IOEC Open to Foreign Investment

Abdol-Qasem Rahmani, CEO of Iranian Offshore Engineering and Construction Company (IOEC), says this company is in talks with international companies, particularly Europeans, for operating oil and gas projects.

“Gas or oil platforms like Forouzan platform, weighing 7,000 tons, used to be constructed in South Korea, but now there is such potential inside the country,” he said.

Rahmani explained about IOEC potentialities in operating infrastructure oil and gas projects, saying: “This company contributes to infrastructure projects in the oil and gas sectors in collaboration with foreign companies capable of investment.”

He also referred to IOEC plans for the current year and said a total of five platforms built for South Pars gas field are to be loaded out this year.

Rahmani said Platform 19C is now ready to start operation, adding: “Platform 19A and the platform of Phase 21 of South Pars have been loaded out on the barge to be transferred to sea for operation in July.”

“By installing five platforms in South Pars this year, more than 100 mcm/d of gas will be added to the country’s gas recovery capacity,” he said.

Private Sector Can Enhance Non-Oil Exports

Iranian President Hassan Rouhani has underlined the significance of boosting the country's non-oil exports and reaching out for stable markets especially in the region, adding, the private sector can set the country's non-oil exports in motion.

Addressing a gathering with a number of Iranian businesspeople, Rouhani said: "All economic activists, entrepreneurs, guilds and banks, backed by the administration, shall join hands to promote the country's production level and generate jobs."

He underlined the necessity of raising export of non-oil items and reaching out for stable markets in the world, especially in the region, adding that entrepreneurs and the private sector can set in motion the engine of non-oil exports for the country.

The Iranian president also stressed the role of banks in boosting national production and generation of jobs.

"Unless banks take steps and reduce interest rates, none of the problems with these two sectors will be solved," he added.

Russia’s Tatneft Eyes Iran Projects 

Russia's Tatneft has announced plans to study investment in Iran’s oil projects.

Tatneft chief executive Nail Maganov said on the sidelines of the St Petersburg International Economic Forum: “Given our experience in recovery from oil reservoirs, we study projects and the possibility of active cooperation with Iran under the present circumstances.”

“In the meantime, we regularly monitor the situation in Libya and Syria in order to resume our oil cooperation projects in these two countries after necessary conditions are provided,” he said.

Tatneft is a Russian vertically integrated oil and gas company with headquarters in the city of Almetyevsk, in the Republic of Tatarstan. It is the sixth largest oil company in Russia.

The main shareholder is the Republic of Tatarstan through its holding company Svyazinvestneftekhim, which holds 34% of Tatneft. The Government of Tatarstan holds also a golden share in the company.

Iran-Turkmenistan Cooperation Deal Finalized

Special envoy of Minister of Petroleum for Export of Technical and Engineering Goods and Services Mohammad-Taqi Amanpour says the Iran-Turkmenistan $2.5 billion agreement was finalized.

Amanpour told more than 150 Iranian companies are now active in Turkmenistan.

He said Iran will import about 30 billion worth gas from Turkmenistan in the next 10 years, while exporting $30 billion worth technical and engineering worth goods and services to the country.

He said cooperation with Turkmenistan in the domain falls among policies of Iranian government and President Hassan Rouhani had talked with the Turkmen Party about the issue during his visit to Turkmenistan in 2014.

NPC Head Stresses Value-Chain Completion in New Projects

Managing director of National Petrochemical Company (NPC) underlined curbing crude oil sale as a primal NPC strategy under the 6th development plan, adding the company accepts new petrochemical projects only if they help complete the industry's value chain.

Marziyeh Shahdaei, who is also deputy petroleum minister in petrochemical affairs, said preventing sale of crude materials in a push to bolster the petrochemical industry in Iran is a chief strategy by NPC under the 6th five-year development plan (2016-2021), and completion of value chain gains much significance under the strategy. 
"NPC considers for construction only those projects that complete the value chain of the sector," she added. 
"NPC, as the custodian of the petrochemical industry of Iran, considers projects only if their investors take measures to complete the value chain and feedstocks like methane, ethane, propane, etc. are supplied to newly-built plants only if do so," the official said.
She said Iran will launch 11 petrochemical projects by the end of the current Iranian calendar year to March 20 2017 which will add nearly 6 million metric tons to the country's total petrochemical output. 

Phase 21 Bracing Starts

Bracing operations have started on the platform of Phase 21 of South Pars gas field after successful load-out of this platform.

The bracing operation started in the presence of Ali-Akbar Shabanpour, CEO of Pars Oil and Gas Company, Abdol-Qasem Rahmani, CEO of Iranian Offshore Engineering and Construction Company (IOEC), contractors and other contributors to the project.

The platform for Phase 21 is the second to have been loaded out by IOEC, after Platform 19A.

The Phase 21 platform, weighing 2,700 tons with a capacity of 1 bcf of gas, is expected to be moved along with Platform 19A to the Persian Gulf aboard Abouzar barge.

The transfer of the two platforms together requires sophisticated and technical operations that will be handled by Iranian specialists.

Now as load-out operations finish in Phase 21, bracing operations start on this platform. In case of favorable weather conditions, both platforms are projected to have been installed early next month.

According to plans, the load-out of the Phase 21 platform will be the first in Phase 20&21 of the giant offshore gas field.

Among the most important features of this offshore project is that 6 million persons/hour have been spent in Khorramshahr Yard under searing sun and amid hazes.

These projects have directly created 1,200 jobs a day in the form of contractor and supervisor. All necessary operations have been handled by IOEC experts.

Phases 20 and 21 of South Pars are under development for the extraction of 50 mcm/d of gas for injection into Iran gas trunkline, production of 77,000 b/d of gas condensate for exports, production of 1 million tons a day of liquefied petroleum gas (LPG) for exports, production of 1 million tons a day of ethane for feeding petrochemical plants and 400 tons a day of sulfur for exports.

India's March Iran Oil Imports Top 500,000 b/d

India's Iran oil imports topped 500,000 barrels per day (bpd) in March, highest in at least five years, as private refiner Reliance Industries resumed purchases after a multi-year lay-off, preliminary tanker data obtained by Reuters shows.

Indian refiners together imported 506,100 bpd oil from Iran last month, a jump of about 135 percent from February, the data showed. In March of last year, the refiners halted imports from Iran to keep shipments within the parameters of the temporary nuclear deal then in force.

The higher imports by India signals Tehran's success in beginning to regain market share after the lifting of Western sanctions targeting its nuclear program.

Iran has said it will continue increasing its oil production and exports until it reaches the market position it held before the imposition of sanctions.

In the fiscal year ended on March 31, Indian refiners shipped in 14.4 percent more oil from Iran at about 251,100 bpd, the data showed. The increase was the largest annual growth since the 2007/08 fiscal year, according to Reuters data.

Essar Oil was the biggest importer of Iranian oil in March with about 207,400 bpd oil, followed by about 130,000 bpd by Mangalore Refinery and Petrochemicals Ltd and about 90,600 bpd by Reliance, its first shipments in about six years.

Reliance had halted Iranian oil imports in 2010 because it was worried that the threat of U.S. sanctions on companies doing business with the Islamic republic would complicate its efforts to boost market share for its fuels in the United States.

Last month Reliance imported Forozan grade and South Pars condensate from Iran, the data showed.

Indian Oil Corp, the country's biggest refiner and not a regular buyer of Iranian oil, shipped in 2 million barrels or about 67,000 bpd from Tehran last month.

Iran Upstream Oil Achievements

Petroleum industry is key to economic development in every country. Some pivotal roles of petroleum industry include its contribution to the materialization of the macro-objectives of national economy in the 20-Year Vision Plan, pushing ahead Iran’s energy and economic diplomacy and contribution to guaranteeing national security through development of cooperation  as well as regional and international interactions, a major share in the gross domestic product (GDP) and the country’s hard currency revenues as well as more than 95% share in supplying the country’s primary energy needs.

The petroleum industry is one of the main advantages of Iran and it provides a good platform for the country to guarantee the independence of its budget of petrodollars and facilitate sustainable economic development in the country.

Since oil revenues continue to be the main driver in the country’s economy, all-out planning in the oil, gas and petrochemical sectors are of strategic significance.

In this report, we review the most important measures undertaken by Iranian Ministry of Petroleum in the upstream oil industry in the last calendar year which ended on March 19.

An increase in crude oil and gas condensate production and exports has been materialized following the development and completion of South Pars gas field and development of planned recovery from the oil layer of the giant reservoir. This sector has seen effective results.

South Pars Development/Production

Concentrating on the development of South Pars gas field, making the necessary arrangements and benefiting from all potentialities for enhancing rich gas production from this joint gas field, full operation of Phase 12 of South Pars as the last development project in this gas field in terms of natural gas refining capacity; Iranian entities have handled 67% of the task, including construction and launch of all top-drives and offshore pipe-laying, at Phase 12 of South Pars.

Completion and inauguration of Phases 15 and 16 of South Pars gas field with more than 70% share for domestic manufacturing in this project; this figure is the highest ever share of domestic manufacturing in implementing South Pars projects.

Commencement of production from Phases 17-18 and Phase 19 of South Pars, installation of two production platforms, construction of pipelines for offshore gas transfer and gas refining units in the development of Phases 17 and 18 of South Pars are among other projects under E&P plan for this giant gas field shared with neighboring Qatar.

All-out and integrated development of the remaining phases of South Pars (Phases 11-24) with a production capacity of 537.7 mcm/d of rich gas, 425 mcm/d of sweet gas, 710 tb/d of gas condensate, 6.5 mt/y of ethane and 6.7 mt/y of liquefied petroleum gas and also the construction of Iran Gas Trunkline 6, 9 and 11 for the transfer of 110 mcm/d of gas from Assaluyeh have been already approved by Iran's Economic Council.

South Pars Rich Gas Production

Rich gas production from South Pars, which is jointly operated by Iran and Qatar, has seen significant increase under the administration of President Hassan Rouhani. When the administration of President Rouhani took office, rich gas production in Iran was 235.5 mcm/d. Last calendar year, it reached 360.3 mcm/d. Rich gas production from South Pars gas field rose to 404.6 mcm/d in March.

West Karoun E&P

As far as development of joint fields in West Karoun area is concerned, the required arrangements have been made for enhancing crude oil production.

Amendments to conditions for those contractors active in West Karoun fields (expulsion of a Chinese contractor involved in the development of South Azadegan, regulating relations and contracts with other contractors and increasing the number of operating drilling rigs from 3 to 18) and the second-phase startup of early production at Yadavaran field for a 50 tb/d crude oil output are among activities carried out in this regard.

The integrated development of West Karoun oil fields with a capacity of 550 tb/d has been enshrined in the annual budget of the calendar year 1393, which ended in March 2015.

The efforts undertaken for the development of West Karoun fields have resulted in brilliant results. Development of Yadavaran field (Phase 1) with a production target of 85 tb/d of crude oil and development of North Azadegan field (Phase 1) with a production target of 75 tb/d are ready to come on-stream.

Other activities regarding the development of West Karoun field include the startup of the first train of production and desalting in West Karoun fields with a capacity of 55 tb/d, facilitating conditions for benefiting from the resources of National Development Fund of Iran as well as other financial resources available for domestic manufacturers and contractors and targeted and optimal allocation of credit and financial resources to projects.

Other Measures in Oil/Gas Fields

In addition to the development of South Pars gas field and the joint fields located in West Karoun area, the Iranian Ministry of Petroleum has taken effective steps with regard to the development of joint oil and gas fields. One of them is the development of Azar oil field.

Shoring up the drilling rigs fleet of the Exploration Directorate of National Iranian Oil Company for further exploration and appraisal activities in border areas, optimal and  target-oriented allocation of credit and financial resources to projects and removal of major obstacles on the way of development of joint fields, finalization of strategy for the development of undeveloped fields and accelerating review of proposals for the development of shared fields are among other measures undertaken in this regard.

Crude Oil/Condensate Production and Exports

The Iranian Ministry of Petroleum has also taken effective measures with regard to production and export of crude oil and gas condensate. Under the administration of President Hassan Rouhani, crude oil and gas condensate production have seen significant growth. Furthermore, the necessary arrangements have been made for developing contractual frameworks that would be attractive to foreign investors. Upon a proposal by the Iranian Ministry of Petroleum, the general conditions, the structure and the model of upstream oil and gas contracts have been approved by the government. The new model of contracts, known as Iran Petroleum Contract (IPC), has already been unveiled through two seminars. IPC is expected to replace buyback deals which are no longer effective for Iran’s rather mature fields.

Focus on crude oil exports at NIOC, transparent trading of crude oil and gas condensate, elimination of intermediaries, negotiations and follow-up on revival of Iran’s pre-sanctions crude oil buyers, following up on the revival of crude oil swap in Central Asia, entente with state-run and private agent banks for financial facilities, following up on the supply of crude oil and oil products at Iran Energy Exchange and activation of relevant markets like forward markets and planning for the development of Jask Port as Iran’s new oil export terminal (construction of oil terminal in Jask, oil pipeline stretching from Khuzestan to Jask) are among important measures by Iran’s Ministry of Petroleum in crude oil and gas condensate production and exports. These measures have had effective and significant results.

In conclusion, one can say that thanks to the foresight of Minister Bijan Zangeneh the target-oriented activities under way at the Ministry of Petroleum are in fact a reconstruction of the petroleum industry as the driver of Iran’s economy.

Partnership in Exploration Blocks

The Exploration Directorate of National Iranian Oil Company (NIOC) witnessed record exploration during the fourth and fifth Five-Year Economic Development Plans. It was ranked first in the world in exploration for several years in a row. In those years, oil and gas field exploration in the country was much more than envisaged. But in recent years, this industry has been ignored due to insufficient resources.

Saleh Hendi, director of exploration at NIOC, tells Iran Petroleum in an interview that exploration industry in Iran needs renovation.

Here is the full text of the interview with Mr. Hendi.

Q: During the 3rd and 4th development plan, 14 exploration blocks were awarded to foreign companies for development. What was the result?

A: Iran is a vast country with highly potential of oil and gas exploration. According to geological and seismic data, Iran has been divided into five zones in terms of oil and gas capacity. The zones with high potentiality for hydrocarbon reserves are located in the west and southwest. A large number of oil and gas fields have so far been discovered in these zones, however more oil and gas fields are hoped to be explored. Contribution of international companies to Iran’s upstream oil industry dates back to before the 1979 Islamic Revolution. By that time, extended exploration studies had been done and new fields had been found.

After the Islamic Revolution, NIOC was tasked in 1997 with formulating a framework for awarding exploration blocks to qualified international companies with the objective of attracting foreign investment, expanding exploration operations across the country even in low potential and high-risk zones and accelerating exploration of hydrocarbon reserves.

From 1998 to 2006, 15 blocks were awarded under buyback deals to companies from Europe, South America and East Asia. In all these 15 blocks, 26 exploration and appraisal wells were drilled, resulting in the exploration of 8 oil and gas fields in Iran. Among the blocks, Anaran (Azar field), Mehr (Band Karkheh field) and Farsi (Farzad B field) are commercial. Given changes in Iran’s exploration plans and ongoing progress in new technologies, four more fields are expected to become operational in the future. For instance, some oil fields in Iran are of low permeability. Or some fields containing heavy crude could be expected to become commercial if such technologies as hydraulic fracturing are applied.

Q: In addition to the discovery of 8 oil and gas fields in Iran, what else was achieved from the cession of work to foreign companies?

A: In addition to what I already mentioned, I would like  to highlight the high volume of exploration operations and gathering valuable geological and geophysical data and drilling of 26 wells. They have all made great contribution to defining exploration strategies and conducting studies for that purpose. Furthermore, more than $1 billion has been invested in these blocks by international companies. In this regard, introduction and application of modern exploration technologies in these projects have provided the ground for Iranian experts to get familiar with the latest achievements in the petroleum industry in the world.

Q: How many new exploration projects does Iran have for cession to foreign companies under IPC (Iran Petroleum Contract) deals?

A: Fourteen new exploration blocks are to be put out to tender. The blocks to be offered for IPC contracts are Abadan, Bamdad, Timab, Zahab, Moghan, Kavir, Raz, Sarakhs, Dousti, Taybad and Sistan, Mahan, Parsa and Toudej.

Q: Working in some blocks like Sistan is riskier than working in blocks located in the west. Are there any incentives in the IPC contracts for foreign companies that choose to work in these high-risk blocks?

A: No. Our objective behind putting out a variety of blocks is to attract companies with different expertise. We think that at least four of these blocks will be welcomed by foreign companies.

Q: Have you held any talks with foreign companies about the exploration blocks following the removal of sanctions?

A: Talks have been held on the general outlines. Companies that used to operate projects in Iran have shown their willingness for presence in these blocks, but we have to wait for more official actions.

Q: Has any contract or memorandum been signed with foreign companies since sanctions were lifted?

A: So far, four memorandums of understanding have been signed with international companies and top universities for joint exploration studies. Three of them have been implemented and are under way now. We hope that the fourth one will be implemented soon.

Q: How do you assess Iranian companies’ potential for cooperation with foreign companies?

A: Iranian companies have experienced a big jump over the past 10 years with regard to exploration services and upstream oil industry and now we have very good companies capable of providing technical services in drilling and seismic testing. However, we have not so far had any E&P company compliant with global standards. Of course a number of well-known domestic companies have been assessed in this regard and they meet minimum requirements. We hope that after the implementation of IPC deals and cooperation with internationally recognized E&P companies, we will witness the activities of first generation of domestic E&P companies.

One of the problems we are facing in the exploration sector and I intend to remove it is the relationship between producer companies and exploration ones. Exploration is a link in the upstream oil industry chain. Upstream chain is like a collective sport activity.

To resolve this problem, we held talks with Iran Central Oil Fields Company (ICOFC) at the 21st Oil Show. In cooperation with this company, we plan to transform extension and appraisal wells into production wells and pursue a new process in the exchange of data.

Q: What are your main plans following your appointment as the NIOC exploration director?

A: Oil and gas exploration is a long-term process and it could not be limited to a one or two-year timeframe. It will take around seven years since the time that geological activities start until exploration wells are drilled and economic studies are conducted. The exploration industry is in fact a late-impact enterprise; therefore, exploration projects are defined as long-term ones in Iran. For the moment, two five-year plans have been defined for the NIOC Exploration Directorate. The minimum objective sought under these plans is exploration of oil and gas by 2025. Therefore, exploration needs appropriate and stable resources with minimum changes. Due to this characteristic, if exploration is dropped off the list of priorities, one day it will be very difficult to make up for consequences.

After defining this strategy and long-term plans, my next plans will consist of convincing senior managers to guarantee their implementation.

Changing the NIOC Exploration Directorate into a project-oriented entity, emphasis on the establishment of knowledge management in this knowledge-based entity, maximizing outsourcing and policymaking, shifting the exploration focus from fields to sedimentary basins and conducting integrated large-scale studies for appraising sedimentary basins and tight oil systems are among my main agenda.

Q: How many wells will be drilled under these exploration plans?

A: Under these plans, nearly 80 oil and gas exploration wells are envisaged to be spudded. This number of wells will definitely be accompanied by massive exploration, geological and seismic activities. The serious plan currently envisaged to be done is to conduct integrated G&G studies for drilling these wells. These projects, which are part of preliminary and basic studies, will be soon implemented across Iran with the objective of oil and gas exploration. For instance, aerial magnetometry data gathering is to be done for the first time in Iran. These operations have always been done by airplanes, but we have recently received two proposals for conducting this project with unmanned aircraft. Therefore, this project is in better conditions in terms of economy, security and technicality. With this magnetic method, the depth of sediments in the country will be known and naturally by achieving this data we will be able to do exploration more effectively. By implementing aerial magnetometry project in Iran, we will see a major development in exploration in the country.

Q: Is the necessary technology for this project available in Iran? What is your timeframe for the implementation of this project?

A: Since local companies have no experience in such operations this project must be assigned to international companies. We are currently in talks with four European companies. Of course given the strong expert body of the Exploration Directorate the analysis and interpretation of data are expected to be done by this Directorate. Exploration in Iran has so far been based on identifying oil and gas fields, but from now on, this sector involves the main plans and more specifically sedimentary basin studies. In other words, we will witness integration in oil and gas exploration in Iran. We have seen such studies in Persian Gulf Morvarid exploration project. These studies enable us to identify parent rock, oil traps and routes of oil migration. That will facilitate exploration procedure in Iran.

Exploration of unconventional oil and gas resources has long been under way in Iran. Now, plans will be more serious about shale oil, shale gas and gas hydrates.

Given the implementation of the first phase of gas hydrate project in the Sea of Oman we plan to start the second phase of these exploration studies. In this regard an offshore well is planned to be drilled, but due to its high costs we are looking for foreign contractor and investor.

Exploration studies for shale gas in Lorestan province are now at 70% and according to the achievements recently presented to a seminar, this area is projected to have major gas reserves.

Shale oil exploration in Qalikouh area is also under way, but they have yet to be finalized. Therefore, no forecast could be made.

I have to recall that in Iran the time of discovery of gigantic fields like Azadegan and South Pars is gone. Therefore, exploration costs and risks in Iran have increased drastically. In parallel with structural traps, we are also looking for stratigraphic traps because such reservoirs are highly likely to exist in Iran. For instance, we are assured that the oil fields in Abadan Plain and West Karoun area are of stratigraphic and combined oil traps. Nevertheless, we are not ignoring traps near salty domes either. In this regard, we are conducting studies in Fars Province in collaboration with University of Barcelona.

Jofair Up for Foreign Investment

Jofair oil field is located in hydrocarbon-rich West Karoun area in southwestern Iran. This field is estimated to hold 2.1 billion barrels of crude oil in place. Jofair was one of projects introduced to foreign investors during a Tehran conference which unveiled the new model of Iran’s oil contracts – Iran Petroleum Contract (IPC). Once fully developed, the field would be producing 50 tb/d of oil.

West Karoun is a quite vast swath of land stretching from Karoun River to Iran-Iraq border. West Karoun area lies in oil-rich Khuzestan Province, but no serious exploration and production project has been carried out due to the Iraqi invasion of Iran in the 1980s and the ensuing devastation and mine-infested areas.

Now, West Karoun area has been proven to be holding huge oil reserves and Jofair field is an important reservoir there.

Iranian mine disposal experts have managed to demine the entire area.

Most fields located in West Karoun are shared with Iraq, but Jofair is an independent one and owned fully by Iran.

Development of West Karoun fields for oil production is part of strategic plans in Iran for enhanced recovery. To that effect, National Iranian Oil Company (NIOC) was assigned with the task to invest more than $500 million in this area several years ago. Over the past two years, West Karoun area has been focused upon. Jofair is expected to start production within the framework of the petroleum industry long-term development plan during the 2025 horizon.

Jofair oil field has also several gas layers. Natural gas production from this field stands at 6.3 mcf/d. Administered by Arvandan Oil and gas Production Company, Jofair development has been assigned to Petroiran Development Company (PEDCO). It means that foreign companies willing to invest in Iran must seek partnership with PEDCO under IPC deals. Four exploration wells were drilled in Jofair through 1975 to 1978. Three reservoirs- Ilam, Sarvak and Gadovan-were identified then.

Jofair oil field is located adjacent to Azadegan, Yadvaran and Ab Teimour fields. It is 14 kilometers long and 70 kilometers wide. Development of this field is in preliminary stage and early production has started at a rate of 3 tb/d.

Of the 2.1 billion barrels of oil in place in Jofair, 89% belongs to Ilam, 6% to Sarvak and 5% to Gadovan. It contains 95% heavy crude oil and 5% light crude. The heavy crude oil is 23 degrees API.

3-Phase Development

Early production aside, development of Jofair has three phases. Early production is at the rate of 6 tb/d, the first phase has the rate of 15 tb/d, while the second and the third phases will be 25 tb/d and 50 tb/d, respectively.

Analyzing 3D seismic data, reservoir studies, drilling and completion of two production wells as well as workover and completion of two wells, laying out 40 kilometers of pipeline and installation of crude oil logging installations are among activities related to early production from Jofair. In addition to formulating master development plan (MDP), PEDCO has to handle workover of wells with downhole pumps. That would raise production from this field without having to spud new wells. Development of Jofair had initially been assigned to Belarus’ state oil company (BNK) under a September 2007 agreement worth half a billion dollars. But the project was halted due to the Belarusian Company’s failure to bring production from Jofair to 3,500 b/d. After four years, it had only brought the output to 2,800 b/d. Since the project is held equally by PEDCO and BNK the foreign entity was expropriated. Currently, PEDCO is doing the job alone.

In the area where Jofair is located it is still possible to discover more reserves because production from the primary layers has started and more precise exploration studies are likely to produce more surprising figures in other layers.

A total of 13 oil fields have been marked in West Karoun area. Chief among them are Azadegan, Yadavaran, Darkhoein, Jofair, Band Karkheh, Sousangerd, Moshtaq, Khorramshahr and Omid.

The main oil production layers in West Karoun are Sarvak with 9.88 billion barrels of oil in place, Kajdomi with 1.26 billion barrels, Gadovan with 370 million barrels and Fahlian with 2.332 billion barrels. The recovery rate from these fields is estimated at 6.15%.

Initial estimates indicate that the value of products from West Karoun area would be at least at 135 billion dollars even if oil price is held at around $45. This figure may justify the significance of focus on and planning for this part of the country.

Iran has so far invested around $4.5 billion in this important area, but it still needs $15 billion more in order to reach the 500 tb/d production target from West Karoun. That objective could be achieved through attracting foreign investment and Iranian oil officials hope that the new model of contracts will provide the necessary finances for the development of West Karoun are

Balal Oil Field Gas Layer Seeks Investment

Over recent decades Balal oil field has managed to account for a good share in Iran’s oil production. But the discovery of gas layers in this field, which are geologically related to South Pars gas field, has provided a new propriety in offshore sector for Iran’s petroleum industry. Development of the gas layer of Balal oil field was introduced at this year’s Tehran conference on new oil contracts.

Due to its gas layers, Balal oil field can produce both oil and gas. Balal is located in Hormuzgan province, more precisely in Lavan area off Persian Gulf. It has two proven reservoirs of Arab and Khatia.

Development of Balal oil field under a buyback deal with foreign companies started in 1999. The field came on line three years after. Balal oil field started production at the rate of 20 tb/d. The oil supplied by Balal is of very high quality and is even better than North Sea’s Brent. Balal has cut its production in recent decades. In order to make up for this loss in production drilling rigs have been ordered to be installed.

Currently, around 12,000 b/d of water is being injected into Balal oil field with a view to enhanced recovery. Development of Khatia oil layer in Balal field is one of the important projects operated by Iranian Offshore Oil Company (IOOC).

Currently, five wells in this oil layer are producing 5 tb/d of oil. Another well is to be completed soon. France’s energy giant Total developed this field in 2001 and 2002 but it could not recover oil from Khatia. According to Total’s forecast, Balal oil production must have been 5 tb/d now. But with the development of Khatia, Balal output is double of Total’s forecast.

The oil recovered from this field is delivered to Lavan Island through a 100-kilometer pipeline of 14 inch. After being blended with oil from Salman, it will be processed and prepared for exports.

The gas layers in Balal oil field can produce 500 mcf/d of gas. According to initial estimates, Balal is proven to hold 6 tcf of gas. According to IOOC officials, the H2S content of Balal gas is below 100 ppm.

Iran’s nuclear deal with West was one of the most influential events in the oil sector in recent years. Iran has managed to raise its output to the pre-sanctions level in recent months.

Iran is also seeking investment for the development of mature oil fields in Iran and renovation of decrepit infrastructure with the help of Western specialists.

Iran is determined to regain its standing as the fourth producer of oil behind Saudi Arabia, the United States and Russia.

The objective sought by NIOC is a 50% increase in output over five years to bring production to 5 mb/d. Iran is currently able to produce nearly 4 mb/d of oil and 700 mcm of gas.

Thanks to political overtures and renewed opportunities for investment in Iran’s petroleum industry, foreign companies are picking fields for development. South Korea is eying the gas layer of Balal oil field.

A South Korean delegation that recently visited Tehran submitted a great deal of proposals and plans for oil and gas industry, ranging from liquefied natural gas (LNG) to increased oil imports from Iran. South Korea has not been unaware of future tender bids and like other major oil and gas companies it is eying a field for its future development plans.

Saeed Hafezi, managing director of IOOC, said leading foreign companies have entered talks with Iran for investment mainly in offshore reservoirs which require cutting edge technology. He said that this inclination by foreign companies was due to the implementation of Joint Comprehensive Plan of Action (JCPOA) and the ensuing relaxation of banking sanctions and creation of safe environment for investment and economic activities in Iran.

Hafezi said companies from France, India, the Netherlands, Norway, Australia, Singapore and China have so far held talks with IOOC.

These negotiations are still under way and foreign companies have expressed hope that they would be able to cooperate with Iran in investment, development and providing technical services.

The technical sections of these companies started assessing bottlenecks and complied with technical and investment packages in recent years.

German Firm Ready to Serve Iran Petchem Sector

The German company Chemieanlagenbau Chemnitz GmbH (CAC) has expressed its willingness to transfer technology to Iran to serve Iran's petrochemical sector.

Mario Kuschel, head of Process Engineering bei Chemieanlagenbau Chemnitz GmbH, told Iran Petroleum that Iranian petrochemical companies have shown interest in the CAC technology, too.

The following is the full text of the interview conducted with Kuschel on the sidelines of Iran Oil Show in Tehran.

Q: Would you please tell us about the field of activity of your company?

A: So starting point because you already have so many methanol plants, we thought no need for our family-owned company to invest in something which is already available on the market and the current capacity of production of methanol is  five million tons per year as far as I am informed, you know better than I, more than  one third of it is exported to China and China is not consuming more than the amount that they consumed in the past and as far as I know 15 million tons capacity of methanol is still on schedule to be a finished plant so that will certainly put a lot of pressure on the methanol producers to find buyers for this methanol.

The big hope was of course the conversion of methanol to olefins like propylene but we discovered that based on the activities of steam crackers being built globally to a large broad scale ,within the next years I think we will have one million ton of olefin  and ethylene capacity in India, we will also have another million ton capacity of ethylene and propylene as I think 6,000 tons exists, so these major steam crackers we will have cheap olefins available so we consider methanol to olefins not to be a very viable output to methanol plants because the price of propylene already is depressed and with increasing capacities and stagnant demand I doubt that these prices will rise.

That is why we think of converting methanol to gasoline, gasoline prices are rising already again. I think that delta of the current methanol price versus the rising price of gasoline will make this technology very attractive.

So you can make use of this scheme that is all public information. This scheme shows roughly how everything works. So here we have the raw methanol from your methanol plants, it doesn’t even have to be distilled.  Methanol forms about 46 percent of water which can be re-used in the synthetic gas because most of your methanol originates from crude oil gases so you need water again. So we would liberate the water for this process and the reactor here allows stirring the composition of what you obtain. So if the methanol plant wants to produce a bigger amount of LPG, they keep the residence time short and the temperature low. If they want to have a precursor like maleic anhydride equivalent, one to four, five tetra-methyl benzene, they keep the residence time up and temperatures high and this determines the quantity of these two. So there is no such tool in the world as this reactor which enables you to control what you obtain as a product. No refinery can do that.

The important advantage of this can be observed in the table wherein you see the composition of premium gasoline and its comparison with the European standard. As I have mentioned and you can see density is identical but there are differences in olefins and that is what has made it attractive for the army which needs to have enough reserves. This compound of olefin makes gasoline age. So after one or two years, gasoline which has been exposed to oxygen is no longer performing properly in the engine. So the army

regularly has to replace the gasoline in its storage facilities but not with this gasoline because it has up to 18 percent olefin, so this can lead to some problems.

We can also control the aromatic compounds and that is another big advantage. So this type of gasoline has different advantages and now we are in discussion with different European refineries that are eager to use this as a blending additive because they can reduce the aromatic content, they can increase the life, the shelf time of the product, so that is a big advantage and this is all based on this reactor being able to be controlled.

Q: Have you developed this technology?

A: Yes, the reactor is all state of the art but the technology is our patented technology. Here we had to make sample - 250,000 tons of gasoline - this is the quantity and the mass balance for those who are a bit more interested in technology but I think that is the most interesting part.

Volkswagen has tested this gasoline, and we are a Volkswagen daughter company. They have tested this gasoline in 1.4 liter series engine and you can see on these two drafts there is the blue dots which is the gasoline from our plant and the red one is the gasoline which was from the European gasoline station  the same as what you buy ,and you can see here that this is the rotational number of the engine, so typically in the city you drive at 2,000 - 3,000 rpms and you see that the pressure at the piston in the engine in both cases is identical, and there is hardly any difference visible.

And the same is true for the ignition angle. So it will not ignite any earlier or any later in the combustion chamber so it will perform exactly the same and also the same is true for the efficient consumption of this gasoline, is identical until 4,000 rpms.  

Because this is typically for the racing cars, they start at 4,000 - 5,000 rpms.  So racing cars, they would complain that their consumption is rather higher but standard consumers; they do not have any difference at all. That is almost all the secrets.

Q: It’s good, it’s amazing!

A: Yes and I think that is a very good technology to cope with the pollution problems of all the cars driving through megacities.

Q: I think that converting methanol to propylene is the best thing we can do, but now you said we can also convert methanol to another product.

A: Exactly. This is a competitive process from Exxon Mobil; they do not have this tool to fine tune. This is unique for our process that we can really look what is required to reduce the particular matter in order to have a more healthy environment, as well.

Q: Do you have any plans to find a partner in Iran and work with Iranian companies?

A: Well to my understanding the interest from the big methanol producers whether it is Zagros, Lavan ,Kaveh, or Mayan; now all these producers are desperately looking for an outlet.

As an engineering company, we are not into investment. It is not also our purpose because we cannot become competitors to our customers. If we started to produce methanol as a supplier, as a vendor of such plant, nobody would buy from us anymore. So we cannot invest, rather we can offer the technology, we will sell it to anyone who is interested and what we can try to do, and we just got a good message from the German government that there is obviously some agreement about this issue, and it has been agreed that the history can be put aside and financing shall become possible in the near future, we can support this financing. A certain share must come from the Iranian partner and about up to 85 percent is secured by the German government for export. These are roundabout figures.

Q: You mentioned that you have already talked with some Iranian methanol producers such as Kaveh, Lavan, etc; have these talks been held before or after the lifting of international sanctions on Iran?

A: This technology is brand new so we have to introduce it to our customers and tell them where it is in operation. I think there is no doubt that we can export this technology and we will do that.

Q: Do you have any plans for cooperation in other sectors of oil and gas industry?

A: Yes, we do. It was just a few days ago that we had a discussion with the petrochemical company. It is premature to go into details but we have cooperation with a German company who issues a license, and is requiring the product which they want to license and probably they would also have a share in the investment and I can tell you more in this regard, once we are further in discussion but it is a plan which was supplied in the 1980s, and since then nothing has happened. It sustained out own company and the embargo has led to a situation that the economics of this plan is put under question. However, the idea is now with the German licenser. They have developed this technology further. They have actually the same plan designed three- fold the capacity and they have they have plans which are five percent higher than what is actually operated, so in such constellation I think we can significantly improve the performance of this particular plant.

Q: Since last year a large number of German companies have visited Iran and even your ministers have led delegations to Iran. Most of them have voiced willingness for investment in Iran’s petrochemical sector. What do you think of that?

A: Well, you have very qualified engineers in the country and I think we must all work together because you are in need of investment; you have been in need of rejuvenation of industry for the last ten years. This needs to be worked out as quickly as possible so I think it is an opportunity for everyone, it is a win-win situation for everyone that we can take a share to bring a new technology such as this methanol to fuel. We can also support with this license which was developed further with new generation of catalysts, so all these measures can be taken and we cannot do it all by our own, you cannot do it all by your own. I think it is a great opportunity also to support this long-lasting friendship between the countries.

My father had assistants in the university which were from Iran whom I liked very much so I think we can take that up again.

Q: So do you think that the petrochemical industry provides a good opportunity for Europe, especially Germany to invest in?

A: I would not discriminate anyone. So, yes it is a great opportunity. We should not lose each other. I feel so welcomed here in Iran, so I appreciate very much and I think that is a good start, a good basis. 

Q: And in general, what do you think of Iran Oil Show?

A: Facing all the challenges, I have discussed with the German exhibitors and I heard from my colleagues what was happening the years before, the run of all potential suppliers on this exhibition is enormous. It was very difficult to cope with all the demands. We wanted a booth, they all wanted a booth and there was a lot of improvisation and if I look at it now, everything is different, the infrastructure is not there, what shall we do, but there were so many helpful hands here and that is what I meant, helpful hands, if we work together we get it resolved. So that is the impression I have.

So all the German booths originally in the last year were all in one place like Italian pavilion, like Spanish pavilion, this year they are all scheduled to be concentrated and typically there was an infrastructure. It is all lost but it does not harm. As long as you have helpful hands so now I see this will form basis of cooperation and I think that is great.

Q: As you know in the post-sanctions era, major European firms from Spain, the Netherlands and France have shown interest in Iran’s projects. How can you compete with other European companies in Iran’s market?

A: I do not have any big doubt because it was the philosophy of CAC not only to provide engineered pipes but to develop technology. And we have always had very good relationship with a technical university with whom we developed this methanol to fuel process for instance, and also with the Russian process technologists, they have excellent technology available and this international cooperation supports us. So, I do not see that competition. If we see a good idea in France, we will also pick it up.

As an engineering contractor we have to look around where is the best potential technology available and I do not make any difference whether it comes from Germany, France or Spain. I tried to realize and put into our plans the best ideas. Always an idea can help, is the slogan that we have. That is why we look for the best available technology across the world we can take to the advantage of our customers. So I think it is great that we can choose all the European suppliers specialties from the neighboring countries – the French, the Dutch, and German, that’s all.  

Q: How do you compare this year’s exhibition with those held in previous years?

A: This is the first time that I am here, but I think our company took part in this exhibition in 2005 for the first time and the feedback from my colleagues was very good and they met many people and after the exhibition we kept in touch with those people and clients in Iran and also some projects came from the exhibition.

Q: Have you implemented any projects in Iran since 2005?

A: One was this project which we finished in 2009; it was for Aban petrochemical company. We are also in contact with Research Institute of Petroleum Industry (RIPI).

Huge Investment in Kurdish-Populated Areas

Plans envisaged under Iran’s Vision Plan indicate that petrochemical industry has been chosen as an option for the country to reduce crude oil and natural gas sales in the coming decades. As a value-generating industry, the petrochemical sector has been through a growing trend and today one of the major petrochemical projects heavily banked in on is West Ethylene Pipeline (WEP) as well as petrochemical plants it is supposed to feed.     

Addressing the inauguration of one of these petrochemical plants recently, Iran’s petroleum minister Bijan Zangeneh said Iran’s third petrochemical hub will be established after Assaluyeh and Mahshahr.

Over recent years, petrochemical industry has captivated Iranian officials due to its appropriate productivity and revenue generation. WEP is the most important investment project by Iran’s petroleum ministry for the development of Kurdish-populated areas. In case the downstream sector of these plants is also launched the final products could be exported to Turkey and Iraq because there are no petrochemical facilities in eastern Turkey and northern Iraq.

Due to proper infrastructure, Iran’s petrochemical industry is currently on the path of growth and development, but it needs to complete its value chain. Therefore, as long as the upstream oil sector, particularly South Pars gas field, is being developed, downstream industries must be also taken into consideration as a national strategy.

It must be noted that a balanced development of petrochemical industries requires downstream industries everywhere across the country. Iran is currently building the longest ethylene pipeline in the world in its western provinces with the objective of developing its petrochemical industry and generate more value-added from ethane. According to Iranian petroleum industry officials, the total production from petrochemical projects under way in western Iran, mainly for Kurdish-populated areas, will be worth $8 billion by 2017. Petrochemical plants in western Iran are expected to produce two million tons this year. These plants are the third largest producers in the country.

Marzieh Shahdaei, managing director of National Petrochemical Company (NPC), said this pipeline has a capacity up to 3 million tons. So far five compressor stations have been installed on the way of this pipeline. Apart from compressor’s price, this pipeline has so far cost IRR 12,000 billion.

$4.7bn Investment

Investments made in petrochemical plants located throughout the path of WEP total $3.5 billion. Furthermore, $1.2 billion investment is under way.

The bulk of ethane produced at the refineries of South Pars phases is expected to be delivered to Kavian Petrochemical Plant by next March. Kavian Petrochemical Plant is currently operating at 70% of its rated capacity. After ethane is converted into ethylene to be injected into WEP, a major development will transpire Iran’s petrochemical industry.

WEP is the most important and the largest project remaining from the 4th Economic Development Plan for Iran’s petrochemical industry. This project was adopted in 2002 by the then government in order to help underprivileged western provinces make up for backwardness, create jobs, engage the private sector, stimulate production and upgrade technology in the oil sector. The project was planned to come on-stream by early 2008, but due to many changes, technical problems and increased costs, so far the project has almost progressed 80%. Currently, 5,000 staff are directly employed by petrochemical plants under way in western Iran. Once these plants come online, 3,000 more jobs will be created.

Given the existence of upstream plants along the path of WEP, downstream petrochemical industries are expected to produce a variety of petrochemicals and keep this industry away from selling raw materials. After completion, WEP will have the capacity of transferring 3.5 million tons of ethylene. It will receive 2.5 million tons of ethylene from South pars and one million tons from Gachsaran. WEP will feed 11 petrochemical plants.

11 Petchem Plants

The operations for the construction of Hamedan, Dehdasht, Mamesani, Boroujen and Kazeroun sections of the pipeline have yet to start. Like

Ilam Petrochemical Plant, Tabriz Petrochemical Plant has moved to build its own connection to WEP.

This pipeline is 2,700 kilometers long and will feed 11 petrochemical plants in Kermanshah, Andimeshk, Lorestan, Kurdestan, Miandoab and Mahabad. On the way of WEP are located Kavian, Lorestan and Mahabad petrochemical plants and Kermanshah polymer plant. WEP takes products supplied by Kavian Petrochemical plant to western areas in Iran aimed at development of petrochemical industry.

Iran’s petrochemical industry, which has been growing rapidly in recent years, will enter a new phase next year as petrochemical plants in western provinces become operational.

Hamedan Petrochemical Plant is in the final phases of its construction and Kurdestan Petrochemical Plant is to come on-stream by next March. The first phase of Ilam Petrochemical Plant recently started production and next year it will be able to run at full capacity as it receives more feedstock.

Undoubtedly, Iran’s western province could soon become an industrial hub as petrochemical industry is being developed there. Then petrochemical products will at times meet domestic needs and be exported. NPC projects' manager recently said that construction of three more petrochemical plants is under way rapidly in western Iran.

Ilam Petrochemical Plant is close to coming online, and startup of several petrochemical plants in western Iran will remove impoverishment and provide the infrastructure for development in underprivileged areas.

WEP is currently in its final stages and enjoys full backing of NPC.

Abbas Sha'ri-Moqaddam, former NPC managing director, said one of the major challenges to WEP is local opposition that has so far caused problems for the contractor of the project. Provincial officials do not want to offend local people; therefore, they take no action to resolve this problem.

He said that WEP is fully operational between Assaluyeh and Miandoab, adding: “At present, Morvarid, Ilam, Lorestan, Kurdetan and Kermashah are being fed by this pipeline.”

Sha'ri-Moqaddam said ethylene has not yet been injected to the pipeline between Miandoab and Mahabad due to local opposition.

Shahdaei recently said WEP is 80% completed, adding: “Currently, the second phase of Kavian Petrochemical Plant is ready to come online and is waiting to be fed with ethylene by this pipeline.”

She added that WEP can create new jobs in the area as several petrochemical plants will start operation.

State-run or Private?

The only body competent to decide about WEP to remain in state hands or be privatized is the government because maintenance, control and protection of the pipeline and accountability to consumers of ethylene is a significant and sensitive issue.

The government assigned the construction of WEP to Ministry of Petroleum in 2002. At that time, the project was supposed to cover Kohguiluyeh Boyer Ahmad, Kermanshah, West Azarbaijan and Kurdestan provinces where petrochemical plants were supposed to be built. But after some time more provinces were added to this project.

After Article 44 of the Constitution took effect, petrochemical units lying on the way of WEP were totally privatized. However, no decision was taken about the pipeline itself in the Cabinet. This issue is now a complicated affair for petrochemical industry because maintenance of this pipeline and the ethylene it carries is very sensitive and costly.

This pipeline is unique in the world because of its length. Petrochemical officials recently said a competent and qualified company is expected to be assigned the startup operation of WEP without being put out to tender. But there is still no word on the privatization of the pipeline itself.  A scenario speculated from the past about WEP has been its cession to Kavian Petrochemical Plant as the main producer of ethylene. But conditions have changed and a single company is now both producer and consumer of ethylene.

Byproducts

Production of some alcoholic substances, agricultural consumption, production of chemicals and other special substances are among other advantages of ethylene transfer by this pipeline. These advantages along with other usages of ethylene for various polymer productions have given a boost to ethylene production and transport by capsule in the market, which shows the high value of this product.

A major point in the policies of the Resilient Economy instructed by Supreme Leader Ayatollah Ali Khamenei has been to avoid the sale of crude oil and natural gas.

It is common knowledge that besides crude oil, what keeps Iran safe from fluctuations in the global economy is sustainable development which implies generation of value-added.

WEP can serve the economy of western Iran the most. This pipeline and petrochemical plants on its path have the capacity to play an important role in upgrading Iran’s economic standing, eradicate unemployment, create jobs and generate revenues for western Iran.

Getting more profits through creating a perennial market for petrochemical products, supplying products in consistency with the market’s taste and for getting more profits, helping national macroplans and sustainable job creation in the country, presenting an alternative model for downstream petrochemical development instead of upstream petrochemical development across the country, clearing the way for further contribution of the private sector to the country’s development plans and helping implement Article 44 of the Constitution, the necessity of taking into consideration complementary industries indirectly at the NPC mix and reducing possible risks and shortcomings resulted from international sanctions are among the advantages of development of downstream petrochemical industries alongside important projects like WEP in western Iran.

IRR 31,000 bn for Gasoline Quality

The 11th festival of national environment award was held this year in order to introduce and reward scientific skills and efforts. This award was first introduced in 2000 in line with Article 46 of the executive bylaw incorporated into Environment Protection and Optimization Law adopted by the Environment Supreme Council.

Among people who received awards was Iran’s petroleum minister Bijan Zangeneh. The minister was awarded the plaque of honor for his contribution to improving the quality of fuel and other petroleum products. Zangeneh received the award from First Vice-President Es’haq Jahangiri.

Innovations, inventions, creativity and projects that would reduce costs and prevent pollution or destruction of the environment on a large scale as well as presenting practical projects and conducting valuable and effective studies and research on preventing environmental pollution and destruction are among the criteria for qualification for this national environmental award. Various reports by state bodies have confirmed that the Ministry of Petroleum has managed to improve the quality of gasoline consumed in the country.

Addressing the ceremony, Masoumeh Ebtekar, the head of the Department of the Environment, said discussions in the 9th parliament about fuel produced by petrochemical plants “wasted our time and energy and put us at the receiving end of media attacks”.

“Several cases of inquiry were launched against us, but with the help of Iranian ministers of petroleum and health and the head of Iran National Standards Organization we managed to call a halt to fuel production by petrochemical plants, which was dangerous and did not respect standards and regulations,” she said.

In addition to halting gasoline production at power plants, the Ministry of Petroleum has also taken effective steps for doubling petrochemical production by the end of the 6th Five-Year Economic Development Plan.

According to Zangeneh’s estimates, Iran will become an exporter of high-quality gasoline after the first phase of Persian Gulf Star Refinery becomes operational.

Zangeneh had earlier said that many do not differentiate euro-4 and euro-2 grade gasoline from substandard gasoline and that is why they do not understand the task carried out by the 11th administration.

Zangeneh and Ebtekar were facing many challenges in order to prove their mission. Moreover, distribution of standard gasoline in the cities was very difficult and breathtaking. But it is done now.

Minister Zangeneh had made it clear that he was never for obstinacy and politicization, reiterating his determination to improve the quality of fuel in the country.

In addition to psychological and political costs, the Iranian Ministry of Petroleum has spent IRR 31,000 billion for improving the quality of gasoline in the country. As part of its plans for improving the quality of fuel, the petroleum ministry devised numerous development and reforming plans at Tehran, Arak, Isfahan, Tabriz, Abadan and Lavan refineries. Furthermore, increasing gasoline production, treatment of gasoil, kerosene, light and heavy naphtha as well as catalytic conversion were among the important development projects carried out at refineries across the country. In the wake of implementation of development plans for gasoline production, euro-4 gasoline production has increased in recent years. The quality of gasoil production has been also upgraded.

The award given to Zangeneh after three years was due to preventing the emission of 1,500 tons of sulfur a day, preventing the consumption of petrochemical industry solvents and 93% reduction in the benzene content in the air.

Add to this long-term investment by Zangeneh in gasoline self-sufficiency. This investment is fully domestic

with private investors contributing. Its production capacity reaches 360,000 b/d of gas condensate.

When Zangeneh took office, Persian Gulf Star Refinery was just a piece of land next to Assaluyeh site. He stood by this project whose inauguration is approaching. According to latest remarks by Zangeneh, Iran will become self-reliant in gasoline production after Persian Gulf Star Refinery starts producing 12 million liters of euro-4 gasoline.

Some parts of this project overlapped with the period of tough sanctions, but now with openness in international interactions, the future startup of the first and largest gas condensate refinery in Iran is inspiring hopes that Iran will be able to covert gas condensate to values of higher value.

Shazand Refinery Euro-4 Gasoline Output

Alongside Zangeneh’s action for the elimination of contaminated gasoline and production of euro-4 gasoline, one must highlight efforts undertaken for high-quality fuel production at other refineries including Shazand refinery as a major gasoline production project.

Imam Khomeini Refinery in the city of Shazand is the largest single-unit refinery in Iran and is one of the most important oil refineries producing euro-4 gasoline in the country. It was launched 20 years ago, but it is still active. With a production capacity of 171,000 b/d of gasoline production, this refinery has become a center of excellence in production of fuel particularly gasoline in the country. Now, given the shift in the consumption pattern of petroleum products in the country from middle distillates to gasoline and the improvement in the quality of products in line with environmental requirements and international standards, its production capacity has increased from 170,000 b/d to 250,000 b/d. Furthermore, gasoline production has increased 12 million liters a day in exchange for reduction in fuel oil production. The refinery’s feedstock has changed from sweet and light crude oil to a blend of 55% light and 45% heavy crude oil. The refinery’s products are sold on the market with Europe 2004 and 2005 standards.

Shazand refinery is currently in such favorable conditions that the State Privatization Organization has placed Shazand Oil Refining Company on the list of companies to be privatized in the current calendar year. Of course, certain considerations must be taken into account regarding its privatization.

Now the Ministry of Petroleum is determined to continue producing high-quality gasoline even without being rewarded.

After the first phase of Persian Gulf Star Refinery comes online, 12 million liters of euro-4 gasoline will be added to the country’s gasoline mix and Iran will become self-sufficient in gasoline production.

Bandar Abbas oil refinery has reached stable production in petroleum products, except for gasoline. Now its production is rising from 8.5 to 12 million liters a day, 50% of which will be euro-4. All this indicates the government’s firm determination for fundamental changes in this sector.

Iran has yet to reach an ideal point in gasoline production. Last calendar year alone, 62.5 million liters a day of gasoline was produced at 9 refineries in the country while the country’s daily production was 70.5 million liters.

By increasing production of high quality, Iran is hoped to become self-sufficient in gasoline production. The government is now determined to reduce gasoline production by 2 million liters a day this year.           

Petroleum Ministry’s Environment Activities

Ministry of Petroleum’s offshoots have environmental projects under study, including gasoline. They range from a national big project in West Karoun area in western Iran to Amir-Kabir semisubmersible in the Caspian Sea. Green hands go along with oily hands. The Ministry of Petroleum is making great contribution to curbing the harmful impacts of hazes blowing into Iran from neighboring states. For instance, the ministry has been regularly spreading mulches on desert lands in order to halt the entry of dust. The petroleum ministry has fulfilled this duty effectively over the past six years with the development of tools at natural resources administrations in cooperation with heavy machinery manufacturing companies.

Many steps taken by the petroleum ministry are often forgotten due to media focus on the inauguration of projects, but efforts undertaken for the revival of Hoor al-Azim Lagoon and fighting dust and hazes in the oil-rich southwestern Khuzestan province, efforts undertaken for the management of wastes, particularly industrial wastes, planting different species of flora in industrial zones including in Mahshahr and Assaluyeh are among effective measures by the Ministry of Petroleum, whose positive effects could be seen in industrial plants.

Brexit Impact on Oil Market

Britain’s vote to leave the 28-nation European Union not only surprised fellow European countries, but it also sent economic shockwaves through world markets. Energy markets were not immune to this shock and they faced sharp decline in oil and gas prices.

Given the profound economic consequences of Brexit, the oil market is forecast to continue to be under impact.

This article aims at reviewing the short and long-term impacts of Brexit.

Post-Brexit Oil Market Scenarios

It seems that Britain’s historic vote to leave the European bloc after nearly five decades has given rise to two major scenarios for oil market.

1. Long-Term Impact on Oil Market: Based on this scenario, as Brexit inflicted shocks on the energy market in the short term and pushed oil prices down, it will be able to leave such an impact in the long-term too. In such a scenario, world markets will remain shocked over Brexit for some time. Several important factors strengthen this scenario:

1. -Uncertainty about Britain Future: Brexit will in the long-term bring about divergence between Britain and Scotland, Wales and North Ireland. Most Scots and Welsh favored remaining in the EU and there has been deep-seated divergence between these countries and England. Therefore, Britain’s decision to break away from the EU may bring about Brexit on a smaller scale inside Britain. If the logic of Brexit supporters is accepted, other parts of Britain may opt for separation from the United Kingdom. For instance, Scotland’s National Party had warned ahead of Brexit vote that if Britain votes in favor of Brexit while Scotland chooses to remain, Scotland will reluctantly leave the European bloc. That could provide the ground for a new independence referendum.
2. Uncertainly About Britain-EU Future Interaction: Article 50 of Lisbon Treaty stipulates that a vote for leaving the European Union means there is no possibility of returning to the bloc unless all member states give the nod. Therefore, Brexit will prompt the Union to reconsider its interactions with Britain. Until now, Britain had access to Europe’s single market without even paying tariffs. After Brexit is formalized, Britain’s trade with EU member states will cost higher, as tariffs will be introduced. Furthermore, since most European leaders particularly German and French leaders favored Britain’s remaining in the European Union and are now unhappy with Brexit the relations between the EU and Britain are likely to turn sour in the future. That could give rise to tensions between the two sides and leave significant impacts on global oil markets.
3. Uncertainly About EU Future: The European bloc will experience important changes following the Brexit vote and it may even lead to total disintegration. It is possible that other member states that are unhappy with certain EU regulations would follow suit and choose to leave the bloc. Such a mentality already exists in some EU member states. In the wake of Brexit, nationalists in France, Germany and Italy have also called for referendum on leaving the Union. Such a process, which would continue until full collapse of the Union, will definitely affect energy markets in the world.

2. No Long-Term Impact on Oil Market: Based on this scenario, Brexit may give short-term shocks to energy markets and result in oil price decline; however, no long-term impact on the oil market is likely to happen. Under this scenario, the markets in the world will be back to normal situation after getting fully familiar with developments in the market. Several factors are involved in this scenario:

1. No Serious Change in Energy Demand: The oil market is more than ever under the impact of market regulations as well as supply and demand; therefore, Brexit will not decrease demand for energy. Even if Britain’s gross domestic product (GDP) falls 2% in reaction to the vote, demand for oil in England will decline by 1%, or 16,000 b/d, which is equivalent to 0.016% of global demand. That is meager and will not affect the current level of demand. Therefore, no significant volatility will be seen in oil demand to be able to affect the prices.
2. Well Thought-Out Brexit: Since uncertainty about the way Britain decided to leave the EU could give rise to political and economic consequences for European countries, the procedure of Brexit is set to happen quickly and under a well thought-out plan. Therefore, world markets will not remain in uncertainty for a long time and they will recover shortly.

World Markets Perspective

The Brexit vote does not necessarily mean its quick formalization. The procedure will start for Britain to leave the Union, but the country will still remain in the bloc for some time. It must be also noted that leaving the EU is not an automatic procedure and it must be negotiated with other member states. All throughout the Brexit procedure, the European Parliament may veto any new agreement about relations between Britain and EU.

Therefore, negotiations about the Brexit procedure and the nature of bilateral relations will not be limited to the reversal of the European Communities Act (adopted in 1972). It will also affect more than 80,000 pages of EU contracts that have been adopted over the past five decades. The European Communities Act 1972 (is an Act of the Parliament of the United Kingdom providing for the incorporation of European Union law (originally Community law) into the domestic law of the United Kingdom.

In fact, Britain and EU should decide about which agreements they will rescind, change or maintain. Negotiations on these issues may last years, even decades. However, some analysts believe that lack of access to Britain’s consumer market will not benefit Germany and France negotiations about a new trade agreement are likely to pay off soon.

In any case, after the Brexit takes effect Britain will no longer be bound to the EU agreements and then one can talk about the future of world markets in the energy sector. For the moment, it could be predicted that energy markets in the world will experience shocks in the short-term, but the conditions will be back to normal very quickly. As far as the long-term impacts of Brexit are concerned, the future of this procedure and its consequences must be taken into consideration because materialization of any scenario may bring about major changes in the oil market.

1------Deepwater Gas Found in Senegal

Kosmos Energy has made a gas discovery in its Teranga-1 exploration well offshore Senegal.

Located in the Cayar Offshore Profond block approximately 40 mi (65 km) northwest of Dakar in nearly 5,906 ft (1,800 m) of water, the Teranga-1 well was drilled to a total depth of 14,715 ft (4,485 m).

The well encountered 31 m (102 ft) of net gas pay in good-quality reservoir in the Lower Cenomanian objective. Well results confirm that a prolific inboard gas fairway extends approximately 124 mi (200 km) from the Marsouin-1 well in Mauritania through the Greater Tortue area on the maritime boundary to the Teranga-1 well in Senegal.

Kosmos has now drilled five consecutive successful exploration and appraisal wells in this fairway with a 100% success rate.

In the process, the company has discovered a gross Pmean resource of approximately 25 tcf and estimates the fairway may hold more than 50 tcf of resource potential.

Andrew G. Inglis, chairman and CEO, said: “Our continuing exploration success demonstrates we have opened a super-major scale basin offshore Mauritania and Senegal with world-class resource potential. Given the scale and quality of the gas resource discovered along the inboard trend, our focus is to move this resource through to development.

“Our forward exploration plan is to mature the two independent tests with oil potential in northern Mauritania and in the outboard of Mauritania and Senegal for drilling in 2017.”

2--------INPEX Drills Wildcat Offshore Japan

INPEX has spudded an exploratory well offshore Japan’s Shimane and Yamaguchi prefectures.

The program is part of a project commissioned by the Agency of Natural Resources and Energy of the Ministry of Economy, Trade and Industry for the “Heisei 26~28 Domestic Offshore Drilling Program in Japan.”

The location is 130 km (81 mi) northwest of Shimane and 140 km (87 mi) north of Yamaguchi Prefecture. INPEX aims to prove hydrocarbons via detailed analysis and evaluation of data obtained through the exploratory drilling.

3------ New Zealand Water Injection Repairs Nearly Over

Upgrade work is progressing on the mooring system for the Maari FPSO offshore New Zealand.

Once the program is finished, repairs should start to the field’s water injection line.

A simultaneous multi-well workover campaign is also proceeding as planned. Production has continued during the mooring campaign, although some wells have experienced short-term shut-ins for operational reasons.

Once water injection has been reinstated, daily production should be enhanced due to resumed pressure support for key producers.

Thereafter production from Maari should stabilize for the rest of the year at around 12,000 b/d.

Cue has a 15% interest in the nearby offshore PEP 51313 permit, also operated by OMV.

The partners are assessing the remaining potential associated with the Matariki trend, up-dip of the Maari field. OMV is finalizing studies to determine the feasibility of acquiring additional 3D seismic to reduce the geologic risk of the remaining prospects.

Over the next few months Cue will decide whether to join the next stage of the permit work program, which will include acquisition and processing of 100 sq km (38.6 sq mi) of 3D seismic, or reprocessing of 100 sq km of existing 3D data.

4----- Venezuela Pipe Replacement Done

PDVSA, Roffco, and IMR Global Supply have completed what is claimed to be the first project to replace large-diameter steel oil pipelines with flexible oil lines in Lake Maracaibo, Venezuela.

IMR performed the installation using the purpose-built vessel Zumaque Tracer. Aquatic Engineering & Construction provided technicians and equipment to handle and deploy the pipelines, and project management, engineering and operational support.

Lake Maracaibo is a large brackish bay connected to the Gulf of Venezuela by the 55-km (34-mi) Tablazo Strait at the northern end, and fed by numerous rivers, the largest being the Catatumbo. The lake is a major shipping route to the ports of Maracaibo and Cabimas.

The first part of the installation took place in late 2015 using 18 reels supplied by GE Oil & Gas/Wellstream. These comprised eight reels of 9-in. ID pipe and 10 of 12-in. ID pipe on 28-ft (8.5-m) diameter 200-metric ton (220-ton) reels.

The Wellstream reels and Aquatic equipment spread – a 500-metric (551-ton) ton modular drive system, 50-metric ton (55-ton) tensioner and ancillary equipment, were loaded at Port of Blyth, northeast England, onto the transportation vessel, HC Paulina for shipping to Ciudad Ojeba, Venezuela.

On arrival, all equipment was transferred to the installation vessel.

5----Providence Secures License Offshore Ireland

Providence Resources has secured a new licensing option following the conclusion of the second phase of awards in the Atlantic Margin licensing round (AMLR).

The company has agreed to terms to raise capital partly to assist in covering the cost of its portfolio of projects and prospects offshore Ireland.

As part of the AMLR, Providence (80%) operated a joint evaluation and bidding group with Sosina Exploration (20%).

The Providence-led group has been offered licensing option 16/27 over an area of around 1,324 sq km (511 sq mi) in the Porcupine basin. The option area is located about 150 km (93 mi) offshore western Ireland and is situated in around 1,300 m (4,265 ft) water depth. 

The licensing option lies directly adjacent to and north of frontier exploration license (FEL) 3/04, which contains the Lower Cretaceous Dunquin North residual oil column.

Last July, Providence agreed to acquire Atlantic Petroleum (Ireland) Ltd.’s 4% stake in FEL 3/04. Subject to approval by the Irish government and the fulfilment of the remaining terms and conditions under the farm-out agreement with Atlantic, Providence’s non-operated stake in FEL 3/04 will increase from 16% to 20%.

During regional interpretation and mapping of vintage 2D seismic reflection data, Providence identified an extensive north-south orientated Paleocene basin-floor channel and fan system within the Porcupine basin’s axial. Termed the Avalon system, it runs about 550 sq km (212 sq mi) and is interpreted to be sourced from the north of the basin and shales out in a southerly distal direction.

---- Gazprom Eyes Asset Swap Deals With Shell, OMV

Russia's state-controlled gas giant Gazprom could gain control over some of the assets that Shell acquired earlier this year from BG group, a senior Gazprom executive said in an interview.

Gazprom's Deputy Chief Executive Alexander Medvedev said the BG holdings could be included in an asset swap deal between Gazprom and Shell that was announced last year. He did not say what the BG holdings were or where they were located.

"The work is under way, progress has been made and the final result is just around the corner - it's certain that the (deals will be completed) by the year-end, maybe earlier," Medvedev said in an interview.

"Obviously, the BG assets are also in that basket," Medvedev told Reuters in the interview.

Gazprom is subject to U.S. financial sanctions imposed on Russia over the conflict in Ukraine.

Shell signed a deal with Gazprom last week to study jointly building a $10 billion gas plant on the Baltic Sea, as part of their strategic partnership which also foresees asset swaps.

Shell, which wants to sell as much as $30 billion worth of assets and exit 10 countries after merging with BG, has never commented on the assets it plans to offer to Gazprom.

The asset swap deal is not covered by the scope of the sanctions. Nevertheless, it could still arouse political sensitivities, especially if as part of the deal the Russian company, run by a close ally of Russian President Vladimir Putin, ends up controlling assets in western Europe.

Under the previously-announced terms of their asset swap deal, Gazprom and Shell will jointly invest $13 billion in three projects in Russia, including construction of a liquefied natural gas plant on the Baltic Sea and the Sakhalin-2 LNG plant expansion, in the Pacific Ocean.

----Technip Replaces Offshore UAE Pipeline

Technip has won a contract for additional work at the ongoing Rashid-C development offshore Dubai.

The scope covers engineering, procurement, fabrication, installation, and pre-commissioning of a replacement 42-in. export pipeline.

Technip allocated the derrick pipelay vessel G1201 for Rashid-C, where project operator Dubai Petroleum Establishment has commissioned a new platform.

During 1Q, the company also secured a fasttrack order for disconnection of the Kitan field FPSO in the Timor Sea off northern Australia, using the Deep Orient vessel.

The vessel has since mobilized to Indonesia for installation of flexible pipe, manufactured at Technip’s Asiaflex plant in Malaysia, for Eni’s Jangkrik project.

Offshore Congo, the G1200 and the newbuild Skandi Africa are on construction duty for Total’s Moho Nord development.

8----- US Adds Most Oil Storage Capacity

The United States added 34 million barrels of crude oil storage capacity from September 2015 to March 2016, the largest expansion since the Energy Information Administration began tracking the data in 2011, it said.

Capacity has grown as oil inventories in the U.S. swelled over the last two years as a result of a massive glut, which also led to prices crashing to 12-year lows early in 2016.

Inventories are up more than 15 percent since the end of September. This has pushed crude oil storage capacity utilization to a near record high of 73 percent for the week ending June 10, the EIA said.

However, crude stocks have begun to drop in the last two months largely due to reduced output by U.S. producers, rising demand and reduced supply, especially in crude from Canada following the May wildfires.

-----OMV Outlines Findings of Barents Sea Horizontal Well

The semisubmersible Transocean Spitsbergen has completed drilling and testing of the OMV-operated Wisting Central II appraisal well in the Barents Sea.

The location, 310 km (192 mi) north of Hammerfest, is the most northerly to date for an oil discovery offshore Norway, in a water depth of 302 m (991 ft).

This was also the fifth well on production license PL537, awarded in 2009. OMV conducted planning and execution of the well in cooperation with various divisions of Schlumberger.

Wisting Central II was the first horizontal appraisal well in the Barents Sea and the shallowest horizontal offshore well ever drilled from a floating drilling unit, OMV claims, with the targeted reservoir just 250 m (820 ft) below the seabed.

The well, spudded on Jan. 15, started vertically and was then steered into a horizontal orientation within a 250-m vertical depth interval.

Subsequently it was landed horizontally with a 12¼-in. hole size; total well length is 2,354 m (7,723 ft) with a horizontal section of 1,452 m (4,764 ft). Advanced data collection and geo-steering continued through the horizontal phase.

The well test, with 461 m (1,512 ft) net perforations at the toe of the horizontal section, was finalized at the end of March. The well has since been permanently P&A’d.

OMV’s aims were to confirm the field’s economic potential by hydrocarbons in the previously undrilled Wisting Central South and Central West segments, and to assess the technical feasibility of long-reach horizontal wells in a very shallow reservoir ahead of a possible development.

TransCanada Wins Offshore Mexico Pipeline Contract

TransCanada says it has been chosen to build, own, and operate the $2.1-billion Sur de Texas-Tuxpan natural gas pipeline in Mexico.

The bid for the Sur de Texas-Tuxpan project was presented in partnership with IEnova, a subsidiary of Sempra Energy. The project will be supported by a 25-year natural gas transportation service contract for 2.6 bcf/d with the Comisión Federal de Electricidad, Mexico’ state-owned power company.

TransCanada expects to invest approximately $1.3 billion in the partnership to construct an approximately 800-km (497-mi), 42-in. pipeline that will run mostly offshore.

Plans call for the pipeline to begin in the Gulf of Mexico, at the border point near Brownsville, Texas, then offshore along the Mexican coast. The system will have three laterals that extend onshore to power generation markets in Matamoros in Tamaulipas state, and Altamira and Tuxpan in the state of Veracruz.

The joint venture, Infraestructura Marina del Golfo, is targeting a late 2018 in-service date.

-----Oil Find in Oman

Masirah Oil has discovered hydrocarbons offshore Oman with its Manarah-1 well in block 50.

The well was drilled to a TD of 3,000 m (9,842 ft). Currently Masirah is analyzing the results and is in discussions with the Ministry of Oil and Gas of Oman concerning a time extension as it plans follow-up wells.

Dr. Rabi Bastia, a G&G consultant and advisor to Masirah, said: “Manarah-1’s confirmation of the source rock and a working petroleum system in block 50 gives us great encouragement and important information towards our deeper understanding of the 17,000-sq km (6,564-sq mi) block.”

The well had two primary sandstone and carbonates targets and three secondary targets, with the selected target based on G&G analysis supported by Masirah’s co-owner Rex Virtual Drilling

----BP Sanctions Quick Development of Atoll Offshore Egypt

BP and the Egyptian Natural Gas Holding Co. (EGAS) have sanctioned development of the Atoll Phase One project in the North Damietta Offshore concession in the East Nile Delta.

Atoll Phase One is an early production scheme (EPS) involving the recompletion of the existing exploration well as a producing well, the drilling of two additional wells, and the installation of the necessary tie-ins and facilities required to produce from the field.

The Atoll wells will be drilled by Ensco’s DS-6 ultra-deepwater drillship, which arrived in Egypt last month and is expected to start drilling in August for roughly the next 24 months. The EPS is expected to bring up to 300 MMcf/d gross of gas to the Egyptian domestic gas market starting in the first half of 2018. BP has a 100% interest in the concession.

According to BP, success of the Atoll Phase One EPS could lead to further investment in the Atoll Phase Two full field development.

The Atoll field contains an estimated 1.5 tcf of gas and 31 MMbbl of condensates. Onshore processing will be handled by the existing West Harbour gas processing facilities.

Hesham Mekawi, regional president, BP North Africa, commented: “BP is proud to progress the acceleration of the Atoll project which will bring critical gas to the Egyptian market and establish a new material hub offshore East Nile Delta.

“Our confidence in the prospectivity of the area along with our ongoing commitment to Egypt and our successful history of partnership with the Ministry of Petroleum, EGPC and EGAS is allowing us to fasttrack Atoll from discovery to production in less than three years which is a significant achievement.”

BP announced the Atoll discovery in March 2015. The Atoll-1 deepwater exploration discovery well was drilled using the sixth-generation semisubmersible rig Maersk Discoverer. The exploration well reached a depth of 6,400 m (20,997 ft), and penetrated approximately 50 m (164 ft) of gas pay in high quality sandstones.

----Saudi Energy Minister Says Oil Glut Is Over

Saudi Arabia may return to its traditional role of balancing supply and demand.

Multiple news reports, including Reuters and the Houston Chronicle, cite the kingdom’s oil minister Khalid al-Falih as saying the global oil glut that has led to a steep fall in the price of the commodity over the past two years may be nearing an end.

“We are out of it. The oversupply has disappeared. We just have to carry the overhang of inventory for a while until the system works it out,” Falih said in an interview with the Houston Chronicle. “The question now is how fast you will work off the global inventory overhang. That will remain to put a cap on the rate at which oil prices recover. We just have to wait for the second half of the year and next year to see how that works out.”

Saudi Arabia abandoned its role as a “swing producer” in late 2014, when it refused to unilaterally reduce oil production despite signs of an impending glut. This was a primary factor in the 70% drop in crude prices between September 2014 and the start of 2016, when they dropped to a 13-year low of less than $30/bbl.

“Despite the surplus in global oil production and lower prices, the focus of attention remains on countries such as Saudi Arabia which, due to its strategic importance, will be expected to balance supply and demand once market conditions recover,” Falih reportedly said following a meeting with officials of the US Department of Energy in Washington, D.C

----Aramco Discovers New Offshore Field

Saudi Aramco discovered three new oil fields last year, the company disclosed in its annual review, including the offshore Faskar accumulation, close to the Berri field.

The company continued exploration in the shallow waters of the Red Sea, and also completed its largest single survey of the seabed encompassing Saudi Arabian territorial water.

In addition, the company continued its “Maintain Potential” program. Last year, for example, the largest offshore tie-in platform to date, weighing more than 6,000 metric tons (6,614 tons), was installed on the Safaniyah field via the floatover method.

The platform serves as the main crude oil gathering and power supply hub for North Safaniyah. Power is supplied through a new 46-km (28.6-mi), 230-kV submarine cable – the longest of its kind in the world installed as a single piece without a field splice, the company claimed.

Aramco increased the computing capability of its Exploration and Petroleum Engineering Center by 177% for reservoir simulations and by 76% in terms of seismic capacity.

These improvements have enabled significantly larger reservoir simulations and have reduced data processing times by a factor of 10, improving the company’s ability to model and characterize the performance of reservoirs over time to optimize field development and increase recovery.

The company dispensed with drilling rigs to replace downhole gauges by for the first time deploying gauges retrievable by wirelines at its offshore Marjan, Safaniyah, and Zuluf fields. The rigless approach is said to be safer and delivers cost savings by freeing up drilling rigs for other work.

Aramco is evaluating this method for possible deployment in other fields.

It also plans to commercialize its inflatable contingency ease scraper technology, which helps prevent production loss in offshore facilities, following a licensing agreement signed with a new company created by IK International in Norway and the Saudi Aramco Energy Ventures corporate capital venture subsidiary.

Finally, Wasit Gas Plant, one of Aramco’s largest non-associated gas plants, came onstream in October with supplies sourced entirely from the company’s offshore fields.

-----SSGC Asked to Utilize Idle Capacity of LNG Terminal

Pakistan’s federal government is pressing Sui Southern Gas Company (SSGC) to enter into an agreement with Elengy Terminal Pakistan Limited (ETPL) to utilise the remaining capacity for handling imports of liquefied natural gas (LNG), an official said.

At present, the terminal operated by ETPL at Port Qasim has the capacity to re-gasify 600 million cubic feet of LNG per day (mmcfd). It is processing 400 mmcfd according to an agreement with the government and could utilise the remaining volume for the private sector.

On behalf of the government, state marketing company Pakistan State Oil (PSO) is importing 300 mmcfd from Qatar and 100 mmcfd from Gunvor.

“ETPL has an unutilised capacity of 200 mmcfd since the start of operation in March 2015, which has put an extra burden on gas consumers,” an official said, adding the levellised tariff of the company was 66 cents per million British thermal units (mmbtu) but it could go down to 45 cents if the entire 600mmcfd capacity was utilised.

So, the consumers are paying around 20 cents per mmbtu in additional charges.

Global Oil and Asian Product Market, June2016

Oil prices in January 2016 hit the lowest since 2008. Since then, the prices have been on a continuous upward trend increasing around 40%. As the price of crude oil came close to $ 50 per barrel for the first time in this year, market players are considering whether the near 40 per cent rally since prices bottomed in January can keep going.

The following are some points to watch that could dictate the next move in the price of crude, currently Brent and WTI are trading near $49 per barrel, while the average Dubai prices is around $ 46 per barrel.

Nigeria, largest OPEC African producer troubled - last month Militants attacked Nigerian crude oil facilities. They caused damages on both pipelines and terminals in Nigeria and hence the crude oil production of this country reached its lowest  level within past 20 years. This attack was an indirect consequence of crude price fall. The growing violence in the country is largely on the back of weaker economical situation which intensified due to the two-year oil price crash. Therefore, it seems unpredictable to say when  Nigeria resume the shipments from the damaged pipelines and terminals.  In Libya, the other OPEC member, oil output remained depressed.
Wildfires in Canada’s oil-producing Alberta province have knocked out about 1m b/d or more than a fifth of the country’s production. Before the accident in Canada, supplies were falling due to the lower price and now it is not clear how fast this eliminated barrels will be back to the market.
According to EIA reports, US crude output is expected to fall to 8.2 million barrels per day in 2017,while we witnessed the peak of crude output last year at 9.4 million barrels per day. With higher crude prices that market is already experiencing, this loss will be moderating and hence it is not clear how much US shale production decline will affect balancing point for the crude oil price.
Demand growth will be around 1.2 mb/d in 2016, with demand reaching 95.9 mb/d.
Saudi Arabia crude oil production: OPEC’s largest producer and exporter is Saudi Arabia and it is the only country with significant spare capacity. Its crude oil production increased to 10.24 mb/d in May 2016 as compared to April 10.16 mb/d, According to OPEC monthly report. The country’s output tends to increase in the summer to deal with rising air-conditioner use when temperatures in Saudi Arabia reach scorching levels and the market may need to wait a few months to get a clearer idea whether Saudi Arabia will scale back its summer output as it did last year or keep the taps open.

Asian Product Markets

 Products market fundamentals in brief

June 2016

Light Distillates

Middle Distillates

Heavy Products

Gasoline

Naphtha

Gasoil

Jet Fuel

Fuel Oil 180 & 380 cst

(Upward arrow: strength, downward arrow: weakness)

Light Distillates (gasoline, naphtha)

During June, the Asian gasoline crack – differential between Singapore gasoline prices and Dubai crude prices- slumped to a 16-month low amid continued oversupply and rebounding crude prices. While demand remains healthy, pressure from the supply-side has continued to build recently, with high exports from major refining hubs such as China and South Korea contributing, although outflows from Japan have eased notably in the last three weeks. Despite this supply weakness, the possibility of run cuts remains relatively low considering the recovery of the middle distillate complex in recent months as well as the fact that gasoline cracks typically have to push a little higher over the summer to satisfy seasonal demand.

Singapore naphtha cracks moved lower for six consecutive months during June and hit a one year low. Soft demand from the gasoline-side, seasonal switching to LPG and a persistent glut continue to weigh on the market. While the West/East naphtha arbitrage spread remains closed on paper, European cargoes continued to move to the east, especially heavy naphtha grades and volumes from the Black Sea.  Meanwhile,  Asian ethylene-naphtha spreads fell to four-month lows amid a weakening ethylene market that is suffering from elevated Atlantic Basin and Middle Eastern inflows, as well as rebounding domestic production following the spring cracker maintenance season. However, the impact on cracker operations and feedstock markets will likely be limited as spreads remained well above typical breakeven levels. 

Middle Distillates (gasoil)

Gas oil cracks improved on the back of firming demand and supply fundamentals, bringing it close to gasoline crack . On the demand-side, Vietnam and South Africa were actively buying  gasoil, while a brief reopening of the arbitrage to Europe (amid French refinery strikes) saw some cargoes moving to the West. Furthermore, reportedly thinner supply from both South Korea and Taiwan offered support.

Fuel Oil

Fuel oil cracks were on a downward trend since January 2016. This was partly due to reduction of floating storage  that brought barrels back into markets, while also pushing Singapore onshore stocks to new lower record levels. In addition, buying interest on the part of South Korea was relatively strong.

Iran-Asia Potential Energy Market

Saeid Khoshrou

Asia crude Demand at a glance

Asia is home for some of the biggest crude oil consuming countries. Asia Demand growth pace is faster than any region else and amounted to more than 1 million barrel per day in the first five months year on year. China is the second largest economy in the world with an apparent demand of around 12 mb/d. As the top Asian importer of crude oil, China has imported some 8 mb/d recently where more than 52% came from Middle East. Indian oil demand continued on its growth path and added to 280 kb/d y-o-y, while the country as the second Asian market for crude oil, imported around 4 mb/d from which more than 60% produced in Middle East. South Korea oil demand is reported to increase 250 kb/d in the last five months compared to the same period last year. According to the latest data from Korea National Oil crop., the country imported about 3 mb/d on average, an increase of 14% m-o-m. Going to Japan as the third oil consumer in Asia, the country’s oil import has decreased steadily over the years. However, it is still one of the main destinations for crude came from M.E with an import of around 3.5 mb/d. Having this picture in mind, it is not surprising that Middle East Producers are increasingly focusing on Asia Market.

Iran is well-known by its practical and potential role in the oil and gas market. 35tcm gas and 157 mmb crude reservoir has brought a strategic position to this country.  Iran has been a key member of OPEC with the current crude production of around 3.9 mb/d and more than 2.5 mb/d as export. Iran has boosted crude oil production and exports due to the new political environment in the country and international relationship.
Iran aimed to raise its oil output to 4 million b/d by end of this year and to 4.8 million b/d in five years. Achieving this goal is not so far and it gives the country a very specific opportunity to make a more strategic relationship with Asian oil consuming countries.
China, imported an average of 7.92 million b/d, of crude oil in May, surging 38.7% year on year from a low base in the same month of last year. Recently, Tehran and Beijing have signed a deal that is indicating Iranian crude supply to China will rise to more than 1 million b/d. This cooperation agreement includes exploration, enhancement of recovery and development [of oil and gas], manufacturing oil and gas equipment and also different investments in these areas. Iran's crude used to cover 11% of China's oil needs, and it can easily to reach that peak very soon. China's crude oil imports from Iran peaked at 557,413 b/d in 2011 but fell to 430,585 b/d over 2013 before recovering to 534,506 b/d in 2015. It is currently around 800,000 b/d and is planned to continue on growing to 1 mb/d.   

Over the first five months, India's oil products demand rose more than 12% year on year to an average of 4.23 million b/d. The International Energy Agency in the Oil Market Report released in May named India as a star performer based on first quarter demand, which was up 400,000 b/d year on year and accounted for almost 30% of the global increase. This provides further support for the argument that India is taking over from China as the main growth market for oil.

Indian crude oil import is around 4.1 mb/d and from which more than 300 kb/d comes from Iran. India’s crude oil import from Iran is doubling and is going to boost to over 400 kb/d in near future.

According to METI, Japan's total crude imports in April averaged at 3.47 million b/d, up 3.4% from a year ago, marking the first year-on-year increase in monthly crude imports in five months. Japan used to import an average 120 kb/d of crude from Iran before lifting the sanctions. Japanese crude imports from Iran have shown more fluctuation over March-April than other months because of the change in financial year which affects insurance renewals for vessels. However the latest news shows that Iran is going to increase its oil exports to Japan drastically and have a new record of around 250 kb/d in very near future.
South Korea’s crude oil imports averaged about 3 mb/d recently and imports of Iranian crude averaged 237 kb/d almost double the level seen a year earlier. South Korea and Iran have agreed to triple their annual trade to $18bn (£12.2bn) as the two countries sign several business deals. South Korea as the world's fifth-largest oil importer remains one of the major crude importers for Iran.
China, India, Japan and South Korea are  importing some 18 mb/d of crude oil. Iran can easily take a share of 12% to meet this requirement, in such case 2 mb/d of Iranian crude oil is going to destined for Asia. That’s the reason make someone confident in saying that there is a really huge potential market between Iran and Aisa.
    Condensate Supply - Demand

Apart from crude production, non-crude liquids production by OPEC averaged 6.6 million b/d in 2015, and it is forecast to increase by 0.3 million b/d in both 2016

and2017, mostly led by increases in Iran and very rarely in Qatar. Non-crude liquids production is mainly including of condensate production. The condensate production is mostly dependent on development and the richness of the gas reserve and in Asia the supply of condensate rallied considerably by developing the world's largest gas field, shared between Iran and Qatar. Hence, Qatar and Iran are the key condensate producers. Although the main source of condensate in both Qatar and Iran is the South Pars / North Dome field, these two countries are also producing condensate from their other gas field. The story of condensate production from this largest gas field is not very old and since then market players started to construct distillation units which are planned to use condensate as their feedstock in both Middle East and Asia Pacific. New petrochemical units were designed to use condensate as feedstock in order to have more flexibility. Furthermore, splitters were designed and constructed to split light hydrocarbons of condensate and thereupon, the market demand for gas condensate were expanded.

The South Pars / North Dome field is a natural gas condensate field located in the Persian Gulf. It is the world's largest gas field, stradles between Iran and Qatar. The Iranian part holds 18 billion barrels of condensate in place of which some 9 billion barrels are believed to be recoverable, while Qatari section believed to contain some 30 billion barrels of condensate in place and at least some 10 billion barrels of recoverable condensate. The South Pars Field was discovered in 1990 by NIOC. The Pars Oil and Gas Company, a subsidiary of NIOC, has jurisdiction over all South Pars-related projects. Gas production started from the field in December 2002 to produce 1bscf/d of wet gas. Gas is sent to shore via pipeline, and processed at Assaluyeh to produce condensate and LPG.

Total Qatari condensate production is now 850 thousand barrels per day and will be remained unchanged by the end of the decade. While in Iran production of S.P. condensate alone is planned to increase during the coming periods reaching 810 thousand barrels per day. The other types of condensate production in Iran are altogether around 150 thousand barrels per day. 

In Iran, the under development phases of S.P. gas field mainly consist of 24 phases. Generally each phase is planned to have nominal production of 40 thousand barrels per day. At the current situation, 15 phases are under operation and totally are producing 530 thousand barrels per day. Looking forward, total production of S.P. Condensate is expected to be around 650 thousand barrels through 18 phases during a year from now. Moreover, with the completion of all 24 phases of the S.P. refinery, total production is expected to be more than 810 thousand barrels per day. Hence Iran is exclusively going to absorb the new capacity of condensate demand in the area.

Condensate production from M.E. and outlook (kb/d)

On the demand side, condensate can be considered a base material, equivalent to crude for refining or feedstock in petrochemical units and splitters. Splitters are simple distillation units which are planned to split light hydrocarbons. Both petrochemical units and splitters are designed to use condensate as whole of their feedstock, while refineries have to use a blend of condensate and crude as feedstock with a ratio 1 to 9. Thus petrochemical units and splitters are major consumers of condensate. The current petrochemical and splitting capacity in Asia Pacific and Middle East is totally around 1/8 million barrels per day. It is expected to see condensate refining capacity additions in both Middle East and Asia Pacific regions during the coming months. 120 kb/d Persian Gulf Star 1 in Iran and 140 kb/d Ras laffan 2 in Qatar are going to come on stream in the near future and Qatari splitter will reduce the country’s exportable condensate by around 140 kb/d. Going to Asia pacific, 130 kb/d Hyundai Lotte splitter in South Korea is planned to start operation from end of third quarter 2016. With consider to the expected domestic demand for Qatari Condensate, Qatar condensate availability for export will be limited.

Condensate Export from M.E. and outlook (kb/d)

The condensate demand mainly originates from Asia in particular South Korea and Japan, while the main source which meets this demand is Iran and Qatar as explained. In South Korea total splitting capacity is around 400 thousand barrels per day and is going to be decreased by 100 kb/d reaching to 500 kb/d in September 2016. Iran is already covering a large share of South Korean condensate requirements and also there are some signed agreements between South Korea and Iran to deliver S.P. condensate to the new splitters coming on stream in the South Korea. This story is happening not only in South Korea but also in other Asian condensate importers such as Japan, Singapore, China and UAE. Looking forward, Iran is likely the leading supplier in South Korea and among other newcomers market.

Iranian S.P. Condensate boom days are coming on the back of new production additions. The development plan of the rest phases of the S.P. gas field aims to help Iran to be the leading market in supply of condensate. As well as Supply side opportunities in Iran, there are also new opportunities in demand side. Emerging consuming units in Asia and also growing interest among refineries to use condensate as any light crudes will support S.P

Condensate demand in both splitting and refinery units in Middle East and more than that in Asia Pacific. Not only condensate, but also LPG production will improve due to the incoming development of S.P. gas field.

 Asia LPG Supply- Demand

The non-refinery LPG production by OPEC Members is around 80 million tons. While, non- OPEC LPG production is near to 100 million tons.  Roughly 43% of total non-refinery LPG production is from OPEC countries and this is while Middle East covers 37 million tons of OPEC LPG production. Based on OPEC’s production targets, its production is expected to grow during the next periods and part of the gain is due to Iran incremental LPG production.

According to the latest statics, Asia LPG Demand is around 105 million tons this year and the LPG market will be the most growing LPG market in the world in both consumption and production side. China, Japan, India and Indonesia will play more important role in the consumption market while Middle East producers are leading LPG production.

Asia  LPG Supply- Demand (mt)

On the demand side, there are two sources which support this increasing volume in the futures, first is residential consumption and the second and is petrochemical usage. Total import volume in Asia for the year 2014 was around 41 million tons and for 2015 was around 44.2 million tons which shows 7 to 8 percent increase in import figures. As per FGE’s forecast annual growth for LPG consumption in the Asian countries between 2015-2020 would be around 4.1% annually and for the period 2020 -2030 would be around 1.1%. China's LPG imports topped 12 million tones in 2015 and put it on course to overtake Japan as the world's largest LPG importing nation. Moreover, India and Indonesia are two other growing Asian LPG consumers.

China imported more than 6.5 m/t of LPG in the first five months of this year, a remarkable increase of about 56 % year on year. This increase is largely attributed to growing LPG demand from propane dehydrogenation (PDH) units. The country’s dependency on imported LPG has increased to around 40%, from 37% in 2015 and 24% in 2014.

Selected Asian Countries LPG Imports (mt)

Furthermore, there is an advantage for countries like Iran to invest and focus on Asian LPG market as main export outlet due to the freight aspects.

On the supply side, Middle East countries are leading the market and the majority of Middle East LPG exports head to Asia and in particular India, Japan, Indonesia and China. Middle East is totally producing 37 million tons of LPG per year. Iran With small difference from its competitors is in fourth place among Middle East exporters after Qatar, Saudi Arabia and UAE. Iran’s LPG production totaled 6.5 million in 2015. However, it is expected that Iranian LPG production and accordingly its export will considerably rally during the upcoming period. This will happen mostly on the back of developing the world's largest gas field shared between Iran and Qatar. Iran aims to produce more than 12 million tons of LPG each year by the year 2025.

As of fourth quarter of 2015, there are sixteen phases in operation in South Pars gas field, with ten of them producing LPG. The eight further phases are currently in the development stage (with varying degrees of progress) and are expected to start up production between 2016 and 2025.

In 2015, the exportable quantity of LPG from Iran is around 13 percent of total volume exported from Middle East. The total volume of Iranian seaborne exports between January and December was round 4.5 million tons. This volume is already significantly higher than 2014, which was estimated at 3.2 million tons. This hike already highlights the current activity of the S.P. developments and its potential. Looking forward, Iranian LPG exportable volume will reach to 9 million tons by the year 2025.

All in all, seaborne exports are estimated to grow significantly in the forthcoming years, but the final export volume will be a function of the investment activity in the country, the further development of S.P. gas field and the startup timing of the new petrochemical consuming facilities.

All things considered, Iran energy investment may plan to Define Future LPG Supply- Demand. The current exportable volume (5 million tons) and forecasted quantity (9 million tons) will be resulted Iran to be in a more powerful position in the LPG market.

With this general picture in mind, you can see why it is important for Asian countries to have a more strategic relationship. Asia demand for Crude oil, Condensate and LPG is growing at a fast pace and Iran growing production should be considered as an opportunity for these countries.

References

BP Statistical Review of World Energy; June 2016
FGE; MENA Gas Monthly Report; May & June 2016
Poten & Partners; LPG in World Markets; Apr & May 2016
FGE;   Asia Pacific Petroleum Monthly; Apr & May 2016
FGE;   Asia Pacific Data book; Spring 2016
FGE;   Middle East Petroleum Data book; Spring 2016 & 2014
Petroleum Intelligence Weekly (PIW); NOs 5,21 & 22

***This paper is presented at the "Asian Energy Cooperation Forum" conference held in Chongqing, China, 26th-37th June 2016

1% Recovery Rate to Produce $200bn

Anyone entering the premises of the Research Institute of Petroleum Industry (RIPI) for the first time can never imagine the intensity of work there. None of Iran’s rivals imagined that such important projects would come on-stream in Iran during years of tough sanctions.

Since sanctions were lifted in January, RIPI has accelerated its activities and it has been even cooperating with the Atomic Energy Organization of Iran.

RIPI has set up a chain of top research institutes from across the globe in a bid to acquire cutting edge technology for Iran’s petroleum industry.

In an interview with Iran Petroleum, Amir Abbas Hosseini, deputy president of RIPI for technology and international affairs, speaks about the RIPI activities.

Q: Which fields do RIPI and AEOI are working together in? How does RIPI use centrifuges?

A: One of our tasks is benefiting from knowledge available in the country in favor of the petroleum industry. Petroleum industry equipment is of high significance to us. One of the most important aspects of petroleum industry is upstream sector, which is a top priority for Iran’s Ministry of Petroleum. In our upstream studies in rock engineering, centrifuges are used in separating rock from oil and identifying the movement of oil fluid in Earth layers and conducting studies on reservoirs, as well as finding traps. Foreign companies refuse to provide such equipment because of their dual use and that causes restrictions for us. Meantime, the Atomic Energy Organization of Iran and relevant bodies have applied nuclear technology in other sectors. For instance, centrifuges have been developed for the Ministry of Health.

Following meetings led by RIPI, AEOI officials agreed with the development of centrifuges for RIPI as the first step in nuclear knowledge spillover into the petroleum industry. Fortunately, RIPI is affiliated with Ministry of Petroleum and due to the ministry’s insistence the first contract was signed for the development of these apparatuses.

Q: What are the terms and conditions and duration of this contract?

A: This agreement involves making 10 centrifuges. The contract for making a first centrifuge has been signed for a 180-day period. Of course, AEOI has already started its work and I think the apparatus will be delivered in less than six months.

Q: Do you envisage any specific sector for using these centrifuges?

A: Yes, they are used in upstream reservoir studies. More specifically they are used in Azadegan, Ahvaz and Yadavaran oil fields development. They are also used in the routine activities of RIPI.

Q: How much do these centrifuges and foreign-made ones differ in price?

A: The centrifuges purchases from overseas are estimated to cost IRR 40 billion each, while they cost IRR 10 billion in Iran, according to an AEOI assessment. It means that we have got our necessary equipment at a price one-fourth the price of foreign products. Meantime, one has to take into consideration that due to their dual use, these centrifuges could not be purchased from abroad. These devices are strategic for Iran’s petroleum industry.

Q: What has the RIPI done for broadening its practical knowledge in this regard?

A: In this regard we have created an international network of technology. As far as development of technology is concerned we have two options; first, we start from the scratch and take the idea to the lab, bench and finally pilot scale. Then we enter the phase of industrialization and commercialization. The problem with this process is that it takes too much time. The second method is the reverse which is expanding in developing countries. In this method, a complex is built under foreign license. The proprietor of this license is often a developed country. The license is brought into a developing country. The stages are gone through from industrialization back to pilot, but not farther (There are nine steps, pilot stands in the 6th position). The level of technological maturity is time-taking in the first method and it has its own risks and it will keep the industry from catching up with the development of technology and it will resort to other sources. On the other hand, in the second method, the proprietor of technology is not interested in offering any assistance in the lower links of development of technology (steps 1 to 6) because it owns the knowledge. Resolution of this issue has different solutions in different countries. In Iran, we have applied our own nationalized method due to the policies of the Resilient Economy as well as changes in Iran’s political interactions with the world. As far as upstream policies are concerned we have applied two major principles of the Resilient Economy, i.e. endogenous development and outward-looking interaction. Endogenous development is in fact moving from down to top at different levels of energy development and going through stages of technology development from step 1 to 9. Outward-looking interaction is aimed at reducing this time. In a sustainable knowledge-based economy, receipt of raw materials must be curbed while the value-added chain must be expanded. That is when the economy will become sustainable and resilient.

For this purpose, the RIPI had to benefit from its extraordinary specialized manpower potential and use the created potentialities to research and applied projects. These potentialities have expanded in recent years.

Furthermore, the accountability time must be reduced. In recent years the RIPI has set up an international network of foreign partners that own technology.

Q: What is the basis of the activities of this international network?

A: This drive was in harmony with the petroleum industry’s priority. Our priority is to resolve the problems of this industry, and move based on demand. In other words, we do not conduct research merely for research, but our objective is to resolve a problem of petroleum industry. This is our major difference with the universities. At RIPI we have to go through step four upwards, i.e. from lab-scale upwards while the main task assigned to universities is to move in lower links of technology and develop technology. The chain of knowledge is completed in this way. We have used this issue in forming technological network.

Q: Can you provide an example to explain this process?

A: In the upstream oil industry, the top priority is to enhance recovery rate. In this way, the problems pertaining to production, reservoir studies, enhanced recovery and the environment will be resolved altogether. In order to deal with all these issues, the RIPI set up a technological network of top international companies to make contribution. In the downstream sector, the Ministry of Petroleum insists on the development of technologies related to repeatable units of petroleum industry. Ministry of Petroleum has tasked RIPI with establishing a sweetening institute for gas products. Similar networks are also used in the environment and energy sectors that would help enhance the RIPI capacity and help us contribute to more projects.

Q: Which countries are most represented in network members?

A: The Netherlands, France, Germany, Brazil, South Korea, Canada and Norway are present in this network. There are also some companies from Britain and Austria. In total, more than 20 countries are working with Iran in this field. Sixty percent are companies and the remaining 40% are universities.

Q: Which sectors are these countries involved in?

A: For instance, France is helping in the upstream industry and in enhanced recovery. In the downstream sector, it is involved in gas sweetening. With Germans, we are cooperating in catalyst production. We cooperate with Austria in upstream oil industry.

Q: Which sectors are related to cooperation with Brazil and England?

A: Heavy crude oil production is one of the important issues to us. Of course it pertains to the future and one of the RIPI strategies. The RIPI is getting ready for the future. That is why we are cooperating with Brazilian companies. Furthermore, for the first time, a consortium of Brazilian companies involved in upstream and field development is cooperating with us. England is working with us in the development of fields in the upstream sector.

Q: When was this network established?

A: Each company or university started

its cooperation with us at a different time. But generally speaking, the network has taken shape over the past two years.

Q: Given the two-year history of this network, has it had any significant achievements?

A: Yes, definitely. We use the achievements of this network in upstream projects. We are working with one of these companies in the development of Ahvaz and Yadavaran oil fields. We use this network in our projects for studying reservoirs. We also refer to this network for some studies related to reservoir engineering. Some companies are internationally reputed. The RIPI has great potential, but it has to cooperate with well-known international companies in a bid to upgrade its technology and acquire updated knowledge. In master development plans for fields, NDP and FFS we cooperate with leading companies.

In the downstream sector, chemicals, additives and catalysts are advantages for us. Such cooperation has already taken shape in sweetening. Our partners will be named soon.

Gas is an important and strategic issue for this industry. That is why RIPI plans to boost its knowledge through interaction with top international companies in a bid to expand its sweetening procedures. The Netherlands’ Delft and Utrecht universities, Imperial College of London, Norway’s University of Bergen and a Brazilian institute are working in the upstream sector within the framework of a consortium. Britain’s Synergy Company and a Canadian firm are present in surface installations.

Q: Does Iran have any plans to export the knowledge it acquires?

A: In some sectors yes, but in some other sectors no. Our priority is to recover further from oil and gas reservoirs and resolve the problems of the petroleum industry in the future. Development of technology lies in the upstream sector and it will make great contribution to wealth generation in the country. One percent increase in recovery will add at least $200 billion to our wealth, with oil price at $40 to $50 a barrel. It means that we have to go that way.

We also provide services in some sectors. We are offering technological services to neighboring countries. The first reason is that our human power is highly potential. The second reason is the manufacturing of equipment despite all obstacles and restrictions. And the most important reason is the existence of huge oil and gas reserves. Therefore, the objective is to make Iran a service-providing hub in the region in terms of education and services. In our collaboration with some international companies, we are pursuing this objective.

Q: What has Iran achieved from cooperating with international companies?

A: We have to take into account the fact that we have got out of unjust sanctions after 10 years and we have just entered an atmosphere of interaction with the world. The Joint Comprehensive Plan of Action is not an old document and we cannot expect foreign companies reach agreement quickly with us. We are just starting.

Naturally, we are expecting the waiting period for investment in the country and transfer of technology to be reduced. We have to create capacities in order to tempt back foreign companies. The RIPI is serving as a partner for attracting foreign companies. It also develops technology based on national policies and principles.

Q: How long will this process take?

A: Definitely this process will not be short-term, but we are making our best to accelerate the affairs. The second part of this issue lies outside the RIPI. Hopefully our petroleum industry has realized this issue very properly. For instance, the first technological proposal for Ahvaz field has been endorsed. The first desalting proposal with foreign partners has been also submitted. What we must do is to enhance our capacities; otherwise, we will face the same old problems

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Tin Container Plant to Become Museum

Iran’s Minister of Petroleum Bijan Zangeneh has given green light for a century-old tin container manufacturing plant in the western city of Kermanshah to become a petroleum museum, joining Masjed Soleyman, Abadan and Tehran petroleum museums.

For the tens of years, the plant used to manufacture tin containers for carrying oil and oil products across the country.

This plant is no longer as important as it was due to the emergence of modern petroleum technologies. But due to its historical significance, this plant is set to become a petroleum museum in Kermanshah which is an ancient oil city in Iran.

According to documents, the tin container making factory had 71 service workers in 1961. It produced 8,000 tin containers every day. When there was more demand for tin containers, 35 temporary workers were added to the 71 permanent workers. Throughout the day, 8,000 tin containers were made during eight hours of work.

2.5m Tin Containers a Year

The October 1961 issue of Ayineh magazine, which specialized in the petroleum industry, has described Kermanshah Refinery’s Tin Container Manufacturing Plant as follows: “If needed, with two hours a day of overtime, 10,000 tin containers could be produced, filled up and delivered. The distribution office’s demands supplied in Kermanshah reach 2.5 million tin containers a year. All of them are provided by Kermanshah tin container manufacturing plant. These tin containers are filled with petroleum products – gasoline, paraffin oil, insecticide and gasoil – before being delivered to the distribution office. Iran needs two million liters a year of insecticide. This plant produces this amount of insecticide and delivers in 18-liter tin containers to the distribution office. The tin containers are carried in trucks from the factory at the rate of 8,000 to 10,000 containers a day.”

As the above report shows, this plant was an important and key facility in Iran’s petroleum industry due to the extent of its activities and the number of its staff. The plant largely met the petroleum industry’s needs. Currently,  the building and installations are the only remnants of the Kermanshah tin container plant.

This plant has been chosen to house a petroleum museum due to the history of its building and its role in tin container production for decades, containers that have been instrumental in petroleum product distribution. It might be interesting to know that tin containers were effective in everyday life more than thought.

Tin in combination with other elements forms a wide variety of useful alloys. Tin is most commonly alloyed with copper. Tin bonds readily to iron and is used for coating lead, zinc and steel to prevent corrosion. Tin-plated steel containers are widely used for food preservation, and this forms a large part of the market for metallic tin. A tinplate canister for preserving food was first manufactured in London in 1812.

Before tin containers were made in Iran, Iran depended on Russia and India.

Iran started delivery of petroleum products in tin containers after a plant was built near the Abadan refinery and subsequently near Kermanshah refinery.

The tin containers manufactured in Kermanshah plant were cube-shaped with a volume of around 18 liters of petroleum products. After some time, the shape of these containers became a significant element because volume indexes were nationalized and an 18-liter tin container indicated a special volume and weight symbol to consumers.

Another advantage with the tin containers was their conformity with health standards. It was easy to wash these containers and microbes could not germinate in petroleum products. The tins were also anti-microbe. Tin containers could be used on many occasions. Some people used to add locks to the tin containers and design a safe box to hold money, jewelry, identity papers and even foodstuff for children. Some grandmothers used the containers for holding rice, wheat and cereals.

In order to preserve the contents of tin containers, soldering was applied. Furthermore, the tin containers were cut from both sides to become slabs to be used in making funnels, jerry cans, ewers, etc.

Oil containers were so important in everyday life that they could be seen everywhere. They were used as chairs in parks and cinemas, seat at homes, stores and even amphitheaters and music halls. In fact, oil containers were the ancestors of cooking oil containers that were developed later.

After new equipment was developed and new materials like plastics, nylon and petrochemicals hit the market, the tin containers met a different fate. Tin containers are not as prosperous as they were, but some products of the former Kermanshah tin making plant could be seen across the country.

Mounting a petroleum museum at Kermanshah tin container manufacturing and filing plant is a good opportunity for showcasing the fate of this industry and its impact on the transport of oil and oil products and people’s life.

Bandar Imam Petchem Tennis Eyes Asia Trophy

The Ministry of Petroleum of Islamic Republic of Iran is engaged in widespread sports activities. Sports teams affiliated with this ministry have been pursuing their activities in different fields and have made significant gains.

Bandar Imam Petrochemical Company (BIPC) has made up teams for different sports disciplines. One of them is its table tennis team which has won the pro league championship title.

Strong Championship

BIPC’s table tennis team has been among the most successful ones in recent years. At a time financial issues is causing serious problems in the sports, BIPC has invested in table tennis and several other sports in order to make itself known as a center of excellence.

In the last season’s pro league, the BIPC table tennis was crowned champion. The important point was that the BIPC table tennis team cemented its victory one week before the championship games ended. It beat Islamic Azad University, the undisputed champion, 6-1.

Sponsoring National Sportsmen

In the year leading to the 2016 Olympics, BIPC sponsored one of Olympic sportsmen in table tennis. At a time Iran’s table tennis federation could not provide any special support to Olympics sportsmen due to its restrictions, Tabriz Petrochemical Company signed a contract with Nima Alamian in a bid to sponsor him. Besides Alamian, seeds like Mohammad-Reza Akhlaq-Pasand and Afshin Norouzi also fared well for the team.

Foreign Seed

In its last season’s matches, BIPC table tennis team had a foreign seed. Chinese tennis player Li Ping played for BIPC this year. Li was invited to Iran in response to Iranian tennis players’ interest in Chinese tennis.

BIPC Wins Praise

BIPC’s activities in table tennis encourage Iran’s table tennis federation. BIPC was praised by Mehrdad Qardashi, head of the federation, after the end of the pro league matches. In the plague of honor awarded to the general manager of BIPC Club, the club’s efforts have been extolled.

Two Trainers Receive Int’l Training

Last year, BIPC sent two tennis trainers from Mahshahr to international courses. Vahid Kazeminejad and Amin Kazeminejad were trained by international trainer Houshang Bohlouli for five days at the National Academy of Table Tennis. They received certificate in order to continue their activities.

Asian Trophy Eyed

Asian Clubs’ cup of table tennis matches are rarely held, but in the current year such an event is likely to be held. Asian table tennis confederation is in talks with relevant officials in order to hold Asian matches by the end of 2016. In case these matches are held, BIPC will run as Iran’s champion and can win a title at the continental level. In that case, the BIPC team lineup will be stronger for next season’s matches at Asian matches.

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Interview with Nima Alamian, BIPC Table Tennis Seed:

I Owe My Standing to BIPC

Nima Alamaian, who forced its way to Olympic matches, is happy with the BIPC Club. He offers his gratitude to BIPC officials and believes that this club has largely supported table tennis in Iran. In his view, the BIPC has been instrumental in his promotion to the Olympics. Here is an interview with Alamian.

Q: You had a tough season at BIPC, but you were finally crowned champion. Would you please talk on this issue?

A: First of all, I must dedicate this victory to the Ministry of Petroleum staff and all BIPC officials for their efforts which helped us achieve good results. The fact is that I had several good proposals at the beginning of the season, but I finally chose this team after making reviewing the conditions. The reason for my choice was that this team has fared well in table tennis. Since I was targeting Olympics I had to be in a club that would be of help to me. Now I feel happy to have had a good year at the BIPC club.

Q: Many Iranian tennis players criticize the economic conditions of this field. How about BIPC’s financial conditions?

A: Hopefully there are no such problems at this club. Unfortunately financial problems exist in this discipline, but BIPC managers have provided us with good facilities. I think that without these hardware facilities we would not reach success. My brother Noshad used to play in this team and he always praised the club’s facilities. I didn’t believe him, but when I personally joined this club I believed what Noshad had told me. BIPC club has significantly contributed to promotion of the level of Iran’s table tennis to a great extent and these endeavors need to be appreciated.

Q: Did you ever imagine championship given the presence of such teams as Islamic Azad University?

A: We had good seeds and we deserved the trophy. We fared well throughout matches and the club’s managers made great efforts for this important objective to materialize. From the very beginning we hoped to gain our 6th championship and I feel happy that we reached this success.

Q: How do you assess the level of matches in the league?

A: This year the matches were held at a high level. Our league is gradually approaching international standards and can help sportsmen to a great extent. There is still room for activity, but this league will be like a springboard for many sportsmen.

Q: Would you please tell us also about the Olympics? How lucky do you think you are for bagging medals?

A: We have to be realistic. Bagging the Olympic medal is no dream, but it is very difficult to win. Iran’s table tennis has so far achieved no success in Olympics and we (Noshad and I) are unlikely to bag a medal. However, we will do our best for our country to feel proud.

Q: Anything else that you would like to say?

A: Once more I express my gratitude to BIPC managers and trainers for their support. Messers Yavari and Farhadi really boosted my morale and thanks to them I feel self-confident now. I hope that I would be able to achieve good results in return. I liked so much to play in the Olympics and to make honor for my country and this team and I feel happy that my dream has come true.

Kerman, 6,000-Year-Old City

Kerman is the capital city of a province with the same name. It is the most important city in southeast Iran in terms of industrial, political, cultural and scientific aspects. This city enjoys a long history with some historians and researchers saying man first lived there in four millennia BC.

Kerman is among the five ancient cities in Iran. A historian has said that the history of Kerman reflects the whole history of the country.

Here is a brief review of tourism attractions in Kerman.

Shahzadeh Garden

Shahzadeh Garden is among the most beautiful traditional gardens in Iran. Located at the foothill of Mount Tigran, it is reminiscent of Abdol-Hamid Mirza Farman-Farma, the governor of Kerman during the final years of Qajar Dynasty.

This garden has a very beautiful entry gate, a royal edifice and a bathroom. Water supply network and water pools in the middle of the garden are captivating.

The garden was restored in 1991.

Ganj-Ali Khan Bathroom

Ganj-Ali Khan Bathroom is one of the most beautiful historical bathrooms in Iran. It was built in 1611 at the order of Ganj-Ali Khan, the then governor of Kerman. This bathroom symbolizes the culmination of Safavid-era art and is an architecture masterpiece. It is located on the main path sneaking through Kerman Grand Bazaar.

Ganj-Ali Khan Bathroom was used until 1937. It was restored in 1971 and then became a museum of anthropology.

Shahdad Yardangs

Shahdad yardangs are the most important factor in attracting tourists to this city after the ancient Bam Citadel.

Yardangs are streamlined protuberances carved from bedrock by the dual action of wind abrasion by dust and sand, and the removal of loose material by wind turbulence.

Shahdad yardangs located in an area 40km east and north east of Shahdad have been formed by the extreme soil and water erosion and extend from north-west to the southeast of the region.

They are considered as one of the greatest natural phenomena in Iran and quite unique in the world. Every year thousands of overseas tourists fly to Kerman to visit these breathtaking sights.

Shahdad yardangs which cover part of the western fringe of the Lut desert with an average length of 145 km are often called one of Iran’s wonders. Presently Iran is gathering relevant documents to propose Shahdad yardangs to UNESCO to be inscribed on the World Heritage List.

Shahdad is the largest town in the Takhab area, a group of about 30 oasis villages wedged between the Payeh Mountains to the south and the vast emptiness of the Lut to the north.

Jabalieh or Rock Dome, also known as the Gabri Dome, a place of historical importance, has been constructed of stone and brick, though the building is  made of stone and gypsum, and its architectural affects have been inspired from the Sassanid period. It was restored during the first decades of the advent of Islam in Iran.

It is of octagonal design and comprises three floors crowned by a rather flat dome, totally empty inside. It appears to predate the 2nd millennium AD and may have been a Zoroastrian building, and is remarkable because of being constructed of stone rather than the more usual brick.

Kerman Jomeh Mosque

Kerman Jomeh Mosque is located next to Moshtaqiyah Square. It is surrounded by Mozaffari Bazaar, Qadamgah Bazaar, Shariati Street and Moshtaq Square. It is among the four-veranda mosques built under Mohammad Mozaffar, the founder of Al-e Mozaffar Dynasty.

The mosque was built in 750 AH in the lunar calendar year. It has three doors opening from north, east and west.

Iran Southeast Exports Hub

Among 37 divisions of National Iranian Oil Products Distribution Company (NIOPDC), Kerman enjoys a special and strategic position.

Due to its location in southeast Iran and its proximity to the provinces of South Khorassan, Yazd, Sistan Balouchestan, Hormuzgan and Fars, Kerman Province provides a special advantage for Iran’s petroleum product exports to neighboring countries located east and southeast of Iran.

In this regard, distribution of fuel and oil products is handled effectively by the Kerman zone of NIOPDC. The startup of new phases of the supergiant South Pars gas field and the ensuing increase in gas production have increased gas consumption at power plants and decreased their consumption of liquid fuels.

The decline in liquid fuel consumption at power plants has ended Iran’s reliance on gasoil imports and has even let the country become an exporter of gasoil.

The expansion of gas distribution network in the country has decreased the demand for kerosene and the conditions are prepared for exporting this product to Iran’s eastern and southeastern neighbors.

Given efforts undertaken in Kerman, this area is turning into Iran’s export hub in southeast.

700ml Products Stored

Jaafar Salari-Nasab, director of the Kerman zone of NIOPDC, referred to Iran’s planned petroleum product exports, saying: “At present, the capacity of petroleum product storage in Kerman area exceeds 700 million liters. Given the capacity of storage of this amount of products in this area, Kerman has become Iran’s southeastern export hub and has facilitated supply and delivery of Iranian petroleum products to eastern and southeastern neighbors.”

He said: “Ahmadi oil storage facility with a capacity of 340 million liters is among the country’s oil storage facilities with mechanized operation and plays a significant role in the supply of Iranian products to the east and southeast of the country.”

In addition to Ahmadi storage facility, Kerman oil storage facility with a capacity of 190 million liters, Rafsanjan facility with a capacity of 140 million liters and Sirjan facility with a capacity of 42 million liters are active in Kerman area. They have significantly increased the export potential of Iran in this area. Oil and gas supply to southeast of Iran for border sales is provided by Rafsanjan facility.

Salari-Nasab said 20 million liters a day of petroleum products is distributed in the oil storage facilities of Kerman area, adding: “Supplying products needed in Kerman and Sistan Balouchestan provinces and some parts of Yazd, Fars and South Khorasan provinces and Torbat-e Heidarieh area are among measures undertaken by the Kerman zone of NIOPDC.”

Salari-Nasab said in the last calendar year which ended on 21 March 2016, gasoil consumption was down 726 million liters year-on-year, saving the country IRR 7,260 billion.

“Thanks to efforts made by the Kerman zone of NIOPDC, important measures were taken with regard to combating fuel smuggling in this area,” he said, adding that Kerman become the top province in the fight on fuel smuggling.

Fuel distribution for transportation sector in Kerman area is handled by 220 active stations and 76 CNG stations as well as seven air refueling centers in the cities of Kerman, Jiroft, Bam, Sirjan and Rafsanjan.

Salari-Nasab said the number of best-serving gas stations in Kerman area has recorded a 75% growth.