyers, adding that the talks are almost coming to an end.

He said that Iran has agreed to export 500,000 b/d of oil to South Africa.

Moazzami said Iran will raise its oil exports to 1.7 mb/d from the current 1.2 mb/d “immediately after the lifting of the sanctions”. He said the country will enhance its output to 2.2 mb/d, six months into the sanctions removal.

“We can afford it and we’ll do so because the share Iran has lost in the market has been taken by others,” he said.

Iran has asked OPEC member states that have increased their share by benefiting from Iran’s absence in recent years to scale back their output.

Moazzami reiterated that Iran has no intention of destabilizing the market.

He estimated a “fair price” for both producers and consumers between $80 and $90 a barrel, twice the current price.

Moazzami said Iran will have no problem in finding customers for the oil stocked in tankers, describing as “exaggerated” reports of 40 million barrels of stocked oil.

He expressed optimism that Indian and Chinese banks will return Iran’s frozen oil money to Iran after the removal of sanctions. Moazzami said Iran’s frozen assets are below $30 billion as mentioned in international media.

Iran plans to raise its production capacity from the current 4 mb/d to 5.7 mb/d over five years. Moazzami said materializing this objective needs more than $30 billion in investment.

Iran has started talks with top companies, Moazzami said, adding that contracts will be signed after sanctions are lifted.

He said Iran has not yet made any decision about increasing its oil output to above 5.7 mb/d.

Tough international sanctions have denied Iran access to modern technologies to develop its petroleum industry.

“In the future, Iran will cooperate with foreign investors ready to bring their technologies to Iran. Therefore, arrangements should be made so as to be profitable for both sides,” President Hassan Rouhani said on September 15.

Moazzami said: “We are interested in cooperating with all companies willing to invest in Iran, including American companies.”

Many of these companies have already entered talks with Iran’s Ministry of Petroleum, but no contract has been signed because the sanctions are still in place.

Iran’s gas production currently stands at around 800 mcm/d, which is planned to rise to 1.3 bcm/d after completion of gas development projects. Iran would be exporting 200 mcm/d. The country is already delivering gas to Turkey, Armenia and Azerbaijan. In October, Iran will start pumping gas to Iraq. Oman will be next in line.

Ten projects under construction in South Pars gas field are up to 60% complete and they are expected to become operational by 2018.

Moazzami said Iran’s neighbors are prioritized for gas exports. Iran’s gas delivery to Europe depends on pricing. Moreover, the Europeans will have to help Iran build a pipeline or an LNG production facility.

Qatar is the largest LNG producer but Moazzami said that “Iran can outperform Qatar”.

Iran produces a large volume of associated gas. In a bid to prevent associated gas flaring, Iran plans to build a power plant fuelled with flare gas. A first tender bid to that effect ended inconclusively.

Iran and Qatar are the only two countries in the Middle East region with sufficient gas reserves for exports. Qatar has long term contracts for LNG sales. Moazzami said Iran has no plan for the moment to export more than 200 mcm/d of gas because it has to meet domestic demand. The gas needed to feed petrochemical plants in Iran is expected to increase from 50 mcm/d to 120 mcm/d. Iran has 67 petrochemical facilities under construction to double the country’s petrochemical output to 120 million tons a year. The Iranian government is pushing ahead with these projects in order to create jobs.

Moazzami said using fracking to extract gas threatens oil and gas producers. He said that future oil price and supply security will depend on the stability of oil producer countries.   

Regaining Oil Market Share

No end is in sight to the current trend of falling oil prices. Crude prices have fallen to six-year lows. In June last year, the prices experienced a sharp 60% decline and the supply and demand system has since changed. Some market analysts have even predicted $20 oil price in the coming months.

Over the past month, oil has seen ups and downs. 

Cautious oil market bulls are stirring, sensing higher prices for future months after a first whisper that the glut may be set to slowly shrink.

In the last 10 years, the one-12 month contango has averaged $1.07 a barrel. Over the last 20 years, this gap has held on average at -$0.43 a barrel - meaning it was in the opposite market structure known as backwardation.

Benchmark Brent crude futures have halved in price in the last 12 months to below $48 a barrel.

In part, the steepening of the curve this year has been the result of fierce pressure on near-term Brent crude futures, which fell in late August below $43 a barrel to their lowest since early 2009.

Since then however, the price has risen by 5 percent, fund managers have steadily upped their bullish bets on crude oil, completing their largest three-week increase in five years.

The outperformance of longer-dated crude prices seems to be more about a pickup in the future prospects for the market, than gloom over the immediate outlook.

Oil prices saw another tumble with the onset of mid-September trading as soft economic data out of China and weak gasoline prices pressured the market.

Another reason for falling oil prices is oversupply by Saudi Arabia and even Russia.

The present article reviews Iran’s oil production and export and examines prospects of future oil market.

In the wake of Iran’s historic nuclear deal with P 5+1 group, diplomats are working hard to make the preparations for the implementation of the deal struck between Iran and the P5+1 group – the US, France, Britain, Germany, Russia and China.

The implementation of this agreement will create numerous opportunities for investment in Iran.

Iran’s petroleum industry is subject to change if foreign investors step in. Currently, the ground is prepared for Iran to raise its crude oil exports and Iran’s Ministry of Petroleum is waiting for the implementation of the nuclear agreement with global powers.

Iran sits atop the world’s fourth largest oil reserves. As a major player in the oil market, Iran will make efforts to regain its status of second OPEC producer.

Iran Regain Scenarios

Iran’s petroleum minister, Bijan Zangeneh, recently told the CNN that the country plans to raise its output by 500,000 b/d immediately after sanctions are lifted. He said Iran will add another half a million barrels to its oil production four to six months after the removal of sanctions.

What will the OPEC monthly reports indicate in 2016?

An international research institute has envisaged five scenarios for post-sanctions oil production in Iran. According to this report, 3.315 mb/d will be the most idealistic projection for oil production in Iran in 2016. In the worst-case scenario, the report predicts 2.658 mb/d oil output for Iran in 2016. The report has categorized the following scenarios: ideal state, good state, basic state, low-capacity extraction state and worst-case state.

The basic state means the nuclear agreement is finalized this year and the sanctions will be partially lifted in 2016. In this case, Iran’s crude oil production will reach 2.994 mb/d, up 197,000 from 2016.

In a good state, the sanctions are lifted immediately and Iran’s oil production will reach 3.219 mb/d in 2016, up 423,000 b/d from 2014 and 226,000 higher from the basic state.

Under low-capacity extraction state, Iran’s oil production will rise only 85,000 b/d from 2014 to 2.881 mb/d in 2016. That would be 113,000 b/d lower than in the basic state.

And the worst-case scenario will be when Iran and the West fail to finalize the agreement. Under such circumstances, Iran’s crude oil production will fall to 2.685 mb/d, down 11,000 b/d from 2014 and 309,000 b/d below the basic state.

The ideal state will be when heavy investment is made in Iran’s upstream oil sector. In this state, Iran’s crude oil production will reach 3.315 mb/d in 2016, up 321,000 b/d from 2014 and 321,000 b/d higher than the basic state.

Iran Strong Return

Iranian and foreign analysts believe that Iran’s nuclear deal with P 5+1 group and its possible implementation later this year, and the ensuing lifting of sanctions, will result in the renovation and development of petroleum industry facilities and increased production in the long-term.

One of major plans pursued by Iran’s petroleum minister has been to increase oil exports, take back the country’s production capacity to its 2005 level, which was 4.2 mb/d. Iran’s strong return to oil market, regardless of its effects on the market sentiments, will facilitate its sustainability and activate its relevant industrial and financial sectors.

Since the administration of President Hassan Rouhani took office two years ago, serious efforts have been made for using the tools of energy diplomacy in favor of the country’s best interests.

Although due to the combination of internal and external factors, the global oil market has not experienced favorable conditions in the past two years, Iran has used up its management and expertise capacities in order to push ahead with its policies within the framework of the Organization of the Petroleum Exporting Countries. To that effect, the active and influential presence of representatives of Iran in the expert meetings and conferences of this organization at managerial and expert levels, exchange of views and submission of reports by experts in support of Iran’s national interests are proof of Tehran’s endeavors.

Over the past two years, OPEC Conference has convened four times. Iran, as a founding member of this organization, has made clear its position with regard to the oil market developments and insisted on its position.

2.9 mb/d Output Targeted

As diplomatic efforts are under way for improving Iran’s role in the global oil markets, the country’s oil production has soared to 2.9 mb/d and the country’s oil and gas condensate exports have increased from 1.2 mb/d to 1.35 mb/d.

Zangeneh said on March 16 that Iran is able to raise its oil production to 3.8 mb/d to become OPEC second largest producer, just behind Saudi Arabia.

After Iran’s nuclear agreement is implemented, the first step will be to make preparations for enhancing exports, the minister said after the landmark deal was reached.

“Immediately, after the lifting of the sanctions, we will add 500,000 b/d to our oil exports, and after five to six months, we will reach a 1 mb/d crude oil production hike,” Zangeneh said. “This is not the first time that Iran is losing its oil customers in the past several decades. This experience occurred during the [1989-1988] war with Saddam, and two OPEC members took Iran's market share. But after the war, Iran increased its production and regained its position. OPEC and non-OPEC countries that are oversupplying the market should create space for the entrants.”

Gov’t Support for Iran Petroleum Industry

By Shuaib Bahman

Over the past century, income from the sale of oil and energy commodities has been instrumental in Iran’s economy and has made up a big share of the country’s national revenues.

According to official figures, at least 40% of government’s hard currency revenues come from oil sales. If oil products are included, this percentage would be estimated at 70%.

That is why oil is an influential factor in Iran’s economy and affects other economic indicators. Any fall or hike in oil prices will directly affect other sectors of Iran’s economy.

The oil price slump which started in June 2014 has affected not only Iran’s economy, but also investment in infrastructural and development projects, particularly in the energy industry. The present article is reviewing government’s policies in favor of the energy industry after crude oil prices plummeted.

Impact on Investment

Decision-making about investment in the energy sector is increasingly influenced by government policies and incentives rather than being affected by competitive market signals. In many countries, the government directly meddles with investment in the energy sector. For instance, the ownership of more than 70% of oil and gas reservoirs and nearly half of the power plants’ capacities in the world belong to governments and are controlled by state-run companies. Of course, some governments have backed down from direct involvement in the energy sector by clearing the way for competition. But some others have refused to do so for a variety of political and social reasons.

Over the past years, Iran has become largely dependent on state investments due to the impact of sanctions. The US oil embargo imposed penalties on foreign companies investing more than $20 million in Iran’s oil and gas projects. That is why international companies have been reluctant to seek investment in Iran’s oil and gas sectors. Another factor that dissuaded foreign investors from investing in Iran was the structure of buy-back model of contacts that oil companies did not consider as up-to-date because it restricted their margins.

In the end, foreign companies pulled out of Iran’s oil and gas projects. The investment envisaged to be made in the petroleum industry under the 5th Five-Year Economic Development Plan was $50 billion a year, but the country managed to attract only $6 billion during the first four years of the five-year plan leading to March 2015.

The following table indicates domestic investment made in the petroleum industry from 2011 to 2014.

Year

Billion Dollars

2011        At present, Iran’s oil reserves are estimated at 158 billion barrels while its natural gas deposits are estimated at 33.8 tcm. These figures are set to rise in the light of new explorations under way. According to plans, Iran’s petroleum industry will need between $100 billion and $200 billion in investment during the 6th Five-Year Economic Development Plan which is due to start in March 2016. This amount of investment is alluring for international companies.

Investment Perspective

Investment in the energy sector is increasing in most parts of the world, but responding to the long-term growing demand for crude oil depends on investment in the Middle East. The expenses of upstream oil and gas sectors are estimated to exceed $850 billion by 2035, mainly related to natural gas.

Over recent years, North America has been the focal point of growing investment in this sector and will remain the major spot for investment up to 2035.

As far as crude oil is concerned, the focal point will be the Middle East region, specifically because non-OPEC supply is estimated to fall in the 2020s. However, doubts continue to cast over oil investment in the Middle East because budgetary restrictions, coupled with political, security and logistics impediments, are likely to cause problem to production growth.

According to OPEC forecasts, the global demand for oil will reach 107 mb/d in 2035, up from 87 mb/d in 2010. The Organization of the Petroleum Exporting Countries has also predicted the investment needed for the petroleum industry up to 2035 will be $4.2 trillion, but the International Energy Agency (IEA) puts the figure at $14 trillion.

OPEC member states are estimated to have invested more than $270 billion in the upstream oil sector between 2012 and 2016. A portion of this investment will go to the preservation of output of operating fields and preventing natural fall-off in production. Therefore, in order to respond to global energy needs in 2035, the annual investment in the energy sector is expected to reach $2 trillion. Moreover, the annual average spending on energy efficiency should increase to $550 billion. That means $48 trillion investment will be needed in the energy sector for the 2014-2035 period, $40 trillion of which will be for the development of energy supply and the rest for energy efficiency.

Investment in the oil and gas value chain in Iran is no exception to this rule and Iran’s oil production is expected to grow significantly amid positive international atmosphere in favor of the Islamic Republic. As investment increases in the petroleum industry, the global demand for oil will increase. At present, oil, gas and petrochemical industries are prioritized by the Iranian government for investment as they contribute to job creation, production and competitiveness. The improvement in relationships between Iran and other countries could help the country attract investment.

Such investment will benefit both Iran’s industry and potential investors willing to come to Iran’s market whose future is bright. Moreover, the future of global oil market and energy supply security is tied to bilateral cooperation and investments.

Oil Products Exports Set to Grow

With the conclusion of nuclear talks between Iran and six world powers and in the light of a positive atmosphere surrounding Iran, many experts have predicted prosperity in Iran’s industries. The expected lifting of sanctions against Iran is anticipated to end in the development of the country’s energy industry and boost gas supply to remote urban and rural areas where oil products have been largely consumed. Sanctions relief will also help start up new refineries that would contribute to boosting Iran’s exports in the Middle East region.

 Seyed Nasser Sajjadi, managing director of National Iranian Oil Products Distribution Company (NIOPDC), has said that the company plans to adopt a new approach in the light of the government’s policies for the upstream oil and gas industries.

He told Iran Petroleum in an interview that rate of natural gas production in Iran has increased, noting that the NIOPDC is moving ahead within the framework of the general policies of the Ministry of Petroleum.

“Simultaneous with the development of gas industry in the country, this clean product will replace petroleum products in the home and industrial sectors and the fuel consumed by these sectors will switch from oil to gas,” said Sajjadi.

“By supplying gas to remote villages and cities and gas-intensive industries, there will be plenty of surplus products. We are planning to clear the way for their exports,” he added.

Sajjadi said by implementing refining projects aimed at improving quality of products, the oil products produced in Iran refineries can rival those produced in the world markets in terms of quality, adding that there is ground for their marketing in international markets.

“After the removal of the sanctions, this possibility will be provided and development of exports has already started in the current year,” he said.

LPG, Gasoil Export

Sajjadi said Iran is ready to export liquefied petroleum gas (LPG) and gasoil to Afghanistan, adding that Iran can also deliver LPG and gasoil to Afghanistan, Iraq and Armenia.

He said fuel oil exports are being handled by the Directorate for International Affairs of National Iranian Oil Company (NIOC), adding: “The production capacity of oil products in Iran is enhancing and the preparations are being made for the export of products.”

Sajjadi said there is desirable capacity for exports in regional markets including Afghanistan and Uzbekistan, adding: “During the first 160 days of the current Iranian calendar year, a total of 560 million liters of gasoil has been exported, which has earned the country $250 million in revenue.”

Consumption Cut

Sajjadi said Iran witnessed 20% cut in consumption of kerosene, fuel oil, gasoil and liquefied petroleum gas (LPG) during the first 160 days of the year. He added that this can translate into the potential for enhancing for oil products exports.

“Over the past 160 days, on average 119.4 ml/d of liquid fuel (gasoil, fuel oil, LPG and kerosene) was consumed in the country. During the same period last year, the consumption was 147 ml/d of liquid fuel,” he said.

Sajjadi said: “Given a 19% decline in the consumption of liquid fuels, so far 4.5 billion liters of fuel has been saved in the country.”

Trans-Border Sales

Sajjadi said a plan is under way for trans-border sales of oil products in order to reduce smuggling, adding that this plan is being developed.

He said that trans-border sales of gasoil in the country has reached 180 million liters a day since the beginning of the calendar year in March. He added that bunkering has been 10 ml/d over the same period.

Sajjadi said 1.2 billion liters of fuel oil (bunker) has been supplied to vessels, noting that price fluctuations have affected the bunkering market. However, bunkering rate has grown during the last two months.

He said Afghanistan is a major buyer of Iran’s aviation fuel. He added that Iran exported 2,000 tons of jet fuel to Afghanistan during the first 160 days of the year.

New Gas Stations

Sajjadi said plans are under way for the construction of new gas stations under new brands.

“In most countries in the world, a brand covers a large number of gas stations, leading to integration of all affairs related to operation and maintenance of these stations,” he said.

Sajjadi said regulations are to be drawn up over the coming two months to require gas stations to have brand coverage, adding that permits will then be issued for that purpose.

Regarding the construction of small-sized gas stations, he said: “So far, several companies have voiced readiness to that effect. For instance, in Isfahan, 40 to 50 single-dispenser gas stations are to be constructed with cooperation of Isfahan municipality.”

CNG Industry

Regarding NIOPDC’s plan for developing compressed natural gas (CNG) industry in Iran, Sajjadi said: “Although over the past years, less investment has been made in this field in big cities (of course it is partly related to the saturation of capacities), we hope to see more growth in this sector by raising the commissioning fees of owners of gas stations and the financial aids allocated to the private sector.”

“With regard to the construction of CNG stations, the issue of branding is being pursued and necessary instructions are being drawn up for building stations within the framework of brands,” he said.

Sajjadi said CNG currently costs IRR 3,500 per cubic meter, which is one-third of gasoline price. “In addition to being clean, it has economic justification for drivers,” he said.

Sajjadi said the government used to provide those who wanted to construct CNG stations with financial aids, adding that the government is envisaging IRR 70 to IRR 80 per cubic meter in commissioning fees for the owners of gas stations. In case the owners provide this investment, he said, this commissioning fee will rise to IRR 130 to IRR 140 per cubic meter.

“Under such circumstances, according to our surveys, the investment made in a CNG station will return in three years and of course these figures (CNG distribution commissioning fee) will rise annually.

Petrol Consumption below Expectations

Sajjadi said supply of oil products is one of the most sensitive issues in the country, adding that gasoline consumption was on average 72 ml/d during the first 160 days of the current Iranian calendar year, up three percent from last year.

“First, we forecasted the gasoline consumption to increase five percent in the current Iranian calendar year; however, according to statistics, it has so far experienced a 3% growth,” he said.

Sajjadi said: “Gasoline sale has become single-rate in the country, but its consumption has not declined due to variety of reasons including the daily increasing number of cars in the country’s transportation sector.”

“We are currently importing gasoline, accounting for 6.4 ml/d of our 72 ml/d consumption. Its quality is euro-4,” he said.

Sajjadi said 4.8 ml/d of the total 70 ml/d of consumed gasoline in the country had been imported in the last calendar year.

End to Petrol Imports

Sajjadi expressed hope that Iran will stop importing gasoline within less than a year as the first phase of Persian Gulf Star Refinery is coming online.

“As far as other products are concerned, at the moment we have surplus production.” he said.

“With the full commissioning of Persian Gulf Star Refinery and the development of gas industry in the country, we will have access to huge volume of this product in the country. That would provide the best ground for the development of product exports in Iran.”      

Iran Petchem Output to Treble in 10 Years

By Rainer Hermann

A senior Iranian official says the country plans to triple its petrochemical production to 180 million tons a year in 2025.

Mohammad Hassan Peyvandi, deputy head of National Petrochemical Company (NPC), told Frankfurter Allgemeine Zeitung newspaper in an interview that Iran envisages $70 billion in investment for that purpose.

In the target to be achieved, Iran’s revenue from petrochemical exports will triple to $60 billion by 2025. Add to this $20 billion in revenue from domestic petrochemical sales.

“German institutes can play an important role in building and developing installations in this industry,” said Peyvandi.

Iran’s current petrochemical production capacity is 60 million tons a year, 45 million tons of which is currently being used.

Peyvandi said the delayed development of South Pars gas field has caused problems in the supply of natural gas. He expressed hope that this problem would have been resolved by the end of 2016.

Iran’s petrochemical production capacity is not fully utilized due to challenges in overhaul and lack of spare parts.

By 2020, Iran is expected to enhance its petrochemical production capacity by 60 million tons. Assaluyeh, where the giant offshore South Pars gas field is located in southern Iran, will account for 40 million tons. Chief among these new plans is the construction of new facilities to produce methanol, urea and cracker, which all need ethane. The remaining facilities for 20 million-ton capacity will be built in different spots across the country.

Facilities for another 60-million-ton capacity are also being envisaged for construction. These facilities are designed to process gas supplied by South Pars as well as associated gas provided by oil fields in Khuzestan province in southwestern Iran.

These facilities will be initially used for producing propylene and its derivatives from methanol. Industrial circles expect these facilities to come on-stream on time. So far, the first phase of these facilities has been completed.

Peyvandi predicts that 60% of Iran’s petrochemical production will be exported with the rest supplying domestic needs.

Due to international sanctions, Iran’s petrochemical exports dropped from 18 million tons in 2011 to 14 million tons now. However, the petrochemical industry remains the second generator of hard currency after oil for the country.

According to Peyvandi’s estimates, at least $70 billion is needed for financing 60-million-ton facilities under construction and planned 60-million-ton facilities. Foreign investment is expected to provide 70% of this sum and the rest will be provided by Iran.

Peyvandi said Iran depended on Germany for 40% of its petrochemical needs before the impositions of sanctions. This 40% included engineering and technological services, building materials and credit. Iranians prefer their manufactured product to be labeled with “Made in Germany and Iran” instead of “Made in Germany”.

Many of these projects are currently being operated by private entities or are planned to be built by private sector.

Peyvandi said the government is pushing ahead with privatization in compliance with Article 44 of the Constitution. According to this constitutional article, state-run NPC is authorized to hold only 20% of petrochemical industry shares and the rest belongs to the private sector and pension funds. The NPC is tasked with coordinating affairs between different sectors so that a new private NPC would take shape.

Peyvandi said Iran is not afraid of rivalry with Saudi Arabia. He said Saudi Arabia’s petrochemical production capacity is currently higher than that of Iran.

Compared with other petrochemical producers in the Middle East region, Iran owns enough oil and gas. Saudi Arabia is rich in oil, but its gas reserves are not as much as Iran’s. Qatar is a gas-rich state, but does not have significant amount of oil. Saudi Arabia is dividing its oil production between different consumers; therefore, it cannot produce more in order to spend more crude oil in its petrochemical industry.

Peyvandi sees another advantage for Iran: Iran’s gas is not composed of only methane because its 10% ethane and propane that could help produce polymers like polyethylene.

Moreover, Iran has not turned to foreign experts during years of sanctions and it has benefitted from domestic experts. Iran has exported only some instances of technology and fundamental engineering, and almost all manufacturing installations have been made in Iran.

According to Peyvandi, Iran’s need for engineering services has declined and the county prefers to make efforts for improving the quality of equipment used in building facilities.

In Assaluyeh, the most important petrochemical center of Iran, a second plant is under way with a capacity as much as three times the existing plants. The new plant is to start production in 2019. A five-kilometer corridor cuts through these facilities to supply gas and provide other services to installations. Facilities are being constructed for the production of 19 million tons of methanol to help raise Iran’s methanol production capacity to 24 million tons a year.

The global market’s need for petrochemicals stands at 40 million tons. Peyvandi believes that the price will fall and China, which has been buying methanol at exorbitant price for producing propylene, will be able to purchase Iran’s methanol at a lower price. In Iran, five million tons of methanol will be spent on petrochemical and chemical production.

After Assaluyeh, the Iranian government plans to build a third petrochemical hub in Chabahar Port off the Indian Ocean and near the border with Pakistan. For that purpose, $25 billion to $30 billion is to be invested. Indian companies have expressed willingness to invest in this project. Construction of such a petrochemical plant will help develop the border province of Sistan Balouchestan. This project will wipe 1,000 kilometers off the distance between the production origin and destinations in China and India. Peyvandi said that would be in the interest of Iran.

After Chabahar, the South Pars gas is planned to be delivered to Pakistan and India in pipeline.

Petrochemicals, Focal Point of Foreign Investment Talks

Over the past two years, foreign companies, particularly Europeans have confidentially sent delegations to Iran and held talks for post-sanctions cooperation. But after Iran and six world powers struck a historic nuclear deal that would give Iran sanctions relief, such talks have been made public and there has been signature of contracts for cooperation. Petrochemical industry is specifically attractive for European companies. In all talks held between Iranians and foreigners for future cooperation, representatives from Iran’s petrochemical industry are present. Foreign parties have always expressed willingness to invest in Iran’s petrochemical industry. There are currently intensive talks under way between the representatives of foreign companies and stakeholders of Iran’s petrochemical industry.

The presence of Iranian petrochemical industry officials in all negotiations with foreign parties and companies indicates the high attractiveness of investment in this industry for both sides. Over the past decade, no new investment has been made in this industry; therefore, it is now thirsty for foreign capital and technology. Meantime, foreign parties are well aware of these potentialities and the big profits they could pocket from petrochemical projects. Companies like Germany’s Basef and Linde, France’s Axens, South Korea’s Hyundai, Royal Dutch Shell and South Africa’s Sasol are preparing themselves to invest in Iran’s petrochemical sector as they are assured that the sanctions will be lifted on Iran following the implementation of the Joint Comprehensive Plan of Action, signed between Iran and six global powers. These foreign companies are well aware of the potential and profits of this industry. The banking interest rate in most of these foreign countries is below one percent, whole profits from investment in Iran’s petrochemical industry projects are more than 20%.

Around $75 billion in new projects has been defined for Iran’s petrochemical industry and most of them should be financed by foreign banks.

Abbas Shari-Moqaddam, managing director of National Petrochemical Company (NPC), has said 62 new and half-complete petrochemical projects in Iran are like 62 sources for attracting investment. By attracting investment in these projects and other ones, backwardness in petrochemical industry will be compensated.

Bidding for Iran Petchem Market

After the nuclear deal, business delegations from European and Asian companies have flown into Iran. They included delegates from petrochemical giants of Europe and Asia. It seems that a combination of foreign investment and the high potential of domestic companies and manufacturers, which have progressed significantly in recent years in the absence of foreigners, will bring about a major change in half-complete petrochemical projects.

Financing in Cooperation with Germans

Mohammad-Hassan Peyvandi, deputy head of NPC, explained about grounds for petrochemical cooperation between Iran and Germany, in a meeting with a delegation of German state and private companies.

“Financing and equipment manufacturing through cooperation between Iranian and German companies is of priority,” he said.

Peyvandi referred to the active presence of German companies in Iran and the utilization of German technology in Iranian petrochemical industry before the sanctions were imposed, saying: “The share of German companies alone in Iran’s petrochemical industry was above 41%. But today we have made great headway in domestic manufacturing.”

“Germany was one of Iran’s preferred partners in financing and technology, but today in addition to these two sectors, we are willing for more joint manufacturing of equipment in Iran,” he said. “Iran’s industry has been developed and today we have competent human resources.”

Peyvandi said Iranians prefer to see “Made in Iran/Germany” label instead of “Made in Germany” alone.

Petrochemical Attractions for Japanese

After attending a joint meeting with Japanese oil, gas and petrochemical officials, Peyvandi voiced Iran’s interest in the development of downstream industries, saying: “Iran is willing to cooperate with Japanese companies for commercialization of technical knowhow of secondary processes.”

He cited the current Bandar Imam Petrochemical Plant as an example of effective cooperation between Iran and Japan in the late 1970s.

“At the time of construction of this petrochemical plant, big investment was made jointly in Iran, which was unprecedented by that time,” he said.

Peyvandi said managers of 21 major Japanese oil companies along with Japan’s minister of economy and a political delegation attended Iran-Japan talks for energy cooperation.

He said that representatives of more than 1,000 Japanese companies are willing to travel to Iran to discuss cooperation.

Iran’s petrochemical industry wants its cooperation with Japanese companies not to be limited to EPC projects. Commercialization of technical savvy in downstream and secondary sectors provides grounds for cooperation between Iranian and foreign companies.

Joint Manufacturing with Koreans

Peyvandi highlighted the willingness of South Korean companies for renewed presence in Iran’s petrochemical industry during a meeting between Iranian and Korean officials.

“The capability of Iranian manufacturers and contractors has increased from a decade ago and we proposed to Korean companies to benefit from the contribution of Iranian manufacturers for making equipment,” he said. “Like other Asian and European countries, South Korea voiced its readiness for return to Iran’s oil, gas and petrochemical industry.”

Before international sanctions were tightened against Iran, South Korean companies were acceptably involved in engineering as well as procurement of equipment and commodity in petrochemical industry.

Throughout talks in Tehran, the South Korean companies and investors have been proposed to cooperate with Iranian companies in supplying equipment needed by petrochemical industry in Iran and other Middle East countries.

Bright Horizon for Tehran-Pretoria Cooperation

South Africa’s state-run sector currently has the capacity to produce more than 45.000 b/d of GTL. Therefore, this country can be instrumental in developing this product in Iran. Iran welcomes joint venture deals with foreign companies like South Africa for financing GTL projects. South Africa is interested in investing in GTL in Iran.

Peyvandi said South Africa has been proposed to produce petrochemicals in GTL production units, adding: “In some countries, GTL production units also supply petrochemical plants.”

He referred to the brilliant record of Iran-South Africa cooperation in petrochemical sector, saying: “We welcome renewed cooperation with this country.”

Petchem Equipment Manufacturing with Spain

Iran-Spain trade transactions reached

their highest in 2011, at 4.7 billion Euros. In that year, bilateral trade between the two countries was centered on Iran’s energy item exports to Spain.

Iran-Spain transactions during the first four months of the current Iranian calendar year, which started on March 21, included Iran’s export of $89 million of iron, saffron, grape, carpet and floor mat to Spain in exchange for importing $53 million of coal electrodes, crane, printing ink, graph paper and textile thread.

Besides the advantage of easy access to petrochemical feedstock, Iran enjoys other competitive advantages that could not be ignored easily. They are Iran’s already extended and growing domestic market for petrochemicals, access to specialized and skilled manpower, extended infrastructure for communications, geographical position due to sharing border with 15 countries particularly Central Asia and South Caucasus, establishment of special economic petrochemical zones, political stability and pro-investment law, allocation of facilities to investors like tax exemptions and an active chain of petrochemical industry. These advantages can contribute to the development of downstream and upstream industries. Add to all these, the advantage of getting facilities from the National Development Fund of Iran (NDFI).

Huge gas reservoirs and abundant feedstock, access to water resources in southern coasts and location on marine transport routes are among advantages turning Iran into an attractive place for potential investment in the petrochemical industry.

The above –mentioned advantages, could turn Iran into a big petrochemical hub in the future and attract investors.

Peyvandi believes that Iran is a country enjoying all tools, capacities and resources needed for a profitable and active petrochemical industry. No other country in the world enjoys these advantages altogether. Therefore, our country enjoys a new and rare opportunity which no other investor in the world does enjoy.

Undoubtedly, improvement of Iran’s international relations and attraction of more investment will result in a brighter future for Iran’s petrochemical industry.

Peyvandi expressed hope that Iran’s negotiations with foreign parties will prove successful.

Gov’t Set to Revise Its Petchem Role

Before privatization in the petrochemical industry, NPC had to tap into its savings. But Article 44 of the Iranian Constitution merely authorizes the private sector to invest in this industry. The petrochemical industry requires both investment and technology; therefore, it is currently facing problems. Since the very establishment of NPC until mid-2000s, this company was the sole entity in charge of the infrastructure and investment for this industry. But following the enforcement of Article 44 of the Constitution, all these responsibilities were delegated to the private sector. However, the results have so far proven not satisfactory. That is why the administration of President Hassan Rouhani has adopted a new approach vis-à-vis the infrastructure and requirements of this industry and is focusing further on the development of the infrastructure and boosting attractions of this industry.

Given the special conditions of Iran and the country’s standing in energy commodities’ exchanges as well as its reserves, paying further attention to the petrochemical industry would be an important and strategic decision. Concentration on other processes including the general trend of oil and petrochemicals market, pricing procedure, methods of sales as well as the volume and conditions of exports seem to need more supervision. Meanwhile, the government can react quickly and timely to resolve the problems hindering this important market. Definitely, everyone will benefit from this important market. Meanwhile, foreigners are willing to renew cooperation with NPC, given their trust in this company in the past.

Over the past one decade, Iran’s Privatization Organization has privatized nearly 99% of petrochemical companies. As much as this privatization drive is attractive to foreigners, it is worrying. That is why many of them have asked for a 20% NPC share in the projects so that this company could settle possible disputes with government organs.

Shari-Moqaddam said some foreigners prefer that the NPC would receive the finance to be invested in projects. “This proposal requires legal authorization. Of course, we prefer direct investment because investors bring in both technology and the market and no pressure is imposed on us,” he said.

But according to the law, the NPC is authorized to merely invest in impoverished zones. In case no potential investor applies, the NPC can operate 49% to 100% of the project. Now, the NPC is seeking permission to be able to have a 20% share of foreign partnerships.

Investment in Poor Zones

A major measure by the Iranian government for upgrading the petrochemical industry has been the reduction in gas feedstock prices. Upon an approval of the cabinet, new petrochemical units in impoverished zones will be granted 10% to 30% discount in the price of gas. This strategy of the government is meant for attracting more investment in this industry. According to a government decision, petrochemical units built in impoverished ones will benefit from 10% discount in gas feedstock price. This discount will double if the petrochemical plant is erected in the places located by Ministry of Industry, Mine and Trade. And the discount will treble if the plant is constructed in places located by Ministry of Petroleum.

This decision has been adopted in order to encourage construction of new petrochemical plants in impoverished zones. This amount of discount will certainly spur investors.

By supporting private sector, the government is creating the required infrastructure in different zones including Persian Gulf and Sea of Oman coasts in order to facilitate the presence of domestic and foreign investors in the petrochemical industry. Over the past decades, the petrochemical industry has always been cohesive enough for the presence of domestic and foreign investors.

Drawing up a roadmap for the petrochemical industry in the past one year has been a symbol of planning and preparation for investment in and development of this industry. Over the past one year, business delegations from different countries have travelled to Tehran in a bid to clear the way for future investment after sanctions are lifted on Iran.

At present, the private sector is not capable enough to create infrastructure in new zones for the daily growing development of the petrochemical industry. The government is expected to become active in this sector again. In case the required infrastructure is not established in the petrochemical industry, in future it will face numerous challenges including unbalanced development, lack of future orientation and insufficient development in proportion with the needs.

At present, $33 billion in investment is needed for the implementation of 55 million tons of petrochemical projects. Such investment will earn the country $26 billion in revenue. There are currently 14 or 15 projects under construction. These prioritized projects are expected to become operational in four years. Then, Iran will see its petrochemical output grow 10 million tons.

Europeans Seek Presence in Iran Gas Sector

Investment in Iran’s petroleum industry has long been welcomed by major international companies involved in this sector and they outperform one another for presence in oil projects.

Given huge oil and gas reserves in Iran, the country has been the destination of many investment companies and proprietors of technology and technical knowhow. Even international restrictions have failed to curb their ambitions.

Meantime, planning over the past two years to enhance Iran’s gas output and develop gas supply infrastructure across the country has resulted in the development of major projects in this sector, and potential investors can now finance projects in Iran under build-operate-transfer (BOT) method.

Gas industry projects, up for investment, are being welcomed by major domestic companies at a time international companies have voiced their readiness to operate these projects.

To that effect, National Iranian Gas Company (NIGC) introduced 18 major gas projects to the World Gas Conference, which was held in Paris earlier this year. A total of 4,000 delegates from 100 countries attended the event in Paris. Among the projects Iran introduced for investment were construction of Iran Gas Trunkline-9 (IGAT-9) and IGAT-11, extension of IGAT-7, storage facility projects and gas refinery capacity development projects.

The World Gas Conference and Exhibition is the biggest and most important gas industry event that will bring together international delegates from energy companies, policymakers, and top executives of major gas companies globally for an opportunity to meet, discuss, debate, learn, and showcase the latest developments on policies, strategies, and technologies.

The WGC is sponsored by the International Gas Union (IGU) which is a global association aimed at promoting the technical and economic progress of the gas industry.

Founded in 1931, the IGU is a worldwide non-profit organization aimed at promoting the political, technical and economic progress of the gas industry. The IGU has more than 140 members worldwide on all continents, representing approximately 97% of the world gas market. The members of the IGU are national associations and corporations within the gas industry worldwide. The IGU organizes the World Gas Conference (WGC) every three years, with the forthcoming WGC taking place in Paris, France, in June 2015. The IGU's working organization covers all aspects of the gas industry from exploration and production, storage, LNG, distribution and natural gas utilization in all market segments.

The managing director of NIGC, Hamid-Reza Araqi, met with a number of foreign investors and a group of 100 CEOs of French companies on the sidelines of the 2015 WGC.

“Generally speaking, IGU is an international body and an NGO. This conference follows up on different issues of planning and operation through its 14 committees,” he said.

He added that NIGC had planned to attend this conference three years ago.

Plans for Committee Membership

Araqi said NIGC is planning over the coming three years to have representatives in the 14 committees. He added that membership to these committees will facilitate consultation and exchange of experience.

The working committees that convene several times a year to discuss a variety of issues including gas-to-electricity conversion, economic benefits of gas and electricity, comparison of prices, exports, new technologies, network maintenance, mini-LNG, CNG, intelligent networks, distance electricity meter reading, all gas-related technologies in terms of raw materials, supervision, implementation and management.

25 Articles

NIGC submitted 25 articles to the 2015 WGC in Paris. Some of them were in written and some others were presented in panel discussions.

He said that NIGC was at the top in terms of the number of submitted abstracts. In terms of the number of articles, NIGC ranked third with 25 articles. The US and France were the two leading countries in this regard.

Regarding Iran’s presence in IGU conferences, Araqi said: “We are active in terms of presenting articles and attending committee meetings because no other company is as active as NIGC in terms of population under coverage, the volume of network and infrastructure and the ecological diversity of gas consumers. Due to these features, Iran has gained valuable experience in the gas sector.”

During this latest conference, three panel discussions were held with Iranian managers present. Mohammad-Reza Qodsizadeh, director of engineering and construction affairs at NIGC, and Saeed Pak-Seresht, director of research and technology at NIGC, presided over the panel discussions.

Another important event in this round of the World Gas Conference and Exhibition was that two Iranian delegates were chosen as the committee head and member of organizing committee of the next round of the conference in 2018.

Negotiations with IFRI

Araqi pointed to his negotiations with the Institut français des relations internationals (IFRI), saying: “In this meeting, we discussed investment opportunities for French companies for presence in Iran’s gas industry.”

He said that the conference encouraged many major companies in the world to request meeting with Iranian delegates to negotiate cooperation with Iran.

Due to overloaded schedule and limited time, all meetings and negotiations were coordinated by the Iranian embassy in Paris, he said.

Araqi added that the meeting between Iranian delegates and IFRI was attended by French researchers, university professors and media.

“In this meeting, we discussed the strategy and capabilities of NIGC and opportunities for investment in the gas industry and answered their questions,” he said.

Iran Warmly Welcomed

IFRI directors said the presence of more than 100 delegates in Iran-IFRI meeting showed the extent Iran was welcomed.

Araqi said Iran and IFRI discussed using Iran’s potential for delivering gas to Europe, potentials for investment in Iran’s gas industry and methods of investment including build-operate-own (BOO), build-operate-transfer (BOT) and direct investment.

Direct Talks with 15 Firms

Araqi said NIGC delegates held talks with France’s lobby group MEDEF, adding: “On the sidelines of this meeting, we met with CEOs of 15 big French companies including Total, Technip, Schneider and Vinci Energy, and negotiated about their presence in Iran’s gas industry.”

“These companies voiced their readiness for presence, investment and participation in different projects in Iran’s gas industry,” he said.

Araqi said the meetings were all held at the NIGC booth at the exhibition.

The Mouvement des entreprises de France (MEDEF), or the "Movement of the Enterprises of France", is the largest employer federation in France. Established in 1998, it replaced the Conseil national du patronat Français (CNPF), or the "National Council of the French Employers", which was founded in 1946.

It has more than 750,000 member firms, 90 percent of them being small and medium enterprises (SMEs) with around 50 employees. MEDEF is engaged in lobbying at local, regional, national, and EU-wide levels.

Investment Opportunities

Araqi said NIGC delegates introduced opportunities for investment in Iran’s gas industry and potential investors asked questions about Iran’s projects.

He said that BOO, BOT and direct investment were outlined in the panel discussions, adding that Iran was warmly welcomed in the conference.

The next round of World Gas Conference and Exhibition will be held in the US in 2018.

Azerbaijan; Oil Dependence and Challenges Ahead

The Republic of Azerbaijan is among the first countries to have extracted oil and is among the first exporters of oil. After breaking away from the Union of Soviet Socialist Republics (USSR), Azerbaijan drew up extensive plans for investment in the energy sector.

In recent years, investors from the United States, China and Europe have been vying to increase their share of production and exploration of oil and gas in this country. The share of foreign investment made in the oil sector compared with other sectors, the share of this sector in gross domestic product (GDP), job creation and foreign trade are among indicators showing the oil sector’s role in the economy of this country.

At present, oil and gas constitute an important source of revenue for Azerbaijan. Given the significance of oil and gas and their revenues for the country’s economic, political and social affairs, we have reviewed the impacts of oil price fall on the Republic of Azerbaijan.

Holding nearly 8 billion barrels of oil reserves, the Republic of Azerbaijan is one of the richest breakaway republics of former Soviet Union. Due to its oil deposits, it has caught the attention of Western companies. Over recent years, giants like BP have invested in this country.

Due to these investments, Azerbaijan’s oil revenue has increased from $5.1 billion in 2006 to $8.5 billion in 2008. According to BP, production from Azeri-Chirag-Guneshli (ACG) fields averaged at 655,700 b/d over January-September 2014 period, up from 663,200 b/d on an annual basis. Azerbaijan’s oil output reached 656,000 b/d in the first half of 2014. Therefore, Azerbaijan’s oil exports reduced from 34.25 million tons in 2013 to 33.04 million tons in 2014. Moreover, oil and gas condensate production in Azerbaijan dropped from 43.1 million tons in 2013 to 41.9 million tons in 2014, down 2.8%.

At present, the main oil production sources in Azerbaijan are Shah Deniz and ACG fields. According to the State Oil Fund of the Republic of Azerbaijan (SOFAZ), this country earned $2.12 billion from 2007 to 2014 by operating Shah Deniz oil and gas field in the Azeri sector of the Caspian Sea. In 2014 alone, SOFAZ’s earnings from Shah Deniz reached $523 million. Shah Deniz is one of the largest gas condensate fields in the world. Discovered in 1999, it is estimated to contain around 1.2 tcm of gas.

The gas produced from this field is feeding Georgia, Turkey and European countries.

Moreover, according to SOFAZ, Azerbaijan’s revenue from ACG oil fields added up to $110.15 from 2001 to 2015. Developed since 1997, the ACG block produced $15.118 billion in revenue in 2014.

But a review of Azerbaijan’s oil exports shows that the country has experienced a downward trend.

Azerbaijan is currently exporting its oil through four routes. Examining each of these routes shows that the country has faced a decline in oil exports.

Baku-Novorossiysk Pipeline: Azerbaijan exports oil to Russia through this pipeline. Official data shows that Azerbaijan’s oil exports through this pipeline have declined from 1.75 million tons in 2013 to 1.02 million tons in 2014. Baku-Novorossiysk pipeline is a 1,330-kilometre (830 mi) long oil pipeline, which runs from the Sangachal Terminal near Baku to the Novorossiysk terminal at the Black Sea coast in Russia. The Azerbaijani section of the pipeline is operated by the State Oil Company of Azerbaijan Republic (SOCAR) and the Russian section is operated by Transneft.

Baku-Supsa Pipeline: Azerbaijan exports oil to Georgia through this pipeline. According to official data, Azerbaijan’s oil exports through this pipeline increased

from 4.028 million tons in 2013 to 4.232 million tons in 2014, which is not a significant growth. Baku-Supsa is an 833-kilometre (518 mi) long oil pipeline, which runs from the Sangachal Terminal near Baku to the Supsa terminal in Georgia. It transports oil from the Azeri-Chirag-Guneshli field. The pipeline is operated by BP.

Baku-Tbilisi-Ceyhan (BTC) Pipeline: This pipeline delivers oil from Azerbaijan to Turkey. Official figures indicate that Azerbaijan’s oil exports through this pipeline sharply fell from 27.5 million tons in 2013 to 8.26 million tons in 2014. BTC is a 1,768 kilometer (1,099 mi) long crude oil pipeline from the Azeri-Chirag-Guneshli oil field in the Caspian Sea to the Mediterranean Sea. It connects Baku, the capital of Azerbaijan and Ceyhan, a port on the south-eastern Mediterranean coast of Turkey, via Tbilisi, the capital of Georgia. It is the second-longest oil pipeline in the former Soviet Union, after the Druzhba pipeline.

Railroads: Azerbaijan exports oil through railroads via Georgia. Azerbaijan’s railroad oil exports fell from 991,992 tons in 2013 to 918,508 tons in 2014.

Heavy Blow to Economy

Oil and gas make up 95% of Azerbaijan’s exports and 75% of the country’s revenues. The country forecast the oil price at $100 a barrel in its 2014 budget. In its 2015 budget, the country sets oil price at $90 a barrel. The country is expected to earn $18.5 billion in oil income. Since oil price has been around $50 per barrel in recent months, Azerbaijan will have no option but to set oil price at $50 to $55 a barrel for next year. If projections come true and oil prices fall to $40 a barrel, Azerbaijan will see its revenues cut by half and its projected 4.4% economic growth will have to be reconsidered.

This fall in revenue comes against the backdrop of SOCAR’s announcement that would channel less money to state coffers next year due to the sharp decline in oil prices.

A review of the economic conditions of the Republic of Azerbaijan shows that the oil price fall is not the only economic challenge to this country because after the depreciation of Russia’s national currency, Azerbaijan has had to devaluate its own currency.

Therefore, in addition to the oil price fall that has cost Azerbaijan a big portion of its petrodollars, the country is facing national currency value challenge and failure to provide finance for energy projects.

Moreover, foreign investment in Azerbaijan’s energy sector has declined. For instance, Azerbaijan’s oil production from ACG fields, led by BP, has declined at a time foreign companies are reluctant to invest in this sector due to oil price fall.

BP and SOCAR have claimed in recent years that oil production from ACG oil fields have been stabilized, but ACG output seems to keep falling.

The persistence of these conditions means further cut in oil and gas production in the future. That could affect the economic and social policies of the government.

Undesired Consequences

Oil constitutes the biggest segment of the Republic of Azerbaijan’s economy and this country has in recent years seen high economic growth thanks to high oil prices. Like most petrostates, Azerbaijan has an unbalanced economic structure and it depends on crude oil exports for the bulk of its earnings. High oil and gas revenues in the past years have resulted in the formation of a rentier government in Azerbaijan. The Azeri government owns SOCAR and SOFAZ, thereby controlling earnings.

Under the present circumstances, crude oil price fall and its continuation could on one hand weaken the government and on the other empower opposition groups whom the government’s financial power has so far barred from presence in social and political arenas. That could give rise to unpredictable political, economic and social consequences for this country.

The Republic of Azerbaijan envisages developing its non-oil sector in a bid to wean the country off oil and gas revenues. To that effect, the Azeri government hopes to develop big industrial complexes in the future in an attempt to reduce the economy’s dependence on oil and gas revenues.

Moreover, the government intends to neutralize economic threats stemming from sharp oil price fall by levying heavy taxes on other sectors.

However, creation of a competitive economic system and reducing jobless rate will continue to remain the top priorities in Azerbaijan’s economic development agenda.

Azerbaijan will have to boost its agriculture, fight administrative corruption and streamline bureaucracy in a bid to experience sustainable economic development.

Niger Oil Field to Come Online in 2017

Spanning an area of 500 sq mi (1,295 sq km) in the Niger Delta block OML 130 is the Egina oil field, situated in a water depth of 5,085 ft (1,550 m).

The $15-billion project is under development with production slated to begin by the end of 2017. The fabrication portion of the project is scheduled for completion by the end of 2016 while integration work will start in January 2017. Total serves as the operator of the field with a 24% stake. Partners include CNOOC (45%), Petrobras (16%), and Sapetro (15%).

This project is the first major deepwater development in Nigeria since the Nigerian Content Act was signed into law in April 2010. According to Total, this meant that the requirements of the act were integrated into the project from the beginning and fully embedded in the scope of work of each of the contract packages.

"The Egina project takes technology and skill transfers to a new level," Total stated on its website, "giving Nigeria the full benefit of Total's deep offshore experience and expertise. At the end of 2017, the start-up of the Egina development will reinforce Nigeria's deepwater production potential."

Locally-worked hours will reach about 75% for Egina as part of a plan to boost local content of Nigerian projects, Total added. Development of this project is expected to employ 1,500 people at its peak construction period.

Total said: "All the basic engineering work was done locally - a first in Nigeria. Total successfully met this 'sustainability target' by ensuring teamwork between international companies and local contractors to accelerate the pace of technology transfer and the training of the local workforce."

CNOOC to Launch More Fields This Year

CNOOC has issued a review of its operations offshore China during the first half of 2015.

The company achieved a mid-sized light crude oil discovery, Liuhua 20-2, in the eastern South China Sea, likely to be developed with the nearby Liuhua 16-2 and Liuhua 23-1 oil and gas structures.

Another mid-size find was Penglai 20-2 in the Bohai region.

Five of the seven projects scheduled to come onstream in 2015 entered production, namely the Jinzhou 9-3 oil field comprehensive adjustment, Bozhong 28/34 oil fields comprehensive adjustment, Kenli 10-1 oil field, Dongfang 1-1 gas field Phase 1 adjustment, and Luda 10-1 oil field comprehensive adjustment.

The other two new projects are said to be making good progress.

In addition, CNOOC has changed its performance evaluation system to motivate its subsidiaries to implement more stringent cost control and optimized management mechanisms, and focused on reducing operational costs.

The company’s all-in cost during the period was $41.24/boe, down 4.5% year-on-year, while its operating cost was $9.60/bbl, down 18.5% on the first half of 2014.

CNOOC’s net oil and gas production totalled 240.1 MMboe, up 13.5%, mainly due to contributions from new projects in Bohai and the eastern South China Sea.

Ichthys Project Offshore Australia Delayed

Operator INPEX Corp. has delayed the expected production start-up schedule while raising the anticipated production  capacity of  its Ichthys LNG gas condensate field, located offshore Australia.

Production is now expected to start in Q3 2017 after the initial target was December 2016.

Meanwhile, INPEX will raise the annual LNG production capacity by approximately 6% to 8.9 mtpa from the initially planned 8.4 mtpa.

While the project’s overall development was approximately 74% complete as of June 2015, INPEX updated Ichthys' production start schedule based on the findings of a detailed review of the project’s development schedule. The company will continue to diligently proceed with development work while prioritizing safety.

It is expected that the revised production start-up schedule and other factors will increase the project’s investment. However, the increase is expected to be limited to about 10%.

INPEX anticipates that the annual LNG production capacity will increase by approximately 6% to 8.9 mtpa from the initially planned 8.4 mtpa. This increase in production capacity is based on the company’s recent technical evaluation of the latest technological information pertaining to the entire LNG production system. In addition, the updated schedule reflects the expectation of a shortened time frame between the start of production and the point where stable production is reached.

PEMEX, GE Sign MoU

GE and Mexico’s state-owned oil and gas company Petróleos Mexicanos (PEMEX) have signed a memorandum of understanding (MoU) to cooperate on technological and financial solutions for a range of oil and gas development activities.

GE and PEMEX have cooperated on a number of fronts over the past few years, including agreements on wellhead development and equipment, and a general collaboration agreement between GE, PEMEX, and the Mexican Institute of Petroleum signed in April 2014.

The signing took place at GE’s quarterly meeting of its corporate executive council in Crotonville, New York, and was attended by PEMEX CEO Emilio Lozoya Austin and GE’s Chairman and CEO Jeff Immelt.

As part of the ongoing reform in the Mexican oil and gas market, PEMEX has redesigned its business strategy with the purpose of finding partners that would strength its operational capabilities, share the risk of execution, and generate new businesses.

The MoU sets forth the framework for GE and PEMEX to work together on technological and financial solutions for gas compression, power generation and hydrocarbons production, onshore and offshore, including subsea and downstream.

Also, GE says it will explore opportunities for the local expansion of its manufacturing and engineering capabilities, and will foster the implementation of technologies based on the Industrial internet –the internet of things. Finally, both companies will share best practices on training and human resources.

Norway to Review New Gullfaks Proposals

The Norwegian Petroleum Directorate (NPD) has submitted its assessment of Statoil’s amended plan for development and operation (PDO) for the Gullfaks field in the North Sea to Norway’s Ministry of Petroleum and Energy.

This concerns production from the Shetland group and Lista formation, located above the main reservoir.

Test production from this formation has been operating for a few years. Statoil believes it can produce 20 MMbbl from Shetland/Lista, which was not included in the original development plan approved by Norway’s parliament (Storting) in 1981.

The new scheme involves investing NOK 1.8 billion ($217 million) in re-using existing wells on Gullfaks for producing this formation.

In the past, Shetland/Lista was not considered to be a reservoir, but subsequent operations have proven that recoverable oil is present.

The zones above the Gullfaks reservoir are under natural high pressure, which makes drilling wells on Gullfaks relatively complex. Moving to production from Shetland/Lista, NPD suggests, could make it easier to drill on Gullfaks in the future.

Statoil’s plan also calls for collection of large amounts of data that may provide a basis for subsequent phases of production from Shetland/Lista, possible via pressure support.

1-----Saudi Crude Stockpiles at Record High

Saudi Arabia’s crude stockpiles rose to a record in July after exports by the world’s biggest oil shipper declined for the third time in four months.

Commercial petroleum stockpiles increased to 320 million barrels, the highest since at least 2002, from 319.5 million barrels in June, according to data on the website of the Riyadh-based Joint Organisations Data Initiative. Crude exports slumped 1.2 percent to 7.28 million barrels a day after hitting a record 7.9 million barrels in March. Overseas shipments declined every month since then except in June.

Saudi Arabia cut back on oil production by 1.9 percent in July, the first drop since February, to 10.36 million barrels a day, according to the JODI data. Saudi Arabia told OPEC its June production of 10.564 million barrels daily was a record, exceeding a previous all-time high set in 1980.

 “It seems that the Saudis are determined to keep their market share at above 10.2 million barrels a day,” Essam al-Marzouq, Kuwait-based independent oil analyst and former vice president at Kuwait Petroleum International, said. “In the case when exports are down, they will not scale back on production and will store the crude at home or even abroad."

Saudi Arabia boosted diesel exports in July to 441,000 barrels a day from 308,000 barrels in June even as production declined to 941,000 barrels from 1.01 million barrels, JODI data show.

The nation wants to keep storage tanks full, partly to feed two new refineries, a person with direct knowledge of the matter said in July. Refineries processed 2.21 million barrels a day in July, up from 2.09 million barrels in June, according to JODI. Saudi Arabia has built storage tanks with new refineries at Yanbu and Jubail, and domestic capacity will increase after the new Jazan refinery starts in 2017, the person said.

2----Kuwait to Start Offshore Oil Exploration by 2017

Kuwait plans to start an offshore oil exploration program within two years, state news agency Kuna cited a Kuwait Oil Company (KOC) executive as saying, part of plans to boost oil output capacity.

In comments suggesting Kuwait will maintain energy investments despite plunging oil prices, KOC’s manager of planning, Bader Al Attar, was quoted as saying his country aimed to add a total of 700,000 barrels per day (bpd) of crude oil production capacity from offshore and onshore areas.

Al Attar did not identify the potential offshore locations.

Most of Kuwait’s production is from the onshore Burgan field, the world’s second largest, in the southeast of the country, though it also extracts reserves from an offshore Neutral Zone where it shares facilities with Saudi Arabia.

Al Attar also said Kuwait aims to boost production capacity to 3.5 million bpd by the end of 2015, including from the Neutral Zone, from around 3.15 million bpd now.

A Kuwaiti oil industry source told Reuters his country will raise oil output by between 250,000 and 270,000 bpd by the end of the year to make up for production lost from two shut oil fields.

Al Attar was quoted as saying by Kuna that his country still wanted to lift output capacity to 4 million bpd by 2020 and sustain this level to 2030.

7---Azeri SOCAR Revenue Halved

Azeri state energy company SOCAR said it would transfer less money to the state next year as its revenues had halved due lower oil price.

The former Soviet republic has had to devalue its currency following a sharp decline in the Russian rouble.

"The decline in the oil price has affected our financial condition. Our revenues fell two times," Rovnag Abdullayev, the company's president, said.

Abdullayev did not say to what level the company's revenue fell. Oil and gas account for 95 percent of Azeri exports and 75 percent of government revenues.

The SOCAR president also suggested that next year's state budget should be calculated based on an estimated oil price of $50-$55 per barrel, down from $90 this year.

The 2015 budget anticipates revenues of 19.4 billion manats ($18.5 billion) based on an estimated oil price of $90 per barrel, down from $100 last year. Brent crude is now trading around $50.

SOCAR's Vice-President Suleiman Gasymov told Reuters in February that an average oil price of $60 per barrel would reduce the company's revenues by $510 million this year. In March, SOCAR placed $750 million worth of Eurobonds.

According to SOCAR officials and independent analysts, the production cost of oil for SOCAR is estimated at $15 per barrel, while the oil production cost for BP, which operates some big energy projects in Azerbaijan, is $12 per barrel.

8---Algeria H1 Oil, Gas Export Volumes Down 4.6%

Algeria's energy export volumes dropped 4.59 percent in the first half of 2015 from a year earlier, prompting a 43.1 percent decline in earnings, the central bank said.

It said in a report that a state fund used to hold surplus oil revenue to cover deficits - Fonds de Regulation des Recettes, or FRR - has experienced a 33.3 percent drop in its resources over the past 12 months.

An OPEC member and a major gas supplier to Europe, Algeria relies on energy for 60 percent of its state budget, and oil and gas exports account for 95 percent of total sales abroad.

Earnings from energy exports reached $18.10 billion in the first six months of 2015, down from $31.97 billion in the first half of 2014, the report said.

It gave no details on export volumes.

The North African country posted a trade deficit of $8.041 billion for the first seven months of 2015, reversing a $3.9 billion surplus a year earlier, due to the sharp fall in energy earnings after the global market crude prices slump.

The government has said it expects energy export earnings will fall 50 percent to $34 billion this year, well below its import bill, estimated at $57.3 billion.

10---China Oil Refining Climbs

China’s crude processing rose as strong gasoline demand encouraged higher refinery output and amid a boost in the country’s oil product exports.

Refiners processed 44.34 million metric tons of crude in August, up 6.5 percent from the same month last year, data from the Beijing-based National Bureau of Statistics showed. That’s about 10.48 million barrels a day, 1.8 percent higher than July and the most since June’s record 10.59 million barrels a day.

China’s apparent gasoline consumption was near a record high in July at 2.73 million barrels a day, up 17 percent from a year earlier, government data compiled by Bloomberg showed. Robust demand of the motor fuel has been supporting Chinese and broader Asian refining margins, Energy Aspects, a researcher, said in report this month.

"As more cars hit the road during summer, refineries enjoyed decent gasoline-refining margins, encouraging them to raise runs," Gao Jian, an analyst with SCI International, a Shandong-based energy consultant, said by phone before the data were released.

The increase in refining runs in August also coincided with a jump in China’s net-exports of oil products to the highest since October, signaling weakening domestic demand for other fuels such as diesel. The country’s industrial output rose 6.1 percent last month from a year earlier, the NBS said, below the 6.5 percent median estimate of economists surveyed by Bloomberg.

Global Shale Output Decline to Stabilize Market

Russia's energy minister expects that cuts in global shale oil production, which has been hard hit by lower oil prices, will help stabilize the fragile oil market.

Alexander Novak also reaffirmed that Russia, one of the world's top oil producers, would not cut its own production as it would lead only to a short-term recovery with risks of subsequent slumps in prices.

The Organization of the Petroleum Exporting Countries, which accounts for around a third of global oil output, changed its policy in 2014 to defend market share and discourage competing supply sources, rather than cut its own output in the face of lower prices.

"Shale oil has been leaving the market bit by bit. This is a good and positive signal, which allows one to say that the market will stabilize in mid-term," Novak told Rossiya-24 TV in an interview.

After three years, in which US production grew on average by more than 1 million barrels per day (bpd) annually, US output is expected to expand by just 650,000 bpd on average in 2015 and then shrink by 400,000 bpd in 2016, according to the US Energy Information Administration.

----Aramco Names New Boss

The world's biggest oil firm Saudi Aramco has picked a career petroleum engineer who oversaw its biggest projects of the past decade, Amin Nasser, to lead it through a price downturn and a market share battle.

The announcement from the Saudi Arabian state company ends five months of uncertainty about the new boss at the oil monopoly. Nasser is known for pushing for cutting edge technology and once said he sought to emulate the gas fracking revolution in the United States.

"Amin is a team player and a visionary. With his appointment the company is in a better position to refocus on upstream objectives," said Sadad al Husseini, a former top executive at Saudi Aramco.

Nasser has been acting chief executive at Aramco since April, when his predecessor Khalid al-Falih was appointed Aramco's chairman and also health minister.

The post of chairman had previously been held by Oil Minister Ali al-Naimi, himself a former chief executive of the company. Naimi remains in the ministerial position he has occupied for 20 years.

The April changes followed a shakeup of leadership by King Salman who made young deputy Crown Prince Mohammed bin Salman the most powerful figure in economic and energy policy, while abolishing the old Supreme Petroleum Council, where energy policy had been historically made.

The deputy crown price is now the head of both an economic development supercommittee and a new council overseeing Aramco, making him the first royal ever to directly supervise the state giant.

Attempting to read Saudi oil policy has become a favourite game of oil market watchers since the kingdom made a strategic U-turn last year, persuading OPEC to open the pumps to fight for a market share with rival producers instead of cutting output to support flagging prices.

Most Saudi watchers still anticipate Falih would take over as oil minister when, and if, Naimi retires. Deputy Oil Minister Prince Abdulaziz, is seen as the second most likely candidate for the ministerial job

.---US Shale Oil Output to Fall for 6th Straight Month

Total US shale oil production for October is forecast to decline by 80,000 barrels per day to 5.21 million bpd, compared with 5.29 million bpd in September, according to data released by the US Energy Information Administration.

The drop in October - the first in five months not to be bigger than the previous month's - was slightly less than the 80,200 bpd decline in September, data shows.

Production in the Eagle Ford is expected to fall for a seventh consecutive month, by 62,000 bpd to 1.42 million bpd, according to the EIA's monthly drilling productivity report.

Oil production from the Bakken region of North Dakota is expected to fall 21,000 bpd to 1.18 million bpd in October. It is the fourth month consecutive declines.

In the Permian Basin of West Texas and New Mexico, production is forecast to rise 23,000 bpd to 2.02 million bpd, the ninth consecutive month of increases.

The lower total shale production comes as rigs become more efficient. New well oil production per rig was set to rise by 2 bpd to 694 bpd in the Bakken, up by 5 bpd to 370 bpd in the Permian and up by 3 bpd to 795 bpd in the Eagle Ford.

Natural gas production in the major shale plays was expected to fall 208 million cubic feet per day (mmcfd) to 44.8 billion cubic feet per day (bcfd) in October from September.

EIA forecast a production decline of 117 mmcfd from the Eagle Ford, a 82 mmcfd reduction in the Marcellus in Pennsylvania and West Virginia and a 50 mmcfd decline in the Niobrara in Colorado and Wyoming.

---Iraq Warns Foreign Oil Firms of Cut in Funds

Iraq has told foreign companies developing the country's southern oilfields that they may need to slash development spending next year because it has less money to pay them due to a slump in crude prices.

In a letter dated Sept. 6 sent to international oil companies and seen by Reuters, the oil ministry said "because of the drop in our oil sales revenues, the Iraqi government has sharply reduced the funds available to the Ministry of Oil."

"This will result in corresponding reductions of spending within the Ministry of Oil but will also reduce the funds available for the reimbursement of petroleum costs to our contractors," the letter said.

The slump in crude oil prices to around $46 a barrel from $115 in June last year has hit the government revenues of OPEC's second biggest exporter, just as it faces an economic crisis triggered by surging expenditure to fund a military offensive against Islamic State militants.

International firms such as BP, Royal Dutch Shell , ExxonMobil, Eni and Lukoil operate in Iraq's southern oilfields under service contracts, whereby they are paid a fixed dollar fee for production.

The arrangement has put Baghdad's coffers under immense strain, as a dramatic drop in crude prices since last year has hammered the revenue it receives from selling oil.

The oil ministry asked the companies to submit 2016 work programs and budgets by end of this month "which should reflect the much lower costs for steel, services and equipment that are prevailing in the current market."

"We do not expect this constraint to reduce production from the levels that were stipulated in 2015 work programs and budgets," the letter added.

Volatile’ Oil Price Hard to Predict

Royal Dutch Shell chief executive Ben van Beurden has told the BBC a recovery in the price of oil is hard to foresee.

"It is a very, very volatile business in terms of supply and demand. The oil price responds to very small mismatches between supply and demand," he told BBC Radio 4's Today program.

The price of oil has roughly halved in the past year, to around $50 (£32) per barrel.

Goldman Sachs predicted earlier this month it could fall as low as $20.

When asked where oil prices may go next, he told the BBC: "The honest answer to that is I don't know."

As it moves, gingerly, through the first stages of exploration 70 miles off the Alaskan coast, Royal Dutch Shell has revealed its commitment to drilling in the Arctic.

And how long it will be before any oil or gas actually comes out of the ground - if at all.

Despite environmental concerns and the low oil price, Ben van Beurden, Shell's chief executive, told me that as the world's energy demands increased, the hunt for new resources was as important as ever.

The Arctic, he points out, has long been a source of oil and gas production. Environmental safety would be the priority, he insisted.

Shell said in June it was cutting 6,500 jobs as part of cost-cutting plans following the oil price slump.

When asked how renewable energy could affect his business, Mr van Beurden said solar power could emerge as a much bigger contributor to world energy needs.

"I have no hesitation to predict that in years to come solar will be the dominant backbone of our energy system, certainly of the electricity system."

However, during that period, the demand for energy will double, he said, leading to a "multi-decade transition," from fossil fuels being the dominant supply for energy, he says.

He also said his reaction to any exit from the EU by the UK would be "one of disappointment" as the firm has a heritage in Britain.

 Global oil and Asian product market, September

The second era for oil drop occurs in 2015

Price of oil started to fall since June 2015 and hit a six-year low in August. Oil markets set an initial 60% price drop a year ago in 2014. The second era for oil drop began in June 2015 and caused prices to fall around 30% on average. In early September, prices started to rise slightly in US and Europe. It seems that oil market players are adjusting to a world of lower prices. On demand side, global oil demand in 2015 is expected to grow. According to the latest IEA report in September, global oil demand growth is expected to climb to a five-year high of 1.7 mb/d in 2015 thanks to lower oil prices and a strengthening macroeconomic backdrop. On supply side, it is expected to have cut in non-OPEC supply and US shale oil output growth.

In Asia, Dubai crude benchmark decreased slightly in September. Low crude prices had only limited impact on OPEC crude supplies. This may  have caused Dubai prices to fall in contrast with WTI and Brent. According to the latest OPEC Monthly Oil Market Report, “total OPEC crude oil production averaged 31.54 mb/d in August while it was 31.53 mb/d in July. Crude oil output increased mostly from Nigeria, Saudi Arabia and Kuwait while production in Iraq and Angola showed the largest drop.”

Asian Product Markets

Singapore products Inventory Data showed that stocks for all products increased in September compared to August. Buyers appeared to react to lower prices and led  to active products market. Market players were interested in increasing their stocks. Singapore light distillates inventories - Gasoline, Reformate and Naphtha- rose by around 250,000 barrels in September, while middle distillates stocks increased 500,000. Middle distillates include Kerosene and Gasoil. The most stock build up was in fuel oil inventories. Fuel oil Singapore inventories rose 4,000,000 barrels at the end of September compared to end of August.

All products cracks – products prices versus Dubai prices- rose during September confirming strong products market.

Products market fundamentals in brief

September 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)

Pick up in regional imports at the end of summer driving season improved Asian gasoline market. Indian demand for transportation fuel supported the market more. Looking ahead, demand outlook is bearish by the end of summer. However, gasoline supplies would be limited due to upcoming maintenance in Saudi’s Jubail, Ras Tanura and Petrorabigh refineries.

Asian naphtha market moved upward for the second consecutive months. Healthy demand on the back of strong petchem margins and high run rates in crackers developed Asian naphtha market. Moreover, Western arbitrage volumes from Europe into Asia fell by 11% compared to the first eight months of the year in both September and October. The outlook for naphtha demand is bullish. Seasonally it is expected to have stronger naphtha demand due to higher LPG  prices in cold weather and also higher petchem demand ahead of new year. Lower supplies on the back of planned maintenance in the region is likely to support the market more.    

Middle Distillates (gasoil, jet fuel)

Asian gasoil market significantly improved over September (graph 3). Flow of gasoil from Asia into Europe was active during  the discussed month.  However, going to the end of summer will bring lower seasonal electricity requirements in the region and wane gasoil demand.

According to EIA, jet fuel and Kerosene market gained some supports from arbitrage opportunities to the US, where imports from Asia roughly doubled y-o-y in H1 . On the other hand, pre-winter kerosene stockpiling in Japan and Korea was developing the market. This situation is likely to continue for the upcoming months since these two countries are used to consume kerosene for heating purposes during cold weather.

Fuel Oil

Fuel oil 380 cst and 180 cst cracks in Asia rose in September after three month of fall. Fewer amount of arbitrage volumes from Europe and also less exports from Middle East improved Asian fuel oil market in both grades. On the demand side, bunker fuel demand in Singapore reportedly reached new heights over August and supported the market. Looking ahead, lower power generation requirements are expected to happen in post summer period. Moreover, there was a drop in Iranian domestic consumption due to higher natural gas availability from South Pars. Despite the expected weaker fuel oil demand, fuel oil supply in the region is bearish due to the upcoming planned maintenance in Saudi’s refineries.

RIPI, Foreign Companies to Cooperate on EOR

During the second international seminar on technological opportunities for Iran’s oil and gas industry, 16 important technologies pertaining to enhanced oil recovery (EOR) were discussed.

At present, the priority of Iranian petroleum ministry is the upstream sector. The Research Institute of Petroleum Industry (RIPI) currently operates five satellite knowledge-based companies.

Amir-Abbas Hosseini, deputy head of RIPI for technology and international affairs, says in an interview with Iran Petroleum that in future oil contracts, RIPI should serve as the research wing of Ministry of Petroleum for the development of modern technologies.

What comes below is the full text of Hosseini’s interview with Iran Petroleum.

Q: The second international conference on technological opportunities for oil and gas industry was recently held. Would you please explain further about its agenda and objectives?

A: The second seminar is in continuation of the path set at the beginning. In the first seminar, opportunities for cooperation between RIPI and foreign partners were introduced within the framework of 40 proposals. The political conditions have since changed. I believe that in the issue of energy diplomacy, regardless of energy trade talks, the vital issue for the countries with oil reserves is access to technologies related to the energy sector. The countries with oil reservoirs are not necessarily considered as owners of these reservoirs. The real proprietors of these oil reservoirs are owners of cutting-edge technologies. Therefore, the second conference is to focus on developing cooperation for acquiring technologies needed in Iran’s petroleum industry.

The upstream oil sector is among the most important sectors in the petroleum industry, which is affected by technology. Since the Iranian petroleum ministry’s priority is upstream sector, the second seminar will focus on upstream projects.

In the second seminar, our focus will be on EOR from Iranian oil fields, particularly joint fields, and EOR-related technologies. At present, given the conditions and life cycle of Iranian oil reservoirs and the necessity for enhanced recovery, optimal use of reservoirs and enhanced recovery requires state-of-the-art technologies. It is noteworthy that one percent enhancement in recovery will significantly raise oil production rate.

Q: Would you please tell us about foreign participants in this international conference?

A: There were two groups of participants in the second international conference on technological opportunities of oil and gas industry. One group comprised companies and research institutes developing technology. It included top European companies working under the DUII consortium. This consortium was led by the Dutch DELFT University that would be present along with RIPI in order to introduce state-of-the-art technologies currently applied to oil fields similar to those existing in Iran. The second group includes international oil companies that not only develop technologies but also operate in the development of fields and relevant operations. Among these companies, Austria’s OMV along with companies from Britain and Norway as partners to RIPI in the development of Iranian oil fields with focus on enhancing recovery participated in the second conference. During the second international seminar on technological opportunities for Iran’s oil and gas industry, 16 important technologies pertaining to enhanced oil recovery (EOR) were discussed that could help resolve strategic problems of Iran’s upstream oil sector.

Q: Let’s speak about the RIPI activities. What projects are currently under way by the RIPI in both upstream and downstream sectors?

A: In the upstream sector, the RIPI's focus is on oil fields particularly fields in Ahvaz. We have reached agreement on four requested fields by National Iranian South Oil Company. RIPI has successfully carried out two projects regarding additives and chemicals over the past three months to prevent wastes, and maintain well production. These products have been commercialized and will be used in October.

On the issue of gas-to-liquids (GTL), a contract has been signed with NISOC for the development of slurry GTL refinery. We hope that this project will start soon. This project entails a 1,000 b/d pilot in NISOC for producing fuel from LNG 600. This generation of GTL refinery is more advanced.

The GTL contract has been signed with the private sector. That is to say that GTL has been commercialized and we hope that the construction of refinery will start up by the end of the current calendar year. The task upon the refinery in the GTL project for the private sector is to design and issue licenses for units. It has already been done and relevant documents are being submitted.

In the downstream sector, the RIPI has managed to produce a type of grease which has replaced US-made greases used in oil platforms. This grease has been tested on the tap of one of Iranian oil platforms. The feedback was good and the RIPI now intends to commercialize this product.

Q: Chief among the priorities of Iranian petroleum ministry has been enhanced recovery from reservoirs. What are your achievements to that effect?

A: On the issue of enhanced recovery, substances and additives related to three oil wells run by NISOC and Iranian Central Oil Fields Company (ICOFC) were successfully tested to be commercialized. Regarding development of fields, the RIPI is drawing up a proposal in collaboration with its foreign partners. That is a long-term job.

Q: Establishment of knowledge-based companies has been on the RIPI agenda. Would you please shed more light on that?

A: At present, the chain of knowledge-based companies of this institute is completed. At present, five satellite knowledge-based companies of RIPI include one company in catalyst sector, one company in engineering affairs, one company in nano sector, one company in GTL and gas conversions and one company in the upstream oil sector. Some of these companies have been registered and are active and some others are in the final phase of their registration.

Q: In the light of Iran’s nuclear agreement with six world powers and the expected removal of sanctions in the near future, what are RIPI’s plans for further cooperation with foreign companies?

A: In the new atmosphere, the RIPI plans to cooperate with foreign partners equipped with state-of-the-art technology in the upstream sector, development of EOR-related technologies and boosting the capacity of its affiliated knowledge-based companies. Also in the downstream sector, the RIPI’s strategies have been reconsidered and these new strategies are based on the country’s new environmental and political conditions. In the new strategies of the downstream sector, in addition to development of technology, the issue of attracting knowledge and indigenizing technology has been focused upon. In the light of the new political atmosphere, the RIPI’s role should be highlighted for the presence of foreign companies and in the oil contracts, particularly those related to technology, it should be directly involved.

Q: During recent months, foreign delegates and energy ministers of European companies travelled to Iran. Did the RIPI hold any talks with these delegations?

A: We had no talks with energy ministers, but we held negotiations with research centers and companies within the framework of the policies of Iranian petroleum ministry. These talks were mainly focused upon technology and joint cooperation for the development of technology because we need cooperation with foreign partners to achieve some of these technologies.

Q: How is the RIPI’s cooperation with universities?

A: As you know, research without the presence and help of universities is meaningless. Therefore, a network of 22 Iranian universities including University of Tehran, Sharif University of Technology, Amir Kabir University of Technology and Petroleum University of Technology are currently cooperation with the RIPI, mostly on the primary development of technologies.

Q: Persian Gulf Pearl and Green Siri Island are among the most important projects of RIPI. Can you tell us about their latest developments?

A: Persian Gulf Pearl, as the biggest research project in Iran, is close to its end now and is in the process of revision of final reports and we hope that this project will be concluded by the end of the year. So far, the results achieved from this project are acceptable and very valuable. Meanwhile, the proposal for the second phase of Persian Gulf Pearl has been drawn up at RIPI and NISOC and handed to National Iranian Oil Company for approval. Therefore, the second phase of this project will start with focus on onshore sector.

The Green Siri Island project, whose objective is to remove oil pollutants from Kharg and Siri islands, has been concluded by RIPI and new sections of the project have started.

Another big project about modeling of pollution in Assaluyeh has been carried out by advanced software of RIPI to determine pollutants, sources, causes and their displacements. This software can help identify pollutants for better managemen

Upstream Technology Development at RIPI

Development of technologies required by Iran’s upstream oil sector is among the main programs followed up on by the Research Institute of Petroleum Industry (RIPI). Valuable activities have already been carried out or under way in this sector by specialists in this knowledge-based center of the country.

Mohammad-Reza Kamali, president of the upstream faculty of RIPI, has said that the RIPI has set up a Research Center on Reservoir Study and Field Development in recent years and been ahead of other research centers in conducting research-oriented studies for the development of Ahvaz and Yadavaran fields.

He said that RIPI has so far conducted reservoir studies in 20 major oil fields in the country.

Kamali referred to the 3D modeling of hydrocarbon systems in the Persian Gulf and the Sea of Oman, known as Pearl Project, saying: “This project is under way on an area of 183,000 square kilometers and depth of 9 to 19 kilometers with 99 geology structures and 890 wells in one of the most complicated geological zones in the world, with most joint fields.”

He added that the project, which is 80% complete, has been under way in collaboration with four international companies for exploration objectives and transfer of technical knowhow.

Kamali said the objective is to develop a 3D model for Persian Gulf and Sea of Oman hydrocarbon systems by benefiting from the most sophisticated techniques and existing software.

Referring to geophysical studies of gas hydrate resources in the Sea of Oman on the scale of case study, he said that this project was concluded last October after four years.

“Seismic structural modeling of sediments under seabed, thermodynamic studies of conditions of the presence of gas hydrates for the first time in Iran, comprehensive conceptual seismic studies on determining optimal seismic parameters in quantitative study of resources as well as spudding appraisal wells and geological studies on surface cores and outcrops are among the objectives and achievements of this project,” he added.

Kamali referred to integrated studies on reservoir horizons in Abadan Plain by RIPI, saying: “Oil traps in Abadan Plain are not merely structural, but they are stratigraphic and combination ones. This issue has increased reservoir complications and increased exploration and production risks in the region.”

“One of RIPI’s objectives with regard to this project is to identify stratigraphic oil traps as new exploration objectives in Abadan Plain,” he said.

Kamali highlighted the successful conclusion of stratigraphy, structural geology and geochemistry studies in Koppeh Dagh region aimed at identifying source rocks and determining the potential and quality of shale formations, saying: “This study showed that Mobarak, Shemshak and Chamanbid formations are generator of gas in this region.”

He said other projects successfully conducted by RIPI include development of technical knowhow, development of drag-reducing and lubricant nano-additives in drilling operations, studying nano-technology in drilling liquids, light weight and ultra-light weight slurry design by nanotechnology, development of knowledge, designing and formulation of drilling liquid with elastic properties, lab research on enhanced recovery, production, drilling, formation damage as well as rock and fluid properties of Yadavaran field.

Kamali said the objective behind the development of technical savvy for examining the performance of friction-reducing and lubricating nano-additives in drilling operations springs is to study the impacts of drilling liquid containing nano-scale additives on formations under drilling particularly water-sensitive shale in order to identify and assess different mechanisms of formation damage.

Referring to the light-weight and ultra-light weight slurry project with nano-technology, he said: “Cementing fragile formations and low-pressure reservoirs, preventing damage to hydrocarbon reservoirs and boosting output are among the most important objectives of this project.”

Kamali said cementing 17 wells in Maroun field in collaboration with National Iranian South Oil Company and cementing of liners in two wells of Homa field in collaboration with Iranian Central Oil Fields Company are among achievements of this project.

Referring to the main projects under way by RIPI in enhanced recovery, he highlighted the selection of the best method of enhanced recovery from Ab Teimour field, injection of hydrocarbon and non-hydrocarbon fluids and water to enhance recovery rate, presenting pilot for Yadavaran field, gas injection for enhanced recovery from Cheshmeh Khosh and Darkhoein fields, injection of chemicals for enhanced recovery in water injection processes in terms of efficacy, compatibility and matrix permeation in the formations of Yadavaran field.

According to Kamali, optimization of acidizing systems to boost recovery from fields, designing and optimizing acidizing fluids, lab-scale studies and modeling of wax and asphaltene sediments in Danan, Dehloran and Yadavaran fields are among outstanding production-related projects at RIPI.

Iran, Europe Eye EOR Cooperation

Iran and six world powers struck a historic nuclear deal in July. Since then, many European countries have shown interest for presence in Iran and particularly its petroleum industry. Benefitting from its past experience of the presence of international companies on its soil, Iran has changed its policies and prefers to achieve long-term economic and scientific benefits in addition to short-term economic benefits. To that effect, Minister of Petroleum Bijan Zangeneh has ordered that any foreign company’s presence in Iran requires partnership with an Iranian entity and transfer of experience.

According to a contract signed between National Iranian Oil Company (NIOC) and nine Iranian universities and scientific centers for technological studies on 9 oil fields, enhanced recovery is planned to be done with the cooperation of foreign companies.

Iran’s Research Institute of Petroleum Industry (RIPI) is one of these scientific centers. It is responsible for enhanced recovery from Ahvaz and Yadavaran oil fields. RIPI has started planning for enhanced recovery from these fields in collaboration with foreign companies and universities.

For the second year in a row, RIPI hosted an international conference themed “2nd International Conference on Technological Opportunities (ICTO) in Oil and Gas Industry: EOR/IOR Technologies and Related Equipment” on September 30. The conference outlined recovery from giant Ahvaz and Yadavaran fields.

Deputy Minister of Petroleum for Research and Technology Mohammad-Reza Moqaddam, the highest ranking government official attending the conference, said attraction of entrepreneurs, development and promotion of technology, systemizing technology, financing technology and effectiveness of technology are among requirements of technological innovation system, which should be taken into consideration in Iran’s petroleum industry.

“Increased costs and delayed projects reduce the economic value of projects in our country. That is the case while in the world, the economic value of projects is multiplied after job is done,” he said.

Moqaddam underlined the significance of revising the techno-executive system of the petroleum industry and switch for upstream, noting that the current techno-executive system is centered merely on downstream activities which could not be helpful by themselves.

He said activities related to the petroleum industry research and technology need to be oriented while immature ideas should be avoided.

“The volume of our spending on research is significant, but we should see how many of these projects have ended in the development of technology, how many managed to attract investor and entrepreneur and how many of them managed ot win the trust of market policymakers,” said Moqaddam. “The fact is that R&D and engineering are not separate and their integrated functioning could end in higher efficiency as well as development of technology.”

Moqaddam also underscored the need for an analysis of existing projects and the pathology of lost opportunities, saying: “With the promulgation of the new directive of Iranian Ministry of Petroleum, the necessary legal possibilities have been provided for realizing the knowledge-based objectives of the petroleum industry. Given the fact that the making the country’s economy knowledge-based depends on making the oil and gas industry knowledge-based, this potential could to a large extent prove to be effective.”

He expressed hope that post-sanctions period would provide a good opportunity for the transfer of technology and benefitting from the market strategy.

$8b Market

Hamid-Reza Katouzian, head of RIPI, referred to the market projections for post-sanctions period following the expected implementation of Iran’s nuclear deal with the global powers, saying: “A market with $8 billion in profits is awaiting international companies and potential investors.”

“The holding of this conference and the foreign companies’ interest in cooperation [with Iran] are advantages of positive changes in global atmosphere for the development of international cooperation with Iran in the light of the approval of the Joint Comprehensive Plan of Action (JCPOA),” he said. JCPOA is the official name of Iran’s nuclear agreement with six world powers – the US, Britain, France, Germany, Russia and China.

Noting that R&D institutes could not rely merely on their own achievements and that sharing experiences would be the best approach for efficient use of technology, Katouzian said: “Analysts

believe that this important agreement will change relations between Iran and the world and will provide Iran with a unique opportunity for boosting its economy.”

“Over the past two years, plenty of changes and actions have been undertaken for realizing the objectives set by Iran’s President [Hassan Rouhani] for economic development in the long-term. In line with the objectives of 2025 Vision Plan, many activities have to be done for the country to achieve the top scientific, industrial and technological standing in the [Middle East] region and to that effect the RIPI is instrumental in meeting the technological requirements of Iran’s petroleum industry,” said Katouzian.

He enumerated three priorities highlighted by Minister Zangeneh for the RIPI activities.

Katouzian said the first priority is attention to the upstream sector. He added that the second priority is to focus on energy consumption intensity in the country and the third one is to supply technical knowhow to the downstream sector.

“Since the most important priority of Iran’s petroleum industry is to enhance recovery from major fields, our planning is all centered on this sector,” he said.

Katouzian said an agreement was signed early this year between RIPI and National Iranian South Oil Company (NISOC) to conduct EOR/IOR studies on Ahvaz and Yadavaran oil fields. EOR stands for enhanced oil recovery and IOR for improved oil recovery.         

He said RIPI has prepared the ground for the commercialization of technologies in the petroleum industry through such activities as establishing knowledge-based companies and communications with domestic industries and the private sector. He added that directing research projects at industrialization and commercialization is a must.

Katouzian said Iran’s petroleum industry has not yet carried out any extensive and deep activity in EOR/IOR field, adding: “In the past oil fields were in the first half of their life cycle and recovery from the fields was done naturally, but now we need EOR/IOR technologies for more recovery from the fields. Therefore, we are concentrating our minds on enhanced recovery from the reservoirs.”

EOR/IOR

Iranian Central Oil Fields Company (ICOFC) is among companies cooperating with universities in EOR/IOR activities. Salb-Ali Karimi, CEO of ICOFC, said: “At present, the recovery rate from oil reservoirs in the country is 24%. By applying modern technologies, the recovery rate could be raised to 50%.”

He said that new technologies could help double recovery from oil reservoirs, adding: “We have to make plans for access to EOR/IRO technologies of the day in the post-sanctions period.”

“Energy is very effective on the life of people and the environment in the world and everyone in the world is accountable to energy and success in the energy sector is not possible without using modern technologies,” said Karimi.

He said that ICOFC covers around 70% of Iran’s territory, adding: “This company is one of the major producers of gas in Iran and therefore it needs innovation and acquisition of modern technologies. Gone is the era of easy access to and recovery of oil and gas. Boosting production requires innovation and modern technologies.”

Karimi stressed the need for benefiting from R&D centers in the country, saying: “Innovation and [development of] new technologies in knowledge-based companies becomes the axis of transforming assets to value-added I the companies. Meantime, new technologies can maximize incomes. At the same time, by hiring specialists and developing necessary software, we can earn the country maximum income by spending minimum costs and preventing energy loss.”

Karimi said technology brings together producer and consumer. He added: “At present, producers are consumers of technology and there is no balance in-between.”

He said that international sanctions have kept Iran from benefiting cutting-edge technology in recent years. “Now, by benefiting from post-sanctions opportunity, we can narrow the gap.”

Karimi highlighted cooperation with R&D centers and universities. He said the 2nd International Conference on Technological Opportunities (ICTO) in Oil and Gas Industry provides a chance for the transfer of technology into Iranian companies. He said that knowledge-based companies can turn out to be very effective in this regard.

Karimi said in the new world, a country with a diverse mix of energy resources could claim to be powerful because that could help the country be highly flexible in the face of traumas and risks.

Regarding the cost-effectiveness of EOR and IOR methods, Karimi said: “Experience shows that using these methods has always been cost-effective, but any decision to that effect needs review and taking into consideration different indices and the costs and benefits of the projects.”

He said benefits from every single dollar of investment in a project have to be analyzed. Karimi also said that capital is not the only determining factor in project. He said that some social and economic factors are also involved.

“Iran has complex reservoirs. Specifically, many layers in West Karoun are still unknown and since most of our fields are in the second half of their life cycle, it is necessary to find out the best EOR/IRO method in order to make a final decision,” he said.

“It is necessary to benefit from the experiences and technologies of leading international companies in different sectors particularly in reservoir management in order to maximize oil recovery,” said Karimi.

OMV-RIPI Cooperation

Austrian OMV’s Stephan Hanke, who is an RIPI working partner in enhanced recovery from Ahvaz and Yadavaran oil fields, referred to using new methods of polymer, steam and water injection for enhanced recovery and said that polymer injection is among costly and time-consuming methods. He added that application of polymer injection methods must be curbed.

Hanke said OMV is making efforts to cut polymer injection by up to 10% by 2020 in order to save costs.

He noted that new EOR/IOR methods are time-consuming and their implementation requires studies and time.

He said EOR/IOR methods and integration of technologies are important, adding that R&D activities must be underscored.

Hanke said planning to use this technology and similar technologies should be taken into account from the very first stages of field development in order to bring about the envisaged economic benefits.

He described EOR as a long-term commerce, saying that this method has the potential to be used in Iran and all across the globe. He said EOR could be used in Iranian oil fields.

Hanke said EOR methods are further used in sand reservoirs, adding that most Iranian oil reservoirs have these specifications to undergo EOR method.

He said that in the US, chemical methods are applied for EOR/IOR, which could be used in Iran’s oil fields.

Hanke said OMV is experienced enough in EOR/IOR and added that OMV and Iran can cooperate effectively.

He said OMV can be specifically of help in enhancing recovery from oil fields that are in the second half of their life cycle now.

Hanke also said that OMV is experienced in environmental risks and erosion, saying it can supply equipment to function for a longer period of time.

Senergy Interested in Iran

James McCallum, CEO of UK’s Senergy

, said the long-awaited lifting of sanctions on Iran would provide a good chance for cooperation with Iran.

He said that Senergy is interested in cooperating with RIPI.

McCallum said Senergy is ready to share its experience with RIPI on EOR/IOR methods.

Also, a representative of Senergy said the company has been active in Iran despite the western sanctions and is in the process of signing new contracts.

“We are in the process of signing agreements. The current sanctions regime does not stop us from signing agreements and does not stop us from signing contracts,” said Iain Morrison, VP Technical of Senergy.

He expressed much satisfaction for the bright prospects in Iran after removal of sanctions, saying, ”We have been in Iran for many years; we have many friends in Iran and many projects. We have carried out in Iran. I am in the country for Iranian Oil Company overseas. So we are delighted to be here.”

Morrison said he is a regular visitor of Iran and had a recent meeting with the vice president of RIPI. The meeting was focused, he said, on the main topics to be discussed at the ICTO.

He said the company participated in the ICTO to present the lectures and the company’s latest achievements in development and application of technologies for EOR.

“There has been a lot of really good discussion in the conference which were not only about technology but the importance of the right thinking and the application of the technologies to increase recovery factors in fields here from25% to 40%,” he said.

The international best practice now is around 50% so there is a huge opportunity, he added. “I think looking at very small steps to start a bridge to achieve these practices is really what we are focused on.”

“In Iran we are trying to do everything we can to position ourselves for the post-sanctions environment. It is a matter of time scale. We would very much like some certainty from our political leaders. Clearly there is progress and there is a real sense of optimism here which is fantastic. And this is what I would like to see. I really look forward to it," he added.

New EOR/IOR Methods

A representative of the Netherlands’ Delft University of Technology (TU-Delft) said in the seminar that new technological methods can help Iran raise its production from the current 2.5 million barrels a day (mb/d) to 6 mb/d.

He said that Iran would see its output fall further in case it ignores the newly developed technologies achieved over the past 15 years.

He noted that the impacts of oil extraction activities on the environment should be curbed. To that end, he said, geological and geo-mechanical methods have helped develop new models.

TU Delft is the oldest and largest Technical University in the Netherlands. It offers 15 university level teaching programs, of which 8 are unique. Seven faculties house more than 60 disciplines, with 2.700 scientific staff. The Faculty Civil Engineering and Geosciences houses the Department of Geoscience and Engineering, which seeks efficient control and use of the earth crust resources and permanent maintenance of the geological infrastructure.

15 Technologies in Ahvaz Field

Mohammad Keramati, head of reservoir studies and field development at RIPI, said RIPI has been assigned the task to study Ahvaz oil field.

He said that five technologies have been used in the research-based development of Ahvaz field, adding that the main objective behind the strategy of assignment of this field would be to enhance recovery from this massive reservoir and minimize costs of operations and technology development.

Keramati said a roadmap has been drawn up by RIPI for reservoir studies and development of fields, adding that this roadmap involves well-based IOR technology, reservoir-based EOR/IOR facilities and environmental assessment.

He said that the well-based project is projected to last two years, the IOR/EOR facilities to last three years and the total project to last 10 years.

“To develop technology, TLR is used and it was first used by NASA in 1989. But according to our studies, this method is not appropriate for the transfer and development of technology in Iranian reservoirs,” he said.

Keramati said the issue of water management in such a massive field as Ahvaz is a vital issue, adding: “Ahvaz reservoir has many water layers and this challenge should be taken into account. We have to use up-to-date technologies in order to prevent more water production in the reservoirs.”

“As far as water, gas or hybrid injection and their monitoring are concerned, more attention is needed with regard to the application of smart technology in order to have a better performance in the field,” he said.

Amir-Abbas Hosseini, deputy head of RIPI, said RIPI is pursuing plans for the technological development of Ahvaz oil field in cooperation with a chain of Iranian and international partners.

He said out of nine oil fields whose studies have been assigned to institutes, universities and research centers, Ahvaz oil field (the largest oil field in Iran) is being studied by RIPI.

“RIPI’s cooperation with a chain of domestic and international partners is being done for the realization of this objective. A network of universities comprising five international universities led by TU-Delft of the Netherlands and several companies led by UK’s Senergy are helping RIPI in this sector,” said Hosseini.

He said NIOC is the initiator of the project and National Iranian South Oil Company (NISOC) is the operator.

“Since this model of contract is being executed for the first time in the petroleum industry, organization of related structures is time-consuming. However, due to its high potentialities and capabilities, RIPI has managed to prepare the necessary structures for the implementation of this contract,” he said.

Hosseini said that opportunities and challenges are being studied in order to help finalize proposals.

“In the short-term strategy, we move towards resolving the problems of production and enhanced recovery,” he said.

Panel Discussions

Two panel discussions were held throughout the conference in order to review enhanced recovery from the giant Ahvaz and Yadavaran oil fields. In the first panel, lab studies, application of EOR/IOR technologies in production from the undeveloped layers of Ahvaz field as well as geological and geo-mechanical research about EOR/IOR from fractured reservoirs and screening method were assessed.

In the second panel, new methods of artificial lifting, the dynamic role of fluids in enhanced production from well as well as advanced technology for controlling sand production were discussed.

Participants in this panel exchanged views about using some fluids in advanced drilling and safety systems in oil and gas fields.

Women Sports at Iran Petroleum Ministry

Sports corps often complain that women’s sports has been ignored in Iran. But after President Hassan Rouhani took office in 2013 and picked Mahmoud Goudarzi as his sports minister, the conditions have improved significantly for female athletes who are now enjoying financial and media support. In this regard, the role of Iranian petroleum ministry should not be ignored. This ministry has spared no efforts to spur development of women sports. Ministry of Petroleum’s precise management and attention to female athletes has prompted them to pursue their sports activities. Below is a report on success achieved by some of them.

Sports Olympiads

Iran’s petroleum minister is the innovator of women’s sports Olympiad. Every year, at the start of summer and autumn, women active in different sports clubs run by the Ministry of Petroleum, come together and compete within the framework of a festival. So far, 15 such Olympiads have been held and athletes of different group ages have competed. A large number of those competing in these matches join higher clubs and teams of the Ministry of Petroleum. In every Olympiad, some 600 female athletes from across Iran run in different sports fields. In the end, the selected members are awarded. This commendable move convinced state officials to attend such events. Last year, Vice-President for Women’s Affairs Shahindokht Molaverdi attended the female sports competitions at the Ministry of Petroleum.

Volleyball Performance

One of the successful clubs of the Ministry of Petroleum is the volleyball team of Tehran Gas Company. This team has shown a brilliant performance over the past several years due to its proper management and target orientation policies. It is currently Iran’s top volleyball team and has trained many players for national volleyball team.

Gaz-e Tehran, which is among the most powerful volleyball teams in Iran, won championship title in 2013. But in the last league, it failed to win the world championship trophy due to bad luck. A change in generations and orientation towards young players has been instrumental in the team’s recent wins. In the current Iranian calendar year, Gaz-e Tehran is set to show a brilliant performance in the women pro league and is a candidate for championship title. A key factor bringing success to clubs run by the Ministry of Petroleum is long-term support for and trusts in young and ambitious trainers.

Sima Seddiqi, a former player with Iran’s female national volleyball team, has become a veteran trainer after years of leading the team. She has managed to train players and Gaz-e Tehran is no longer a little-known team. The team won permit to join Asian club cup competitions two years ago, but it failed to go ahead due to the emergence of certain problems.

Promotion in Basketball

Naft-e Abadan female basketball team is also sponsored by Iran’s petroleum ministry. It managed to win the top spot in Iran’s basketball after five years. For five years, it was under B level, but this year, it acquired 10 points to find its way into Iran’s professional basketball matches.

It comes at a time the Khuzestan province has no representative at the women’s professional basketball team and Naft-e Abadan will represent the entire Iran during its first presence. This team is preparing for the Pro League matches under the aegis of Abadan Oil Refining Company. Given the present circumstances, a strong team will find its way into matches in order to mark another honor.

Karate

It would be impossible to remain tight-lipped about the female karate team of Masjed Soleyman. By investing heavily in the men’s category, this team has managed to become the top team in Iran in recent years. It is poised to win titles in the female category, as well.

In the past, the female karate team of Masjed Soleyman competed with its rivals and finally bagged two gold, four silver and three bronze medals. It finished third after Tehran and Mazandaran. This team is continuing its activities and will undoubtedly mark a brighter future.

Ambitious Locals

The female handball team of Gachsaran Oil and Gas Company is another team with great success in recent years. During its second presence in the female league of handball, it finished fifth and is now determined to run again with a new line-up. The team managers have drawn up long-term plans for training talented handball players; therefore, they have decided not to recruit any players from other cities in order to prepare a strong team for championship title. The handball team of Gachsaran Oil and Gas Company is among leading clubs in Iran. It is active in many sports disciplines, but as far as women sports is concerned, it has preferred to remain in handball for the moment.

Futsal Championship

National Iranian Drilling Company (NIDC) is an undisputed team in futsal pro league. This year, the NIDC futsal team smashed all records and won the championship title for the third consecutive term. In the last season, the team aced 54 points and registered 90 goals. It was a record for this team.

Manijeh Ziba is the trainer of this team which is preparing itself to win titles in the Asian continent. The Ministry of Petroleum supports the Abadan oil refining company’s futsal team which is expected to mark history in the current season.

Phenomenon in Ilam

The Ministry of Petroleum is also present in the women’s football pro league. In an appreciable move, this team is investing in a team from an underdeveloped city. Headed by Inas Arastenejad, the football team of Ilam gas refining company has started struggling for the championship title despite all difficulties. By recruiting several veteran players, this team is set to win a title. Last year, this team finished fourth in the eighth round of women’s football pro league.

Other Activities

The points highlighted here constitute a large part of the widespread activities of the Ministry of Petroleum with regards to women’s sports. The teams financed by this ministry in other disciplines including swimming, diving, table tennis, Tae-Kwon Doe and other sectors have already started their activities and they are expected to gain fame in the future.

All this comes against the backdrop of inclination by many important organs in Iran for investing in women’s sports so that women would be pushed to bold relief in sports activities.

Kurdestan, Land of Natural Beauties

Iran's Kurdestan Province, with an area of more than 29,000 square kilometers, is located in in a mountainous area with an altitude of 2,000 meters in western Iran, near the border with Iraq.

The province shares border with East Azarbaijan Province and part of Zanjan Province in the north, Hamedan Province and part of Zanjan Province in the east, Kermanshah Province in the south and the Iraqi Kurdish province of Sulaimaniya in the west.

According to the latest official data, Kurdestan Province is home to 10 counties, 25 cities, 23 districts, 79 sub-districts and 1,767 villages.

Sanandaj is the center of Kurdestan province. Other important cities in the province are Baneh, Bijar, Divandareh, Sarvabad, Saqez, Qorveh, Kamyaran, Marivan and Dehgolan.

Asef Mansion

Asef Mansion, known as the “Kurd house” in Sanandaj, is among the most ancient edifices in Sanandaj. The mansion dates back to the Safavid Dynasty due to its architecture. However, under the Qajar and Pahlavi dynasties, the mansion has undergone some restoration work.

Sprawling on around 4,000 square meters, the building has four yards. It is expected to become a cultural complex. In the first phase, its anthropology museum has been completed and other sections like the museum of archeology, museum of handicrafts, documents center and traditional arts workshop are expected to open soon.

Lake Zarivar

Lake Zarivar is one of the most important water attractions in the west of Iran. It is located not far from the city of Marivan and lies at an altitude of 1,285 meters above the sea level.

The lake which is 4.5 kilometers long and 2 kilometers wide is surrounded by forested mountains. The depth of the lake varies between 2 and 5 meters. It is an appropriate place for skipping and water skiing.

Palangan Village

This village is located 50 kilometers northwest of city of Kamyaran and on a road linking Kamyaran to Mariwan. The structure of this village is in the form of stairs and is divided by Tanguiwar River.

Some 800 meters southeast of the village are located Sheikh Khatoun, Sheikh Omar and Sheikh Aladdin springs. The proximity of these springs to Tanguiwar River near towering mountains gives rise to a very captivating perspective.

Another tourist attraction in this village is Palangan Castle whose remains are still seen on these springs. The castle was the center of governance by Ardalan Clan for 472 years.             

Uraman

Uraman or Huraman, as it is called in the Kurdish language, is a vast area covering the entire southern part of Kurdestan Province.

  It has a very fine and pleasant weather. The area, due its mountainous terrain, is rich in tourist attractions and natural fascinations.

Terraced farms and stone architecture of terraced villages, where the roofs of one row of houses happens to be the courtyards of another row of houses situated on a higher level, add to the beauty of the region. Uraman village is located in an east-west valley on a steep slope overlooking the northern front of the Takht Mountains 75 km south of the city of Mariwan. Since the village had been the center of the local rulers, it is called Uraman Takht, "takht" meaning throne in Persian. The climate of this region in spring and summer is very pleasant and it is very cold in winter.

Fuel Supply along Iran-Iraq Border

Iran's Kurdestan Province, which borders Iraq, has become a transit route for trucks. Fuel supply to Iran-Iraq border in the Kurdestan province is a tough job due to likelihood for fuel smuggling. But the Kurdestan zone of National Iranian Oil Products Distribution Company (NIOPDC) has carried out this job effectively.

Fereydoun Yassemi, director of the Kurdestan zone of NIOPDC, told Iran Petroleum that the two spots along Mariwan and Baneh borders are active in fuel supply.

Kurdestan province shares some 220 kilometers of border with Iraq.

At the border with Mariwan, one stationary and two mobile gas stations are providing fuel supply services, said Yassemi. “On average, 120,000 liters a day of gasoil is supplied at the border floating prices.”

He said that between 60 and 70 passenger cars and 400 trucks fill up their tanks at this spot every day. Moreover, transship fuelling is done for 400 trucks every day.

At the border with Baneh, fuel distribution varies between 4,000 and 5,000 liters as a fewer number of cars are taking that route.

Yassemi said Kurdestan is the first Iranian province to have enforced filled-reservoir law since September 2014.

He said that implementation of this law has channeled around IRR 770 billion into state coffers from selling petroleum products along Iran’s border.

87ml Storage Capacity

Yassemi said the fuel storage capacity in Kurdestan province stands at 87 million liters.

He said petroleum products are supplied in the central, Baneh, Saqqez, Divandareh, Bijar, Dehgolan, Qorveh, Kamyaran and Mariwan zones.

He added that there are 63 gas stations and 51 CNG stations in this province.

Yassemi said gasoline consumption in Kurdestan has been more than 135 ml during the first four months of the current calendar year which started on March 21, up one percent on an annual basis.

He said gasoil consumption during the first four months of the current year was down 2% y-o-y, adding that the consumption stood at 134 million liters, power plants excluded.

Yassemi said kerosene consumption during the four-month period was above 24 million liters, 22% down y-o-y. He also said that fuel oil consumption during the same period was up 20% to 6 million liters.

He said that fuel supply to power plants has seen a significant decline due to the power plants’ use of gas as fuel.

Yassemi referred to enhanced gas production in the country, saying: “The consumption in power plants was down 18% during the first four months to 37 million liters.”