21st Oil Show and Iran Return to Oil World

Iran’s 21st Oil Show was held in Tehran with the participation of some 1,900 Iranian and foreign companies. The assembly of oil and gas giants in Tehran was the biggest event in the oil sector over the past years.

It must be always remembered that the 21st International Oil, Gas, Refining and Petrochemical Exhibition was held for the first time in post-sanctions Iran. Oil giants came to Tehran with more certainty thanks to the removal of sanctions following the implementation of Iran’s nuclear deal with six world powers.

This annual event showed very well that all those involved in oil projects across the world have concluded that Iran could not be pushed out of the circle of oil-related economic interactions. Maybe that is why when the show was under way in Tehran international media referred to Tehran as the capital of world’s oil.

Both exhibitors and visitors to the exhibition were engaged in serious negotiations with Iranian oil managers in a bid to enhance the level of their contribution to oil transactions. The enhancement of Iran’s oil power over the past two years was another reason for investors to further seek the strengthening of their economic and oil ties with Iran. Oil experts were unanimous on the point that Iran will soon revive its oil power and it is likely to grab a bigger share in global markets.

Iran’s crude oil production has reached 3.7 mb/d and its exports exceeded 2 m/bd in April. Moreover, Iran is producing 700 mcm/d of gas, which would be brought to 2.1 bcm/d by the end of the 6th Five-Year Economic Development Plan in 2020.

Persian Gulf Petrochemical Industries Co. (PGPIC) alone has embarked negotiations with 15 foreign companies.

The giant offshore South Pars gas field, which Iran shares with Qatar, was said to have been abandoned. But now, phases 19, 20 and 21 have become operational and phases 17 and 18 are to come on-stream by next March. If these phases start up, Iran will be recovering more than 500 mcm/d of gas from this gigantic reservoir.

The aforesaid figures are just part of Iran’s oil and gas potential that motivated oil and gas cooperation with Iran at the 21st show.

This year’s exhibition showed that Iran was serious in regaining its share in the oil and gas market. Participants at the exhibition also showed their belief in such a return that could be understood by the eagerness of participants at the even

NITC Ready to Rent out Tankers

                                                 Managing director of National Iranian            Tanker Company Ali Akbar Safaei has said the company is ready to    lease out its tankers to foreign companies for oil transfer.

Safaei said the company is also fully prepared to deliver all of Iran's oil exports to international destinations.

"NITC's full capacity is available to the National Iranian Oil Company for export of crude oil and we are trying to cover the country's rise in crude oil exports," he said.

He also said NITC tankers will be signed up in the P&I Club for using insurance coverage in the near future.

A Protection and Indemnity (P&I) Club is a mutual insurance association that provides risk pooling, information and representation for its members. Unlike a marine insurance company, which reports to its shareholders, a P&I club reports only to its members.

P&I is a member of a 13- member International Group Agreement (IGA). All of the members except for one that is American based and is banned by the US government to offer insurance coverage for an Iranian company, have approved signing NITC in the club, the official added.

Once listing of Iranian tankers in the IGA is complete, they will be allowed to call at European ports, Safaei said.

Phase 19 Gas Recovery at 2bcf

Iran has envisaged plans to extract at least 2 bcf of natural gas from phase 19 of the supergiant South Pars joint gas field in Persian Gulf waters.

A senior official at the Iranian Offshore Engineering and Construction Company (IOEC) said topsides 19A and 19B belonging to the phase will be loaded during summer this year for installation at their designated spot to bring production from the phase to over 2 bcf.

Rahim Tabrizi said construction of the two topsides is nearly complete.

After loading, the topsides will take nearly four months for installation and launching, he said.

Tabrizi further said phase 19 will be fully operational by the end of the current calendar year to 20 March 2017.

The gas recovered from the phase is injected in the national gas distribution network, he added.

Phase 19 development of South Pars is set to produce 50 mcm/d of sweet gas, 75 tb/d of gas condensate, 400 tons a day of sulfur, 1.05 million tons a year of liquefied petroleum gas and one million tons a year of ethane.

This development phase was awarded by Pars Oil and Gas Company (POGC) to a Petropars-led consortium of Petropars Limited and Petropars Iran and Iranian Offshore Engineering and Construction Company (IOEC) in June 2010 under an engineering, procurement, construction (EPC) contract.

Petropars Limited and Petropars Iran are responsible for onshore installations and drilling operations.

Foreign Firms Free to Choose Iranian Partners

Foreign companies who want to work in Iran, have the right to choose their Iranian partners, senior Ministry of Petroleum official said.

Amir Faraji an official affiliated to the Ministry of Petroleum made the remarks in a meeting with representatives of exploration & production (E&P) companies.

According to the new Iran Petroleum Contracts (IPC), foreign companies which are interested in participating in Iran Exploration and Production projects, are free to choose their Iranian partners, he added.

The official said that Iranian Ministry of Petroleum will provide the foreign companies a list of qualified Iranian E&P Companies but the foreign companies can choose their partner out of the list.

If the foreign company is interested in choosing an Iranian company as its partner which is not in the list provided by the Ministry of Petroleum, the Iranian company should be evaluated by the Ministry, he noted.

Faraji said that any Iranian company which aims to work with foreign companies should be approved by the Ministry of Petroleum officially before start of cooperation.

Iran's new oil and gas contracts are a cornerstone of its plans to raise crude production to pre-sanctions levels of four million barrels per day.

The sanctions imposed in 2012, over Iran's nuclear program, have made us lose billions of dollars. Now Iran wants foreign firms to revive its giant but ageing oilfields and develop new oil and gas projects through joint ventures with Iranian partners.

Phase 19 Gas Recovery at 2bcf

Iran has envisaged plans to extract at least 2 bcf of natural gas from phase 19 of the supergiant South Pars joint gas field in Persian Gulf waters.

A senior official at the Iranian Offshore Engineering and Construction Company (IOEC) said topsides 19A and 19B belonging to the phase will be loaded during summer this year for installation at their designated spot to bring production from the phase to over 2 bcf.

Rahim Tabrizi said construction of the two topsides is nearly complete.

After loading, the topsides will take nearly four months for installation and launching, he said.

Tabrizi further said phase 19 will be fully operational by the end of the current calendar year to 20 March 2017.

The gas recovered from the phase is injected in the national gas distribution network, he added.

Phase 19 development of South Pars is set to produce 50 mcm/d of sweet gas, 75 tb/d of gas condensate, 400 tons a day of sulfur, 1.05 million tons a year of liquefied petroleum gas and one million tons a year of ethane.

This development phase was awarded by Pars Oil and Gas Company (POGC) to a Petropars-led consortium of Petropars Limited and Petropars Iran and Iranian Offshore Engineering and Construction Company (IOEC) in June 2010 under an engineering, procurement, construction (EPC) contract.

Petropars Limited and Petropars Iran are responsible for onshore installations and drilling operations.

Indonesia to Get 500,000 Tons Iran LPG

Iran’s petroleum minister has said that Indonesia will be buying 500,000 tons of liquefied petroleum gas (LPG) from Iran next year.

“Iran’s LPG exports to Indonesia will reach 500,000 tons next year,” Bijan Zangeneh said after a meeting with Indonesian Minister for Energy and Mineral Resources Sudirman Said on May 30 in Tehran.

The Iranian minister noted that there are no restrictions to broader relations between Tehran and Jakarta.

He said he held fruitful talks with the Indonesian minister in their meeting. Referring to Indonesia’s membership of the Organization of the Petroleum Exporting Countries (OPEC), Zangeneh said: “The oil market and OPEC [upcoming ministerial] meeting was one of the topics of today’s meeting.”

He said an agreement has been signed for the sale of two consignments of LPG, a total of 80,000 tons, to Indonesia.

Zangeneh said negotiations are under way for Iran’s crude oil and gas condensate to be sold to Indonesia.

“In this meeting, Iran’s supply of feedstock to refineries in Indonesia under long-term contracts or purchase of stocks of Indonesian refineries by Iran was discussed,” he said.

Zangeneh said Indonesia’s state-owned oil and natural gas corporation Pertamina is willing to contribute to the development of oil fields in Iran.

‘Negotiations will be held with National Iranian Oil Company in this regard,” he said.

Iran Waiting for India Say on Farzad B

Managing director of Pars Oil and Gas Company Ali Akbar Shabanpour has said the company is expecting a financial plan by Indian companies that have agreed to develop Farzad B gas field.

"Iran and India are in talks for developing Farzad B gas field, and we are expecting a financial model for developing the field from them," he said.

Once POGC receives the proposal, it will start studies on its feasibility and profitability for the country and will then enter into a heads of agreement (HOA) with Indian developers.

POGC is waiting for Indians to offer their financial model on how they will share the recovered gas and gas condensates from the field with Iran as the host country, he said.

Development of Farzad A and B fields need around $ 9 billion in investment. The location of these fields near Forouz and Lavan indicate the country’s high potential for gas production.

Iran may use the new model of energy contracts known as IPC for developing Farzad B gas field.

Farzad B development was formerly being carried out under a buyback contract with ONGC India, but the contract can be presented in the IPC model, said Shabanpour in April.

A consortium led by ONGC Videsh with investments by ONGC India located gas in Farsi offshore block in  the Persian Gulf. The consortium has shown interest to extract natural gas from Farzad B. 

30 Wells Drilled in 2 Months

National Iranian Drilling Company (NIDC) has drilled about 53,669 meters of oil and gas wells by its drilling fleet during a 2-month period, a deputy head of the company has said.

Hamid-Reza Khoshayand said 30 wells have been spudded and completed 30 onshore and offshore wells during the first two months of the current calendar year which started on March 20.

He said that 15 of these wells are development/appraisal wells and 15 others are workover/completion wells.

According to Khoshayand, 17 wells have been drilled in the regions administered by National Iranian South Oil Company (NISOC), 2 wells in the regions run by Iranian Offshore Oil Company (IOOC), 9 wells in the projects operated by Petroleum and Engineering Development Company (PEDEC) and 2 wells within the framework of drilling projects.

He said that 75 offshore and onshore drilling rigs have been at work over this period.

Khoshayand also said Fath-95 drilling rig is to start work for NISOC soon, adding that three onshore drilling rigs – known as Fath 72, Fath 73 and Fath 30 – have been added to NIDC’s fleet.

He also said that an offshore drilling rig is being installed at Abouzar Platform in the Persian Gulf.

 

 

 

Iran Insists on 14.5% OPEC Output Share

The 169th ministerial meeting of the Organization of the Petroleum Exporting Countries (OPEC) was held on June 2 in Vienna, but the atmosphere dominating the gathering was different.

This time, the meeting of the oil producer group did not see disputes and verbal war. Iran’s petroleum minister Bijan Zangeneh described the meeting as calm and tension-free. This description was seen in the election of a new secretary-general for 13-member OPEC.

Nigerian Mohammed Sanusi Barkindo replaced Algerian Abdalla Salem el-Badri, who has been set to retire since 2013 but had seen his mandate renewed due to lack of consensus over who would take the top job. The election of Barkindo as the new boss indicated Africa’s influence on the body.

There was no talk about revival of OPEC quota system and due to Iran’s opposition no new production quota was decided.

Ministers attending the gathering agreed on the point that world market conditions are improving. Analysts believe that global oil reserves have reached unprecedented figures and that disruptions in oil supply by Canada and Nigeria which have helped shore up the prices are short-lived and that obstacles continue to exist on the way of OPEC’s efforts to regain its previous status.

14.5% Share

The most important point with regard to the 169th OPEC meeting was the presence of Iran’s Zangeneh and conveyance of Tehran’s message that OPEC member states must create space for Iran to return to its 2011 production level, i.e. pre-sanctions level.

Now that sanctions have been lifted, Iran is looking for a way to return to oil market. Iran has not set its eyes only on OPEC. Over recent months, it has taken measures which indicate the country’s determination to resume oil exports and sell its oil through OPEC. Iran has been grappling with sanctions for years, but now it plans to resume exports of its most strategic commodity, which is crude oil.

Zangeneh insisted on Iran’s position on the sidelines of the OPEC ministerial meeting.

“Tehran deserves a 14.5% share of OPEC’s total production and it relies on its historical production level,” said the minister.

No Output Ceiling

During years of sanctions on Iran, Saudi Arabia had managed to appropriate a bigger share of the market. Now they are worried about Iran’s return to world oil markets. This is why the Saudi oil minister suggested a production ceiling for OPEC, but he faced opposition mainly from Iran.

Since Iran considered setting production ceiling for OPEC without setting quota for member states as “meaningless” the oil producer group decided to renew its policy of unlimited production.

Iran’s minister insisted on setting production quota for OPEC member states because without quotas OPEC could not control anything.

“In my view, OPEC production ceiling without quota is meaningless. This ceiling is not controllable and there is no possibility for supervising it. Without quota for countries, how can we control and supervise this level of production?” he asked.

“Nothing new has happened in OPEC with regard to oil market” said Zangeneh. “As far as production is concerned we can either continue the current trend. Members must be careful with their production and steer clear of destabilizing the market. Another view is that each country be given a production ceiling. This issue was not acceptable to us and most member states because raising a figure will not have any advantage for the market.”

Tensions-Free Meeting

After the end of the meeting, oil prices fell temporarily. However, there were no important signs of disputes which had seen in the previous meeting last December.

Zangeneh, whose words were exactly opposite to remarks by his Saudi counterpart in the previous meetings, described the 169th meeting as “calm and tensions-free”.

He even spoke of “very good unity” among member states.

Such an atmosphere proves two things: First, Saudi Arabia’s new oil minister had decided to offer a successful performance at the beginning of his job. Second, an 80% growth in oil prices since January has convinced OPEC members that the body’s two-year strategy in regaining a bigger share of the market has proven to be effective. 

Alexandre Andlauer, head of oil and gas sector at ‎AlphaValue, said there is firm determination by OPEC member states to strengthen the body and destabilize the market.

Barkindon, OPEC New Boss

A one-time group managing director of the Nigerian National Petroleum Corporation (NNPC), Mohammed Barkindo, was appointed the secretary-general of OPEC.

Mr. Barkindo’s appointment was announced in Vienna, Austria after the 169th meeting of the group.

He is succeeding the Libyan Minister of Oil, Abdalla El-Badri, whose tenure comes to an end in July.

Mr, El-Badri was elected acting secretary-general of the group in December 2015.

But ahead of the expiration of Mr. El-Badri’s tenure, speculations became rife that Mr. Barkindo would be appointed as his successor.

Until the meeting, OPEC members failed to reach a consensus on who should be handed the office.

In 2006, Mr. Barkindo, who was at the helm of affairs at the NNPC between 2009 and 2010, was nominated by the federal government to vie for the position.

He had previously occupied the position acting capacity while representing Nigeria in the organization.

Sanctions Committee

Zangeneh met with Austrian Finance Minister Hans-Joerg Schelling in Vienna. The Iranian minister called for the implementation of agreements reached during Schelling’s meetings with Mohammad Khazaei, who heads Iran’s Organization for Investment and Economic and Technical Assistance.

He also called for the formation of an ad hoc committee headed by Khazaei-run organization and Austria’s OKB.

“Such a committee can help the implementation of agreements and removal of problems stemming from sanctions and the severance of ties between the two countries,” he said.

The Austrian minister expressed his country’s readiness for cooperation with Iranian banks, saying the banks have already received instructions to that effect.

Schelling said there are international banks which all banks have to respect. He also insisted on stronger banking interaction between the two countries. 

In a separate meeting with Schelling, Iranian Minister of Finance and Economic Affairs Ali Tayyeb-Nia said Iran and Austria need to enhance cooperation in the banking sector and work toward stopping the flow of financial aid to terrorists.

Tayyeb-Nia proposed forming a special committee by Tehran and Vienna to accelerate the implementation of agreements reached between the two sides, removing certain problems caused as a result of international sanctions against Iran and helping Austrian companies in promoting cooperation with Tehran in the near future.

Iran’s Favorite Candidate Becomes OPEC Boss

Quota Regime Not Revived

OPEC Output Ceiling Unchanged at 30 mb/d

OPEC 169th Meeting Tensions-Free

Nigerian Barkindo, OPEC New Secretary General

Oil Diplomacy Racing Ahead

Iran’s oil diplomacy has picked up speed thanks to the removal of sanctions on the country.

Iran’s petroleum minister Bijan Zangeneh regularly meets with senior officials from different countries to discuss resumption of energy cooperation.

In the final days of the Iranian month of "Ordibehesht "which ended on May 20, Zangeneh hosted three top officials.

On May 16, Zangeneh met with the International Monetary Fund (IMF)’s First Deputy Managing Director David Lipton who led a five-member delegation to Tehran.

Formed in 1944 at the Bretton Woods Conference, IMF came into formal existence in 1945 with 29 member countries and the goal of reconstructing the international payment system. It now plays a central role in the management of balance of payments difficulties and international financial crises.

Countries contribute funds to a pool through a quota system from which countries experiencing balance of payments problems can borrow money.

According to the IMF itself, it works to foster global growth and economic stability by providing policy, advice and financing to members, by working with developing nations to help them achieve macroeconomic stability and reduce poverty.

The rationale for this is that private international capital markets function imperfectly and many countries have limited access to financial markets. Such market imperfections, together with balance-of-payments financing, provide the justification for official financing, without which many countries could only correct large external payment imbalances through measures with adverse economic consequences.

The IMF provides alternate sources of financing.

Germany’s ADKL Awarded Iran Petchem Deal                     

Iran has awarded a major contract to a German company over the development of a petrochemical project in the country’s southwestern city of Masjed Soleyman.

The contract has been awarded to Abels Decker Kuhfuß Lenzen (ADKL) and has an initial value of €2 billion which will be increased to as high as €10 billion in the future.

Accordingly, the ADKL will cooperate with Masjed Soleyman Petrochemical Industries Company over providing the funds, transferring the technology and implementing contracts for the project within the framework of engineering, procurement, construction and finance (EPCF).

The deal was signed during the visit to Iran by Garrelt Duin, the state minister for economic affairs and energy of Germany’s Nordrhein-Westfalen State.

Yousef Davoudi, the managing director of Masjed Soleyman Petrochemical Industries Company, told reporters after signing the contract with ADKL, that his company is interested in working with European enterprises.

Davoudi also expressed hope that this would be the start of a mutually beneficial cooperation with ADKL.

Also, ADKL’s Bernd Lenzen told reporters that €2 billion will be invested in the first phase of a petrochemical project in Masjed Soleyman.

Lenzen added that this will be increased to €10 billion in further phases.

Masjed Soleyman Petrochemical Industries Company says on its website that a petrochemical project - that it plans to develop in northern parts of Khuzestan province - will produce urea and ammonia as its key products. The daily production target of each in the first phase will be 3,250 tons of urea and 2,050 tons of ammonia.

The company is part of a delegation of 60 businesses alongside trade officials of Germany's western state of North Rhine-Westphalia that traveled to Tehran.

Lenzen said that negotiations with Iranian officials just took off earlier this month and "we managed to finalize the agreement in a short time".

"We are a multicultural company and have an Iranian team in our business. This has enabled us to swiftly coordinate with the present condition," he added.

Duin also underlined the MoU as a major step toward expanding ties with Iran and said he would brief German Federal Minister for Economy and Energy Sigmar Gabriel on the agreement.

"The agreement is a clear example of how German and Iranian companies can boost cooperation," he noted. "The state of North Rhine-Westphalia is Germany's industrial backbone and major companies operate there. This [agreement] will lead to more partnerships in the future."  

Portugal, Lithuania, Ukraine Seek Investment in Iran

Iran’s Deputy Minister of Petroleum for International Affairs and Trading Amir-Hossein Zamani-Nia held meetings with three top European officials on May 29 in Tehran.

The first meeting was between Zamani-Nia and Portugal Deputy Foreign Minister Jorge Costa Oliveira. In the meeting, they stressed the need for cooperation in different sectors of petroleum industry including investment in refining and petrochemical sectors.

Representatives of several major Portuguese companies, including ENMC, explained about their field of activity. ENMC is involved in refinery construction and production of petroleum products.

Lithuania Interested in LNG

Separately, Zamani-Nia announced Lithuania’s willingness to import Iranian LNG, crude oil as well as other oil products.

He was speaking to reporters on the sidelines of a meeting with Lithuanian Deputy Energy Minister Aleksandras Spruogis.

He pointed to the main axis of talks with the European country saying “Lithuania possesses invaluable experience in the area of Liquefied Natural Gas (LNG) and their proposals over technical cooperation and investment will be investigated.”

“Lithuanian officials have also made proposals to study shale oil and gas production,” highlighted Zamaninia adding “despite being a small country in Europe, Lithuania has managed to reduce its dependence on Russian energy supplies.”

The Iranian official went on to note that “Lithuania seeks to truncate its dependence on Russia from the current 90 to 50 per cent.”

“The European country’s deputy energy minister has confirmed the availability of floating facilities to transfer LNG to natural gas,” underlined Zamaninia asserting “given the capability, Lithuania is eager to launch technical collaboration with Iran in the area of LNG.”

Referring to the fact that Lithuania’s private sector is in charge of purchasing crude oil, Iran’s deputy oil minister concluded “accordingly, relevant negotiations will be conducted with the European country’s private sector since they are eager to import crude and oil products from Iran.”

Ukraine and Gas Storage

Zamani-Nia also met with Ukrainian Foreign Minister Pavlo Klimkin. After the meeting, the Iranian deputy minister said: “Gas transmission to Ukraine with pipeline or in liquefied natural gas (LNG) form, gas storage, oil equipment and formation of a joint venture company were the top four points of negotiations between the two countries.”

Highlighting the experience of Ukrainian companies in gas storage and their willingness for contribution to this sector, Zamani-Nia said: “They also want investment in Iran for gas storage.”

In the meeting, he said, preparations for gas storage were discussed and expert-level talks are projected to continue.

“A consortium of European companies and Iran’s private sector are to contribute to natural gas storage in Iran,” said Zamani-Nia.

 

Halegan Gas Field Open to Investment

Halegan gas field is one of ten Iranian gas fields whose development was presented for investment during an international conference in Tehran. This gas field is located 73 kilometers north of Assaluyeh and 25 kilometers south of Sefid Baghoun gas field and north of Sefid Zakhour and Dey gas fields.

In order to get a 15% share in global gas trade, Iran is trying to enhance its gas production capacity in addition to implementing household, business and industrial gas efficiency programs.

Onshore gas fields have attracted investors from across the globe due to easy accessibility and need for a low level of investment.

National Iranian Oil Company (NIOC) plans to establish a gas hub in the south of Fars Province. This company envisages gas production and refining by developing Sefid Zakhour, Sefid Baghoun, Dey, Halegan and several other fields.

Halegan was discovered in 2005 following 2D seismic test on 1,000 square kilometers of land in Fars Province. After that seismic test, which lasted one year, Halegan and several other gas fields were discovered in this southern province. Halegan measures 50 kilometers long and 11 kilometers wide. It holds 12.4 tcf (355 bcm) of gas in-place. Given the recovery rate of 70%, 8.938 tcf of gas could be extracted from Halegan. Such a recovery rate is unique among Iranian gas fields.

Halegan also holds 249 million barrels of gas condensate in-place, 98 million barrels of which are recoverable.

Output at 50 mcm/d

The gas and condensate contained in Halegan are estimated to cost around $83 billion while the discovery of this field lasted only 2.5 years and cost $36 million. With the development of this gas field, it would be possible to produce 50 mcm/d of gas for a period of 20 years.

According to NIOC officials, due to rough land which results from high-pressure layers, drilling operations for exploration were going ahead at a low pace and a 5,000-meter-deep well was needed to be spudded. Several layers like Kangan, Nar, Higher and Lower Dalans were tested and in the end, the volume of this field was estimated at 12,400 bcf.

The important point with the discovery of this gas field is that all geophysical studies, reservoir studies, petroleum engineering and reservoir layer tests have been conducted by the Exploration Directorate of NIOC.

Fars Province is a gas hub in the Middle East region. Some exploration studies conducted in this province indicate the existence of huge gas reserves. Halegan is the latest gas reservoir discovered in this province. Compared with surrounding gas fields, Halegan has bigger dimensions.

Iran’s landmark nuclear agreement with the West is one of the most influential events in the oil sector over recent years.

After ten years of intensive talks, the agreement cleared the way for Iran oil to return to oil market. Iran’s efforts to regain its real status among gas exporting countries has made the coming years very difficult for production.

An analyst with the industry consultant Wood Mackenzie Ltd has said that Iran’s oil and gas industry needs lots of foreign investment. Although less numerous, gas fields are the biggest projects on offer. Out of the potential for 28 billion barrels of oil equivalent, gas represents 17 billion BOE. But they are almost all greenfield developments. In fact, 19 of the 20 gas assets are greenfield compared to 19 of the 29 crude oil projects.

The scale of the opportunity could be huge and major IOCs and NOCs are likely to be interested. The seven biggest projects could attract more than US$100 billion in capital investment.

“The Iran Petroleum Contract (IPC) includes payments in kind and a floating remuneration fee linked to oil prices, making this service contract more like a PSC (production sharing contract). There has been more interactivity and flexibility created with 20 to 25-year contracts, joint ventures with Iranian companies, and shared risk,” wrote Wood Mackenzie.

“Above all, the IPC addresses weaknesses of the previous buy-back contracts. The new terms are more competitive with no ceiling for cost recovery and a floating remuneration fee per BOE based on oil price, exposing investors to upside oil price risk. The model will allow priority or riskier projects to be rewarded with higher returns. Exploration terms have also been made more attractive. All this points to Iran, returning to the market as a major producer. We expect a return close to pre-sanctions levels of production at 3.7 mb/d in H2 2017. The next installment in our Iran series looks at the impact, this new capacity will have on oil price.”

After the implementation of Iran’s nuclear agreement, top officials from France, Germany, Italy and Japan have traveled to Tehran and discussed exploration of opportunities for investment in Iran’s oil and gas sectors.

It is not clear yet which governments and companies would take the initiative for investment in Iran.

Under IPC contracts, Iran plans to seek nearly $200 billion in investment. Halegan will definitely be one of these options.

IPC Deal for Soroush Development

Soroush oil field is the largest offshore field in Iran. This field started production in 2001 after development by Shell. Today, modern enhanced recovery technologies are needed for the development of this field which is facing production loss. The main reservoir in this field is Bourgan located in the west of the Persian Gulf.

Soroush is estimated to hold 14 billion barrels of oil in place. Its development was offered among opportunities for investment in Iran during a conference in Tehran in February. Most oil fields introduced during the Tehran conference for investment are mature fields. Iran now plans to enhance production from these fields by applying cutting edge technologies owned by big oil companies.

Over the past 15 years, less than 3% of Soroush’s total deposits has been extracted. In 2000, a buy-back contract was signed with Shell for the development of this field. Fourteen horizontal wells were drilled in this field. The number of wells spudded in Soroush top 32. The heavy crude oil contained in Soroush is 14 to 22 degrees API. The oil currently being extracted from this field is 18 degrees API.

Since Soroush’s current output stands at 46,000 b/d, down from its initial production of 50,000 b/d, this field enjoys great potential for applying enhanced oil recovery methods.

Soroush is among oil fields off Persian Gulf waters. It is located 83 kilometers southwest of Kharg island in Bushehr province.

It was discovered in 1962 and 14,000 b/d was produced from this field after its first well was drilled. But during the Iraqi imposed war on Iran from 1980 to 1988, this field was seriously damaged and oil production from this field was halted. The development and renovation of this field started in early 2000. Two years later, Soroush started production at the rate of 100,000 b/d.

Like most oil fields in Iran, Soroush’s output has been on the decline since 2005. Soroush is the largest field run by the Iranian Offshore Oil Company (IOOC), but it is a mature reservoir where state-of-the-art technology is needed for extraction.

The crude oil held by Soroush is one of the heaviest in Iran and the world. The oil extracted from Soroush, along with oil from the adjacent Norouz field, is transferred to the Persian Gulf floating terminal before being sold to customers. A main feature of Soroush platform is that oil and gas produced from this field is prepared and exported at the same time. It is among few platforms where associated petroleum gas is not flared off. Prior to the 1979 Islamic Revolution, the US and Italy were in charge of developing and extracting from Soroush. This project was halted when Iraq invaded Iran.

At the Tehran conference held for introducing new oil contracts – Iran Petroleum Contract – the head of reservoir engineering at IOOC said Soroush oil field is the largest offshore field whose development needs intervention by international oil companies.

EOR Research Project

Enhanced recovery from Soroush field started some time ago after an agreement was signed between Sahand University of Technology and IOOC. The university also signed an agreement with Dutch research institute Panterra Geoconsultants B.V. as a foreign partner.

According to National Iranian Oil Company (NIOC), Soroush oil field will have a recovery rate of 5%, lower than the rate of similar fields. Therefore, EOR projects and application of modern technologies will raise Soroush’s recovery rate to 10 to 15 percent. That would increase production from the field by 1 to 1.5 billion barrels of oil.

Under this ten-year project, universities are required to, in cooperation with top foreign consultants and research institutes carry out activities and research projects that would enhance recovery under short-term and long-term plans.

NIOC is currently planning to improve recovery from oil and gas fields in the country, including enhanced recovery from Soroush oil field. With a 10% increase in Soroush’s recovery rate, around 1 billion barrels is estimated to be added to the recoverable crude oil capacity of this offshore field. In other words, if 1 billion barrels are added to the recoverable capacity of this offshore field, Iran would see its revenue increase by around $30 billion (at current oil prices).

Javad Rostami, director of research and technology at IOOC, recently said different scenarios are being studied for enhanced recovery from Soroush under new cooperation projects between IOOC and universities.

He noted that Soroush oil field enjoys great potential for enhanced recovery, saying: “The oil contained in this field is heavy and its recovery rate is very low and around five percent.”

Rostami said a variety of methods include miscible gas injection, immiscible gas injection and chemical injection are being studied for raising output from Soroush.

“In this regard, good cooperation is under way between IOOC and Sahand University of Technology and following talks held with foreign consultants we are drawing up a complete and comprehensive roadmap for enhanced recovery from this field,” he said.

Rostami recalled that the recovery rate from Soroush field could increase 15%, adding: “We intend to benefit from the experience of enhanced recovery which has already been applied to Soroush-style fields which hold heavy crude of high viscosity in this offshore field.”

Oil Show Crystallize Iran Oil Diplomacy

Tehran’s 21st Oil and Gas Show was welcomed by domestic and foreign companies as well as industrialists and energy experts. The presence of foreign companies registered a 60% increase on an annual basis.

Iran’s First Vice-President Es’haq Jahangiri, who visited the exhibition, told a group of industrialists involved in oil, gas refining and petrochemical sectors that the Iranian government adopted policies during years of sanctions to minimize the impact of international restrictions on the economy.

“The significance of this round of the Oil Show is that after years of sanctions and pressure on the country’s economy, particularly in the oil sector, it is the first time that we are witnessing the organizing of this exhibition in the post-sanctions era,” he said.

Jahangiri enumerated the achievements of the administration of President Hassan Rouhani as bringing back stability and calm to the country’s economy, cutting the runaway inflation rate from 40% to 11% and putting back the economy on the path of prosperity.

Foreign companies and businesspeople are wondering about the government’s post-sanctions policies, he said, adding: “In recent months, we have witnessed the massive presence of senior officials from Southeast and European countries and leading international companies in Iran. The most important message conveyed by them has been the existence of potential and merits which can help Iran turn into a center of development.”

Jahangiri said Iran is rich in natural resources, natural gas and crude oil, mines and human resources, and enjoys a lucrative market and geopolitical position.

“The government is seeking to accelerate development and progress in the country so that it would reach its desired status,” he said.

Crude Oil Output Hike

Jahangiri said the Iranian petroleum ministry is expected to follow up courageously and firmly on the signature of oil contracts, stressing that all government departments support measures and negotiations by this ministry in the oil, gas, refining and petrochemical sectors.

“In order to reach crude oil exports’ share, before the [nuclear] agreement [was struck], the petroleum ministry invested in joint fields in order to raise output from South Pars gas field, West Karoun area fields and other fields, and brought Iran’s crude oil production to the pre-sanctions level within three months,” he added.

Jahangiri praised the Ministry of Petroleum’s measures with regard to technology and knowledge-based branch and cooperation with universities, saying: “With a century-old petroleum industry and despite the existence of restrictions in enhanced and improved recovery from oil fields, cooperation between the petroleum industry and universities has become a turning point for the activation of the scientific potential of the country as well as development and growth of knowledge in oil and gas recovery from hydrocarbon fields. Another priority of the petroleum industry is indigenization of knowledge and strategic equipment, as well as serious presence of the private sector and moving towards domestic manufacturing and self-sufficiency.”

He went on to call on domestic manufacturers to cooperate with international producers in order to enhance their production capacity and quality and find a toehold in global markets.

Gov’t Supports IPC

Jahangiri said the Iranian government supports the new model of oil contracts, known as Iran Petroleum Contract (IPC).

“Iran is currently moving towards industrial development with oil and gas sector being the most important and the most pivotal part of Iran’s economy,” he added.

“Under these contracts (IPC), we are seeking to transfer savvy and technology in order to benefit from all capacities of the country. Of course, we have to make bet use of domestic engineering and domestically manufactured equipment,” said Jahangiri.

“The priority for the government is to attract direct investment and we welcome companies that enter into talks with Iran in this regard because we believe that by doing so the management of these companies and attraction of investments will be also put at our disposal,” he added.

“All regulations related to oil contracts are transparent and clear and investors will operate in Iran under clear circumstances. The principles of oil contracts were drawn up by the government. Some were critical of the contracts and we asked them to present their views to the petroleum ministry and the government. Tens of meetings were held on this issue,” he said.

Jahangiri said the principles of new oil contracts are precise and attractive to investors. He noted that any necessary amendments will be made to the contracts.

Iran, Regional Hub for Commodity Exports

Under the present circumstances, domestic manufacturers in cooperation with foreign companies are developing products that would be not only used in the country but they will be also exported to countries in the region, said Zangeneh, noting that Iran will become a regional hub for commodity exports.

The minister said under the country’s sixth five-year development plan, foreign investment is needed in addition to domestic investment for the development of petroleum industry.

“Using technology in updated technical savvy is a requirement for post-sanctions petroleum industry. Implementation of JCPOA has helped better communications with foreign companies,” said Zangeneh.

He said the petroleum ministry’s priorities in the new oil contracts include development of joint fields and recovery enhancement.

“Hopefully, our contracts in West Karoun and South Pars gas field and for enhanced recovery from the country’s main fields are being finalized,” Zangeneh said.

He highlighted the development of petrochemical industry for increasing production capacity, diversifying products, creating jobs and completing the value chain, saying: “This year, more than $4 billion is added to the value of petrochemical products while petrochemical production capacity will rise by 8 million tons.”

Petroleum Products Quality

Zangeneh said Iran has in recent years experienced a boost in the quality of petroleum products. He said the first unit of Persian Gulf Star Refinery becomes operational this year to make import-dependent Iran an exporter of gasoline.

Regarding gas supply operations in 1394, the last calendar year to March, he said: “A major drive started in gas supply. We saw a 50% increase in recovery from South Pars gas field from 1391 to 1394.”

“Recovery from South Pars gas field has increased from 240 mcm/d in 1391 to 360 mcm/d in 1394, which is a big figure,” said Zangeneh. “As a result, the country has become powerful in the development of gas supply network in different parts of the country. Moreover, we will witness the export of 20 million liters of gasoil this year.”

He expressed hope that Iran Oil Show will prepare the ground for organized communications between Iranian manufacturing companies and their foreign partners.

“The objective behind partnership with foreign companies is not limited to the transfer of technology, but also gaining market shares and presence in different reliable markets are among the most important objectives,” Zangeneh said.

11 Pavilions at Oil Show

Rokneddin Javadi, deputy minister of petroleum and CEO of National Iranian Oil Company (NIOC), said the message carried by the 21st Oil Show was “speedy development of self-sufficiency in the petroleum industry” and added: “After the [implementation of] JCPOA, the conditions were created for foreign companies to have a bigger chance of presence in Iran.”

He said the participation of foreign companies in this round exhibition was 64% higher on an annual basis, adding: “The number of foreign pavilions was up 90% from the previous round to reach 11.”

Javadi said domestic industrialists attended this year’s Oil Show with a lot of experience. He said he himself visited 200 foreign companies at the exhibition.

“Today, Iran is different from the past and the state policymaking, particularly the petroleum ministry’s policymaking, is aimed at supporting domestic industries alongside foreign companies within frameworks set by the minister of petroleum,” said Javadi.

He said foreign companies will be able to operate projects in Iran on condition that they make investment, have partnership with Iranian companies and transfer technology into the country.

“Foreign companies have realized this fact that domestic companies have taken useful steps in recent years for the manufacturing of petroleum industry equipment,” said Javadi.

He referred to the manufacturing of 10 items of petroleum industry equipment and knowledge-based development contracts and the presence of universities as the strong points of this round of Iran Oil Show.

“For manufacturing 10 items of commodities, 100 contracts must be signed. So far, 38 contracts have been signed for manufacturing strategic commodities, downhole equipment and other petroleum industry equipment,” said Javadi.

Iran Crude Exports Surpass 2mb/d

The managing director of National Iranian Oil Company (NIOC) has been quoted as saying that Iran’s crude oil production has reached 3.7 mb/d, adding that the country’s crude oil exports crossed 2 mb/d in April.

Addressing reporters on the sidelines of the 21^st International Oil, Gas, Refining and Petrochemical Company, Rokneddin Javadi said: “Iran’s crude oil production has reached 3.7 mb/d, which will soon reach 3.8 mb/d.”

He said that Iran has returned to its pre-sanctions production and export levels.

Noting that Iran’s average crude oil exports reach 2.1 mb/d, he said: “Gas condensate exports stood at 250 tb/d before the sanctions, which has now reached 450 tb/d. We hope that this figure will increase with the development of South Pars gas field.”

Petroleum Industry Upgrade

Javadi, who is also a deputy minister of petroleum, said NIOC is not inclined to any specific company for cooperation with foreign firms, adding: “We intend to develop the petroleum industry with maximum capacity and strengthen internal beliefs.”

He said the petroleum industry has opened its doors to Western and Asian companies provided that they get along with Iran’s conditions.

“As you know, Iran’s oil sales to Europe had halted before the lifting of sanctions, but after the sanctions were lifted several oil sale and export agreements have been signed with European companies,” said Javadi.

He said that Western and some Asian companies are able to cooperate with Iran within frameworks set by Tehran, adding: “The memorandums of understanding recently signed involve both Western and Asian companies. Three MoUs are related to Western companies and two MoUs to Asian companies.”

Javadi said that the names of exploration and production (E&P) companies under study by NIOC for future cooperation are to be announced by July.

No Stored Oil on Water

Asked if under Iran Petroleum Contract (IPC), the newly developed model of oil contracts, Iranian companies will partner foreign companies for exploration, Javadi said: “Under the framework of this model of contracts approved by government, Iranian companies can be present, but their share depends on their capabilities. In this regard, we choose a list and if any company lies outside the list we are ready to evaluate that company.”

He said Iran has no floating oil cargo, adding: “Iran’s oil buyers are from Europe, Asia, Southeast Asia and Africa.”

Asked if Iran offers discount to its buyers in order to win more customers in the oil market, Javadi said: “We have faced a problem. Our rivals are offering discounts in order to tempt our customers. So far, we have refused to bow down to this game and I hope that we will not bow down in the future.”

Regarding media reports that Saudi Arabia is not allowing Iranian oil tankers to dock, he said: “The rivalry in the oil sector is both political and economic. In the economic sector, we are making efforts to return clients to the market and persuade them to rely on a reliable source.”

“In the political sector, our rivals are spending a lot in order to reach their political objectives in the region. One method is to demand restrictions from transportation companies. So far, they have failed,” he added.

South Azadegan Output at 80 tb/d

Javadi also referred to NIOC’s plan for the development of Yadavaran oil field, saying negotiations with the Chinese side about the second phase of this project is coming to an end and that relevant legal measures will be taken soon.

“The main reason for our hesitation to complete Phase 1 is that developing Phase 2 of each project needs assessment of the performance of Phase 1,” he added.

Javadi said the first phase of Yadavaran field came on-stream two months ago and reached its full capacity.

“Currently, we are in a position to make decision about the second phase of this project and finalize it under a buy-back contract,” he added.

Regarding South Azadegan oil field, Javadi said domestic companies replaced a Chinese contract due to certain problems.

“At that time, two rigs were operating in this field. The rig-count has now reached 18. By that time, five wells had been drilled, which have reached 80 over the past two years,” he added.

Javadi said this framework is set to continue in Phase 1, adding: “The wells of this field are producing gradually and three wells have been completed over the past three weeks.”

He expressed hope that this phase will produce 30 tb/d more to bring the total output to 320 tb/d.

Javadi said the second phase of development of this field will be handled within the framework of IPC. “Two companies have voiced interest for the second phase of this field, but they were not authorized to conduct studies,” he said.

Javadi said all new decisions are high-risk and need consensus, adding: “The new decisions have their own risks and nobody can say a decision is 100 percent correct.”

“Amendments to the new model of oil contracts have been done and we hope that [IPC] will be finalized soon without any political motivation,” he added.

Javadi said a working group is currently drafting oil contracts to be put out to tender in July after winning the approval of NIOC Board of Directors.

Asked about any contract with Azeri oil company SOCAR for the development of Shah Deniz field, he said: “There was no plan for any new investment. We accepted to preserve our 10% share.”

IPC Conference

Javadi said no conference for unveiling IPC is planned to be held outside Iran.

“An open political atmosphere is now available in Iran and representatives of foreign companies can travel to Iran. Most probably, the so-called London conference will not be held,” he added.

Javadi also said that time will be saved if this conference is put off to after receipt of tender documents by bidders.

North Azadegan Production

When asked by "Iran Petroleum" reporter about the inauguration of Phase 1 of development of North Azadegan field, Javadi said: “Production from this field has started at the rate of 35 tb/d, which will soon rise to 75 tb/d.”

Negotiations with Chinese companies on the second phase development of this field have not been concluded yet, he said. “A new decision is likely to be taken in this regard.”

He also said that no decision has been made for the involvement of France’s energy giant Total in the development of South Azadegan field.

West Karoun to Raise Output

Javadi also referred to the development of oil fields in West Karoun area, saying: “From a pessimistic standpoint, the production capacity of West Karoun will reach 280 tb/d by the end of the term of the 11th administration. This capacity will reach 720 tb/d by the end of the 6th [development] plan.”

Gas Transmission to Assaluyeh

Javadi said the gas produced at Salman field was planned to be exported to the United Arab Emirates, but that did not happen due to existing problems.

“Thanks to efforts by the Iranian Offshore Oil Company (IOOC), Salman gas field has started production and its gas will be transferred to Assaluyeh through a 300-kilometer pipeline,” he added.

Javadi put gas production from Salman gas field, jointly operated by Iran and UAE, at 120 mcf/d and said: “We expect the gas production from this field to reach 300 mcf/d in two months.”

 

Post-Sanctions Iran Gas Industry

Hamid-Reza Araqi, CEO of National Iranian Gas Company (NIGC), told a press conference on the sidelines of Tehran Oil and Gas Show that the last calendar year, which ended in March, was known as the year of gas industry development.

“In the current year, in addition to development, we have to take steps for quality enhancement and converting gas into higher value-added [products],” he said.

Araqi said Iran’s gas industry is tasked with sustainable gas supply to all sectors including exports, industries and power plants in the current calendar year.

“By injecting gas into oil reservoirs, delivery to industries and conversion to petrochemical products, gas can become a reliable source of hard currency revenue for the country,” he added.

Araqi said gas supply operations to 5,000 villages started last year and 2,800 villages got connected to national gas network by the end of the year. He said the remaining villages will be connected to the national gas network this year.

He said that power plants received 38 bcm, 50 bcm and 58 bcm of gas in the Iranian calendar years 1392, 1393 and 1394 respectively, adding that replacement of this amount of clean fuel with middle distillate fuels saved the country $ 6 billion.

IGAT-6 to Supply Gas to Iraq

Araqi said the financing of Iran Gas Trunkline-6 (IGAT-6) started last year in preparation for gas exports to Iraq. For the first time, build-operate-transfer (BOT) method was used for financing pipeline and the financier is currently building the pipeline.

Regarding gas delivery to Sistan Balouchestan province, he said: “Implementation of Zahedan pipeline is under way despite obstacles lying ahead and a section of national network in the city has been built. Therefore, gas supply to this city and its power plants will become operational before the end of the year.”

Araqi referred to gas pricing mechanism for liquefied natural gas (LNG) projects, saying: “It is up to the CEO of National Iranian Oil Company (NIOC) to respond to this question, but given Iran’s gas capacity we can make good investment in LNG projects.”

Pipe Gas Exports, a Priority

He said Iran has long-term plans for gas exports and it would be beneficial for the country to export gas through pipeline.

“But it does not mean that we should stay clear of LNG because it is a good method for exporting gas to remote spots,” he added.

Araqi said the world LNG market is not lucrative because of high costs. “Before anything else, studies must be conducted on the economic justification of these projects,” he added.

Gas Exports to Pakistan

Regarding the construction of a pipeline for gas exports to Pakistan, Araqi said: “By investing in IGAT-7 stretching from Assaluyeh to Iranshahr, NIGC is eying gas exports to Pakistan. Currently, construction of gas pipeline from Iranshahr to Zahedan is a priority for this company.”

Pointing to recent talks between Iran’s petroleum minister Bijan Zangeneh and Pakistani officials about gas exports, he said: “In order to diversify its gas resources, Pakistan has recently held talks with Qatar for the production of LNG, but undoubtedly this country will import gas from Iran because this issue will be in the interests of this country both in terms of quantity and quality.”

Araqi said gas supply to power plants and industrial units in the southeastern province of Sistan Baouchestan will be a priority for Iran.

“Anytime Pakistan expresses its readiness for receiving gas from Iran, we will deliver gas to this country within five to six months. Based on a gas contract between the two countries, Pakistan has to pay fines because of its failure to build its own section of the pipeline, but decision-making about these issues falls upon the government and we will follow government order,” he said.

Araqi said NIGC should reduce the price of gas exports by 13 to 16 percent due to the fall in gas prices. “Talks are under way to that effect and the result of talks will become clear in three months,” he added.

Cooperation with Saipem

Araqi said a memorandum for cooperation has been signed with Italy’s Saipem. He said IGAT-9 and IGAT-11 must be constructed in the coming years “and we have entered negotiations with big companies in this regard”.

He said that talks are under way with companies for the construction of gas pipeline to Sistan Balouchestan province through BOT and EPCF methods.

Araqi also referred to the signature of memorandums of understanding with South Korean companies, saying: “Four grounds for cooperation have been set out. We will reach a conclusion after formation of expert groups.”

He referred to the construction of LNG units in the country and said: “In cooperation with the University of Tehran, an LNG research center has been set up so that we would acquire technical savvy for data mining.”

As for the awarding IGAT-7 project to Russian companies he said: “We are ready for cooperation with major companies in the world, but the awarding IGAT-7 project to Russian companies is not true.”

Araqi said Russian and Turkmen companies are willing to cooperate with Iran in gas and LNG exports, adding: “We have held talks with Russia on this issue, but we need more time to reach tangible results. We have long held talks with Turkmenistan on this issue.”

Gas Exports to Europe

Araqi also said gas exports to Europe in the form of LNG is  among NIGC major strategies, adding that gas could be also delivered to Europe through pipeline.

“We have to make use of the latest technology in the world so that gas production and exports would be economical,” he said.

 

$14b Investment Opportunity in Iran Refining Sector

The managing director of National Iranian Oil Refining and Distribution Company (NIORDC) said refining projects under construction in Iran needs more than $14 billion in investment.

“NIORDC has a number of refining projects under way, which must be completed or commenced soon, due to their significance. We will use different methods for their financing,” Abbas Kazemi said.

He said that completion and operation of half-finished projects are the top priority of NIORDC, adding: “Some time ago, the financing of Abadan refinery development project was approved at the Council of Money and Credit. This project will be operated in two phases with a credit of $3 billion. We have reached agreement with the Chinese for starting its first phase.”

“The resources' forecast for implementing phase 1 of development of Abadan refinery is estimated at $1.15 billion, which will be supplied through China credit line,” said Kazemi, adding that the second phase  of development will need $1.7 billion that is hoped to be provided by Chinese financiers.

He highlighted a 20% progress in the detailed design of the development project, saying: “We hope that construction operations for this project which is designed to reduce fuel oil production and enhance the quality of other projects will start in four to five months.”

Sustainable Exports to Neighboring States

Kazemi said since the beginning of last calendar year in March 2015, Iran has managed to ensure sustainable export of five core products to neighboring countries.

“With 10,000 kilometers of pipeline and storage facilities with a total capacity of 80 million liters, Iran has managed to enhance the capacity of storage of its strategic products to 4 times its refining capacity,” he added.

Kazemi said negotiations are under way with foreign companies for the development of Tehran, Tabriz and Bandar Abbas refineries. “These projects are being operated for the development and execution of production processing optimization for reducing fuel oil production.”

Referring to negotiations with foreign companies for cooperation in the development of Tehran, Tabriz and Bandar Abbas refineries, he said: “The government has recently accepted the necessary guarantees for foreign investment in these refineries under special conditions.”

He said Iran’s priority in crude oil refining is to reduce fuel oil production rate and instead to produce euro-4 oil products. He added that Iran’s nine refineries are processing some 1.85 mb/d of crude oil.

Euro-4 gasoline production at Isfahan refinery has now reached 12 ml/d, he said, adding that Shazand refinery’s euro-4 gasoline output now stands at 16 ml/d. He said that the number of cities receiving euro-4 gasoline will rise to 15 from the current 8.

Kazemi said the gasoil quality upgrade unit of Lavan refinery has been launched, promising that a similar unit for upgrading the quality of gasoline will become operational at the refinery soon.

Branding in Fuel Supply

Nasser Sajjadi, managing director of National Iranian Oil Products Distribution Company (NIOPDC), said single-rate gasoline distribution cut annual fuel consumption growth from 6 percent in the calendar year to March 2015 to 2 percent.

“Given an eight-year experience of gasoline distribution with smart fuel cards, we have no problem with renewed gasoline distribution with smart fuel cards which will be issued for all domestically and foreign manufactured cars after the government’s decision,” he said.

Sajjadi referred to a decline in gasoline smuggling, saying less fuel has been smuggled across borders due to its price.

“When a number of gas stations are covered by a brand, that brand will supervise quality, quantity and technical issues. Therefore, brands will compete with each other for offering better services to people,” he added.

Regarding prices under branding, he said: “The price of fuel products will be set based on approved prices. Of course the prices are likely to increase in the future based on services they provide.”

“We believe that better services will be provided after brands take shape and this issue will finally lead to better service-providing to people. The objective behind brand development is to provide better and more appropriate services in petroleum products supply,” Sajjadi said.

He said brand development plan has started in the country with the objective of management and improvement of fuel distribution in the country. He added that management of fuel distribution in the country is a top priority of the Iranian petroleum ministry.

He noted that branding does not seek to supply fuel at two rates at gas stations, stressing that the objective is to enhance the quality of service providing to people.

Private Sector Welcomed

Sajjadi said Iranian and foreign private sectors are expected to increase their share more than ever and make greater contribution to Iran’s market which has become lucrative thanks to the development of the giant South Pars gas field.

Addressing a seminar on solutions for enhancing the private sector’s share in international energy markets, he said: “In addition to the strategy of gas production enhancement in the country, boosting the quality of petroleum products is another important strategy. We have become active in this field and this important issue can be an important point with regard to the private sector’s share seeking for presence in export market.”

Sajjadi said Iran cut gasoil imports by 20% in the last calendar year to March, due to higher domestic production and liberalization of oil products.

He said important projects like the construction of Persian Gulf Star Refinery are currently under way that would make Iran an exporter of gasoline. He added that quality improvement projects in the country are boosting the quality of products and creating capacities for the private sector.

“Boosting the quality of products in the country’s refineries has been expedited and refineries like Bandar Abbas will enhance their output capacity in October and their euro-4 gasoline production will be earmarked for exports,” said Sajjadi.

$14b Investment Opportunity in Iran Refining Sector

The managing director of National Iranian Oil Refining and Distribution Company (NIORDC) said refining projects under construction in Iran needs more than $14 billion in investment.

“NIORDC has a number of refining projects under way, which must be completed or commenced soon, due to their significance. We will use different methods for their financing,” Abbas Kazemi said.

He said that completion and operation of half-finished projects are the top priority of NIORDC, adding: “Some time ago, the financing of Abadan refinery development project was approved at the Council of Money and Credit. This project will be operated in two phases with a credit of $3 billion. We have reached agreement with the Chinese for starting its first phase.”

“The resources' forecast for implementing phase 1 of development of Abadan refinery is estimated at $1.15 billion, which will be supplied through China credit line,” said Kazemi, adding that the second phase  of development will need $1.7 billion that is hoped to be provided by Chinese financiers.

He highlighted a 20% progress in the detailed design of the development project, saying: “We hope that construction operations for this project which is designed to reduce fuel oil production and enhance the quality of other projects will start in four to five months.”

Sustainable Exports to Neighboring States

Kazemi said since the beginning of last calendar year in March 2015, Iran has managed to ensure sustainable export of five core products to neighboring countries.

“With 10,000 kilometers of pipeline and storage facilities with a total capacity of 80 million liters, Iran has managed to enhance the capacity of storage of its strategic products to 4 times its refining capacity,” he added.

Kazemi said negotiations are under way with foreign companies for the development of Tehran, Tabriz and Bandar Abbas refineries. “These projects are being operated for the development and execution of production processing optimization for reducing fuel oil production.”

Referring to negotiations with foreign companies for cooperation in the development of Tehran, Tabriz and Bandar Abbas refineries, he said: “The government has recently accepted the necessary guarantees for foreign investment in these refineries under special conditions.”

He said Iran’s priority in crude oil refining is to reduce fuel oil production rate and instead to produce euro-4 oil products. He added that Iran’s nine refineries are processing some 1.85 mb/d of crude oil.

Euro-4 gasoline production at Isfahan refinery has now reached 12 ml/d, he said, adding that Shazand refinery’s euro-4 gasoline output now stands at 16 ml/d. He said that the number of cities receiving euro-4 gasoline will rise to 15 from the current 8.

Kazemi said the gasoil quality upgrade unit of Lavan refinery has been launched, promising that a similar unit for upgrading the quality of gasoline will become operational at the refinery soon.

Branding in Fuel Supply

Nasser Sajjadi, managing director of National Iranian Oil Products Distribution Company (NIOPDC), said single-rate gasoline distribution cut annual fuel consumption growth from 6 percent in the calendar year to March 2015 to 2 percent.

“Given an eight-year experience of gasoline distribution with smart fuel cards, we have no problem with renewed gasoline distribution with smart fuel cards which will be issued for all domestically and foreign manufactured cars after the government’s decision,” he said.

Sajjadi referred to a decline in gasoline smuggling, saying less fuel has been smuggled across borders due to its price.

“When a number of gas stations are covered by a brand, that brand will supervise quality, quantity and technical issues. Therefore, brands will compete with each other for offering better services to people,” he added.

Regarding prices under branding, he said: “The price of fuel products will be set based on approved prices. Of course the prices are likely to increase in the future based on services they provide.”

“We believe that better services will be provided after brands take shape and this issue will finally lead to better service-providing to people. The objective behind brand development is to provide better and more appropriate services in petroleum products supply,” Sajjadi said.

He said brand development plan has started in the country with the objective of management and improvement of fuel distribution in the country. He added that management of fuel distribution in the country is a top priority of the Iranian petroleum ministry.

He noted that branding does not seek to supply fuel at two rates at gas stations, stressing that the objective is to enhance the quality of service providing to people.

Private Sector Welcomed

Sajjadi said Iranian and foreign private sectors are expected to increase their share more than ever and make greater contribution to Iran’s market which has become lucrative thanks to the development of the giant South Pars gas field.

Addressing a seminar on solutions for enhancing the private sector’s share in international energy markets, he said: “In addition to the strategy of gas production enhancement in the country, boosting the quality of petroleum products is another important strategy. We have become active in this field and this important issue can be an important point with regard to the private sector’s share seeking for presence in export market.”

Sajjadi said Iran cut gasoil imports by 20% in the last calendar year to March, due to higher domestic production and liberalization of oil products.

He said important projects like the construction of Persian Gulf Star Refinery are currently under way that would make Iran an exporter of gasoline. He added that quality improvement projects in the country are boosting the quality of products and creating capacities for the private sector.

“Boosting the quality of products in the country’s refineries has been expedited and refineries like Bandar Abbas will enhance their output capacity in October and their euro-4 gasoline production will be earmarked for exports,” said Sajjadi.

$14b Investment Opportunity in Iran Refining Sector

The managing director of National Iranian Oil Refining and Distribution Company (NIORDC) said refining projects under construction in Iran needs more than $14 billion in investment.

“NIORDC has a number of refining projects under way, which must be completed or commenced soon, due to their significance. We will use different methods for their financing,” Abbas Kazemi said.

He said that completion and operation of half-finished projects are the top priority of NIORDC, adding: “Some time ago, the financing of Abadan refinery development project was approved at the Council of Money and Credit. This project will be operated in two phases with a credit of $3 billion. We have reached agreement with the Chinese for starting its first phase.”

“The resources' forecast for implementing phase 1 of development of Abadan refinery is estimated at $1.15 billion, which will be supplied through China credit line,” said Kazemi, adding that the second phase  of development will need $1.7 billion that is hoped to be provided by Chinese financiers.

He highlighted a 20% progress in the detailed design of the development project, saying: “We hope that construction operations for this project which is designed to reduce fuel oil production and enhance the quality of other projects will start in four to five months.”

Sustainable Exports to Neighboring States

Kazemi said since the beginning of last calendar year in March 2015, Iran has managed to ensure sustainable export of five core products to neighboring countries.

“With 10,000 kilometers of pipeline and storage facilities with a total capacity of 80 million liters, Iran has managed to enhance the capacity of storage of its strategic products to 4 times its refining capacity,” he added.

Kazemi said negotiations are under way with foreign companies for the development of Tehran, Tabriz and Bandar Abbas refineries. “These projects are being operated for the development and execution of production processing optimization for reducing fuel oil production.”

Referring to negotiations with foreign companies for cooperation in the development of Tehran, Tabriz and Bandar Abbas refineries, he said: “The government has recently accepted the necessary guarantees for foreign investment in these refineries under special conditions.”

He said Iran’s priority in crude oil refining is to reduce fuel oil production rate and instead to produce euro-4 oil products. He added that Iran’s nine refineries are processing some 1.85 mb/d of crude oil.

Euro-4 gasoline production at Isfahan refinery has now reached 12 ml/d, he said, adding that Shazand refinery’s euro-4 gasoline output now stands at 16 ml/d. He said that the number of cities receiving euro-4 gasoline will rise to 15 from the current 8.

Kazemi said the gasoil quality upgrade unit of Lavan refinery has been launched, promising that a similar unit for upgrading the quality of gasoline will become operational at the refinery soon.

Branding in Fuel Supply

Nasser Sajjadi, managing director of National Iranian Oil Products Distribution Company (NIOPDC), said single-rate gasoline distribution cut annual fuel consumption growth from 6 percent in the calendar year to March 2015 to 2 percent.

“Given an eight-year experience of gasoline distribution with smart fuel cards, we have no problem with renewed gasoline distribution with smart fuel cards which will be issued for all domestically and foreign manufactured cars after the government’s decision,” he said.

Sajjadi referred to a decline in gasoline smuggling, saying less fuel has been smuggled across borders due to its price.

“When a number of gas stations are covered by a brand, that brand will supervise quality, quantity and technical issues. Therefore, brands will compete with each other for offering better services to people,” he added.

Regarding prices under branding, he said: “The price of fuel products will be set based on approved prices. Of course the prices are likely to increase in the future based on services they provide.”

“We believe that better services will be provided after brands take shape and this issue will finally lead to better service-providing to people. The objective behind brand development is to provide better and more appropriate services in petroleum products supply,” Sajjadi said.

He said brand development plan has started in the country with the objective of management and improvement of fuel distribution in the country. He added that management of fuel distribution in the country is a top priority of the Iranian petroleum ministry.

He noted that branding does not seek to supply fuel at two rates at gas stations, stressing that the objective is to enhance the quality of service providing to people.

Private Sector Welcomed

Sajjadi said Iranian and foreign private sectors are expected to increase their share more than ever and make greater contribution to Iran’s market which has become lucrative thanks to the development of the giant South Pars gas field.

Addressing a seminar on solutions for enhancing the private sector’s share in international energy markets, he said: “In addition to the strategy of gas production enhancement in the country, boosting the quality of petroleum products is another important strategy. We have become active in this field and this important issue can be an important point with regard to the private sector’s share seeking for presence in export market.”

Sajjadi said Iran cut gasoil imports by 20% in the last calendar year to March, due to higher domestic production and liberalization of oil products.

He said important projects like the construction of Persian Gulf Star Refinery are currently under way that would make Iran an exporter of gasoline. He added that quality improvement projects in the country are boosting the quality of products and creating capacities for the private sector.

“Boosting the quality of products in the country’s refineries has been expedited and refineries like Bandar Abbas will enhance their output capacity in October and their euro-4 gasoline production will be earmarked for exports,” said Sajjadi.

Foreigners Looking for New Opportunities in Iran

Iran’s 21st Oil and Gas Show was held under searing sun in Tehran. This exhibition was held under remarkably different conditions. In the run-up to the start of the exhibition, most hotels in the Iranian capital had been fully booked by foreigners who had travelled to Tehran to either participate in or visit the show. Companies from France, the Netherlands, England, Germany, Poland, Turkey, Russia, Spain, Ukraine, Italy, Japan, South Korea, China, Republic of Azerbaijan and India came together in Tehran. The Secretariats of Organization of the Petroleum Exporting Countries (OPEC) and the Gas Exporting Countries Forum (GECF) were represented in the show like in previous years. According to official figures, more than 900 foreign and 800 domestic companies were present in this year’s exhibition. More interesting was that they were extremely eager to negotiate. The quality of the exhibition had changed and leading upstream and downstream companies were present and they were speaking more openly about their future plans for cooperation with Iran.

Germany Eyes Business Guarantee

In every hall, one pavilion was occupied by German companies. However, it was not hard to locate Linde, a company with more than 6,000 staff worldwide. It was among the first institutes to voice its readiness for cooperation with Iran post-sanctions.

Linde’s booth was in sky blue and it was visited by a large number of visitors. Alexander Brandon, a young expert representing Linde at the exhibition, said the company started work in Iran many years ago.

“We were very active in Iran before the sanctions and even during sanctions we fulfilled our obligations. For instance, we operated several major petrochemical plants and also in Maroun area,” he said.

He spoke with certainty about the quality of products and their guaranteed market in Iran, saying: “I imagine that at present in Iran there is high demand for German technology and particularly our advanced technologies. We are sure that we will have good business in Iran.”

Alexander, who was making his third visit to Iran, said he believed that obstacles to cooperation with Iran will be removed gradually.

“It is very unlikely that the sanctions would be re-imposed. Germany is trying to resolve the problems of cooperation with Iran as soon as possible. That is why the German foreign minister travelled to Iran to negotiate this issue. Moreover, the government plans to improve conditions for investment in Iran. In fact, by investing in Iran, the German government intends to give assurances to entrepreneurs in Germany and reduce risks of their activity in Iran,” he added.

Iran Market to Be Back on Track in 5 Years

A small booth on the other side of the hall was overcrowded. It belonged to Belgium’s STS company whose CEO said works mainly in tubular solutions.

“We are active in upstream oil and gas activities and our office is based in Dubai,” he said.

Regarding the products and market of his company, Arnaud van den Eynde said: “We have been cooperating with Iranians for 20 years. For instance, we have worked in Assaluyeh, phases 7, 8 and 9 of South Pars [gas field]. Iran is an ideal market. Our products are favored in the oil and gas market, as well as in Iran.”

Eynde said there is no hidden treasure in Iran for investment. He, however, added that Iran enjoys high potential for investment.

“We have to wait for the amount of investments to be clarified,” said Eynde.

“We want to reach a compromise with Iranian companies. In my view, we will need at least five years in order to resolve these issues. After that, the market will be back to normal situation,” he said.

Czechs Eye Iran Investment

In Hall No. 40, a booth decorated with Persian banners attracts attentions. The banners are in Persian, but the company representative tries to speak English. The project manager of IBG, a Czech company, is representing his company. The company specializes in industrial valve manufacturing and the project manager is experiencing his first visit to Iran. He said that Iran’s market is an ideal opportunity for everyone, expressing hope for a better future in the light of growth in all sectors.

He said that IBG is a small company with record of activity in Russia, Kazakhstan and Ukraine. He added that the company intends to expand its activities in Iran.

“We are willing to have a small business in Iran. We estimate the minimum revenue from Iran market to top € 500,000 over the coming years,” he said.

Iran Favored by Medium-Sized Companies

South Korean and Russian companies are mainly housed in Hall No. 21. The Koreans were willing to attract visitors into their booths, but the Russians were silent hunting for visitors. A number of Russians were speaking between themselves. They stopped talking as soon as they noticed my press card. One of them finally accepted to talk to me. He introduced himself as the director of equipment exports center at his company which brings together six medium-sized companies working in different sectors. Some of them supply equipment and some others provide other services.

“We had not been active in Iran. Here is an attractive and ideal market. I think that our company will have a successful business in Iran. Over the past days, big institutes visited us several times. Even the Association of Iran Oil and Gas visited our booth,” he said.

He said Russian small and medium sized companies are more willing than ever to operate in Iran, adding: “Today, we see no reason and obstacle for not working in Iran. The companies that we represent , want to export products to Iran and invest here. Many companies like to establish a representative office in Iran, but manufacturing companies are following up on this issue more seriously. They want to cooperate with Iranian companies directly and without any intermediary.”

Regarding business and the companies represented in Iran, he said: “Since these companies are mainly small and medium-sized we estimate that their trade totals $ 2 to 3 million.”

Smart Customers

In another section of Hall No. 21 is a pavilion housing South Korean companies. Mansour Najafi is sales expert at Raytech Pouya company that represents Korean-German company manufacturing valves, gas detectors and lab instruments. It is currently representing a South Korean company at the exhibition. This Korean company is active in manufacturing pipes and joints. “This is the third year we attend this exhibition,” said Najafi, adding that medium-sized South Korean companies are very interested in working in Iran.

Comparing the current year’s exhibition and the one held last year in terms of visitors, he said: “Currently, most customers are acting smartly. They are looking for after-sales services, guaranties and warranties. It shows that their attention to the quality of products has increased.”

Loss Compensation in 3 Years

Numerous German pavilions are present at the 21st exhibition. In one of these pavilions, a company with various and interesting field of activity was present. Coincidentally Iran is an ideal market for the products of this company. The sales manager for the Middle East region of Vogelsang said the company produces plastics as well as materials protecting gas corrosion in transmission pipelines.

This company is attending Iran oil show for the fourth time in a row, but it is still pursuing its business affairs in Iran through intermediaries.

Regarding the pace of progress in Iran’s gas sector, he said: “Due to the sanctions, Iran has lagged behind neighboring countries in terms of technology, but it can make up for this loss. Of course one has to take into account that Iran is in a different position from its Persian Gulf neighbors as far as maintenance, pipeline network and construction are concerned. I think that Iran will be able to put its retarded potential into practice in three to four years.”

He said that his company has signed its biggest ever contract with Iran, valued at €1.5 million.

He expresses optimism about the future of his company in Iran and estimates that his company will be able to guarantee between € 3 and 5 million in annual contracts.

Regarding transfer of technology to Iran, he said: “We have to discuss this issue in the near future, but we are ready to study any relevant proposal from Iran in this regard. However, we will realize our financial objectives in three years. On the other hand, Iran’s political conditions are of high importance to us. We are active in India, Iraq, Pakistan, Dubai, Oman, Qatar and UAE.”

Business Prosperity

Numerous German companies were present at this exhibition, but English companies were not so visible. One of them was Angus Fire that is active in fire fighting technology. It has a history of manufacturing fire fighting products. Charlie King, the company’s sales manager, said Angus Fire last attended Tehran oil show 13 years ago. During its presence in Iran, Angus Fire was in contact with a variety of companies.

King, who has already worked in Iran’s neighboring countries like Qatar, Bahrain and Oman, said: “Iran’s oil and gas industry will definitely grow in the post-sanction era.”

He said that Angus Fire’s revenue from Iran market is estimated to account for 5% of its total income in five years.

Most foreign companies that participated at the Oil and Gas Show this year, were medium-sized companies, but according to Iranian petroleum industry officials, the market of this industry needs the specialty and services of these companies for partnership with Iran.

Russia’s giants Gazprom and Lukoil were present at the exhibition, but they refused any interview.

Dutch Firms Ready for Upstream Technology Transfer

Dutch firms attended Tehran Oil and Gas Show after a decade-long absence. This time, they filled a major pavilion. The presence of Dutch companies at Tehran exhibition was so important that the Dutch minister of economy travelled to Tehran to visit the pavilion. In the presence of the Dutch minister, a memorandum of understanding was signed between Dutch companies and the Society of Iranian Petroleum Industry Equipment Manufacturers (SIPIEM). FME was the chief Dutch company at the oil show. Iran Petroleum has an exclusive interview with Micha Van Lin, the international business manager of this company.

Q: After a decade, Dutch companies have a pavilion this year at Tehran oil and gas show. How did you reach this conclusion?

A: Yes. Of course it is the first time I personally attend Iran oil show, bust most Dutch companies present here last attended Iran Oil Show in 2006. After November last year, I have travelled to Iran three times, the first one in the delegation of the Dutch minister of economy. At that time we decided to take part at Iran Oil Show in the form of a pavilion if sanctions are lifted on Iran and the Dutch minister of economy welcomed this issue and as you know the minister travelled to Iran to visit the exhibition. The objective is to develop long-term relations with Iran, particularly in the oil and gas sectors. That is why this year we are attending the exhibition along with a large number of Dutch companies involved in oil and gas under the umbrella of Dutch Energy Solutions.

Q: How many companies are attending the Dutch pavilion?

A: This year, we have two pavilions at the exhibition. A total of 22 Dutch companies involved in oil and gas are present. Furthermore, 10 Dutch companies are participating independently and this number will definitely grow in coming years.

Q: What’s the field of activity of Dutch companies present in this exhibition?

A: Downstream and mid-stream oil industry.

Q: To what extent can presence at Iran oil show assist Dutch companies in their oil and gas operations in Iran?

A: It will be definitely effective, because we can introduce ourselves to Iran’s petroleum industry and Iran’s minister of petroleum in person. We can also introduce ourselves to major companies involved in the oil and gas sectors. One of our objectives is to pave the ground for further cooperation between Iran and Dutch companies, particularly in contracting. We know quite well that such cooperation must be win-win. Therefore, we are looking for Iranian partners and this exhibition is the best venue for negotiations and familiarity with the capabilities of these companies.

Q: Have your negotiations and meetings with Iranian officials and companies resulted in the signature of any memorandum or contract as long as Iran oil show was under way?

A: Yes, on the last day of the exhibition, a memorandum was signed between Dutch Energy Solutions and SIPIEM in the presence of Dutch minister of economy and Iran’s deputy minister of petroleum. We are an institute charged with introducing Dutch companies, including Iran Industrial Equipment Manufacturers Association and Association of Petroleum Industry, Engineering and Construction Companies (APE). These meetings will result in the signature of memorandums and contracts in the near future.

Q: Iranian petroleum ministry officials have underscored the need for the transfer of technology in the deal with foreign companies. What do Dutch companies think of that?

A: Under the memorandum I just mentioned, both sides will be given six months to make decision about grounds for cooperation. Of course, transfer of technology and training are among the most important clauses of this memorandum. But of course we must first know what Iran exactly needs in technology and training. Therefore, we are seeking to hold seminars, training courses and every other kind of activity that would lead to transfer of technology and training. For instance, we are aware of the Iranian petroleum ministry’s plan to manufacture 10 items of basic commodities. We must see in which sectors the Dutch companies are willing to cooperate with Iranian companies. I have to recall that Dutch companies are very qualified in the gas industry, upstream oil industry and offshore oil industry and we are interested in transferring our technical savvy to Iranian companies.

FME at a glance:          

FME is the Dutch association of enterprises in the technological industry. The 2,200 affiliated companies employ a total of 220,000 people and are active in the fields of manufacturing, trade, automation and maintenance in the metal, electronics, electrotechnology and plastics sectors. The combined turnover of all FME members is € 70 billion, their collective added value amounts to over €20 billion, and their exports total € 37 billion. FME members therefore account for one-sixth of all Dutch exports.

Dutch Energy Solutions is founded by Association FME, Association IRO and the Ministry of Economic Affairs. Dutch Energy Solutions is a collaboration of Oil & Gas suppliers, R&D companies, associations and governmental bodies. The objective of the cluster is to establish on-going exchange of information, knowledge and business contacts with partners in the Persian Gulf region.

Spain Looking for Iranian Partners

As in previous years, Spain attended the 21st Tehran oil and gas show in the form of a pavilion. Gontzal Ruiz, project manager at Fluidex, acknowledged that the number of Spanish companies attending the event this year has increased significantly thanks to the implementation of Iran’s nuclear agreement with six world powers.

Iran Petroleum’s interview with Ruiz is as follows:

Q: You attended Iran oil show last year, too. But the point now is that oil sanctions on Iran have been lifted. How different do you see this year’s exhibition from last year’s?

A: The most important difference between this year’s exhibition and last year’s is that the number of participants has increased. Furthermore, we are witnessing the significant presence of international pavilions from countries like France, Italy, the Netherlands and Germany. We can say that the number of European companies has doubled compared to the previous round. Last year, there were rumors about the lifting of Iran sanctions and we were hopeful. Hopefully, it has happened; therefore, companies are taking part in this exhibition with more peace of mind. On behalf of Spain, we are also attending the exhibition in the form of a pavilion.

Q: Would you please brief our readers about your own company and Spain’s pavilion?

A: Fluidex is a Spanish institute with 90 companies as members and of course these companies are acting independently. We have brought together these 90 companies like a union and we are doing activities more strongly. This union brings together big and small companies whose focus is on oil and gas projects. Iran’s Ministry of Petroleum and Iranian companies can either independently communicate with Spanish companies or refer to us to get the necessary information. I should also highlight the point that in addition to oil and gas, we are also active in hydropower sector and as you know in some oil and gas projects, hydropower is needed. In this year’s show, 23 companies are attending within the framework of pavilion and 10 others are attending independently.

Q: Last year, you stressed that you were looking for more significant presence in Iran’s petroleum industry. Have you signed agreement for any projects during the past year?

A: I should recall that some Spanish companies were authorized to operate projects in Iran even before the Joint Comprehensive Plan of Action was implemented. Our organization in fact provides data to Spanish companies willing to invest in Iran. Before the JCPOA implementation, the Spanish companies were present in Iran with fear and caution and that is why the costs of cooperation stood high. These problems no longer exist, but the new issue is tight competition between foreign companies for return to Iran’s petroleum industry. Therefore, we have to make further efforts for a more prominent presence. Some obstacles like insurance and banking problems have not been removed completely yet, but in order to accelerate negotiations, words must be transformed into deeds. In that way, foreign companies will be able to enter Iran’s oil market very quickly.

Q: Undoubtedly, in order to compete with other foreign companies, you need to be well aware of Iran’s oil market and its needs. Have you conducted any need analysis?

A: Yes, analyzing international markets is one of the most important activities of our institute. We are in contact with many Spanish and international oil companies and we are tasked with providing them with information with a view to their effective presence in global markets including Iran. Therefore, we have sought to provide as much information as possible about Iran’s petroleum industry and its needs to these companies in order to pave the ground for their presence and so that they would enter Iran’s market under an appropriate roadmap.

Q: Iranian petroleum ministry officials always emphasize that foreign companies had better team up with an Iranian company for presence in Iran’s oil market. What do you think of that?

A: This issue must be looked into from two aspects. In my view, having an Iranian partner is an opportunity because that would help provide better and more effective access to market. But the second phase of picking a partner is very difficult because you don’t know which Iranian company can be appropriate for this purpose. Therefore, you will need much more information in order to make sure. You are supposed to work with a partner for many years and we are very cautious and careful on this issue. Of course, I have to recall that due to economic conditions in the world and low oil prices, the present time is not appropriate for Spain investment; however, we keep making efforts.

Q: Another issue highlighted by Iranian petroleum ministry officials with regard to signing contracts with foreign companies pertains to transfer of technology. What do you think of that?

A: That is a need which must be fulfilled, but it depends on the certificate, licenses and companies. In certain cases companies are able and are authorized to transfer their technology to other companies, but some companies do not have such a possibility. However, it seems that many foreign companies are willing to team up with Iranian companies for technology transfer.

Q: In an interview last year you noted that the Spanish government’s support is needed for better cooperation between Iranian and Spanish companies. What does the Spanish government think now that Iran sanctions have been lifted?

A: Elections are looming in Spain and we are waiting to see who will emerge winner. But I should recall that Spain’s Minister of Industry, Energy and Tourism of Spain, José Manuel Soria López recently visited Iran and held talks with Iranian officials including Iran’s petroleum minister. He had negotiations on banking issues. This proves that the two countries are opening their doors to further economic cooperation. This is largely desired by Spanish businesspeople. Practical steps have been taken in this regard. The pace is slow, but we hope that everything will pay off soon. The presence of Spanish companies in this pavilion is indicative of their interest in enhancing the level of cooperation with Iran.

French Companies Double in Number at Tehran Oil Show

France was among countries that held a pavilion at this year’s oil and gas show. Agnès Hagyak, oil and gas project manager at Business France, a state-run agency, said more than 47 French companies are present in this year’s exhibition. She said that several French companies failed to attend due to space limitations.

Hagyak told "Iran Petroleum" that last year, 17 French companies took part in the exhibition.

She referred to the impact of this exhibition on the resumption of economic relations between Iran and France, saying: “Most French companies that had attended the last exhibition have managed to develop good and valuable relations with Iranian companies. Of course, it was the result of sanctions whose lifting everyone expected.”

Noting that the 21st exhibition has been more important and more effective than the 20th one, mainly due to the lifting of sanctions on Iran, Hagyak announced the higher number of French companies present in the current event. She added: “Since last year, we have reached positive results. Therefore, in my view we are on the right path.”

Hagyak said 32 French companies are present in the form of pavilion and 15 others are independently attending the 21st exhibition.

She said more French companies had applied to participate in Tehran Oil and Gas Show in light of the lifting of sanctions on Iran, but due to space limitations they could not make it.

“This is while we booked our envisaged space immediately after last year’s exhibition ended and we even increased the area of our stand and pavilion,” said Hagyak.

She said the French companies present in this year’s exhibition are active in the downstream and upstream oil industries, adding: “I have to recall that some of these companies have already started cooperating with Iranian companies and they are very happy with this cooperation.”

Drawing a parallel between Tehran Oil and Gas Show and other regional exhibitions, Hagyak said: “Iran oil show is very vast and is attended by most countries in the world while similar exhibitions including ADIPEC are just regional events.”

“For entering Iran’s petroleum industry and having strong presence in its projects we have conducted numerous surveys and studies such that after the lifting of the sanctions we have improved our focus on activity in Iran’s petroleum industry and cooperation with Iranian companies,” she added.

 

France Reopens Business Office

Romain Keraval, Iran director at Business France said the Tehran office reopened in November last year.

“The philosophy behind its reopening was to provide the ground for imports and exports by both countries and also to encourage French companies to invest in Iran, particularly in its oil and gas sectors,” he said.

Noting that widespread negotiations have been held since the reopening of the business office, he added: “We are a state-run institute and our most important objective is to help French companies expand their business at international level.”

Keraval said Business France’s services include organizing pavilions at exhibitions, facilitating visits by different economic, industrial and business delegations to Iran, introducing Iranian companies to French companies for future partnership, introducing Iranian exporters, importers and businesspeople to French companies and finally encouraging and persuading French companies to invest in Iran.

He said Business France has a variety of plans for broadening economic and business ties with Iran in 2016.

“Presence of 40 French delegates, holding a seminar jointly with Iran’s Agriculture Ministry, more significant presence in economic, industrial and trade exhibitions are among our plans,” he said.

Keraval said a Business France’s message to French companies for presence in Iran’s market is to team up with an Iranian company and transfer technology to this country.

He added: “Of course, a competent partner must be found before this issue could materialize. In that way, the project will be pushed ahead, while proper ground will be provided for communications with clients. Furthermore, Iran currently needs to attract investment for all its projects and the French companies must have the ability to provide the required capital.”

“We always tell French companies to transfer their technology to Iran because Iran is turning into a big industrial country rapidly and it continued this process of development even during years of sanctions. Therefore, they must give Iran a valuable product before getting something in return,” he added.

Keraval highlighted the French government’s positive view of enhanced interaction and cooperation between Iranian and French companies, particularly in the oil and gas sectors, saying the reopening of this business office was a clear example of the intention of French government officials.

“We enjoyed communications and cooperation with Iran in the past too, but due to the imposition of sanctions these communications did not go ahead well for some time, but in the post-sanctions period we are reviving those communications on a larger scale,” said Keraval.

Referring to the significance and status of Iran oil show, he said it was a valuable opportunity for promoting and introducing companies for partnership.

“The interesting point regarding Iran oil show is the presence of all those involved in oil and energy including government officials, public managers, manufacturers, vendors, engineers and petroleum industry specialists. In similar exhibitions, we see less diversity,” he said.

FCE Boss: Iran Can Save World

Over recent years, Italian companies have been attending Iran Oil Show regardless of international sanctions. Every year the number of Italian companies attending the exhibition has been growing. This year too, the Italian companies in the pavilions were very visible. The number of Italian companies participating in this year’s exhibition had doubled from the year before.

Fabio Casiraghi, CEO of FCE, was the chief organizer of pavilion of Italian companies at the 21st Oil, Gas, Refining and Petrochemical Exhibition.

In an interview with Iran Petroleum, he said Iran Oil Show is of high significance because its main organizers are Iran’s Ministry of Petroleum and National Iranian Oil Company (NIOC).

“This issue has improved the status of Tehran exhibition,” he said.

Casiraghi, however, said there are also weaknesses at Iran Oil Show. “The most important weak point at this exhibition is that the visitors are not registered and identified.”

“In all highly visited exhibitions in the world, in addition to participants, visitors are also identified and their names are registered,” said Casiraghi. “It is often important for the participants to know who is to visit their booths because they would be able to make proper planning for after the exhibition and communicate with visitors.”

He referred to the twice increase in the number of Italian companies participating in this year’s oil show, adding: “Eighty companies have participated at the show in the form of Italy pavilion and a number of Italian companies are present independently.”

Casiraghi said the Italian companies present in this year’s exhibition are active in different sectors of oil and gas, including contracting, platform construction and manufacturing of such equipment as pumps, compressors and valves.

40 Italian Companies Failed to Attend

Casiraghi said 40 more Italian companies, among them well known ones, were willing to attend, but due to space limitations they could not put on exhibit their achievements.

He stressed the need for planning on this issue in coming years, saying: “Given Iran’s petroleum industry high potential and important opportunities for investment in this industry, Oil Show is a good venue for introducing these opportunities. Therefore, it would be regrettable for companies not to be able to attend due to shortage of space.”

Casiraghi said 150 Italian companies would be ready to attend Tehran Oil Show if necessary space is provided.

Referring to the lifting of sanctions and the presence of top European companies, he said: “The Italians are accustomed to competition. They are not supported sufficiently by the Italian government and they act independently. This issue has disadvantages, but it has led us to compete for safeguarding our interests individually. That is why we are one step ahead of our rivals.”

He referred to good and long-term relations between Iran and Italy and said: “We hope to be able to have progressive and effective cooperation in technology and industry.”

MoU Signing

Casiraghi said a memorandum of understanding was signed between the Italian Association of Valve and Fitting Manufacturers and the Society of Iranian Petroleum Industry Equipment Manufacturers (SIPIEM) on the sidelines of Tehran Oil Show.

“This memorandum is the result of one year of interaction and negotiations which started one year ago and paid off this year,” he said.

Casiraghi said the Italian Association of Valve and Fitting Manufacturers is a private entity comprising valve manufacturing companies. The association has agreed to cooperate with SIPIEM about technology transfer and manufacturing of industrial valve.

He said SIPIEM has signed a memorandum of understanding with another Italian association involved in oil and gas during a recent visit of Italian Prime Minister Matteo Renzi to Tehran.

“Among the important points in this memorandum are research, transfer of technology and information and holding seminars and conferences,” said Casiraghi.

He said despite sanctions, Italian companies have maintained their presence in Iran in recent years. “The conditions have now become better and the ground is prepared for joint cooperation,” he added.

Casiraghi said Iran can save “itself and the world” thanks to its potentialities in the oil and gas sector.

“In light of growing interest for cooperation with Iran, Iran has to choose the best partners. Therefore, the best ones must attend such shows,” he said.

 

MoUs at 21st Oil Show

It might be premature to make judgment about the achievements of Tehran’s 21st Oil Show, but one thing is clear: This year’s International Oil, Gas, Refining and Petrochemical Exhibition was held against the backdrop of improvement in Iran’s international standing and concomitant lifting of sanctions which persuaded a large number of foreign companies to attend.

Among the most important events in this big show was the signature of memorandums of understanding (MoUs) and agreements in different sectors between domestic companies and also between domestic and foreign companies. Some of them are highlighted here.

Tehran Refinery Fuel Oil Cut

A memorandum of understanding has been signed with a Japanese firm to minimize fuel oil production at Tehran Oil Refinery, director of coordination and supervision for the National Iranian Oil Refining and Distribution Company said.

“A Japanese company has signed an MoU to study plans for reducing fuel oil production in Tehran Oil Refinery and improving energy efficiency in Abadan Refinery,” Saeed Mahjoubi said.

“Japanese and South Korean firms have shown strong interest in Iran's refinery projects. The unnamed Japanese company is working on plans to raise the quality of Iran's petroleum products to match Euro 4 emission standard,” he added.

Fuel oil is a heavy, low quality fuel oil used in power plants and other similar applications. It is a low-value and more polluting fuel compared to other fuels such as diesel and natural gas.

Drilling Talks with 20 Firms

Senior marketing expert at National Iranian Drilling Company, Saeed Heydarian, said initial talks have been held with managers of oil industry and drilling companies from more than 20 countries.

“Throughout talks between NIDC managers and experts and technical, commercial and engineering managers of foreign companies, it was agreed that technical and specialized meetings be held between senior managers of the two companies,” he said.

Heydarian said most of these companies are entering talks with NIDC for the first time, adding: “These companies are from Germany, Italy, Austria, Australia, the Netherlands, France, Norway, England, South Korea, Japan, Russia, Turkey, etc.”

Among foreign companies, he cited Dutch Huisman which makes light and heavy offshore and onshore drilling rigs and relevant equipment; Russian TMK which produces drilling pipes and casing.      

MoU with the Netherlands

Two separate MoUs were signed between the Dutch Association of Energy Industries and the Society of Iranian Petroleum Industry Equipment Manufacturers (SIPIEM) and the Association of Petroleum Industry, Engineering and Construction Companies (APEC). The memorandums were signed at a ceremony presided over by Dutch Minister of Economic Affairs Henk Kamp and Iran’s Deputy Minister of Petroleum for International Affairs and Commerce Amir-Hossein Zamani-Nia.

These agreements clear the way for the private sector to get involved in joint projects in Iran and the region.

Mohammad Taheri, secretary of APEC, said: “By signing this MoU we plan to expand the realm of our activities to other countries.”

For his part, Behzad Hazrati, chairman of the Board of Directors of APEC, said: “Based on this MoU, joint cooperation will take shape between Iran and the Netherlands for implementing joint projects in the region and markets outside Iran’s reach.”

He said that future cooperation between the two associations will be defined based on the category of projects.

“We have also to take into account the point that designing and engineering activities in Iran are remunerated far less than in European countries. Therefore, we have to maximize the share of domestic sector in engineering, operation and commissioning in joint projects,” he added.

Hazrati said: “Joint investment, operating joint projects, training, and transfer of technology, holding exhibitions, exchange of technical and commercial delegations and holding business forums are among the main points in this MoU.”

MoU on Valve

An MoU was signed between Society of Iranian Petroleum Industry Equipment Manufacturers (SIPIEM) and Italian Valve and Fitting Manufacturers’ Association.

Iran-China Petchem MoU

Iranian Oil, Gas and Petrochemical Products Exporters’ Association (OPEX) and China Petroleum & Chemical Industry Federation (CPCIF) signed a memorandum for cooperation.

The agreement between the Iranian and Chinese private entities was signed on the last day of Oil Show and following a seminar on how to enhance the private sector’s share in international energy markets.

The agreement between OPEX and CPCIF provides the proper ground for the expansion of relations between two private entities. Exchange of information, sharing skills and experiences in production and exports are among articles enshrined in the MoU.

Making efforts for enhancing information, identifying opportunities for business among member companies and preparing the ground for direct investment in Iran are among points highlighted in the MoU between the Iranian and Chinese private entities. Furthermore, introducing potentialities of Iranian companies to Chinese chemical and petrochemical companies, facilitating trade ties between member companies, holding seminars and conferences and organizing exhibitions and workshops for OPEX and CPCIF members have been included in the memorandum.

Petchem Catalyst Commercialization

On the last day of Tehran Oil Show, Petrochemical Research and Technology Company (PRTC) and  Supplying Petrochemical Industries Part, Equipment and Chemical Engineering Company (SPEC) for commercializing 10 catalysts. Esmaeil Qanbari, CEO of PRTC, said this memorandum has been signed for commercializing the research achievements of the company so that this acquired technical savvy would be commercialized and serve the country’s industry.

Underscoring the necessity of paying attention to new technologies in the country, he said: “In other words, we can meet the country’s technological needs in this way.”

PUT, OICO to Cooperate

Petroleum University of Technology (PUT) and Oil Industries Commissioning & Operation Co. (OICO) signed an education-research MoU. The memorandum was signed between Abdol-Nabi Hashemi, on behalf of PUT, and Amir-Hossein Razzaqi, on behalf of OICO.

The MoU which focuses on specialized oil, gas and petrochemical issues is aimed at conducting joint research projects, supporting dissertations and PhD theses and holding training courses. The MoU, which will be valid for one year, is expected to result in the signature of a variety of agreements between the two sides in different fields.

ICOFC-NIOC MoU

Iranian Central Oil Fields Company (ICOFC) and Exploration Directorate of National Iranian Oil Company (NIOC) have signed an MoU to accelerate development and completion of exploration wells.

Salb-Ali Karimi, CEO of ICOFC, and Saleh Hendi, the NIOC exploration director, signed the memorandum during a visit to Tehran Oil Show.

Implementation of this memorandum and its generalizing to the NIOC offshoots could result in better coordination between NIOC Directorate and commissioning companies and would also accelerate the completion of wells.

The grounds for cooperation highlighted in this memorandum are exchange of data and information, technical reports of fields, geological, geophysical and geochemical studies, drilling, petroleum engineering, map logging, updating data of ICOFC fields on the website of NIOC Exploration Directorate, planning for optimal use of the capacity of drilling rigs, cooperation in production from exploration wells with the objective of early production, prioritizing and drilling extension and appraisal wells within the framework of a comprehensive package, consultation on geological activities by exploration experts and reservoir description activities, static and dynamic modeling by ICOFC experts and the possibility of benefiting from services of contractors and consultants.

MoU on EPD

On the second day of Tehran Oil Show, an MoU was signed between Oil Exploration Operation Company (OEOC) and Petro Gohar Farasaleh Kish Company. Under the memorandum, both sides will make their best to strengthen national power for solving engineering, operating and services problems and challenges. A synergy between the power and efforts of both companies for EPD projects in oil and gas fields, training specialized human resources within the framework of specialized courses, and completion and equipping joint bases.

Fire Extinguishing System

Iran’s Kaveh Saipa and two European companies signed an agreement on fire extinguishment systems.

With the signature of this agreement, low-cost fire extinguishing systems fitted with cutting edge technology and with high speed will hit Iran’s market. Fire extinguishing system would be developed in two forms: one for being installed in cars and one for being used in industrial and non-industrial centers.

Implementation of this agreement will save the country 40% in costs. But this figure is expected to reach 60% after new changes.

Supplying Parts for SPGC

A contract for supplying parts to South Pas Gas Complex (SPGC) by Iranian companies was signed on the sidelines of the 21st Oil Show.

Masoud Hassani, managing director of SPGC, said three agreements were signed with domestic companies during the show.

“These agreements are in harmony with resilience economy plans, including the main national plans and gas projects. Currently, the bulk of equipment used by this complex is provided by domestic companies,” he added.

Hassani said it was a principle for SPGC to get its required parts from domestic companies, adding: “SPGC has short-term and long-term plans for self-sufficiency and materialization of the policies of resilience economy.”

Research Projects with Universities

Semnan Province Gas Company has signed four research contracts with a group of universities with the objective of realizing the policies of resilience economy and benefiting from domestic capabilities.

Ali-Reza Jarrahi, CEO of the company, underscored the significance of communications between industry and university and highlighted the provincial company’s continuous efforts to that effect, saying: “With the objective of quantitative and qualitative development of research projects, this company has signed four research projects with short-listed universities for more than IRR 4.6 billion in line with the roadmap of gas industry technology and the research requirements of different units of the organization.”

He said monthly meetings are held on a regular basis and necessary permits have been obtained from different directorates of National Iranian Gas company (NIGC), adding: “Research agreement for formulating strategic planning framework, designing and developing image processing-based measurement system, feasibility of using composites instead of spiral wound gaskets and research agreement for designing and developing integrated software for energy consumption management in administrative buildings and CGs are among them.

These agreements have been signed with the Science and Technology Park of Semnan University, Sharif University of Technology, Qouchan University of Modern Technologies and Islamic Azad University of Semnan.

RIPI, Focal Point of Oil Show Technology Talks

Iran’s Research Institute of Petroleum Industry (RIPI) participated in the 21st Oil Show and put on display 9 commercialized products. The institute was pursuing three objectives: introducing itself as a reliable partner for international exploration and production companies, concentration on commercialization and development of technologies and commitment to sustainable development in upstream oil sector, energy and environment for future cooperation.

Different groups of Iranian and foreign companies held talks with the RIPI senior directors. Representatives from at least 20 countries were engaged in negotiations with RIPI mainly on technology, exchange of information and future cooperation.

RIPI, KIGAM Sign MoU

RIPI signed a memorandum of understanding (MoU) with Korea Institute of Geoscience and Mineral Resources (KIGAM).

The Korean institute, whose activity pertains to upstream oil sector, has agreed to cooperate with RIPI for a five-year period.

The memorandum is based on cooperation in geology, modeling of sedimentary basins, unconventional hydrocarbon resources, laboratory projects and petroleum engineering.

MoU with Aker

RIPI also signed an MoU with Norway’s Aker. Under this memorandum, RIPI will provide technical data to Aker for operating projects in Iran. RIPI and Aker will also develop technology jointly and hold joint training courses. Furthermore, Aker will offer consultation services to RIPI for operating projects.

HOA with Ferdowsi University

On the sidelines of Tehran Oil Show, a heads of agreement (HOA) was signed with Ferdowsi University in the northeastern city of Mashhad. The 18-month agreement involves such domains as recovery, geological studies and lab studies. Lab-scale as well as surface and underground geochemical studies and presenting model for stratigraphy in sedimentary medium will be studied under this agreement.

MoU with NIOC Exploration Directorate

An MoU was also signed between RIPI and the Exploration Directorate of National Iranian Oil Company on 12 points.

This memorandum was signed for the development of knowledge, application of modern technologies, resolution of problems, and removal of challenges and bottlenecks for reducing risks and costs and increasing production and creating maximum value-added.

The memorandum, which will be in effect for two years, covers geological, geochemical and petrophysical studies and development of software for upstream oil sector.

MoU with ICOFC

A six-point MoU was signed between RIPI and Iran Central Oil Fields Company (ICOFC) on six points. Acquisition of technology, maximizing domestic manufacturing and minimizing installation time and launching a desalting system are among subjects of this memorandum.

Studying methods of controlling corrosion at Tang Bijar site and offering solutions for reducing operational problems and sledge recovery and removal of water and soil from oil at Cheshmehkhosh production unit are also included in this memorandum.

Furthermore, controlling water produced by oil wells in the ICOFC-administered oil fields and low-pressure wells lifting by applying jet pump technology are among other subjects of this memorandum.

Cooperation on EOR

RIPI and Alborz Rahbord Energy Company signed a two-year agreement which focuses on operating enhanced oil recovery (EOR) projects, gathering and storage of carbon dioxide.

Moreover, injection of CO2 in enhanced recovery as well as designing and implementing clean and renewable energy systems are included in this memorandum.

Three-Party Gas MoU

RIPI, National Iranian Gas Company (NIGC) and Akson Shimi Jonoub signed a three-party agreement on the manufacturing and indigenization of silicon-based anti-foam.

Saeed Pakseresht, director of research and technology at NIGC, said this MoU is aimed at producing anti-foam substance which is widely used at gas refineries.

Noting that Iran has so far been imported, he said: “So far, there has been a limited number of domestic suppliers of anti-foam and efforts made in the past for its production had failed.”

Agreement with IMIDRO

RIPI also signed an agreement with Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO).

Compiling the report of feasibility studies as well as engineering designing for coke industrial unit are subjects of this cooperation.

Iran Ready to Supply LPG to Europe

With the slump in oil prices, Iranian Ministry of Petroleum has reconsidered its policies with regard to access to market and selling oil products.

Iran remains a top holder of natural gas in the world. According to BP, Iran produced 166 bcm of gas in 2013, coming fourth after the United States, Russia and Canada.

Iran has not yet used all its capacity in gas production. In a move to benefit from its gas advantages, Iran recently hosted a conference of producers of natural gas and liquefied petroleum gas (LPG).

On the sidelines of this conference, “Iran Petroleum” interviewed Mohammad-Ali Barati, CEO of Iranian Gas Commercial Company (IGCC), and Tatsuya Hamaguchi, ‎General Manager at Middle East Office for Astomos Energy Corporation.

The full text of interview with Mr. Barati is as follows:

Q: Now that sanctions have been lifted, how do you see Iran’s LPG market?

After financial issues are resolved our exports will increase post-sanctions. Our objective is to export 100% of our products to our new markets. If Ministry of Petroleum assigns us new phases we are ready to sell all their products.

Q: Which countries are currently buying LPG from Iran? Do we have any plans for entering new markets?

A: Our traditional LPG buyers are the countries that used to cooperate with us before the sanctions. Our customers also include countries that joined buyers [of Iran’s LPG] during sanctions and they are now purchasing from us. We plan to reestablish contacts with traditional and reliable buyers of Iran’s LPG. These customers include Japan and South Korea. We are currently focusing on China and India. If our problems related to price index in Europe market are resolved we are ready to export our products to the countries in this continent, too.

Q: How much LPG is Iran currently exporting? How much will it export to Europe?

A: Our exports currently total 1.1 million tons, which are produced by phases 4 and 5 [of South Pars gas field]. If Iran’s Ministry of Petroleum awards new phases to us, the products of new phases will be exported to Europe. One of our strategic goals is to export LPG to Europe. Exporting LPG to these countries will have many advantages for us. Of course as I said there must be surveys and agreement about the prices. We failed to communicate with Europe during years of sanctions and we are looking for new markets in this continent. In this regard, we are currently in talks with Italy and Spain. If these negotiations prove fruitful we will export several spot cargoes to these countries in the first step. If our products are welcomed we will become active in the long- term.

Q: How different are the current LPG prices from those under years of sanctions?

A: As far as LPG trading is concerned, two issues are involved. The first thing is the market share and pricing. If we are currently offering discounts to customers it is because of insurance problems. Once these problems are resolved, the price of products will become realistic. Another issue is financial transaction with P&I Club, which affects our prices. Meantime, our prices are not much different from our competitors’ in the region. If our financial transactions become normal and the volume of cargoes increases the prices will improve.

Q: How do you compare trading in Iran and in regional companies?

A: The [calendar] year 1394 (which ended on March 19) was a good year for us and we exported all our products to our target markets. We have already sold all our products in advance for up to end of June and our contract starts from July. Last year, our exports went to China and India. We are certain that in the coming year we will be able to export all of our production if we exercise correct market management. Annual data about LPG exports are indicative of constant growth. The products from Kangan and Sarkhoun refineries are exported to Pakistan and Sri Lanka. Due to the low amount of LPG at these refineries, exports to these countries is not costly. But the products from Phases 4 and 5 of South Pars mare mainly destined to China and India.

Q: How do you compare the quality of LPG produced in Iran and in other countries?

A: Earlier, the quality of our LPG for exports was different, but now two types of LPG are being produced in Iran. One type includes products supplied by Bandar Imam Petrochemical plant and Phases 4 and 5 and their quality is below 10 ppm sulfur content. Earlier we had some problems in the gas sector and based on coordination with the engineering section of South Pars Gas Complex, the sulfur content of products is on the decline and we estimate the sulfur content of LPG to reach standard level in five to six months. Standardized quality of LPG is of high significance to us because one of our target markets is Japan. We have to minimize the sulfur amount in LPG due to environmental restrictions.

Q: The LPG market is said to be moving towards saturation. Sanctions have just been lifted on Iran and the country can sell its products quickly. What plans does Iran have for LPG exports as prices are falling?

A: We will put into practice any decision taken at the Iranian Ministry of Petroleum. We will face surplus production in the next two to three years. We have to find ways from now about converting them into other products. For instance, we can set up PDH and factories that create value. We can also use LPT as liquid fuel. We have to find alternatives. Different solutions need to be examined.

Q: Based on these forecasts, does Iran have any intention of cutting its exports?

A: Not at all. We maintain our market share. In line with this objective, we can invest in plants and refineries fed by LPG which we can supply. Therefore, we can gain profits while creating a specific and unique market for our own products.

Japan, New Buyer of Iran LPG

Tatsuya Hamaguchi, ‎General Manager at Middle East Office for Astomos Energy Corporation, was among speakers at the conference. The company is based in Abu Dhabi, but it has not yet established contacts with Iran. It is cooperating with Saudi Arabia, United Arab Emirates, Qatar and Kuwait. Here is an interview with Hamaguchi.

Q: What do you think of Iran LPG industry?

A: This question is a little bit complicated. Currently, even after the sanctions were lifted there are still some problems; for example, payments and P&I problems. In order to take the next step we need to sign contract with Iran.

Q: How much LPG do you plan to buy from Iran?

A: Our country examines the portfolio of countries first, then it determines its annual purchase volume from regional countries. We have not yet reached any final decision on this issue. We may be able to discuss pricing and payment at this seminar. I can’t provide any precise figure.

Q: What do the Japanese people and industrialists think of Iran’s oil and gas industry? What do they think of cooperation with Iran and Iranian companies?

A: Japanese companies are still studying conditions and are waiting for the sanctions to be lifted completely. But after full lifting of the sanctions, the Japanese companies will take into consideration several certain factors with regard to cooperation with Iran. One of them is the price of cargoes and the other one is the specification of products they have bought. The method of payment is also important.

WLPGA Invites IGCC

The international LPG conference, held by Argus every year in different countries, is one of the most important events in the oil and gas industry. For the first time, it was held in Tehran thanks to Iran Gas Commercial Company (IGCC).

During the two-day conference held in Tehran on May 9-10, companies from 65 countries including Australia, England, the Netherlands, New Zealand, India and Pakistan were present.

The objective behind the seminar was to bring together LPG industrialists to discuss global markets, falling oil prices, daily growing demand, higher productivity and exploring new markets.

The World LPG Association (WLPGA) invited Mohammad-Ali Barati to attend a seminar in Istanbul in summer. WLPGA is the authoritative global voice for the liquefied petroleum gas (LPG) industry and the worldwide industry association which represents the interests of the LPG industry globally. The WLPGA promotes the use of LPG to foster a cleaner, healthier and more prosperous world.

With over 200 members headquartered in more than 125 countries, the WLPGA represents the interests of private and public companies from the entire LPG value chain under one umbrella.

Designed with a particular focus on key challenges and industry requirements, the Tehran conference covered topics prioritized by industry stakeholders in order to promote trade, enhance efficiency and forecast vital developments. A group of global experts shared case studies, presented keynotes and led interactive panel discussions.

Oil Crash Impact on Giants

The sharp decline in oil prices has seriously and deeply affected ongoing affairs in both producing and consuming countries. Furthermore, it has affected oil giants, inflicting losses on them.

The oil companies that had failed to pay their debts when oil prices were at their highest are suffering the biggest losses. In order to make up for losses and head off bankruptcy, these companies have resorted to a variety of positive and negative measures.

Studying the consequences of oil price decline on oil giants as well as measures adopted by them for dealing with the crisis are important, in terms of forecasts about the future of oil market.

Consequences

The slump in oil prices has inflicted heavy damage on oil companies, most of which have had to slash their investments in the petroleum industry. Table No. 1 shows the profits and losses of major oil companies in 2015.

Table 1: Profits/Losses of Major Oil Companies, 2015

Company

4Q 2015

Full year 2015

BG

Loss of $29 mln

Profit of $2.3 bln

BP BP., +0.34% BP, -1.47%  

Loss of $3.3 bln

Loss of $6.5 bln

Eni ENI, +1.31%  

Loss of $9.4 bln (€8.5 bln)

Loss of $9.7 bln (€8.8 bln)

Galp Energia GALP, +1.20%  

Profit of $164.2 mln (€149 mln)

Profit of $704 mln (€639 mln)

Lundin PetroleumLUPE, +0.94%  

Loss of $493.7 mln

Loss of $866.3 mln

Neste NESTE, +0.10%  

Profit of $203.3 mln (€209 mln)

Profit of $617 mln (€560 mln)

OMV OMV, +0.89%  

Loss of $1.1 bln (€1 bln)

Loss of $1.2 bln (€1.1 bln)

Repsol REP, +1.74%  

Loss of $2.3 bln (€2.1 bln)

Loss of $1.3 bln (€1.2 bln)

Royal Dutch ShellRDSB, +0.21%  

Profit of $939 mln

Profit of $1.9 bln

Statoil STL, +0.67%  

Loss of $1.1 bln (9.2 bln NOK)

Loss of $4.3 bln (37.3 bln NOK)

Total FP, +1.12% TOT, -1.06%  

Loss of $1.6 bln

Profit of $5.1 bln

Tullow Oil TLW, +0.41%  

No quarterly earnings

Loss of $1 bln

Generally speaking, oil price decline has had a number of consequences for oil giants.

Profit Loss: Some companies have seen their profits fall sharply. Official reports indicate that the revenues of top international companies like Schlumberger, Royal/Dutch Shell, Britain’s BP, France’s Total, France’s GDF Suez, Italy’s Eni, US’s Chevron, ConocoPhillips and ExxonMobil, Russia’s Gazprom, Lukoil and Rosneft, China’s PetroChina and Sinopec, Canada’s Imperial Oil, Malaysia’s Petronas, Spain’s Repsol, Brazil’s Petrobras, Austria’s OMV, Saudi Aramco, Norway’s Statoil have declined.

Job Cuts: Some of these companies have had to axe jobs. For instance, BP has announced plans to fire 1,000 staff due to big losses in 2015, the highest in 20 years. Abu Dhabi's oil giant ADNOC is cutting thousands of jobs as it vies to cut costs to cope with a sharp drop in oil revenues. ADNOC manages and oversees oil production of more than 3.15 mb/d.

Abu Dhabi controls the bulk of the oil wealth of the United Arab Emirates which is the sixth largest OPEC member in terms of reserves.

Assets Sale: Some companies have started selling their assets in order to escape the threat of bankruptcy.

Projects on Hold: Oil projects with low economic justification have been put on hold.

Exploration Halted: Exploration and production from newly discovered oil fields have come to a halt. For instance in 2015, some major oil companies like BP, Shell, Statoil, Chevron and Woodside Petroleum halted some of their new projects which are mainly located in the Gulf of Mexico, Africa and Canada. There projects were expected to produce 5.6 billion barrels of crude oil from tar sands.

Refining Capacity Enhancement: Some companies like Shell, BP, Chevron and ExxonMobil have had to increase their refining capacity in a bid to produce oil products instead of crude oil.

Managers Resignation: In some major oil companies, top managers like exploration director of BP have had to step down due to loss production. The British giant has suffered losses due to oil crash.

Investment Cut: Major oil companies have significantly cut their investments in the oil sector. The world is experiencing a historic period of low investment in oil. The reason is clear. The oil price decline to $37, which was last seen 11 years ago, makes investment in most oil fields where extraction is costly uneconomical. According to Norwegian consulting group Rystad Energy, investment in oil is expected to fall to its lowest in six years in 2016, to $522 billion, down 22% from the year before. It shows that the world is experiencing fall in investment in the oil industry for two years in a row for the first time since 1986.

Budget Cut: Some oil companies have had to cut their budgets and costs. For example, BP, Total and Statoil need 60 dollar oil for balancing their budget; therefore, they have had to cut their costs. Chevron and ConocoPhillips have announced that they have cut their budgets by a fourth. Shell has also raised the possibility of reducing costs by more than $5 billion.

Stock Selling: Some oil companies have had no option but to sell some of their stocks in order to evade some problems created for them.

Therefore, top oil companies in the world have been following the aforesaid policies in a bid to leave behind the crisis of low revenues and manage oil profits.

Ways Out

In an attempt to get a way out of this crisis, oil giants have envisaged several solutions:

Setting Ceiling for Investment Cut: Oil giants have set ceilings for reducing their investments so that in case oil prices rebound they would be able to pocket profits anew.

Investment in Refining: Although the decline in oil prices has reduced the profits of big oil companies and inflicted losses on them, the refineries have logged big profits. That is why most big companies are increasing investment in refined products. By investing in refinery products and focusing on processing, big companies are trying to make up for losses caused by oil crash. It has to be recalled that big oil companies that have invested in upstream sector for production are among the main investors in the refining sector in most countries. Last year, following a sharp decline in feedstock price, the refineries experienced an unprecedented increase in their profits because their refined products including gasoline did not experience a crash like oil.

Getting Loans: Companies will have to get more loans in order to make up for their losses and pay dividends to investors. Since the ratio of oil giants to their assets continues to stand at a quite low level (around 20% or lower), getting loans could be of help to these companies.

Oil Companies Merger: Some small oil companies are likely to tie up or be acquired by big companies as a solution to possible bankruptcy. Ernst & Young, a multinational professional services firm headquartered in London, has announced that the merger of oil companies is likely to continue in 2016 because the financial pressure from oil price slump will force smaller companies to accept proposals by buyers.

Investment in Reliable Resources: Oil companies have lost their motivation for investment in sectors with lower profitability. For instance, most companies are no longer willing to invest in shale oil. But most big companies are eager to invest in reliable resources. An example is seen in the willingness of most big companies for investment in different sectors of Iran’s oil and gas. Under conditions that world oil giants have been harmed by oil price decline and have practically lost their power of investment in exploration and production from newly discovered fields, Iran continues to be attractive for them. Most oil giants have welcomed Iran’s new model of oil contracts – Iran Petroleum Contract (IPC) which is to replace buyback. In fact, the economic and commercial conditions set forth in IPC have convinced Western companies to opt for investment in Iran’s oil and gas fields even under conditions of recession. Iran’s petroleum minister Bijan Zangeneh has said that the country needs $200 billion of investment in its petroleum industry. That makes Iran an attractive country for major oil companies.

1-------------CNPC Strengthens Offshore Mozambique Ties

CNPC Chairman Wang Yilin and Omar Mitha, chairman of Mozambique’s national oil and gas company ENH, have signed a cooperation framework agreement between the two companies.

This will reinforce their collaboration in oil and gas exploration and production and natural gas processing and marketing.

This will lead to CNPC participating in Mozambique’s E&P projects and developing technicians and managers for the country’s oil industry.

CNPC has been participating in Mozambique offshore gas E&P projects since 2013. Block 4 is the company’s first ultra-deep subsea natural gas venture and the largest individual project of Chinese enterprises in the country.

In addition, the company is involved in oilfield services and engineering construction projects in Mozambique, such as geophysical prospecting, pipeline construction, project contracting, and equipment supply.

2---------------Aqualis Extends Warranty Role With ONGC

United India Insurance Co. has re-appointed Aqualis Offshore to provide marine warranty services to ONGC offshore India.

This is the third one-year contract for Aqualis Offshore since it started working for United and ONGC in 2014.

Marine warranty surveyors from the company’s office in Dubai will support ONGC’s fleet of jackup rigs and mobile offshore production units in Indian waters.

Operations include reviews of rig move documentation, issue of certification and on-board attendance.

3------------Platform, FPSO Moorings in Place in Australia

Offshore pre-lay has been completed of the 77-km (48-mi) chain and cable mooring system for INPEX’s Ichthys LNG project in the Browse basin off Australia’s northern coast.

This involved installing 49 chains on the seabed in water depths of up to 250 m (820 ft) and anchored to foundation piles 5.5 m (18 ft) in diameter and 63 m (206 ft) long.

The mooring system should secure the central processing facility (CPF) and FPSO to the seafloor at the Ichthys field location for at least 40 years of continuous operation.

Once at the field, the CPF will deliver natural gas and condensate through an 890-km (553-mi) subsea gas export pipeline to onshore processing facilities in the Northern Territory. Most of the condensate will be processed through the FPSO and shipped directly to market from the field.

Total weight of the anchor chains is more than 40,000 metric tons (44,092 tons) – each chain link weighs more than 700 kg (1,543 lb).

The 28 CPF mooring consignment comprised more than 25,000 metric tons of mainly 178-mm diameter chain, while the 21 FPSO mooring chains, mainly 161-mm diameter, weigh a total of more than 15,000 metric tons (16,534 tons).

Ichthys project managing director Louis Bon said the mooring system pre-lay was a significant undertaking with challenging soil conditions for the piling scope of work.

As the field is 120 km (74.5 mi) from the main hump back whale migratory routes and calving grounds of northwest Australia, an early decision was taken to avoid pile driving during the whale calving period as associated underwater noise may have created a disturbance.

The CPF and FPSO are nearing completion at shipyards in South Korea, after which they will be towed 5,600 km (3,479 mi) to the field.

Aside from the mooring system, more than 16,000 metric tons (17,637 tons) of subsea structures and 140 km (87 mi) of rigid flowlines have been installed for the project.

 

4---------- Mexico Seismic Survey Near Completion

TGS has acquired around 75% of its 186,000-km (115,575-mi) Gigante 2D seismic survey over Mexico’s offshore sector.

This is designed to tie into the company’s regional 2D grid across the US Gulf of Mexico.

Analysis of preliminary data has led to identification of numerous prospective play fairways within a variety of structural provinces.

Delivery of fasttrack pre-stack time data continues, with 103,380 km (64,237 mi) currently available along with 64,000 km (39,768 mi) of preliminary pre-stack depth data for Mexico’s Deep Water Bid Round this December.

In addition, TGS has acquired almost one-third of associated multi-beam data, used to identify hydrocarbon seeps on the seafloor. It is using the results for its seafloor coring operations which began on Jan. 22.

Coring in the Perdido area has finished. Seafloor core samples will be analyzed to determine hydrocarbon grade and will be combined with the company’s other geoscience data as part of a comprehensive interpretative study of the region.

Elsewhere, Norway’s government has notified TGS of a claim for compensation of up to NOK326 million ($39 million) covering the government’s alleged tax losses.

These are said to have arisen from tax benefits received by Skeie Energy (later known as E&P Holding AS) under the Petroleum Tax Act in connection with a sale of seismic data in 2009 from TGS to Skeie.

The government alleges that TGS has aided Skeie in attaining undue tax advantages. However, TGS denies any wrongdoing and maintains its position that it is not liable for the claims.

It views the sale of seismic data to Skeie Energy as a legitimate transaction between two independent companies, involving a sale at market prices.

5-----NPD Receives Northeastern Barents Sea Drill Cores

Geologists from the Norwegian Petroleum Directorate (NPD) are analyzing drill cores retrieved from seven shallow wells drilled last fall in the northeastern Barents Sea.

This is an area currently off-limits to petroleum activity.

The team is studying 1,000 m (3,281 ft) of shallow stratigraphic cores with a magnifying glass, tape measure, and hydrochloric acid at the core store in Stavanger.

Later this year external consultants will conduct biostratigraphic work to determine the age of sedimentary rocks and geochemical studies.

“Once these studies have been completed, we will understand much more about the geology in these sea areas,” said geologist Andreas Bjørnestad, who participated in the drilling expedition with the vessel Bucentaur.

The cores were first transported to the NPD core store in Trondheim where three consultants prepared the samples. Last month the container holding the cores arrived at the core store in Stavanger, which holds samples and drill cuttings from nearly all exploration and production wells drilled on the Norwegian shelf.

While most of these drill cores are from reservoir rocks, the samples taken last fall were complete cores from the seabed, containing both source and reservoir rocks. They should therefore provide useful information on the subsurface, NPD said.

The drill cores are 5-7 cm in diameter and are split lengthwise and will be used for research into sediment types, stratigraphy, sedimentation environment, and climate variations.

1-----------EU and Energy Firms Court Algeria Gas

European Union officials and energy firms urged Algeria to adapt to more competitive energy markets so as to attract the investment needed to pump more gas north again after years of dwindling exports.

Algeria is seen as a natural partner for the European Union as it looks to diversify energy supplies after the Ukraine conflict again exposed the risks of relying too much on the bloc's top gas supplier, Russia.

 

The North African country is the EU's third biggest gas supplier behind Russia and Norway, yet its export capacity through three pipelines and LNG shipments across the Mediterranean Sea is widely underused.

Declining European demand has cut into Algerian exports, but the amount of gas for export has also been hit by a combination of slowing production from mature fields, low investment and Algeria's own rapidly expanding need for gas to generate power.

"Algeria needs to bring in more investment if it is to maintain its exports to the EU in the long term," EU Climate and Energy Commissioner Miguel Arias Canete told a business forum in Algiers. "If this continues in the long term, then Algeria's position as a key supplier may be compromised."

Algeria's long-term gas contracts to Europe are due to expire through 2021 and European companies are pushing for more flexible deals given the more competitive gas market, though Algerian officials appear committed to long-term arrangements.

Algeria has dozens of projects, mostly in its southern Sahara, that the government expects to generate new production and help keep its flow of gas exports to Europe stable. But it has failed to attract the investment needed to discover and develop new fields and maintain old ones.

Executives from major European firms at the forum, including Spain's Repsol, ENI, and Norway's Statoil, acknowledged Algeria was a key supplier, but urged officials to reduce red tape and address security concerns and tough regulatory terms.

"Only the best projects will be developed ... be demanding with us, but we will be demanding too," Total's executive committee member Philippe Sauquet told the forum, also attended by state oil firm Sonatrach and the energy ministry.

Oil industry sources say the problems Algeria has struggled with over the past decade have stemmed from a glacial bureaucracy, tough contract terms, security worries, delayed projects and turmoil at state oil company Sonatrach.

The forum was also discussing renewable energy sources and energy efficiency, as well as technology for alternative energy sources as Algeria looks to reduce its reliance on gas to produce electricity and free up more for export.

According to a Sonatrach document from a March meeting with EU officials, oil companies had six areas of concern, including lack of quality offers and clearer data, rigid contracts, fiscal terms, taxes, and the need for more flexibility.

Still, there have been signs of progress since last year, industry sources, EU and Algerian officials say.

Talks between technical teams are working on common ground. Sonatrach, long hampered by rapid management turnover and scandals, is starting to appear a little more agile, offering direct negotiations as a more flexible approach.

And gas exports to Europe are rising, Algerian officials say, helped by new fields. Sonatrach says shipments will grow 15 percent to more than 50 bcm in 2016. Shipments by pipeline and LNG were up 30 percent in the first 4 months.

"We are listening to investors to remove any constraints they face, and if necessary, to make improvements in this," Energy Minister Salah Khebri said, without detailing what amendments the government was considering.

But he said any review to Algeria's long-term, oil price-indexed gas contracts to a more spot based model, would need financial guarantees from banks willing to accept the change.

2----------- Kuwait Plans to Invest $42bn by 2022

Kuwait’s state-run oil company is planning US$42 billion in investments by 2022, as the country pursues a three-fold strategy to increase oil production, expand its refineries and flesh out a clean fuels project.

Speaking at an oil committee meeting, Kuwait National Petroleum Corporation’s (KNPC) officials said investments would focus on expanding two key refineries—Mina Al Ahmadi and Mina Abdullah.

KNPC officials also touted the country’s Clean Fuel Project (CFP), which they said was already more than half complete and should be 75 percent complete by the end of this year.

It all fits into Kuwait’s apparent policy of spending extravagantly in the middle of an oil price slump that is now easing.

A senior Kuwaiti official was quoted as saying that Kuwait is "spending as much as possible" to boost economic growth in an atmosphere of depressed oil prices.

But cuts are also in order. Finance Minister Anas Al-Saleh, also the acting oil minister, has told Bloomberg that the country is pursuing some austerity and other measures as well, including a reduction in utility subsidies, the introduction of corporate taxes, and merging of state entities.

“We are determined to go forward and spend as much as possible on our economy and infrastructure,” Al-Saleh said in an interview with Bloomberg Television, adding that reducing the budget shortfall is also a priority.

Last week, a senior Kuwait Petroleum Corp official said the company planned to increase oil production by 44 percent to almost 4 million barrels a day in 2020. That was when Kuwaiti crude was trading at around $40 per barrel.

3------------Norway: Forget About $100 Crude Coming Back

The oil market is rebalancing, but no one should count on prices recovering to $100 a barrel again: that’s the message from Norway’s petroleum and energy minister.

Brent crude has surged more than 75 percent from a 12-year low earlier this year as a global glut shows signs of easing, bringing relief to oil companies and producing countries like Norway, which have been pummeled by the worst market downturn in a generation. While it’s “quite obvious” that supply and demand will return to equilibrium, it doesn’t mean Norway is planning -- or even hoping -- for prices to go back to what they were, Tord Lien said in a Bloomberg TV interview.

“It’s better to plan for $60 and let the people who want to hope for $100, hope for $100,” he said. “We saw oil prices hitting $140 a barrel, and that does not contribute to economic growth. So , I’m not hoping for it.”

The collapse in crude prices has put Norway, Western Europe’s biggest oil and gas producer, at a crossroads, with investments in its offshore industry falling the most since 2000 and the government for the first time dipping into its $850 billion sovereign wealth fund to plug budget holes.

State-controlled Statoil ASA, Norway’s biggest oil company, said Lien’s comment on planning for $60 was a “reasonable business model.”

“I’d be surprised if we don’t see $100 again,” Statoil Senior Vice President for Marketing and Trading Tor Martin Anfinnsen said in an interview in Oslo. “But I hope, as Tord Lien, that we don’t get a new level of $100 or above. That would undermine the industry’s long-term perspective.”

Even as 40,000 jobs disappeared in two years, the Nordic country resisted deploying drastic measures, like tax breaks for the oil industry introduced in the U.K. The Norwegian petroleum-tax system, which includes a top tax of 78 percent but offers generous deductions for exploration and development spending, is “the best” there is and remains attractive because of its stability,

Virgin Territory

Norway has instead kept offering new acreage to explorers, such as new licenses in a Virgin area of the Arctic Barents Sea along the maritime border with Russia as recently as last week. It was the first time Norway opened entirely new blocks to the industry in more than 20 years. After crude production dropped by half since a 2000 peak and as exploration results hit an almost 10-year low in 2015, the Nordic country is betting on the Barents Sea to help it maintain output in the coming decades.

Both Norwegian authorities and the companies involved “have a strong belief in the possibility of finding significant resources in the Barents Sea,” Lien said.

 

4---------US Crude Supply Down 5.1m Barrels

 

U.S. crude oil supplies fell by 5.1 million barrels for the week ending in May 20th, causing the largest inventory draw since December 2015, according to American Petroleum Institute’s (API) weekly report.

 

Ahead of the data, the anticipated reduction in supply caused crude prices to jump over US$49 a barrel. It was expected that the draw would be two million barrels or less.

 

Zero Hedge pointed out a seasonal trend for large draws in May. Last year, crude oil experienced a draw of 16.4 million barrels around the same time of the current month.

 

Oil supplies at Cushing, Oklahoma dropped by 189,000 barrels - the first in four weeks.

 

Distillate supplies decreased by almost three million barrels.

 

Gasoline inventories, on the other hand, rose dramatically with a build of 3.6 million barrels instead of a draw of 1.5 million.

 

Last week, the amount of crude oil at hand dropped by 1.1 million barrels, less than the three million barrel dip forecasted by S&P Global Platts.

 

During the week ending on May 13th, crude oil supplies fell by 1.14 million barrels, while Cushing increased its stock by 508,000 barrels.

 

The API, however, does not have the last work on this week’s inventory situation. Recent weeks have seen the Energy Information Agency (EIA) come out with completely contradictory data, so all eyes will be on the official report which is to be published.

 

5----Oil Discoveries Sink to Lowest Since 1952

Oil discoveries in 2015 fell to their lowest since 1952 as energy companies slashed exploration budgets in the wake of the oil price fall, creating a gap for meeting future demand, analysts at Morgan Stanley said.

 

The oil and gas industry discovered 2.8 billion barrels of oil outside the United States last year, the equivalent of one month of global consumption, the U.S. bank said, quoting data from consultancy Rystad Energy.

 

Including the United States, where the rapid expansion of the onshore shale industry unlocked major resources over the past decade, global discoveries rose to 12.1 billion figure - but still the lowest since 1952, when the oil industry was one-seventh of its current size.

 

Oil discoveries are vital to replace resources, meet still-growing demand and offset the depletion of existing fields.

The sharp drop in oil prices over the past two years has led companies including Exxon Mobil and Royal Dutch Shell to sharply reduce budgets, particularly for exploration, where spending fell in 2015 to around 95 billion from $168 billion two years earlier, according to Morgan Stanley.

 

Despite a big increase in exploration spending since the start of the decade, when oil demand rapidly rose, there have been few major hydrocarbon discoveries, such as Statoil's Johan Sverdrup field off Norway's coast or Eni's giant Zohr gas field off Egypt.

 

BP last week announced the surprise departure of its exploration boss, and a shift in its oil search strategy that is focusing mainly on expanding existing fields rather than venturing expensively into the unknown.

 

A big increase in new oil fields in recent years and the ramp up of Iran's production following the lifting of international sanctions mean that in the short term, the impact of the low exploration record will be limited.

 

But even under the most modest demand forecasts, driven by a drive to limit global warming to 2 degrees Celsius, where consumption will decline to around 86 million barrels per day in 2030, only around two thirds of the demand can be met by currently producing fields or resources under development, Morgan Stanley said.

 

"Building this capacity over the next 25 years will require ongoing investment. Our strong suspicion is that this will be higher than what companies are currently spending, even relative to the 2 Degrees scenario under which demand is falling."

 

The outlook for exploration remains challenged, the bank said.

 

"The return on exploration dollars spent has clearly deteriorated in recent years. On top of this, oil companies increasingly need to consider scenarios for oil demand in which there may not be much need for further exploration."

 

6----UK Approves Fracking

 

Third Energy U.K. Gas Ltd. was given the go-ahead to frack an existing U.K. natural gas well, overcoming last-minute protests and reviving a practice not used in Britain for five years.

North Yorkshire County Council approved a proposal by Third Energy to create five fractures in a vertical gas well in the Ryedale district in northeast England. The council’s planning committee voted by a margin of seven to four in favor of the plan after a two-day meeting that drew heated opposition.

“It’s obviously very positive news and it’s an important first step,” said Corin Taylor, a director at U.K. Onshore Oil and Gas, a trade association that represents Third Energy and spoke in favor of its application. “Now it will really be about whether or not that gas can be produced in sufficient quantities,” said by phone.

The decision comes in the middle of a national debate about fracking, gas supply, climate change and energy security. Plunging domestic production has caused Prime Minister David Cameron’s government to support the controversial practice to shore up energy supplies. Fracking caused tremors in the U.K. in 2011 after Cuadrilla Resources Ltd. unknowingly drilled into an area with a fault. A temporary moratorium was put in place as the government sought to address concern the technique is unsafe.

Opponents can still contest the approval and request a judicial review. That could delay Third Energy’s plans by a year if an injunction is put in place that halts work while the U.K. government determines whether the application is valid, according to Taylor.

Third Energy’s Chief Executive Officer Rasik Valand said the company viewed the approval as a “huge responsibility” rather than a victory, according to a statement on its website. “We will have to deliver on our commitment, made to the committee and to the people of Ryedale, to undertake this operation safely and without impacting on the local environment.”

Hydraulic fracturing, or fracking, uses water, sand and chemicals to blast underground rock to release trapped fuel.

The U.K. may have as much as 26 tcf of technically recoverable shale gas, the U.S. Energy Information Administration said in 2013, or about nine years of the nation’s gas consumption. It should become clearer whether other companies will be able to resume fracking in the U.K. by the end of the year.

Third Energy’s gas application, filed in June 2015, requested permission to fracture an extension of a well drilled in 2013 in the northern English countryside and carry out associated clean-up and monitoring activities. The company estimates the fracking will be completed within eight weeks and says the purpose is to flow test gas to help determine the volume of reserves in the Bowland Shale.

“That will be an important result but it’s not necessarily the case just because the well flows there it will flow everywhere,” said Taylor. “You do need to carry out tests in other wells as well.”

An application by Cuadrilla to drill eight exploratory wells in northern England has been under consideration by local officials for three years and will be decided on by Secretary of State for Communities Greg Clark by July 4. Ineos Group, the U.K.’s largest closely held company by sales, expects fracking in the country within two years and estimates seismic surveying will be completed in about six months. IGas Energy Plc is looking at existing data on exploration blocks awarded to it by the U.K. government to determine areas rich in shale gas deposits.

7---Venezuela Ryes $2.5 bn Debt Issue

Venezuelan state oil company PDVSA is preparing to issue $2.5 billion in promissory notes to settle unpaid bills to services companies, according to industry sources and documents seen by Reuters.

PDVSA has already issued at least $310 million in debt securities as part of a broader effort to prevent crucial oil services providers from downing their tools for lack of payment, Reuters reported this month.

The company has hired little-known, Miami-based financial services firm CP Capital to structure 3-year notes with a one-year grace period that will have the same status as PDVSA's global bonds, according to documents obtained by Reuters.

The operation creates additional financial obligations for a company already facing doubts about its capacity to meet ballooning bond payments amid low oil prices, a collapsing socialist economy, and chronic shortages reminiscent of the Soviet bloc.

President Nicolas Maduro said any talk of default is part of an international campaign to undermine his government and points out that the ruling Socialist Party has never missed a bond payment.

"CP Capital has been hired to advise PDVSA on the exchange of commercial invoices for financial debt with a minimum amount of $2.5 billion," read a PDVSA document seen by Reuters.

"PDVSA will issue unsecured debt with the same risk levels as PDVSA's other publicly traded notes and obligations," read the document, adding that CP Capital will work with providers to help them get paid for outstanding bills.

PDVSA's board of directors approved the operation in April, according to a separate PDVSA memorandum.

Neither PDVSA nor CP Capital responded to requests for comment.

The document did not say which companies would participate.

PDVSA's most recent financial statements show it owes nearly $21 billion to providers, though industry sources say the amount denominated in dollars is around $7 billion.

Participants in the operation include small and medium-sized service companies but not top industry players, according to two industry sources involved in the negotiations.

One supplier has agreed to the proposal because it has not received hard currency payment in over a year, according to documents provided by a company source who asked that the company not be named.

That company was told by PDVSA that the securities had a "cross default" clause linking them to PDVSA's other bonds, according to the documents.

Many providers have said they will not participate in the operation due to the heavy discounts they will likely suffer, according to a third industry source also involved.

The sources asked not to be identified because talks are ongoing and because they are not authorized to comment publicly on the issue.

The total haircut to providers will depend on the market value of the promissory notes, which are expected to price below PDVSA's bonds because they are more difficult to trade.

PDVSA's benchmark 2022 bond trades at around 45 cents on the dollar.

RIPI Supports Iran National Soccer Team

Football pitches have long posed a challenge to Iran’s soccer games. Iranian sports officials, coaches and players have been constantly complaining about the stadiums’ grass, but no serious step has been taken for the resolution of this problem. Except for Azadi Stadium in Tehran and several other stadiums, other soccer pitches are not appropriate for football games.

Several months to go to reparatory matches for the World Cup, this issue has infuriated the head coach of Iran’s national football team. In his interviews, Carlos Queiroz has complained that there is no proper venue for training.

Now, this issue has been resolved to some extent thanks to Iran’s Ministry of Petroleum and Iran’s Research Institute of Petroleum Industry (RIPI).

RIPI Valuable Work

After Iran’s soccer head coach Carlos Queiroz said most stadiums in Tehran are not appropriate for national soccer team training and Azadi Satidum failed to house training due to its grass problems, RIPI officials decided to offer their soccer pitch to Iran’s national football team as Queiroz is preparing Iranian footballers to find their way into the 2018 World Cup in Russia.

VP Stresses Support for Football

Several months ago, Iran’s first vice preident Es’haq Jahangiri ordered sports officials to throw their weight behind Iran’s national soccer team. Officials at Iran’s Ministry of Petroleum and RIPI offered to support the team. In a statement, RIPI said: “Pursuant to the First Vice President’s instruction for all-out support for national football team in preparation for Russia World Cup and given emphasis placed by Dr [Hamid-Reza] Katouzian, the RIPI director, on the necessity of support [for national football] and putting all RIPI sports facilities at their disposal, the national team managed to hold appropriate exercises at this complex.”

Background

It is not the first time that training for World Cup matches are held on the RIPI soccer pitch. Last March, Queiroz trained Iranian footballers for more than two weeks there. A new round of training is also to be held on the same pitch.

The RIPI has volunteered to provide venue for the national football team’s training in order to help it prepare itself for the World Cup matches.

Full Facilities

The complex the RIPI has put at the disposal of Iran’s national soccer team is not limited to soccer pitch. Modern bodybuilding, sauna, Jacuzzi and swimming pool, office, conference hall and every other sports facility are available.

Geographical Location

In addition to the high quality of sports facilities, the geographical location of RIPI is appropriate. It is located at the western boulevard of Azadi Stadium. The important point is that the RIPI pitch used to be used exclusively by the research institute’s staff. But now given national and international objectives, these facilities are put at the disposal of national soccer team without any quid pro quo.

Towards World Cup

The only soccer pitch approved by the technical panel of national soccer team is the RIPI’s pitch. Queiroz has repeatedly offered gratitude to RIPI and reminded officials of the fact that a body with no connection to sports has taken such a stride in favor of national soccer.

“On behalf of the players I thank the RIPI officials for having put all their facilities at the disposal of national team,” he said, adding: “A Portuguese proverb goes that someone who has everything does not need to put everything at the disposal of others. Without these supports we could not do anything.”

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Interview with Afshin Peirovani, manager of national football team:

We Are Grateful to RIPI

Afshin Peirovani, who managers national football team, has become Queiroz’s right-hand man.

Peirovani, the former captain of Iran’s national team, has managed to bring about good relations between the Iranian footballers and the Portuguese head coach. He gives a positive assessment of the RIPI facilities and expresses hope that other football-related bodies would support national team.

Here is an interview with Peirovani:

Q: The soccer pitch problem seems to remain unresolved, doesn’t it?

A: Yes, unfortunately we have been talking about the improper quality of the soccer pitches, but nothing happens. We were denied the camp ground of national teams and even Azadi Stadium during the days club matches are not held. We were offered Dastgerdi Stadium, but Queiroz was unhappy with its grass and he rejected it.

Q: What about RIPI’s pitch? Are you happy with it?

A: I feel compelled to offer my sincere gratitude to RIPI officials for having provided us with such a proper and good space. National football team should not be outside football space and it should not seek assistance from bodies outside football, but we owe RIPI. The soccer pitch here has still some problems, but RIPI did its best for helping national team. That is nice job which must be appreciated.

Q: Have you had any negotiations with RIPI officials?

A: I talked to the sports director of RIPI and I thanked him. At present RIPI’s pitch is much better than other training grounds in terms of quality. RIPI’s view of national team is excellent. They expressed their readiness to put all their sports potentialities at the disposal of national team. This issue comes at a time football bodies refuse to be cooperative. What’s interesting for me is that RIPI officials said they were ready to do more for the national team. Such gestures will remain forever in the memory of football.

Q: Do you think that the national team will be able to force its way into World Cup?

A: The fact of the matter is that there are still many problems on the way of national team. We need all-out support before taking steps towards World Cup. However, since Mehdi Taj has been named head of football federation we are in much better conditions. We held several meetings and we reached agreements. The national team is enjoying support and I hope that this trend will continue until World Cup games start.

Q: What are future plans for national team?

A: Preparatory matches for World Cup start in September. Before that we will hold three training rounds and I hope that preparations would be made for some preparatory matches so that we would fare better in the face of our tough rivals.

Isfahan, Half of the World

Isfahan has long been credited with the tile of “half of the world” in Iran and across the globe. The existence of more than 6,000 historical monuments, which are centuries and millennia old, along with intact natural attractions can provide good reason for such an internationally recognized title.

Due to the importance and abundance of historical monuments in Isfahan Province, Iran Petroleum continues its introduction of Isfahan in this issue. The first part was printed in Issue No. 46.

Ali Qapu Palace

Ali Qapu is a grand palace located on the western side of the Naqsh e Jahan Square, opposite Sheikh Lotfollah Mosque, and had been originally designed as a vast portal. It is thirty-eight meters high and there are seven floors, each accessible by a difficult spiral staircase. In the sixth floor, Music Hall, deep circular niches are found in the walls, having not only aesthetic value, but also acoustic.

There are floral, animal, and bird motifs in the artistic works in Ali Qapu. The highly ornamented doors and windows of the palace have almost all been pillaged at times of social anarchy. Only one window on the third floor has escaped the ravages of time. The 18 columns of the hall are covered with mirrors and its ceiling is decorated with great paintings.

On the sixth floor, the royal reception and banquets were held. The largest rooms are found on this floor. The stucco decoration of the banquet hall abounds in motif of various vessels and cups. This floor was popularly called the Music Hall. Here various ensembles performed music and sang songs. Ali Qapu is rich in naturalistic wall paintings by Reza Abbasi, the court painter of Shah Abbas I, and his pupils.

 

Vank Cathedral

Holy Savior Cathedral, also known the Church of the Saintly Sisters, is a cathedral located in the New Julfa district of Isfahan, Iran. It is commonly referred to as the Vank, which means "monastery" or "convent" in Armenian language.

The cathedral was established in 1606, dedicated to the hundreds of thousands of Armenian deportees that were resettled by Shah Abbas I during the Ottoman War of 1603-1618.

The cathedral consists of a domed sanctuary, much like an Iranian mosque, but with the significant addition of a semi-octagonal apse and raised chancel usually seen in western churches. The cathedral's exteriors are in relatively modern brickwork and are exceptionally plain compared to its elaborately decorated interior. The interior is covered with fine frescos and gilded carvings and includes a wainscot of rich tile work.  The ceiling above the entrance is painted with delicate floral motifs in the style of Persian miniature. Two sections, or bands, of murals run around the interior walls: the top section depicts events from the life of Jesus.

Hasht Behesht

Hasht Behesht, meaning "Eight Paradises" is a Safavid era palace in Isfahan. It was built in 1669 and is today protected by Iran's Cultural Heritage Organization. Of more than forty mansions which existed in Isfahan during the rule of Safavids, this is the only one left today.

The vast garden where this palace is located was part of the larger Bulbul Garden built by Shah Esmaeil I.

This hexagonal monument has four totally different views.

Menar-e-jomban

Menar-e-jomban, is a monument located in Isfahan. Construction began in the 14th century to cover the grave of Amu Abdollah Soqla. Its notable feature is that if one of the minarets is shaken, the other minaret will shake as well. The veranda is 10 meters (33 ft) high and 10 meters (33 ft) in width, the minarets are 7 meters (23 ft) taller and are 4 meters (13 ft) in circumference. The roof above the shrine contains some skilled brickwork. The brick minarets were constructed later, and are probably of Safavid dynasty era origin.