Accord on Output Cut

End of Oil War

September 28 marks a historic day for oil market. On the sidelines of the 15th Ministerial Meeting of International Energy Forum (IEF) held in Algiers, OPEC ministers attending the 170th ( Extraordinary ) Meeting of the OPEC, reached basic agreement and opted for an OPEC-14 production target ranging between 32.5 and 33.0 mb/d, in order to accelerate the ongoing drawdown of the stock overhang and bring the rebalancing forward. That would bring new life into the oil market which has been battered by oil price crash since mid-2014.

An important aspect of this breakthrough was that Iran is exempted from the production cut scheme. The Islamic Republic is allowed to bring its production back to the pre-sanctions share of 4 mb/d.

This historic agreement, which was the first consensus among OPEC member states in eight years for reducing output, was not achieved easily. It faced obstructionism on several occasions. In the end, that was Iran’s proposal which fellow OPEC members agreed upon.

In the previous OPEC ministerial meeting, Iran’s Minister Bijan Zangeneh had said that the idea of oil output freeze would not help strengthen prices and manage the market. The Iranian minister had suggested the revival of OPEC quota system. Zangeneh’s proposal faced stiff opposition from Saudi Arabia. But in the end, Iran’s petroleum minister’s words were accepted.

OPEC Contribution to Price Stability

Speculation was rife about oil market conditions before the IEF ministerial meeting started work in Algiers. This IEF and its biennial meeting provide a venue for producers and consumers to exchange views on energy issues. In the Extraordinary meeting of the OPEC conference, all officials from the member states of the Organization of the Petroleum Exporting Countries tried their best to make contribution to a final agreement.     

Algerian energy minister Noureddine Boutarfa said everyone in OPEC agreed that the market was badly oversupplied and the situation had worsened since the last OPEC meeting in June.

"Credible and significant action is needed to help the market rebalance… One fundamental aspect is that OPEC production should be significantly below the level of August. The second is that the effort must be shared out."

"Third is that any agreement should be limited to the time it takes to reabsorb oil stocks. And the fourth is that the action should be credible in the eyes of the market and verifiable," Boutarfa told French-language Algerian daily Liberte.

These remarks came against the backdrop of a promise by Saudi Energy Minister Khalid al-Falih that his country would support any decision that would help stabilize oil market.

Before leaving for Algeria, Zangeneh said: “In the status quo, investment in oil has fallen sharply and this trend will harm consumers in the long-term.”

Moreover, remarks by some OPEC member states and their expression of hope for an agreement pushed up prices.

The United Arab Emirates’ energy minister, Suhail Mohamed Al Mazrouei, said for his part: “For us in the UAE, we are for a decision. We think a freeze will help if it is agreed. We hope that all are going to agree.”

Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu said “surely there will be” an accord.

OPEC plans to hold its next formal ministerial meeting in Vienna.

Venezuela’s Oil Minister Eulogio Del Pino warned that by December 2016 prices may tumble below $20 if no deal is reached. Caracas has been grappling with 700% inflation.

Due to these remarks, the oil market became hopeful of an agreement about oil production.

When the OPEC meeting was going on in Algiers, Angus Nicholson, a market analyst in Melbourne at IG Ltd said: “There’s skepticism creeping in as to whether there will be an agreement at this meeting,” said. “Still, there seems to have been some very strong groundwork laid for a possible deal in the coming months. There is a very significant psychological anchor for oil at around $45. It always seems to come back to that level.”

Saudi No Longer a Decision-Maker

International media and market analysts maintained that any agreement would hinge on Iran’s decision. Market symptoms also indicated that the conditions have changed in favor of Iran and unlike in the past, Saudi Arabia does no longer have final say on oil affairs.

Speculation about Saudi Arabia’s weakening position gathered steam after reports emerged of economic woes in the Arab kingdom.

“Suddenly the tables have been turned on Saudi Arabia,” wrote Bloomberg.

The biggest oil exporter has swapped its traditional role as price dove with regional foe Iran, for years OPEC price hawk, it said.

The government in Riyadh is now offering a deal -- including its first output cut in eight years -- to boost prices; Tehran is dragging its feet. At the center of the reversal is their contrasting threshold for enduring economic pain.

"Both countries are coming from different positions," said Jason Tuvey, Middle East economist at consulting firm Capital Economics. "Iran has been under sanctions until recently, so it’s getting an economic boost as investment returns and oil output rises. Meanwhile, Saudi Arabia is facing steep fiscal cuts."

The contrast between the two countries is stark. Iran, never as dependent on oil revenue as its neighbor, has seen prospects boosted by rapprochement with the west. In Saudi Arabia, tentative moves toward economic reform haven’t prevented two years of weak prices causing financial havoc: it’s burning through foreign exchange reserves, government contractors have gone unpaid and civil servants will get no bonus this year.

Saudi Arabia will suffer a budget deficit equal to 13.5% of gross domestic product this year, compared with one of less than 2.5% of GDP for Iran, the International Monetary Fund estimates. The IMF says the Saudis need oil close to $67/bbl to square the books. For Iran, it’s lower, at $61.50. Brent crude, the global benchmark, fell to $46.50/bbl in early trading in London.

When it comes to economic growth, Saudi Arabia is slowing sharply to 1%, while Iran is accelerating toward 4%. The current account -- a broad measure of a country’s economic relationship with the world -- tells the same story. Saudi Arabia faces a double-digit deficit this year; Iran’s is nearly balanced following economic reforms in 2012 and 2013 to weather the impact of international sanctions over its nuclear program.

Saudi Offer Turned Down

Saudi Arabia had offered to reduce its oil output from 10.6 mb/d to 10.2 mb/d in exchange for Iran freezing its output at 36 million tons.

But Iran turned down the offer with Zangeneh reiterating that the country would continue to raise its output to 4 mb/d.

Under normal conditions, such views would have driven the market further into degradation because Saudi Arabia was sticking to its positions.

However, Saudi’s Falih adopted a more flexible position, saying Iran, Libya and Nigeria must be able to produce oil at their maximum reasonable capacity.

Although Falih said no agreement was expected to be signed in the Algeria meeting, tough economic conditions forced Saudi Arabia to bow to Iran’s proposal.

“Saudi Arabia and Iran are sworn enemies on opposite sides of proxy wars tearing through the Middle East. But at a marble-paved conference centre on the outskirts of Algiers that is a legacy of the $100 a barrel oil era, there was an unexpected sign of conviviality this week: Iran’s OPEC governor was chatting warmly with a member of the Saudi delegation, even posing for a photograph together,” wrote the Financial Times.

It was the prelude to an agreement five hours later that should result in the OPEC-14 cutting production for the first time since 2008.

Iran’s Zangeneh, called it “a very good day for OPEC” as his Saudi counterpart headed straight for a waiting car.

The pact wrongfooted oil traders. It also signaled the end of a two-year Saudi experiment to surrender the oil price to market forces. More broadly, it has forced the industry to rethink its assumptions about the supposedly unbridgeable chasm between Riyadh and Tehran.

“It is a massive deal for the oil market that Saudi Arabia and Iran can set aside the poisonous regional rivalry that has dominated the relationship in recent years,” said Bill Farren-Price, an energy industry consultant. “It shows the extent both sides wanted and needed to get a deal done.”

Oil Edges Up

The 15th IEF ministerial meeting turned into OPEC ministerial meeting. Saudi Arabia agreed to exemption of Iran, Libya and Nigeria from an oil production ceiling cut. Immediately after the decision was revealed, the West Texas Intermediate (WTI) oil jumped to $47, gaining 5.3%.

“OPEC made an exceptional decision and reached consensus on market management after two and a half years,” Zangeneh said.

He and other ministers said the Organization of the Petroleum Exporting Countries would reduce output to a range of 32.5-33.0 mb/d. OPEC estimates its current output at 33.24 mb/d.

"We have decided to decrease the production around 700,000 bpd," Zangeneh said.

The move would effectively re-establish OPEC production ceilings abandoned a year ago.

Many traders said they were impressed OPEC had managed to reach a compromise after years of wrangling, but others said they wanted to get to know about the details.

"This is the first OPEC deal in eight years! OPEC proved that it still matters even in the age of shale! This is the end of the ‘production war' and OPEC claims victory," said Phil Flynn, senior energy analyst at Price Futures Group.

Goldman Sachs Group Inc. said OPEC’s deal to cut output could add as much as $10 a barrel to oil prices, though it remains skeptical along with other banks on how the accord will be implemented.

“Strictly implemented in the first half of 2017 and all else constant, the production quotas announced today should be worth $7 a barrel to $10 a barrel to the oil price,” Goldman analysts including Damien Courvalin and Jeffrey Currie wrote in the report. “It has historically taken a fall in oil demand to ensure quota compliance, as in that case, production is forced lower by a decline in refinery intake around the world. This is not the case today with resilient demand growth.”

If OPEC cuts its production by 200 tb/d, to 33 mb/d, that wouldn’t be enough to bring production back in line with demand until the second half of 2017, according to estimates by the International Energy Agency (IEA).

That timing is roughly in line with what analysts already believed would happen if OPEC took no action.

If OPEC cut output by up to 700 tb/d, the production glut would disappear as soon as the end of this year, according to IEA estimates. The world’s inventories could then be drawn down and prices could rise.

NIOC Signs 1st New-Style Contract

POGIDC Partnering Europe Firms

National Iranian Oil Company (NIOC) and Persia Oil & Gas Industry Development Company (POGIDC), affiliated with Tadbir Energy Development Group have signed a heads of agreement (HOA) to enhance recovery from Yaran, Maroun Bangestan, Koupal Asmari and Koupal Bangestan oil fields.

This agreement, which is the first new model oil contract, is hoped to enable Iranian companies prove their capabilities.

Addressing the event organized for the HOA signature on October 4, Iran’s Minister of Petroleum Bijan Zangeneh said: “Today, the HOA for enhanced recovery from four oil fields is being signed with Persia Oil & Gas Industry Development Company. It will become an agreement in the near future.”

The Iranian minister said that the text of the relevant agreement has yet to be finalized, noting that it is being readied.

In addition to the text of the agreement, there are more than 500 pages of appendices attached.

“In order to speed up executive work and save time, we decided to use HOA signature method. HOA involves the master development plan (MDP), total cost estimate, profits, contractor’s fee and the calendar for the implementation of the project,” said Zangeneh.

Responding to criticisms about formation of exploration and development (E&P) companies in Iran, the minister said: “Currently in Iran we have no E&P companies, but we are in the process of establishing such companies and that is an important issue.”

“Many were critical of formation of these companies, citing the undermining of National Iranian Oil Company. But that’s not like this,” he said.

E&P Companies

Zangeneh said eight E&P Iranian companies have been endorsed to be established, adding: “In the aftermath of new surveys, these companies are likely to number up to 10. The Iranian Ministry of Petroleum will help these companies because in the end supporting such entities would help strengthen the petroleum industry and create jobs.”

He said that one of objectives pursued by the new model of oil contracts was to boost E&P companies.

He said that general contractor companies were established in Iran when he was last minister up to 2005.

“Formation of these companies (GC) was facing certain problems, but these companies are currently operating as knowledge-based companies. E&P companies are also knowledge-based companies whose asset is engineering, management and technical capability. Definitely, formation of E&P companies in Iran and their maturity would help Iran gain revenues from outside the country,” said Zangeneh.

Under new model of oil contracts designed by Iran’s Ministry of Petroleum, foreign companies will have to form a joint operating company with an Iranian E&P company before being allowed to develop oil and gas fields.

Iranian companies whose qualifications are approved by the Ministry of Petroleum would be allowed to sign an independent contract with NIOC in a bid to steer the project.

The HOA signed with POGIDC the first of its kind struck with an Iranian company to steer the project. POGIDC is now required to set up a joint operating company with a foreign party.

Other Iranian companies that could prove their financial capability in addition to technical qualifications will be considered as proper choices for cooperation contracts, Zangeneh said, adding that technological capabilities are more significant than financial capabilities.

Focus on EOR

Zangeneh said the HOA signed with POGIDC is based on enhanced oil recovery (EOR) from the aforesaid fields, adding: “Currently, the Ministry of Petroleum is seriously focused on EOR from oil fields. As much as jointly owned fields are prioritized the recovery rate is important.”

Underlining the need for the implementation of EOR projects, he said: “At present, we have 60 reservoirs in oil-rich regions in the south, all of which need EOR projects.”

“There are also offshore fields, gas fields in central Iran and newly discovered fields that all need investment [for development]. It must be noted that the time is now ripe for domestic and foreign investment as well as [transfer of] technology. Drilling wells alone would not be enough. Rather, it is important to reach maximum recovery from fields.”

Zangeneh said National Iranian South Oil Company (NISOC) plans to develop some fields like Rag Sefid, Maroun, Bangestan, Khami, Koranj, Parsi and Pabdeh.

“The objective is to benefit from all national capacities for the development of the country and meeting our needs,” he said.

New-Style Contracts, a Chance

Ali Kardor, CEO of NIOC, said that the signature of HOA with POGIDC would prove a good chance for eight Iranian companies shortlisted for E&P activities to put their capabilities into practice. These eight companies used to operate EPC projects.

POGIDC is one of these eight companies. It has no long experience, but it managed to prove itself by developing North Yaran oil field specially during years of international sanctions against Iran’s oil sector.

Kardor noted that the Ministry of Petroleum and NIOC are seriously pursuing enhanced recovery of oil from reservoirs, adding: “NIOC expects Persia Oil and Gas to take this issue into account.”

Enhanced recovery needs technology and innovation. POGIDC is largely expected to be able to handle the job assigned to it.

75,000 b/d Hike

Touching on production from these oil fields, Kardor said: “Currently, four fields – Yaran, Maroun Bangestan, Koupal Bangestan and Koupal Asmari – are producing 185,000 b/d, which is projected to reach 260,000 b/d. But our expectations go beyond 260,000 b/d and enhanced recovery would facilitate it.”

“Currently, the recovery rate in Yaran, Maroun Bangestan and Koupal Bangestan is 10%, 9.3% and 13 percent while Koupal Amsari, which has better conditions, has a recovery rate of 18 to 20%,” he said.

Kardor said that under the signed HOA, the recovery rate of these reservoirs would increase by application of cutting-edge technology.

$2.2b Credit

Kardor said the first new-style contract is forecast to need $2.2 billion in investment.

“These four fields are estimated to hold 14.5 billion barrels of oil in place, 2.5 billion barrels of which would be recoverable. Efforts are under way for increasing this figure by applying state-of-the-art technologies,” he added.

Kardor said Iran would earn $27 billion in revenue during this 20-year contract for enhanced recovery from the aforementioned fields.

He said that POGIDC has negotiated with European and Russian companies for partnership to develop Yaran, Maroun and Koupal fields.

He added that foreign companies willing to invest in Iran’s petroleum industry projects within the framework of new-style contracts are set to provide data next week.

 

Iran, Int’l Firms Cooperate on HSE

National Iranian Gas Company (NIGC) is cooperating with international companies in the field of security, health and environment (HSE).

Mohammad-Reza Yousefi-Pour, HSE director of NIGC, said: “By benefiting from the state-of-the-art technology, this company has been engaged in significant activities in the HSE sector.”

“Given the high sensitivity of gas industry, in addition to the capability of qualified domestic companies, international companies with good reputation and technical savvy could be also engaged,” he said.

Yousefi-Pour said NIGC is cooperating with companies from France, Sweden, England, Australia and the Netherlands in the domain of HSE.

“So far, visits have been made to different sections of gas industry by these companies and they have offered proposals for upgrading the HSE level,” he added.

Yousefi-Pour gave a positive assessment of the gas industry’s HSE conditions, saying protection of the environment is a priority of gas industry.

Lukoil Studying Two Iran Oil Fields

Iran’s Minister of Petroleum Bijan Zangeneh and CEO of Russia’s Lukoil Vagit Alekperov have met in Tehran and exchanged views about ways to increase cooperation.

Speaking to reporters after their meeting, Alekperov said Lukoil has already signed two confidentiality agreements with National Iranian Oil Company (NIOC) on Ab Teimour and Mansouri oil fields.

“Our experts are studying the data of these fields and they will go to Ahvaz (western Iran) for more examination. We will submit the results of preliminary studies on these fields to NIOC in the near future,” he said.

“Due to the extent of Iranian oil fields and the high volume of deposits, a company cannot naturally handle the development of all oil fields. Therefore, we focus on these two fields so that we would reach conclusion sooner,” he added.

Alekperov said that Lukoil was also studying the Persian Gulf area for future discovery projects.

Regarding investment in Iran’s oil fields, he said: “Studies are under way about how to invest.”

For his part, Zangeneh said Lukoil has signed an MoU for the development of an Iranian oil field.

He also called for long-term cooperation between NIOC and Lukoil.

South Pars Condensate Exports Cross 70mbb

South Pars Gas Complex (SPGC) has exported more than 76 million barrels of gas condensate since the start of the current calendar year, SPGC chief Masoud Hassani has said.

He said that the 76 million barrels, which were exported during the first half of the current calendar year which started on March 20, were up 25% year-on-year.

Hassani also said that 1.35 million tons of liquefied petroleum gas (LPG) was exported from SPGC to different countries during the same six-month period. “This amount was 6% higher from the year before and its outcome was further currency generation for the country, continuous production of high-quality products at this complex and the materialization of the slogan of Resistive Economy (instructed by Supreme Leader Ayatollah Ali Khamenei).”

Noting that SPGC’s brilliant record has caused regional development and entrepreneurship in the country, Hassani said: “This complex is currently supplying around 62% of the country’s gas needs and this great achievement has been made thanks to efforts by specialized and young manpower.”

“In addition to meeting domestic needs in the country, SPGC has turned into one of the largest hard currency-generating gas companies for the country,” he said.

Central Asia, Persian Gulf Get Iran-Made Items

Central Asian and the Persian Gulf littoral states are buyers of certain Iranian oil industry equipment, a senior Iranian official has said.

Deputy Minister of Petroleum for Engineering, Research and Technology Mohammad-Reza Moqaddam said Iranian manufacturers are now capable of manufacturing 60 to 65 percent of the equipment needed by the petroleum industry.

He added equipment, used in the upstream sectors of exploration and extraction, and the equipment used in downstream sector like refining, gas and petrochemicals are exported to neighboring countries.

He noted that upstream sector equipment is further in volume than downstream sector equipment.

The official put the total value of indigenized petroleum industry items at around $2 billion.

Iran, Kenya Ready for Oil Product Trading                                           

Iran’s petroleum minister has said that Iran and Kenya are now able to broaden their cooperation in oil and petroleum products supply.

Bijan Zangeneh said in a meeting with the visiting speaker of Kenya's National Assembly, Justin Muturi, in Tehran that the removal of international sanctions on Iran has paved the way for such cooperation.

“Cooperation with Africa is a priority in the Islamic Republic of Iran’s foreign policy,” he said.

Zangeneh said Iran and Kenya had singed memorandums of understanding in the past, a small part of which was put into practice.

“With the removal of sanctions, better conditions are provided for expanding cooperation,” he added.

Separately, Iran’s parliament speaker Ali Larijani said following a meeting with his Kenyan counterpart that they had discussed bilateral cooperation in different economic, agricultural industrial, oil and gas, medical equipment and pharmaceutical fields.

He said that the necessary arrangements are made for facilitating broader economic cooperation between Iran and Kenya.

Located in East Africa, Kenya is a buyer of Iran’s condensate. Last year it bought several cargoes of gas condensate and liquefied petroleum gas (LPG) from Iran.

Kenya has expressed its willingness for purchasing different petroleum products from Iran.

German banks urged to provide more guarantees

Iran's petroleum minister Bijan Zangeneh has announced that Iranian and German companies are resuming cooperation now that sanctions against the Islamic Republic have been lifted.

In a meeting with the visiting German vice-chancellor and minister of economy, Sigmar Gabriel, Zangeneh said plenty of negotiations have been held between Iranian and German companies as part of plans under way by the two countries to broaden ties following the implementation of Iran's nuclear deal with six world powers.

"Linde, Siemens and Lurgi are already cooperating with their Iranian partners. In case German companies complete their [financing] guarantees the two countries will see a good future," said the Iranian minister.

Earlier, Gabriel said an Iran-Germany business meeting that the two countries were interested in expanding relations particularly in the economic sector.

"Hermes insurance company can start its work in Iran although there are some financial problems and obstacles, but through cooperation between private entities and enterprises of the two countries, we can change the conditions," he said.

During the visit to Tehran of the German minister, a memorandum of understanding was signed between Iranian and German central banks.

Gabriel led a 160-member business delegation to Iran, the largest European delegation. The visit was aimed at boosting cooperation and facilitating transfer of technology through investment.

During this visit, ten memoranda of understanding were signed between the two sides for broader cooperation.          

 

 

 

 

 

 

Prioritized Projects Named

A deputy head of National Iranian Oil Company has said named prioritized development projects to be awarded under the newly developed format of oil contracts.

“Azadegan, the oil layer of South Pars [gas field] and Farzad B are among the prioritized projects” to be awarded under the new format of contracts, said Gholam-Reza Manouchehri, who is deputy NIOC for engineering and development affairs.

“I cannot say with precision which contract would be finalized by the end of the year because we do not know which project would go ahead better,” he said.

Manouchehri said negotiations were under way with Indian companies for the development of Farzad B, adding: “For Farzad B, a contract will be signed with the Indians because there has already been a contract with them. Of course it is not finalized yet.”

“Since the gas in this field is sour and the reservoir’s pressure is high with a low amount of condensate, the issue under discussion between Iran and India is the economic adaptability of this development project with this model of contract,” he said. “In a meeting recently held, our views got closer to the Indians’, but the Indian side is still to examine the issue and announce us the result so that we would soon have meetings in this regard.”

Manouchehri said Denmark’s Maersk has shown interest for the development of the oil layer of South Pars gas field.

“For the development of the oil layer of South Pars, an MoU has been signed with Maersk that sets the foundation for a contract. But we have not yet decided on putting this field out to tender or dealing with it outside bidding legal procedures,” he said.

Manouchehri also announced that non-disclosure agreements have been signed with Japan’s Inpex, China’s CNPC and France’s Total for the development of Azadegan oil field.

“For the development of Azadegan, besides Total, we have also signed MoUs with Inpex and one or two other companies and this field is planned to be put out to tender,” he said.

“We have just signed confidentiality agreement with Inpex and CNPC and we had already signed a non-disclosure agreement with Total,” said Manouchehri.

He has already announced that three oil deals are to be signed with foreign companies before the end of Iran’s calendar year in March 2017.

NIOC to Ask for Int’l Bidders’ Documents

The CEO of National Iranian Oil Company (NIOC) has said that international companies willing to bid for projects in Iran will be asked to provide documents.

Ali Kardor was speaking after the Iranian parliament approved the newly drafted type of oil contracts with sweetened terms aimed at tempting back foreign companies.

“According to legal procedures, the request for the submission of financial and technical data will be sent by NIOC to international Exploration and Production (E&P) and international oil companies (IOC),” he said.

“Once the documents have been submitted by the companies, NIOC will start assessing the applicants in order to announce the list of its endorsed bidders,” he added.

Kardor said the short-listed bidders would be able to choose from a basket of contract models which are mainly the new model of oil contracts, buyback and engineering, procurement, construction and finance (EPCF).

He said that Iranian companies would be able to steer the development of medium-sized and small-sized fields and team up with foreign companies.

Kardor added that large oil fields would be awarded to foreign companies under the terms of new deals, adding that qualified bidders would form a joint operating company with NIOC for the development of fields.

Iran Oil Feeds 40 World Refineries

A senior Iranian oil official has said that Iran’s crude oil is fed into 40 refineries across the globe.

“The bulk of refineries that use Iran’s oil are located in Asia and there are also some in Europe,” Mohsen Qamsari, director for international affairs at National Iranian Oil Company (NIOC), said.

He said that the Iraqi Kurdistan Region has already requested ran to help sell its oil, adding: “Export of Iraqi Kurdistan Region’s crude oil by Iran needs some technical work like building new installations and new pipelines that would cost too much. In any case, negotiations are under way to that effect and we cannot give a final response now.”

Regarding blending oil with the objective of winning more customers, Qamsari said: “The consumption of different refineries in the world has changed from the past and many refineries no longer use only a specific category of crude oil. Some refineries in the world purchase a variety of crudes and then blend them. That is a way to strike a balance between revenue and profit. Some refineries in the world blend 30 to 40 types o crude oil before consuming them.”

He noted that crude oil blending is a common method of satisfying buyers, saying: “We are seeking to implement crude oil blending system at Kharg terminal. Some refineries in the world need a specific category of crude oil that could be purchased and that opens our hand for marketing.”

Iran H1 Gas Exports Near 4 bcm

Iran has sent nearly 4 billion cubic meters of natural gas to foreign destinations in its half-yearly exports, a gas official said.

Mehdi Jamshidi Dana, director of the Dispatching Department of the National Iranian Gas Company (NIGC), said the country's exports amounted to 3.92 bcm during the six-month period between March 20 and September 21.

He said the exports rose by 3.4% year-on-year.

Furthermore, the country's gas imports dropped by 25.1% from the same period last year.

Jamshidi added that over 6 bcm of sour gas was injected to Aghajari oilfield for enhanced recovery.

He said another 2 bcm of sweet gas was also injected to oil reserves during the same period.

Over 1 bcm of gas was also injected to Shourijeh and Sarajeh underground gas storage facilities in central Iran for withdrawal in cold seasons. The amount is 17% higher year-on-year.

Iran recovered over 102 bcm of gas during the first half of the current Iranian calendar year which began on March 20, up 9.1% from the same period a year earlier.

Out of the total amount of gas consumed in the country, 68 bcm go to households, 55 bcm to industries and 58 bcm to power plants.

 

 

 

Danan, Cheshmeh Khosh Fields Waiting for Foreign Investment

Among scores of oil and gas fields introduced at an international conference in Tehran for development under the new model of oil contractual framework, there are fields which may need less investment and work than offshore and complicated fields. One of such fields is Danan oil field in Ilam Province along Iran’s border with Iraq.

Danan oil field is located 80 kilometers northwest of Andimeshk and 30 kilometers southeast of Dehloran. This field incorporates Bangestan and Asmari reservoirs.

In this field, Ilam and Sarvak formations – measuring respectively 85 and 750 meters thick – form Bangestan Reservoir whose thickness is 835 meters.

At present, 26 tb/d of crude oil is being extracted from Danan field before being carried to Dehloran production center through pipeline. After being sweetened, it is pumped through a 52-kilometer pipeline to Cheshmeh Khosh desalting unit.

Danan is administered by Iranian Central Oil Fields Company (ICOFC). A variety of scenarios have so far been envisaged at National Iranian Oil Company (NIOC) for the development of Danan field. The broad lines for the development of Danan field (scenarios categorized under natural depletion, water injection and gas injection) have been submitted and experts have offered their views.

In studying Danan field, after the reservoir’s properties are examined, a static and dynamic model is designed and the performance of the reservoir is studied under different scenarios. Natural depletion scenario includes drilling new wells, including vertical and directional wells, and gas injection scenario involves returning gas to an injection well in the reservoir.

These studies have indicated that in the gas injection scenario, oil production wells face the problem of high GOR, while in water injection scenario, the volume of injected water is limited due to the low permeability of reservoir rock; therefore the recovery rate could not be improved.

Thus, the best scenario for the development of Danan field is natural depletion which involves drilling new wells with high diversion and spudding directional wells in order to establish further contract with the rock reservoir. Application of this method will require a fewer number of wells than vertical drilling.

The contract for exploration and development of Danan block was signed between NIOC and a Vietnamese company in March 2008 for exploration and development activities, identification and evaluation of hydrocarbon deposits in this block and winning cooperation of top international companies in the upstream sector after issuing tender bids. The Vietnamese party has so far invested more than $20 million in this block.

OMV Ready to Develop Cheshmeh Khosh

Cheshmeh Khosh which was explored in 1964 and started production 11 years later is one of old fields in western Iran. Its current output stands at 18,000 b/d and its gas production stands at 3.3 mcm/d.

Cheshmeh Khosh is located in Ilam Province in western Iran. It is 52 kilometers south of Dehloran and 70 kilometers west of Andimeshk.

The oil produced from this field is processed before being carried to Ahvaz-3 production plant through a 153-kilometer pipeline. This oil is finally brought to Kharg Island in order to feed refineries or to be exported through Kharg oil terminal.

Cheshmeh Khosh is run by ICOFC and it currently needs investment and state-of-the-art technology in order to preserve and enhance its output.

Iranian oil officials introduced this field for investment at the conference on oil contracts. This field was so attractive for investors that Austria’s OMV was quick to voice its readiness for its development.

This expression of readiness for the development of Cheshmeh Khosh under new oil contracts comes as Iranian oil officials have always said that these fields will be put out to tender.           

 

New Contracts for Dey, Sefid Zakhour Fields

The objective behind the development of Dey and Sefid Zakhour gas fields is to produce 5.1 mcm/d and 10 mcm/d of gas respectively, and the delivery of gas processed at Farashband refinery to Iran Gas Trunkline (IGAT) 2 and 3 for supplying national needs.

Dey is located 60 kilometers south of Firouzabad and 140 kilometers south of Shiraz in the southern Fars province. Dey which is estimated to contain 2.6 tcf of gas is close to Aghar and Dalan gas fields.    

Sefid Zakhour which is located near the city of Qir in Fars Province holds 5.6 tcf of gas in place, 8.5 bcf of which is recoverable. If 17 wells are drilled in this area 30 mcf/d will be recovered from this field.

Development of these fields needs investment and state-of-the-art technology and that is why these two reservoirs were introduced as opportunities for investment during a conference held earlier this year on Iran's new model of oil contracts.

Sefid Zakhour which measures 40 kilometers long and 8 kilometers wide is situated 150 kilometers southeast of Shiraz.

According to studies conducted by the Reservoir Engineering Studies Office of National Iranian South Oil Company (NISOC), Iran plans to recover 15.1 mcm/d of gas from these fields after drilling seven new wells and workover of two wells in Seif Zakhour and drilling four new wells and workover of one well in Dey.

According to surveys, delivery of gas and gas liquids from Sefid Zakhour field to Farrashband refinery will be done trough two pipelines of 20 and 6 inches in diameter.

The gas produced at Dey field will be delivered to Farrashband refinery after being gathered.

Upstream development of Dey and Sefid Zakhour fields need acquisition of land for the construction of pipelines and drilling of wells, completion of two wells, drilling and completion of 11 new wells, purchase of wellhead commodities and installations, building wellhead pipelines, establishing gas and condensate separation units in Sefid Zakhour, installation of two pumps for the delivery of condensate from Sefid Zakhour, purchase and installation of pigs and installation of double butterfly valves.

The Board of Directors of National Iranian Oil Company has given the go-ahead for the initial production of 13.2 mcm/d of gas from Dey and Sefid Zakhour gas fields with a budget allocation of IRR 1,645 billion plus $159 million.

In the light of change in flow from 13.2 mcm/d to 15.1 mcm/d and changes in the nature of fluid produced by Sefid Zakhour field, the NIOC Board of Directors has given its nod to a budget allocation of IRR 1,572 billion plus $272.65 million.

Given the decline in the feedstock supplied to Fajr Jam refinery and the plan for supplying feedstock to this refinery from adjacent fields, gas delivery from Sefid Zakhour to Fajr Jam refinery with the objective of making up for feedstock shortages of the refinery is currently under review.

In case of final approval, the planned gas delivery from Sefid Zakhour to this refinery, more than IRR 822 billion will be required for the upstream development of this field.

After the start of drilling operations in the second half of the calendar year 1384, the first exploration well was drilled up to the depth of 5,271 meters.

The Exploration Directorate of NIOC managed to explore sweet gas in different layers of Kangan and Dalan. As a result, the reserves in this field were increased to 4.11 tcf.

Sefid Zakhour is estimated to hold 205 million barrels of gas condensate. Its gas recovery rate is 75% and its condensate recovery rate is estimated at 35%.

EOGPC, Sustainable Gas Supplier/

East Oil and Gas Production Company (EOGPC), a subsidiary of Iranian Central Oil Fields Company (ICOFC), produces natural gas and gas condensates from Khangiran fields (Mozdouran, Shourijeh-B and Shourijeh-D reservoirs) and the jointly owned Gonbadly field in Sarakhs in northeastern Iran.

EOGPC supplies gas to Khorasan Razavi, North Khorasan and South Khorasan, Golestan, Mazandaran and partly Semnan provinces. By providing gas to these provinces, the company is playing a prominent role in the economic blossoming of the country in the energy sector.

“The top priority of this company is production, particularly in cold seasons of the year, because the EOGPC operating area is among cold areas in the country and therefore planning must be such that before cold seasons of the year start all maintenance, overhaul, and preventive activities must have been finished so that we can benefit from its production advantages and continuousness during sensitive periods of time,” Mohammad Mam-Beigi, CEO of EOGPC, told "Iran Petroleum".

“For years EOGPC has made sophisticated plans for the technical management of the workover of wells and related services in a bid to fulfill its obligations and no problem has been created so far in this regard,” he added.

Mam-Beigi said the reservoirs operating under EOGPC administration are in the second half of their lifecycle, noting that the company’s management has made efforts to help sustainable energy supply in this area through appropriate planning.

The company has plans to ensure sustained production which is still in the exploration and appraisal phase. New fields are expected to start production in the coming years.

Holding 8% of Iran Gas Deposits

Mam-Beigi said the EOGPC’s recoverable gas reserves stood at more than 647 bcm, which make up nearly 8% of the country’s gas reserves and 17% of ICOFC gas reserves. So far 332 bcm of gas has been recovered from EOGPC fields and there still remains 315 bcm for future decades.

Meanwhile, due to development projects like increased sour gas production from Khangiran field and Shourijeh gas storage facility, as well as discovery of new fields like Tous and Attar, EOGPC is heading towards a bright future.

“In the current year development of new fields has been planned. One of these new fields is Tous which we hope will become operational soon. This field has sour gas production potential,” he said.

Referring to the development of Tous field, Mam-Beigi said: “Astan Quds Razavi has signed a memorandum of understanding with ICOFC. It has so far conducted detailed and development plans for this field and the case has been referred to the Reservoirs Committee for further examination. In my view, in case the ICOFC manages to provide the required finance, it would be able to develop this field on its own.”

He announced the existence of Kashfroud gas layer beneath Mozdouran layer in Khangiran field, saying: “In the past, two wells were used in this layer temporarily. The results of tests indicated that this layer holds very high-pressure gas. Production from this layer is expected to be realized thanks to plans devised by the Exploration Directorate of National Iranian Oil Company (NIOC). Based on these conditions, we will be able to have one operating gas field in this part of the country for years.”

Khangiran Gas Supply

Khangiran gas field is located in Khangiran area and 25 kilometers northwest of the border city of Sarakhs. It has three separate gas reservoirs (Mozdouran, Shourijeh B and Shourijeh D) which lay one another.  The one on the top is Shourijeh which is divided into layers A, B, C, D and E. At present, only the layers B and D contain sweet gas.

Mam-Beigi said the most dangerous sour gas in the petroleum industry currently exists in Khangiran operating area.

“The sour gas in Khangiran area with H2S content of more than 36,000 ppm is among the most dangerous sour gases in the petroleum industry of Iran and the world. With a primary wellhead pressure of 5,400 pam, it has special design in terms of safety and operation,” he added.

Regarding tough weather conditions in Khangiran operating area, he said: “The geographical conditions of this area are such that the temperature varies between 50 degrees Centigrade in summer and minus 25 degrees Centigrade in winter.”

“Furthermore, the absence of desirable fauna, recent drought and quick sands moved by strong monsoon winds are among other environmental problems in this area,” he added.

Shourijeh-B reservoir, which was discovered in 1967, started production in 1974 by supplying gas to the city of Mashhad. Currently, 50 wells of the reservoir are producing up to 1.5 mcm/d of gas. After condensates are separated by wellhead separators, the remaining gas is delivered to an old dehydration plant. The recoverable gas reserves of this reservoir are estimated at 16.141 bcm, nearly 72% of which was recovered by March 2006.

Shourijeh-D reservoir was discovered in 1987 and started production the same year. Like Shourijeh-B, Shourijeh-D’s gas lacks sulfured hydrogen and is known as sweet gas. But due to carbonic gas impurities, it corrodes pipelines and installations. Therefore, in a bid to contain corrosion, special substances are injected into the wells.

 

 

 

Natural Gas Storage

Mam-Beigi said a plan for storing natural gas produced by Shourieh-D started in 2010 after primary feasibility studies were conducted.

“In this project, as a support for gas supply to northern provinces, gas storage is done during eight hot months of the year to be used during cold months. By operating Shourijeh UGS plan, Iran will become the first in the Middle East and the fifth in the world in terms of underground gas storage capacity,” he said.

Mam-Beigi also drew a parallel between natural gas injection into Shourijeh storage facility during the first five-months of the current year and that of last year, saying: “During last [calendar] year’s five months, 722 mcm of gas was injected into this storage facility. This amount has exceeded 1 bcm for the current year.”

Regarding the process of gas injection into Shourijeh-D, he said: “If we can inject 10 mcm/d of gas to this storage facility as planned during the first eight months of the year we will be most probably able to withdraw 20 mcm/d of this gas in cold seasons of the year.”

In the current calendar year, approximately 70% of gas injection into Shourijeh has materialized. In the peak shaving, 14 mcm/d of gas is expected to be recovered from Shourijeh storage facility.

Mozdouran reservoir was discovered in 1968. It started production in late 1983 after more wells were drilled and installations were designed and built for sour gas treatment at Shahid Hasheminejad refinery.

Mozdouran contains high-pressure sour gas. Due to its 3.5% sulfur and 6.5% carbonic gas contents, this sour gas is very corrosive in wells, installations and pipelines. Furthermore, since sulfured hydrogen is acutely poisonous its release into the environment is very dangerous to human being and the environment.

Safety and Anti-Corrosion Requirements

Maximum carefulness, discipline, vigilance and knowledge of recovery from this reservoir and similar ones are pretty essential. Over the past 22 years, this reservoir has experienced no specific problem or fatalities. The pipeline and installations are in ideal conditions in terms of interior and exterior corrosion although their lifecycle is approaching its end.

Mam-Beigi cited precision, observation of international standards in choosing and consuming commodities for the completion of sour gas wells and building installations and pipelines in contact with sour gas, observing welding standards, removal of stress, conducting pressure tests throughout installations, workover or replacement, carefulness in choosing anti-corrosion material and correct use of them in injection into wells and wellhead continuous injection into production system, registering the properties of all pipelines and installations during periodic thickness measurements, timely installation and replacement of corrosion monitoring coupons and conducting rectification measures in the shortest possible time, monitoring the amount of water produced from wells and controlling the salt content of gas production and transmission facilities and the continuous monitoring of cathodic protection systems as the effective factors in preventing the corrosion of installations and pipelines.

According to him, preservation of valves and the safety systems of wells and installations, continuous education of the staff and precise supervision over the safe performance of all operating and reparation staff at all levels and regular inspection and preventive reparation are among other factors that would prevent the corrosion of installations.

Gonbadli gas field, which is situated 25 kilometers southwest of the city of Sarakhs, near the border with Turkmenistan, became operational in 1986. Of a total of 9 wells dug in this reservoir, three wells are producing 1.1 mcm/d of gas at best. Nearly 91% of the gas contained in this field was recovered by March 2006. Since this gas filed is jointly owned, production from it is under way non-stop and by operating pigging. The gas contained in this field is sweet and contains less than one percent of carbonic gas.

13% Share in Gas Output

Mam-Beigi said EOGPC accounts for 13% of gas production in the country, adding: “This amount of gas is produced under the toughest operating conditions because the gas in this area contains a high amount of H2S, and there are few reservoirs in the world with such production conditions. In a bid to prevent corrosion, every year from May to September, all installations, wells and gathering centers are tested so that weaknesses would be identified and to ensure the necessary reparations are made.”He said the average annual production from Mozdouran, Shourijeh-B, Shourijeh-D and Gonbadli reservoirs stood between 1 and 1.1 bcm.

ICOFC has assigned EOGPC with the following missions: Implementation of contracts about steering production, processing and transfer of oil and gas and similar products, maintenance, optimization and overhaul of all major and related facilities (production units, pipelines, gas pressure booster stations, wellhead equipment, electricity, telecom and water installations, roads), conducting all necessary modifications to subsurface facilities (workover of wells, development of major and related facilities), drilling new wells in the operating fields in coordination with the main company and conducting field development projects and implementation of surface and subsurface facilities.

9mb/d Crude Oil Loading Capacity

Iran Oil Terminals Company (IOTC) acts on behalf of National Iranian Oil Company (NIOC) for Iran’s oil exports. IOTC also completes Iran’s oil production-export chain. Currently, 93% of Iran’s crude oil exports are handled via Kharg oil terminal with the rest being exported via Neka and Mahshahr terminals. All gas condensates produced in Iran is exported by IOTC via Assaluyeh oil terminal.

Iran Petroleum has interviewed Pirouz Mousavi, CEO of IOTC, on Kharg and other oil terminals handling Iran’s oil and gas condensates exports.

Q: Would you please first talk about IOTC activities in the aftermath of the implementation of the Joint Comprehensive Plan of Action (JCPOA)?

A: Following the entry into force of the JCPOA (the official reference to Iran’s nuclear agreement with world powers) and the subsequent removal of sanctions, Iran has concentrated on its oil exports. The Iranian Ministry of Petroleum plans to bring its oil production, exports and swap to the pre-2005 level, i.e. before the sanctions were imposed. To that end, IOTC has made the required arrangements to move towards materialization of these objectives in order to fulfill the petroleum industry’s obligations to the international community. In order to reach its oil export objectives, IOTC has made precise and competitive planning so that Iran’s sustainable oil production and exports to world markets would be guaranteed. Today, due to limited capacity of storage in Iran, the country’s oil production largely depends on sustainability in oil exports. In the light of insistence by Iran’s petroleum minister [Bijan Zangeneh] for a 1mb/d oil production and export hike during six months following the implementation of JCPOA [last January], IOTC has severely focused on the materialization of this issue. But we have met our targets much earlier than the determined date, while market analysts did not expect it. Today, the amount of oil supplied by oil fields to Kharg Island is not much different from the amount delivered during years before the sanctions were imposed. With such preparations as reconstructions and renovations at jetties, power plants and oil storage tanks we have managed to stabilize Iran’s oil exports in the post-JCPOA era.

Q: You just spoke about the infrastructure for sustainable crude oil exports. Would you please provide more details?

A: Before the sanctions [were imposed], Iran’s crude oil storage capacity had declined to 19 million barrels. Therefore, immediately after removal of the sanctions, the overhaul of ageing tanks was placed on the agenda as Iran’s oil exports were set to increase. Meantime, in parallel with renovation of ageing storage tanks, we accelerated the construction of new ones with a capacity of 4 million barrels. At the moment, Iran’s oil storage capacity stands at 28 million barrels. Furthermore, in collaboration with the private sector, a group of oil storage tanks with a capacity of 10 million barrels is expected to be delivered to us soon. Then, Iran’s oil storage capacity will reach 38 million barrels, which we can say is in compliance with international standards. Until recently, IOTC owned 10 tugboats. Two tugboats have been added to its fleet, while as many tugboats have been rented. Six loading berths are active in the eastern jetty and three others in the western jetty.

Last month, IOTC managed to smash its own record for transfer. By simultaneous transfer to 9 oil tankers in the jetties and to an oil tanker through ship-to-ship method we managed to set the new record. An outstanding feature of Kharg oil terminal is its reference lab that determines the quality of crude oil delivered to customers. This lab serves as reference and its reports are reliable. This center, which is equipped with specialized and experienced forces, analyzes the quality of crude oil. It is also able to export technical services to other countries in the region.

In 2010, only four loading berths were active at Kharg terminal. But today, thanks to renovation and overhaul projects, all berths at this terminal are active.

Q: Given Iran’s petroleum industry development plans in the upstream sector and the planned export of more than 5 mb/d under the country’s Vision Plan, does IOTC have any other projects on agenda?

A: Given the application of modern technologies to loading arms and the issue of environment, we are focusing on these two issues. Currently we are cooperating with Tehran Academic Center for Education, Culture and Research on these two domains and also application of new technologies to reservoirs, decontamination of oil-polluted soil and preventing the release of polluted water into sea. This company managed to obtain green certificate after having implemented environmental projects. We also plan to use automatic systems for removing oil and sludge from contaminated soil.

Q: Given the implementation of JCPOA and political overtures, have you had any talks with foreign companies on using cutting-edge technologies in different sectors?

A: Today, a major need for Iran’s petroleum industry is to attract foreign investment. This industry needs $50 to $60 billion in annual investment. IOTC is no exception in this regard. We hope to witness the presence of foreign companies and investors in Iran after finalization of the new model of Iran oil contracts. As part of the petroleum industry, we have also held talks with foreign and European companies on new technologies and environment.

new technologies and environment.

Q: Now given the possible entry of foreign companies into Iran’s petroleum industry, what’s your plan for supporting Iran’s knowledge-based companies?

A: Over the past four years, IOTC has had a domestic approach in equipment supply. For the first time, ship-to-ship operation carried out in the Persian Gulf by relying only on our domestic potentialities. For this project, we have engaged knowledge-based companies and centers in 13 provinces in Iran to be able to indigenize tugboat engines. Meanwhile, in cooperation with the Academic Center for Education, Culture and Research, we are developing crude oil loading arms for the first time in the Middle East. These domestically manufactured arms, along with master meter provers, are to be installed at Jetty No. 10 of Kharg terminal. Domestic manufacturing petroleum industry equipment is the way that must continue with the support of the petroleum industry subsidiaries.

Q: in what sectors is IOTC willing to cooperate with foreign companies?

A: New measurement systems and new technologies in the management of storage tanks, safety, environment and loading arms are the sectors in which we would negotiate with foreign companies for cooperation. We have so far reached good results with Dutch companies in this regard.

Q: How much of the current 28-million-barrel crude oil storage capacity is operational?

A: We are currently using only 11 million barrels of this capacity and the rest is empty, but ready to be filled.

Q: How much is the current capacity of Iran’s oil exports?

A: Sometimes, due to the congested navigation of oil tankers at Kharg terminal and bad weather conditions, exports are disrupted. However, we face no problem in this regard given the 9-million-barrel capacity of this terminal and the skilled manpower. This record has recently been set and we managed to export 9 million barrels of oil in a single day. So, whenever it is necessary, IOTC is ready to utilize all its jetties and potential to export crude and /or products.

Q: What about Iran’s gas condensate exports?

A: As you know Iran started exporting gas condensate with a single-point mooring (SPM) in the early 2000s after South Pars [gas field] development phases became operational. Today, new phases of South Pars have become operational and are exporting condensate with three SPMs. This figure will increase soon after Phase 19 of South Pars has been launched. Of course, I have to recall that Iranian petroleum industry managers wish to bring down gas condensate export to zero so that this valuable hydrocarbon substance would be processed in refineries inside the country.

In compliance with the policies of Resilient Economy, the bulk of gas condensate produced at jointly owned South Pars gas field is [planned to be] treated at Persian Gulf Star Refinery (360,000 b/d), Siraf refining park (480,000 b/d) and petrochemical plants to be converted into downstream products like gasoil, gasoline and naphtha in conformity with euro-4 standards. But before the launch of these plants, gas condensate will continue to be exported by SPMs.

Q: One of Iran’s policies about crude oil export has been to shorten the distance for clients. To that effect, Iran is launching Jask export terminal to diversify its exports. What are the latest developments about this terminal?

A: Yes, that’s true. At present, 5,400 ha of land has already been allotted to this project. Basic studies have been conducted. According to plans, alongside petrochemical and refining facilities, crude oil storage tanks with a capacity of 10 million barrels would be built in Jask area. Also by installing an SPM at Jask area we will be able to export oil via Oman Sea. We are currently choosing an investor who will be most probably a foreign investor. Furthermore, in cooperation with National Iranian Gas Export Company, facilities will be also built for exporting gas to Oman.

Q: When will we witness crude oil swap resumption in northern Iran?

A: Crude oil swap between Iran and Caspian Sea littoral states will be resumed via Neka oil terminal. According to plans by the Department for International Affairs of NIOC, contracts for crude oil swap have been finalized and this terminal will soon start its work. With the energy diplomacy applied by the 11th administration of Iran, lots of efforts have been made for providing the infrastructure for the implementation of this project. Over the past two months, Neka oil terminal has received many international certificates. This terminal is now able to swap 150,000 b/d of oil. According to plans, with the development of this terminal and an increase in the draft and storage capacity, Iran would be counting on swapping 500,000 b/d of oil. I have to recall that Neka oil terminal development project would be a good opportunity for investment in Iran by foreign companies.

Q: One of the important issues which Iran’s Ministry of Petroleum has focused upon and international companies have been paying attention to has been the issue of social responsibility in oil and gas zones. How does IOTC deal with this issue?

A: IOTC believes that it will be able to fully implement a project when local people and residents could enjoy an acceptable level of social welfare and cultural services. In that case, we can count on their contribution to the implementation of the project. In Kharg Island where it has a record of decades of oil production and export, IOTC has managed to provide good and proper services to local residents. For instance, we can refer to the construction of hospital, ferry with 50% discount in fares, low-price fresh water and electricity supply and free transportation of people’s needs on ship, and modern collection system of garbage and waste. In the light of their social responsibilities, oil companies pay due attention to this issue.

Shazand Propylene Unit to End Imports

Iran sits atop one of the largest natural gas and ethane reserves in the world. Since other countries in the Middle East lack abundant ethane deposits, the huge reserves in Iran serve the country as a big opportunity and a bargaining chip in its petrochemical industry. Natural gas and ethane are the base for many chemical products, the most important of which is polypropylene.

Ethylene and propylene are among the main basic petrochemical products. Their value-added is higher than that of raw materials like gas and naphtha.

Last year Iran produced more than 1 million tons of propylene, but this trend seems to be changing.

In fact, one of major reasons for the low production capacity of downstream industries during years of international sanctions must be sought in this sector.

Over the coming ten years, Iran’s National Petrochemical Company (NPC) plans to have propylene-based activities. Propylene production is set to increase in coming years.

40 Tons Propylene in Pre-Commissioning Stage

Establishment of a propylene production unit at Shazand Petrochemical Plant is a step in this direction. That is why Marzieh Shahdaei, CEO of NPC, visited Shazand Petchem Plant during the final days of summer and inaugurated the propylene production unit there.

The propylene production unit is an important infrastructure project in Iran in line with the general policies of the Resilient Economy instructed by Supreme Leader Ayatollah Ali Khamenei. This semi-industrial unit will be operating with a capacity of 2,400 tons a year and will be able to supply propylene at different grades.

On the sidelines of the inauguration ceremony, Shahdaei said that Petrochemical Research and Technology Company (PRTC) was tasked with providing required technologies for petrochemical sector.

“This company has in recent years been markedly active in the field of processes and production of catalysts and the inauguration of this propylene unit is one of these results,” she said.

“In the near future, with the petrochemical projects set to become operational, propylene production will increase and new downstream units will be developed,” said Shahdaei.

Construction of a semi-industrial propylene production unit started in October 2012 and it has produced 40 tons of propylene in the pre-commissioning phase since April this year. Furthermore, manufacturing of key equipment for semi-industrial propylene production has been done by domestic manufacturers. Its objective is to acquire technical knowhow for catalysts and develop new grades, develop process and catalyst, develop products and resolve problems of related industrial units.

The objectives and plans envisaged for the semi-industrial propylene production unit include research projects to indigenize technical knowhow, develop products and optimize processes, indigenize special equipment, boost output and profitability, renovate technology and help train researchers.

The nominal capacity of propylene production in the country was about 965,000 tons up to 2013. Under the 6th Economic Development Plan (2015-2020), the country’s propylene production capacity is expected to increase to about 4 million tons. According to plans, the country’s propylene production capacity would reach 8 million tons by the end of the 7th Economic Development Plan.

KhomeynPetchem Plant Waiting for Propylene

One of development plans for Shazand is to envisage new destination for its products. Khomeyn Petrochemical Plant is one of these destinations.

“The Shazand refinery supplies feedstock to Arak Petchem Plant and due to its location in the center of the country it is strategically very significant,” said Shahdaei. “Khomeyn petrochemical project, which has been designed based on the products of this unit, is in the stage of purchase of equipment and it would produce propylene.”

Catalyst Supply Restrictions Lifted

KhodadadGharibpour, CEO of Shazand Petrochemical Company, presented a report about the activities of the company. He said that the company’s production and sale of petrochemicals reached 1 million tons last calendar year to March 2016. He said that the company set a new record in production and sale last year.

Gharibpour added that the ShazandCompany has fully collected its money from petrochemical exports without being affected by banking restrictions.

He said it was among the first Iranian companies that have managed to get back frozen money from Japanese and German companies following the implementation of Iran’s nuclear agreement with world powers. He said Iran received $1 million from Japan and €4.6 million from Germany.

Gharibpour said the feedstock needed by the ShazandCompany was supplied by Isfahan refinery at 1,800 tons, which has now been cut to 450 tons.

“Shazand Petrochemical Plant has received feedstock from 16 national and foreign resources. We have so far managed to identify 9 types of feedstock with different composition at Imam Khomeini refinery,” he said.

“With planned measures we have managed to strike this industry off the list of polluting industries,” said Gharibpour.

He also said that health, safety and environment (HSE) requirements are fully met at Shazand Petrochemical Company.

“We have gone ahead with safety instructions and this important issue has been proven as no incident has happened,” he said.

Noting that the company is equipped with the best systems for water treatment in Iran and the Middle East, Gharibpour said: “With the objective of optimal recovery from underground waters, a wastewater treatment project is set to be implemented with an investment of €7 million to €8 million.”

“As far as financing of the wastewater treatment project is concerned, the tender documents have been issued and we are looking for a contractor,” he said.

Shazand Refinery in Talks with Europeans

Ali Jamshidi, CEO of Imam Khomeini Oil Refining Company, was also present at the inauguration ceremony.

Asked by “Iran Petroleum” about the conditions of this refinery for producing euro-5 and euro-6 gasoline, he said the preparations have been made for that purpose.

Referring to the tough conditions of years of sanctions, he said: “At that period of time, the activity of some units used to be halted due to the lack of parts and equipment and Phase 2 became operational under the tough conditions of sanctions. We have now reached self-sufficiency for the production of many catalysts used in the gasoline production unit and we can say that we will stop importing catalysts within two years.”

He also said that talks had been held with leading companies from the Netherlands, Germany and France for their future contribution to this refinery and implementation of development projects.

 

Iran Petchem Incentives

Iran’s top rank in terms of hydrocarbon reserves has placed the country at the center of attention in the world. The widespread growth and development of energy-related technologies, ranging from exploration to refining and processing of oil and gas in Iran on one hand, and the country’s history and civilization as well as its geostrategic and geopolitical position on the other, have bestowed valuable benedictions on Iran to become the sole energy hub in the future.

Undoubtedly, the most important competitive advantage for investment and the development of petrochemical industries in Iran would be access to feedstock like natural gas, ethane, naphtha and condensate in big volumes and at competitive prices.

The capacity of gas treatment and transmission industries in Iran currently stands at around 750 mcm/d, which will soon reach 1,000 mcm/d. Furthermore, access to ethane as petrochemical feedstock is instrumental in boosting Iran’s competitive status for the production of petrochemicals.

With the completion of development phases of the giant offshore South Pars gas field, i.e. full development of phases 12-27, some 650,000 b/d of gas condensate and 6.7 million tons a year of liquefied petroleum gas (including propane and butane) and 4 million tons a year of ethane would be recoverable. This ethane will be fully served to the petrochemical industry.

In addition to easy access to feedstock, Iran enjoys other advantages in the petrochemical industry. The big and growing market in the country for petrochemicals, easy access to skilled and specialized workforce, extended communications infrastructure, sharing borders with 15 countries including Central Asia and South Caucasus, establishment of special economic petrochemical zones with political stability guarantees and pro-investment laws, offering incentives like tax exemptions to investors and the existence of a chain of active units of petrochemical industries. All these advantages can play a prominent role in the development of upstream and downstream industries.

Furthermore, the National Development Fund of Iran (NDFI) is also another important incentive for potential investors.

Iran is currently one of the most secure countries in the Middle East for domestic and foreign investment in the petrochemical sector. This security pertains to the infrastructure, return of investment, higher rate of return, growing demand in the region and knowledge-based structure.

In Iran, where political stability and security are prevailing, domestic and foreign investors are active. But, terrorist groups are freely operating around Iran, and they scare away any foreign investment.

Low net costs, security and rapidity of transfer are the most important concerns of investors for the transit of commodities. These parameters exist in Iran from north to south and from east to west of the country.

The economic dynamism along Iranian borders bears proof to this fact. Energy exchange, swap of oil, gas and electricity, exchange of commodities between Iran and Turkey, Azerbaijan, Turkmenistan, Iraq, Pakistan, Afghanistan, Caspian Sea littoral states and Persian Gulf Arab sheikhdoms, and the start point of a future gas pipeline stretching from Iran to China via Pakistan and India, are indicative of the fulfillment of requirements for transit of commodities in Iran. Iran targets 15 million tons a year of good transit. This figure is likely to be achieved as international sanctions have been lifted, trade transactions are on the rise and foreign companies are coming back to Iran.

An advantage which foreign delegates always highlight in their remarks for investment in Iran, is the existence of skilled manpower in different engineering, construction and contracting sectors. That gives Iran a big advantage over its rivals. Every three to four years, around 4,000 students graduate from universities and they are ready to work.

for transit of commodities in Iran. Iran targets 15 million tons a year of good transit. This figure is likely to be achieved as international sanctions have been lifted, trade transactions are on the rise and foreign companies are coming back to Iran.

An advantage which foreign delegates always highlight in their remarks for investment in Iran, is the existence of skilled manpower in different engineering, construction and contracting sectors. That gives Iran a big advantage over its rivals. Every three to four years, around 4,000 students graduate from universities and they are ready to work.

Long-Term Feedstock Pricing Formula

By working out a gas feedstock pricing formula for petrochemical plants for long term, Iran has practically given the green light to domestic and foreign investors willing to finance projects in the country. The prices set for the gas feedstock remain in force for at least 10 years. Up to that time, 21% of Iran’s 1.4 bcm gas output would have been converted to petrochemicals.

Today, in case long-term feedstock prices are set, investors would be able to make a more realistic assessment of projects they would be willing to finance in Iran. Setting gas price for petrochemical units for the long term would let investors, producers and industrialists of petrochemical sector to have a clear price range for coming years and therefore they would not be worried about price fluctuations in the market.

In order to meet the expectations of potential investors in Iran, three principles must be taken into consideration; First, setting long-term price to be more attractive than in rival countries; Second, establishment of infrastructure by the government; and Third, sustainable rules and regulations.

Iran Petchem Thirsty for Investment

Iran currently needs $33 billion in investment to finance petrochemical projects for a total output of 55 million tons. That would earn the country $26 billion in revenues a year. There are also 15 petrochemical projects under construction, which are all prioritized. These projects would become operational in four years and are expected to add 10 million tons to the country’s petrochemical production capacity.

With the finalization of financing for 7 methanol projects in Assaluyeh, some 10 million tons of methanol would hit global markets. Before this, the country’s petrochemical development has been mainly in the ethylene sector because due to the abundance of ethane, most products became ethylene-based and downstream industries had the chance to grow. But in order to accelerate the growth of these industries, propylene production must be facilitated. Propylene generates and feeds an extended chain of downstream industries. Therefore, Iran eyes propylene-to-methanol projects so that it would not slash the methanol price while propylene production would help improve downstream industries in the country.

According to National Petrochemical Company (NPC)’s projections, Iran plans to bring the capacity of petrochemical production to 180 million tons a year in ten years’ time from now. That would promote Iran to the first rank of petrochemical industry in the region.

Completion of 60 incomplete projects with 10-90% progress could raise the current production capacity of petrochemicals to 120 million tons a year. Furthermore, by implementing 36 new projects which need $41 billion in investment, the annual production capacity will go beyond 180 million tons.

Financing so many petrochemical projects is not possible merely by domestic resources; therefore, foreign investment must be involved.

Senior NPC officials have stressed the point that banks in Iran would not be able to provide so much investment for the petrochemical industry. They have welcomed the entry of banks and financial institutes into this value-generating industry. In the wake of the lifting of international sanctions on Iran, the country has held talks with foreign companies and voiced its readiness to cooperate with leading countries. Several European countries with a record of working in Iran have expressed readiness to return to Iran’s petrochemical sector.

Maximum use of the existing petrochemical production capacity is one of strategies envisaged in the 6th Five-Year Economic Development Plan (2015-2020). The industry can complete the value chain, but the presence of private sectors and particularly foreign investors must be increased by facilitating conditions for their presence.

No new investment has been made in Iran’s petrochemical sector over the past one decade. Therefore, this industry is now thirsty for foreign investment and technology. Foreign parties are well aware of potentialities and big profits of this industry for them. Germany’s BASF ad Linde, France’s Axens, South Korea’s Hyundai, Britain’s Shell and South Africa’s Sasol are set to benefit from post-sanctions period in Iran to resume work in Iran’s petrochemical projects in the near future. They know quite well that the rate of return for depositing money in banks is around 1% in their countries, while their investment in Iran’s petrochemical projects would produce at least a 20% rate of return.

Some 62 incomplete and new projects in Iran are like 62 sources of investment attraction. Implementation of these projects would let

would let Iran’s petrochemical sector make up for losses it has incurred during years of sanctions. New petrochemical projects, worth $75 billion, have been envisaged in Iran. Most of them must be financed by foreign countries, particularly China.

Wood Mackenzie, a global leader in commercial intelligence for energy, predicts Iran can attract $70 billion for petrochemical projects under some conditions.

Afsar Hussain, an expert in Wood Mackenzie's EMEARC Refining and Chemicals research team specializing in olefins and polyolefins, has said Iran has ambitious plans to expand its petrochemical industry, including a large number of projects in planning and construction phases.

"We believe Iran can attract $70billion worth of investments, but only over a prolonged period that confirms it is an attractive investment opportunity. By comparison, the US shale gas revolution attracted over 200 projects worth over $130 billion within a decade of its emergence," Hussain said.

European investors are eying Iran but still acting cautiously as the imposed sanctions removal is yet to occur. Nonetheless, there has been news of Chinese and Indian investors looking at a number of these projects. Hussain said Iran is clearly another viable location in terms of low cost gas-based feedstock in the world other than the Middle East players which, except for Qatar, have limited supplies of low-cost ethane available, as well as the US with their shale gas-based developments.

Asked about the prospects of Iran's petrochemical exports, the Wood Mackenzie expert said Iran is taking steps to boost exports but their first priority is to increase production.

"As a result of sanctions, assets have lower than Middle East average production rates because of limited access to international technology/catalysts, difficulty in delivering feedstock and trade embargos limiting potential markets. We expect Iran to increase its production slowly. Hence, it will provide a boost to exports, but the process will be slow at first and is heavily reliant on sanctions removal," he said.

Iran exported about $15 billion worth of petrochemicals in 2011, before western sanctions were imposed. It has revived the export volume since 2014 due to elimination of petrochemical-related sanctions in November 2013. According to a report by Iran Customs Administration last week, Iran exported $10 billion worth of petrochemicals during the first eight months of the current year, unchanged in value, but increased almost 40% in volume.

Given the fall in the value of petrochemical products, Hussain said, "Petrochemical prices generally plummet due to lower oil prices. However, we didn't witness the sharp falls in petrochemical prices the same way as oil, as demand for petrochemicals remained strong and supply outages supported prices."

Downstream Sector Rivaling Upstream Industry

The advantages of development of downstream petrochemical industries are no secret to anyone. These advantages push investors towards these industries. The rate of return on investment is around 10 to 15% in the upstream sector and around 35% in the downstream sector. One million tons of raw petrochemicals is valued at $300 million. But if these raw products are converted into artificial products the country would be earning $670 million in revenues.

After petrochemical feedstock prices increased in 2014 many operating petrochemical plants in Iran expressed their interest in developing value chain around their complexes and they started negotiations with foreign developing companies.

Many agreements have so far been signed. One of them is the EPCF-type contract between a consortium comprising an Iranian entity and South Korea’s Pields for a pentane project in Assaluyeh. It seems that Iranian negotiators have realized the significance of value-added in the downstream petrochemical industries more than ever.

Foreign investors seeking cooperation with Iran are active in a variety of sectors. For instance, the Japanese are willing to invest in centralized utility, olefin and ammoniac projects, the Indians seek investment in urea units, South Koreans favor investment in fuel and aromatic units, while Europeans prefer GTTP and basic units.

Due to political overture in Iran in the aftermath of the country’s historic nuclear accord with the West in 2015, major European firms are interested in basic and downstream petrochemical sectors in Iran. That proves the significance of this industry for European companies.

At present, the competitive advantage of petrochemical products particularly in the downstream sector in return for the sale of oil and gas has pushed this group of industries into the focal point. Given the significant role of these industries in social and economic development and given the country’s potentialities, the petrochemical industry must be taken into consideration more than ever as it serves domestic and foreign industries.

Marzieh Shahdaei, CEO of NPC, has said that the presence of foreign companies in Iran’s petrochemical industries hinges upon the completion of petrochemical chain, noting that downstream petrochemical industries are welcomed both in Iran and abroad.

With the development of upstream and mid-stream petrochemical industries in recent years, important steps have been taken for the completion of the value chain of this industry; however, selling raw materials continues to be the main advantage of this industry. Official estimates indicate that 70% of the value-added of petrochemical industry materializes in downstream industries, while it has not been developed along with upstream industries.

 

Denmark to Help Iran Develop Sabalan Petchem Plant

Iran has made plans for some 80% of its future petrochemical projects. This sector needs investment to implement its projects. Now that banking and monetary restrictions have been eased, Iran hopes to be able to benefit from foreign loans for developing its petrochemical sector and complete incomplete projects. According to plans, Iran’s petrochemical industry needs at least $50 billion for its projects.

Many of stakeholders in Iran’s petrochemical projects are pinning hope in enhanced gas production from South Pars gas field and the presence of foreign investors over the coming two years. Once South Pars development phases have been completed, Iran would be able to recover 650 tb/d of gas condensate, 6.7 million tons a year of liquefied petroleum gas (LPG), which comprises both propane and butane, and 4 million tons a year of ethane.

Iran’s Ministry of Petroleum plans to use ethane totally for petrochemical projects. Therefore, petrochemical projects currently under way and those planned for future will be pursued more seriously by shareholders and manufacturers.

Petrochemical projects in Phase II of Assaluyeh would take up added significance when one takes into account that this zone would account for 40 million tons of a total of 60 million tons of petrochemicals, Iran plans to add to this output by the end of 6th Economic Development Plan in 2020.

Most incomplete petrochemical projects in Phase II of Assaluyeh are under construction in the vicinity of Kangan city. Most of these projects need foreign loans and financing. Over recent years, development of these projects has been slowed down for a variety of reasons including sanctions and financials shortcomings.

China has accepted to finance 5 out of 22 projects in Assaluyeh in southern Iran.

Sabalan Petchem Plant which houses a methanol production plant is one of projects located in Phase II of Assaluyeh. This project, which is 50% complete, is financed by China Export & Credit Insurance Corporation, commonly known as Sinosure.

Mohammad Zali, CEO of Sabalan Petrochemical Company, has said that this plant would produce 5,000 tons a day of AA-grade methanol. The Sabalan plant would be built on a piece of land measuring 7 ha in area and close to Damavand Petchem Plant.

Zali referred to a 45% progress in Sabalan Petchem Plant, saying: “The financing of this project is done by China’s credit line. This financing became operational in January 2015. The technical knowhow for this plant has been provided by Denmark’s Tapso and an EP-based commodity purchase contract has been struck by Petrochemical Industries Design and Engineering Company (PIDEC).”

He said that detailed engineering and commodity purchase at Sabalan Petchem Plant are respectively 70% and 60% complete. He noted that Tapso has applied the state-of-the-art technology for methanol production in order to boost output.

“Although this project is financed by China, the management and shareholders are putting efforts into using the assistance of domestic manufacturers,” said Zali.

He said assessments show that the products of this plant would have foreign buyers, adding that the market for these products would become lucrative in 15 years.

“Since this project is being run by Sepehr Energy Co, it seems that this company would launch downstream processes in this plant in the near future. Countries like China and India are main foreign buyers of products of Sabalan plant by March 2018,” he said.

Zali stressed the need for respecting environmental regulations in petrochemical processes and engineering, saying: “The latest environmental standards will be used in this plant.”

He said that converting gas to methanol would be one of the main advantages of construction of Sabalan Petrochemical Plant.

“Currently, methanol enjoys a good market due to its high diversity in consumption,” he added.

Zali said more than 76,000 cubic meters of natural gas and 95,000 cubic meters of oxygen are fed into Sabalan Petrochemical Plant per hour, adding all utility equipment at this plant are supplied by Damavand Petrochemical Plant.

He referred to spatial restrictions at Sabalan petrochemical project, saying: “Sepehr Energy Investment Company, as the holding company of Sabalan petrochemical project, has plans on the agenda for building downstream units and supplying products of higher value-added. Preliminary studies are under way for that purpose.”

He said that over 95% of the shares of Sabalan petrochemical plant belong to Sepehr Energy.

Zali said the project is estimated to cost $600 million with a projected rate of return at 22%.He expressed hope that construction of Sabalan petrochemical plant would pick up speed, thanks to the implementation of Iran’s nuclear deal with six world powers, dubbed the Joint Comprehensive Plan of Action (JCPOA).

Projects in Phase II of Assaluyeh still need foreign loans and financing, although construction operations have begun and investors have been decided upon.

Iran’s petrochemical projects constitute an incentive for foreign investors. The country hopes to double its revenue from petrochemical projects to $40 billion. Petrochemical projects in Phase II of Assaluyeh are likely to make great contribution to this big jump.

Phase III of Pardis Petchem Plant

For Iran, whose motto is to minimize sales of raw materials, development of petrochemical units is the most important step for reaching its objectives. Meanwhile, it seems that the sharp oil price decline to below $50 would also justify avoiding crude oil and natural gas sales and instead, supplying products of higher value-added. In this regard, different projects have been defined in the second phase of Assaluyeh that would help boost Iran’s downstream products and earn the country revenue.

In this phase, there are prioritized projects that would help enhance Iran’s income from petroleum products and development of petrochemical industry. Phase III development of Pardis Petrochemical Plant is one of these projects. This project started when Iran was under toughest ever international sanctions. Despite all restrictions, Iran is just steps away from starting up this project.

Bahman Zamani Qaravoshi, CEO of Pardis Petrochemical Plant, has said that this phase would become operational before the current calendar year ends in March 2017.

95% Progress in Phase III

Pardis Petrochemical Plant is one of the leading producers of urea and ammoniac that is currently operating in two phases. In terms of capacity, it is one of the largest in the Middle East in urea and ammoniac production. Once Phase III becomes operational, it will be among the top petrochemical units in the world.

Zamani said before Phase III of Shiraz unit was launched, urea and ammoniac production in Iran stood at 4.4 million tons, half of which was supplied by Pardis. After Phase III of Shiraz unit became operational, the urea and ammoniac output reached 5.5 million tons. It would again rise to 6.6 million tons once Phase III of Pardis comes online. Pardis would make up 50% of the country’s petrochemicals production capacity.

Currently, two phases are operating with ammoniac production capacity of 2.15 million tons and urea production capacity of 1.16 million tons.

Construction of Phase I of this plant started in 2001 and lasted six years. Construction of Phase II began in 2004 and lasted six years. The two phases are now producing at rated capacity.

Phase III, which is among the most important projects in Phase II of Assaluyeh, started in 2011.

“Phase III is a new project, but it resembles Phases I and II. It started in 2011 and will come online this year,” said Zamani. “Phase III has had 95%progress: Ammoniac unit has progressed 96% and urea unit 93%.”

Domestic Manufacturing at 60%

Like Phases I and II, Phase III has a production capacity of 1,075 million tons of urea and 680,000 tons of ammoniac.

After startup of Phase III, the production capacity of the entire plant will go from 2.15 million tons of urea to 3 million tons and from 1.68 million tons of ammoniac to 2.04 million tons. The total capacity of this plant will rise from 3.51 million tons to 5.265 million tons. That would be a great step in line with the objectives of the company and the country’s petrochemical sector.

Currently, Pardis accounts for 7 to 8% of Iran’s total petrochemical output. That share will increase after Phase III is launched.

“At present, Pardis is the third or fourth company in terms of production capacity and after Phase III is launched it will be among the top producers,” Zamani said.

Another important point with Phase III of Pardis is that 60% of this phase has so far been handled by domestic companies. He said that domestic companies also accounted for the manufacturing of 50-60% of Phases I and II.

Cooperation with Foreign Firms

In this project, cooperation was not limited to domestic companies. The CEO of Pardis said foreign companies had been involved in the project.

“We worked with different foreign companies. In the first and second phases, they were mainly the Japanese Toyo and Chiyoda companies. We got our licenses for the ammoniac unit from Britain’s M W Kellogg, for the urea unit from the Dutch Stami Carbon and for the granulation unit from Belgium’s HydroAgri,” said Zamani.

He added that the basic and detailed engineering activities had been handled by a consortium of Japan’s Toyo and Chiyoda and Iran’s Petrochemical Industries Design and Engineering Company (PIDEC). Various Iranian companies were in charge of installation.

For the third phase, Zamani said, licenses were received from the same companies.

He said Phase III was different from the first two in the sense that the country was under tough unjust Western sanctions in 2011.

Regarding suppliers of equipment, he said: “Some equipment was supplied domestically, and some other was supplied by European companies.”

He said that the control system belongs to Yokogawa, safety and control valves were purchased from Germany, Italy and France; while relief valves were purchased from Spain. Some South Korean companies were also among suppliers of equipment. Some Iranian companies were in charge of installation.

India to Buy 70% of Products

Over recent years, Pardis has not had any exports due to restrictions emanated from current circumstances. Urea had to be consumed domestically. But Pardis started exporting urea in 2009.

Zamani said India was the first buyer of Iran’s urea, adding: “After some time, 70% of products went to India and the remaining 30% were exported to other countries.”

“Pardis is currently exporting its products to 25 countries,” he added.

Senegal, Ivory Coast, Nicaragua, Brazil, India, Costa Rica, Mexico, Mozambique, Tanzania, Uruguay, Guatemala, China, South Africa, Brazil, Syria, Turkey, Iraq, Thailand, Spain, France, Germany, Bulgaria and Italy are among the importers of Pardis products.

After the implementation of Iran’s nuclear deal with world powers, dubbed the Joint Comprehensive Plan of Action (JCPOA), five more European companies have been added to the list of Pardis buyers.

Referring to past restrictions imposed on exports, Zamani said: “At present our exports stand at 1.5 to 1.7 million tons a year of urea. After sanctions were imposed, ammoniac exports were halted because of problems related to special vessels needed to carry ammoniac which has its specific properties. Ammoniac exports resumed in 2014 and currently our surplus ammoniac mainly goes to India.”

800mcm Feedstock for One Phase

Pardis Petrochemical Plant feeds on natural gas supplied by South Pars gas field in southern Iran.

Zamani said that each phase consumes 670 mcm of natural gas a year. But this figure would be around 800 mcm for Phase III.

The reason is that the first and second phases of utility, i.e. water, electricity, nitrogen and water steam, are handled by Mobin company, while Phase III is independent and it produces water steam inside itself. Therefore, it was decided that even water steam for phases I and II be produced by the plant itself so that dependence on Mobin would be reduced. That is why gas consumption in Phase III is more than that of the two previous phases.

Domestic Financing

JBIK’s credit line has been used for the first and second phases, but the third phase was denied any foreign credit due to sanctions.

Zamani said these restrictions gave cause for the domestic financing of the project.

“The installments for the first and second phase that have been fully paid were around 400 million Euros. But in Phase III, nobody volunteered for financing because of sanctions. Therefore, Phase III costs were higher than equity and domestic investment,” he added.

He said that more than 430 million Euros has so far been spent on the project. This sum has been provided by equities and the company’s profits. The ammoniac unit will come online in 2016 and the urea unit in early 2017.

Zamani also said that the technology applied to Phase III is up-to-date, while pollution of air, water and soil has been mitigated to its minimum level.

Return to Good Old Days

Iran Oil Output to Hit 4mb/d in 2017 Q1

Iran is one of few countries in the world with huge oil and gas reservoirs that would be able to keep producing for long years. Therefore, Iran will be instrumental in the future of energy supply security in the world. Along with other oil and gas producers, Iran is increasing its output in a bid to get a bigger share of international market. That would serve Iran as a bargaining chip in political interactions.

Iran as the fourth largest oil producer in the world, has moved to bring its production to pre-sanctions level. Due to overtures following the removal of sanctions in the aftermath of a historic nuclear accord, Iran is negotiating with Asian and European companies to export more oil.

Iran has also been revising the terms of its contracts in a bid to tempt back foreign companies that had to pull out of Iran for fear of penalties.

In order to get more familiar with measures taken by National Iranian Oil Company (NIOC) on the global scale, “Iran Petroleum” has interviewed Mohsen Qamsari, director for international affairs at NIOC.

Q: First of all, would you please tell us about the upward trend of Iran’s oil production?

A: Iran has devised plans to increase its output to 4 mb/d, a target which is forecast to be met by early 2017.

Crude oil production currently stands at 3.8 mb/d. Iran is projected to bring its output to more than 4 mb/d in the first quarter of 2017 and to 5 mb/d in two to three years. The bulk of Iran’s new production capacity would be related to heavy crude oil which is highly demanded by market.

Q: What is NIOC’s plan for exporting oil from the jointly owned oil fields in West Karoun area?

A: Definitely, full development of West Karoun shared fields, whose primary output would be 300 tb/d, will play a significant role in the growth of Iran’s exports. Furthermore, a new terminal is being launched in the vicinity of Kharg Island in the Persian Gulf. After its completion up to the end of the current [calendar] year, it will be ready to export crude oil from West Karoun area.

Q: How do you assess Iran’s oil and condensate exports to Asian and European markets?

A: The level of Iran’s crude oil sales to Asia has remained unchanged, but exports to Europe will exceed 500 tb/d by the end of September. As you know, Asia is the largest energy consumer in the world and all producers are fixing their eyes on this market. Since Iran is located in this region, our priority would be to export 63% of Iran’s oil to this region with the rest going to destinations in European countries and other countries in the region. Gas condensate is currently being exported only to Asia. In the meantime, negotiations are under way with some European and Asian countries for increasing Iran’s oil sales. That would be officially announced once they are finalized.

Regarding crude oil and gas condensate exports, we can say that a total of 2.74 mb/d of crude .

oil and gas condensate was exported during last month. That included 600,000 b/d of condensate. Iran’s oil exports are in good status, but have not reached the pre-sanctions level (2.35 mb/d). Gas condensate exports have been on the rise. If we take into account Iran’s entire crude oil and gas condensate exports, we have already reached the pre-sanctions level.

Q: Iran has recently made plans to export oil to ‘teapot refineries’ in China. Would you please tell us about that?

A: By virtue of laws in China, until last year teapot refineries or private companies were not authorized to import oil. But now in a bid to make the domestic market of petroleum products competitive, the Chinese government has recently issued such authorization so that teapot refineries in this country will be able to buy oil on their own. However, these refineries lack logistic and financial facilities. So far, a 2-million-barrel cargo has been sold to these teapots. The high volume of demand by Chinese teapot refineries has persuaded countries like Saudi Arabia and Kuwait to deliver unitized oil cargoes.

Q: Does Iran have any plans to rent storage facilities in China?

A: So far, no need has been felt for these facilities because storage costs too much in China. But if we can supply a large volume of Iran’s oil to Chinese teapot refineries, we will be moving in this direction. So far we have not needed storage tanks in China. However, that would not be difficult to provide storage tanks.

Q: Which countries has Iran negotiated with so far, for exporting oil?

A: Iran is benefiting from any opportunity in the post-sanctions era to facilitate its return to market. In this regard, establishment of new trade ties with European companies, which are old customers of NIOC, are specifically prioritized.

Negotiations are under way for starting trade ties and finalizing relevant contracts. It is hoped that we would be able to load more crude oil cargoes to different countries in the near future.

After the removal of sanctions, Iran’s oil was sent to different European countries that had stopped receiving oil from Iran during years of sanctions. [France’s] Total, [Royal Dutch’ Shell, Italy’s Saras and Iplom Spa, Greece’s Hellenic Petroleum and Spain’s Repsol are among buyers of Iran’s oil. Europe is currently receiving roughly 600 tb/d of crude oil from Iran. During the first month of the second quarter of the Iranian calendar year (started on March 21), 2 million barrels of Iran’s crude oil were sent to East Europe.

Q: Do you think that unitized oil cargoes to East Europe would lead to the signature of long-term contracts?

A: Signing long-term contract depends on the market conditions and the policies of countries in this region.

Q: How do you assess the role of foreign capital in the progress of development projects?

A: It is natural for the country to need foreign investment in order to maximize recovery from oil reservoirs because any foot-dragging in the development of jointly owned fields will inflict irreparable damage on energy supply in the world. Iran’s petroleum industry currently needs $100 billion in funding. This figure requires foreign investment. That would help fix oil and gas production fall-off, while it will be instrumental in the development of hydrocarbon resources. It must be also noted that every single day in the development of fields will result in irreparable costs for the petroleum industry.

Russia-Saudi Deal

Oil Market Stability; Hopes and Fears

On the sidelines of the G20 Summit, which ended on 5 September 2016 in Hangzhou, China, Russian Energy Minister Alexander Novak and his Saudi counterpart Khalid al-Falih made a joint statement aimed at stabilizing crude prices.

Russia and Saudi Arabia recognize the need to contain excess volatility in the market, the statement said.

The two countries will form a working group to monitor the market and draft recommendations to stabilize oil prices and ensure steady investment in the industry. The group will meet, for the first time, next month.

Novak said a production freeze would be one way to stabilize prices.

Novak described Monday's announcement as a "historic moment" in relations between OPEC and non-OPEC members.

Given the significance of such an agreement, it would be necessary to examine its various aspects. This article aims at reviewing challenges and obstacles to Russia-Saudi oil agreement.

Optimistically looking, the agreement signed between OPEC kingpin Saudi Arabia and non-OPEC producer Russia would boost hopes for finding a solution to help shore up oil prices which have experienced a sharp decline since mid-2014.

In their statement, the Russian and Saudi ministers have underlined the importance of constructive dialogue and close cooperation with the objective of supporting oil market stability and guaranteeing long-term investment in different sectors for crude oil production enhancement. In case this agreement is implemented several important events are likely to happen.

First of all, in the light of such an agreement, the oil price will be stabilized at $50 a barrel, which is currently touted by most oil producers.

Second, oil price at $50 would call into question the profitability of shale oil production in the United States. That would drive the main rival to conventional oil out of the market for some time.

Third, implementation of the Russian-Saudi accord would pave the ground for future cooperation between Moscow and Riyadh, as they are currently at loggerheads over many regional and international issues.

Challenges to Agreement

Despite projections for a positive outcome, the Saudi-Russian agreement or even a deal between Russia and the Organization of the Petroleum Exporting Countries (OPEC) are likely not to bring about oil price hike. The reasons are as follows:

The agreement reached between Russia and Saudi Arabia is so ambiguous. This ambiguity could be seen in somewhat contradictory remarks by oil officials of the two countries. The Saudi energy minister has said that “Saudi Arabia and Russia will take advantage of their prominent status in the oil production market”. “These two countries share a motivation, i.e. bringing stability to international oil market. At present, freezing the oil output level is not on the agenda and does not seem necessary,” the Saudi minister said. But Russia’s Novak said: “We have reached agreement to cooperate for oil market stability and forecasting future developments”. These contradictory remarks by Russia and Saudi oil officials show that the Russians are supportive of stability in the oil market, while the Saudis do not envisage freezing oil output level. These official stances by Riyadh and Moscow show that the two countries do not pursue any specific and unique strategy for controlling global markets and shoring up crude oil prices.

What led Russia and Saudi Arabia to reach this agreement was economic challenges. This agreement is not viewed as rapprochement in strategic relations between the two countries. Russia and Saudi Arabia are at odds over a variety of issues including political and regional affairs.

relations between the two countries. Russia and Saudi Arabia are at odds over a variety of issues including political and regional affairs, terrorism, security and extremism. As a result, their cooperation in the economic sector will not last long because any political tensions in their relations would annul or undermine economic agreements.

The idea of oil output freeze is just a show and will not help the market at all because OPEC is pumping at full capacity and any freeze in production would not significantly affect world markets. In a bid to make up for sharp declines in their oil revenues, the producers have had to increase their exports. Freezing the oil production at the January 2016 level would not cut oil supply by these countries. The first step for the formation of a realistic idea that would help increase oil prices would be to cut the output level, but it is unlikely to be agreed upon by oil producers. None of these countries, whether OPEC or non-OPEC, would be ready to reduce its production and subsequently its petrodollar gains. Saudi Arabia has already maximized its output to more than 10.6 mb/d in a bid to ease the strain on its oil-dependent economy. Russia has been also raising its oil production over the past one year. It has brought its output from around 10.2 mb/d in January 2015 to more than 10.4 mb/d in April this year. Other countries that have been supporting the idea of oil output freeze are also in similar conditions. For instance, Kuwait has increased its oil production from 2.85 mb/d to 3 mb/d over the past year. In fact, the proponents and supporters of the idea of oil production freeze have had to boost their output over the past one year and it seems that there are no proper grounds for such an idea to materialize. If Russia and Saudi Arabia decide to follow up on the idea of oil production freeze, they have first to quit increasing their output, but such a plan would be impossible for Russia and Saudi Arabia, whose economies have been harmed seriously by oil price fall. Russia's top oil producer Rosneft has seen its net profits fall sharply by 80% during the first quarter of 2016 from a year ago. Rosneft’s first-quarter profit was reported at $200 million, much lower than the $800 million recorded in the first quarter of 2015. Meanwhile, Russia’s second largest oil producer Lukoil released its financial report for the first quarter of 2016, showing a 59% in its net profits year-on-year. Furthermore, economic challenges in Saudi Arabia in the aftermath of oil price decline have gone beyond budget deficit and monetary shortfall. The Saudi government and firms are unable to pay thousands of foreign workers. Abandoned in desert camps, foreign workers have said that they would not accept the Saudi government’s offer to repatriate them on free flights. They insist on receiving their back wages, now due more than eight months. The main reason behind unemployment and non-payment of salaries is the decline in oil prices and the economic stagnation of the Saudi kingdom.

The idea of oil production freeze will not be welcomed by all OPEC and non-OPEC oil producers. Most countries whose national revenue heavily depends on oil are not ready to maintain their output at the current level and they have plans to enhance production and exports in order to relieve economic pressures. Therefore, it would be widely unlikely that other oil producers join Russia and Saudi Arabia in their planned oil production freeze.

In rivalry with Iran, Arab countries, particularly Saudi Arabia, will not agree to keep their production unchanged. While Iran is making every effort to claw back market share it lost due to years of international sanctions, many Arab countries are calling on Iran to freeze its production.

Generally speaking, as Saudi Arabia’s obstructionism killed any chance of reaching an agreement on oil output freeze at the Doha meeting, the Arabs’ stubbornness vis-à-vis Iran would block any comprehensive deal in the future in this sector.

Different Approach on Iran

Russia and Saudi Arabia are largely divided regarding their views of Iran’s oil production. While Saudi Arabia wants Iran to freeze its oil production, Russia has openly said that Iran must be allowed to bring back its output to the pre-sanctions level. In fact, Russia is supporting Iran’s oil supply return to the pre-sanctions level, while Saudi Arabia remains opposed. That could pose challenges to future cooperation between Moscow and Riyadh about freezing oil production.

In conclusion, joint action by Saudi Arabia and Russia for bringing back stability to crude oil market and strengthening prices could not be viewed as a permanent agreement. As Russia and OPEC failed to reach agreement in early 2016 on oil production freeze, such a consensus is still unlikely to be reached in the future.

Petrobras See Presalt Output Rise

Oil and gas production from Petrobras-operated presalt fields offshore Brazil rose by 4% in August to a new monthly record of 1.36 MMboe/d.

This was mainly due to the connection of new wells and increased production from wells already linked to the FPSOs Cidade Maricá and Cidade de Saquarema.

Both are installed in the Lula field in the presalt Santos basin.

Meanwhile, Malaysia’s SapuraKencana Petroleum has delivered the sixth and final pipelay vessel, Sapura Rubi, to Petrobras.

The vessel started work offshore Brazil last week.

SapuraKencana’s Brazilian joint venture with Seadrill, Sapura Navegacao Maritima (SNM), is managing operations.

In 2011 and 2013, Petrobras awarded SNM two contracts with a total value of S$4.1billion ($3 billion) to build and operate the six pipelay vessels for deepwater flexible pipelay offshore Brazil for up to eight years, extendable by a further eight years.

The previously delivered Sapura Diamante, Sapura Topázio, Sapura Ônix, Sapura Jade, and Sapura Esmeralda are all at work on deepwater fields.

Nigeria Offshore Block on Sale

Canadian Overseas Petroleum Ltd. (COPL) has acquired 80% of the share capital of Essar Exploration and Production (Nigeria).

Essar Nigeria’s sole asset is a 100% operated interest in OPL 226, 50 km (31 mi) offshore in the central area of the Niger Delta.

Assuming approval from Nigeria’s government, COPL subsidiary ShoreCan will take over management of Essar Nigeria.

Recently Essar gained an extension to the first phase of the PSC to Dec. 31, 2017. The remaining commitment on this phase is to drill one well. COPL has identified a drilling location, which will be an offset to an oil discovery made in 2001 by a previous concession holder.

OPL 226 spans 1,530 sq km (591 sq mi) in water depths of 40-180 m (131-590 ft), with near-term oil production potential and exploration upside.

Five wells have been drilled, of which the last proved oil after earlier drilling intersected largely gas-bearing sands.

The block is located along a large fault-controlled structural complex. To date 1,750 km (1,087 mi) of 2D seismic and around 1,300 sq km (502 sq mi) of 3D seismic have been acquired. In addition, ShoreCan has completed additional seismic processing to the most recent 3D survey acquired by Essar in 2012.

ShoreCan applied advanced seismic processing techniques to differentiate oil-bearing sands from gas and water-bearing sands.

Thailand Oil Field in 2^nd Phase

Tap Oil Ltd. has provided an update on exploration drilling in the Manora oil field area in the northern Gulf of Thailand.

Last week the jackup Atwood Orca started drilling the MNA-17 well from the Manora platform.

This is an appraisal/pilot well, appraising the 500 series sands and assessing a separate untested fault block, the Manora West Structure, which could de-risk the Greater Manora West prospective resources.

MNA-17 (AP) well reached a TD of 1,916.5 m (6,288 ft) TVDSS. It intersected three sands in the Primary 500 sand target, the upper two of which were water wet with the lower sand delivering a log-derived oil column of 2.1 m (6.9 ft) TVDSS in good-porosity reservoir.

The deeper Manora West Fault block target intersected a low porosity reservoir with minor oil shows.

Drilling has now commenced on the MNA-17 (AJ) well path, which will use the upper pilot section before being side tracked northeast into the central fault block as a new production well.

It should take seven days to drill with a planned depth of 1,981.2 m (6,500 ft) TVDSS.

Gulf of Papua Grants Exploration Licenses

ExxonMobil and Oil Search (PNG) have agreed to acquire 40% stakes from Gini Energy in two licenses offshore Papua New Guinea.

PPLs 374 and PPL 375 are around 150 km (93 mi) south of Port Moresby in the deepwater Gulf of Papua, in water depths ranging from 1,000-2,500 m (3,281-8,202 ft). They span a total area of 24,936 sq km (9,628 sq mi).

Subject to regulatory and other approvals, operatorship of both licenses will transfer from Gini, a subsidiary of CNOOC, to ExxonMobil.

Oil Search managing director Peter Botten said: “During 2015/16, we undertook a comprehensive study of exploration opportunities in PNG. This work identified the offshore Papuan Gulf as an area where there is significant gas potential, with several multi-tcf gas leads and prospects already delineated in these licenses…“Entering these licenses is consistent with the company’s strategy to focus on areas that have the potential to support the company’s expanding LNG portfolio.”

North Sea Statfjord Reaches 5Bboe Mark

Norwegian Petroleum and Energy Minister Tord Lien joined representatives from Statoil, Centrica, and ExxonMobil to acknowledge 5 Bboe of production from the Statfjord field in the North Sea.

Operations started in 1979, and the partners have achieved a recovery factor to date of 67%, compared with the original target of 40%. They are now looking to extend production through 2025.

The field was slated to be shut down over a decade ago, but new technologies have helped extend its productive life. In fact, production has risen the past four years following a combination of subsurface work, efficient drilling and well operations, Statoil said.

Drilling costs have been reduced by 50%, while more than 1 million m (3.28 million ft) of wells have been drilled into the field.

Although Statfjord still produces oil, the Late Life project converted it to a predominantly gas field by reducing the reservoir pressure.

The program involved drilling 70 new wells and extensive modifications to the three platforms.

The high recovery factor is largely thanks to the Statfjord Late Life project, lifting the horizon towards 2025. This means that the old oil giant Statfjord will still be producing when a new giant by the name of Johan Sverdrup has started its 50-year production.

 

Sweden Conducts 1^stShip-to-Ship LNG Bunkering

The Finnish liquefied natural gas distributor Skangas is claiming the world’s first ship-to-ship bunkering of LNG fuel in what it is called a ‘new era’ in the use of LNG fuel in international shipping.

The bunkering operation took place September 3 and involved the LNG-fueled product tanker MT Ternsund taking on fuel from the small-scale LNG carrier Coral Energy, which is owned by Anthony Veder and chartered by Skangas. The operation was carried out at the entrance to the port of Gothenburg, Sweden.

Prior to the operation, LNG fuel has been supplied on board ships by either truck or onshore terminals.

The 15,000 DWT Ternsund was delivered to Swedish tanker owner Terntank in June 2015. It is the first of four LNG powered oil/chemical tankers the company has on order at AvicDingheng Shipbuilding in China. The vessels are equipped with a Wärtsilä two stroke dual fuel main engine capable of running on both diesel and liquefied natural gas. The hull design is supplied by Rolls-Royce.

Skangas is actually getting ready for delivery of a new LNG bunkering vessel, named Coralius, in early 2017. Coralius will have a capacity of 5,800 bcm and will provide ship-to-ship bunkering and LNG feeder services to terminals throughout Europe.

“We are very proud to be one of the first in the world to bunker LNG ship-to-ship. We strongly believe that LNG will rapidly become the fuel solution for forward-thinking ship owners”, says Tor Morten Osmundsen, CEO of Skangas. “We have developed an LNG infrastructure to serve the Nordic Industrial and Marine sectors, and make LNG available for customers who are willing to switch to a much cleaner fuel than traditionally used. The bunkering operation in Gothenburg clearly indicates that the market is developing and that our efforts to make LNG readily available are paying off.”

“The ship-to-ship bunkering between Ternsund and Coral Energy represents a significant milestone in the adoption of LNG as marine fuel,” said Jean-François Segretain, Technical Director of Marine & Offshore at Bureau Veritas, which classed both vessels. “Bureau Veritas has facilitated this major step through our dedicated rules and active participation in development of new international guidelines that encourage the adoption of clean fuel and enhance designs for new clean vessels.”

SOCAR Eyes Bulgaria Oil Products Market

Azerbaijan’s state oil company SOCAR is interested in entering the Bulgarian oil products market, head of SOCAR Balkan MuradHeydarov told reporters.

He noted that currently SOCAR is holding talks on the possibilities of benefiting from Bulgaria’s gas and oil products markets.

“Such talks are underway. We believe this market is very promising. From Bulgaria’s point of view, this also covers the diversification of oil products supply. However, this is a long-term project. This issue will also be discussed during the upcoming meeting of the Azerbaijan-Bulgaria intergovernmental commission in Baku,” said Heydarov.

The fourth meeting of the Azerbaijan-Bulgaria intergovernmental commission on trade, economic, scientific and technical cooperation will be held Sept. 27-29 in Baku.

Bulgaria is one of the buyers of Azerbaijani gas. The country will receive gas from Azerbaijan from 2020. Bulgarian government plans to buy 1 billion cubic meters of gas per year with the possibility of increasing the volume in the future.

Currently, the talks on delivering Azerbaijani gas via the Interconnector Greece-Bulgaria (IGB) continue. IGB is expected to be connected to the Trans-Adriatic Pipeline (TAP), which is a part of the Southern Gas Corridor.

Bulgaria also believes that this can be an area of cooperation in the energy sector.

Bulgarian government presented a package of projects to Azerbaijan in 2015 for energy cooperation. Azerbaijani side was proposed to take part in the construction of a gas station, to invest in construction of oil and gas storages and refineries.

Turkmenistan to Host Oil, Gas Forum

The International Oil and Gas Conference (OGT) will be held in Ashgabat on Nov. 15-17, 2016, the Turkmen Oil and Gas Complex said in a message Sept. 16.

The Energy Exchange of the UK is a co-organizer of the forum.

The conference is important for those who work or want to work in the field of oil, gas and oil processing in Turkmenistan.

The agenda of the event will include the discussion of such issues as development in hydrocarbon transportation and infrastructure distribution, investment opportunities in the oil and gas industry, understanding the current legal framework, development of potential of onshore and offshore sites, new gas processing technologies, modernization of oil and gas processing facilities.

Turkmenistan ranks the second in terms of natural gas reserve in the CIS after Russia.

Turkmenistan supplies its gas to Iran and China.

According to a program of development of the oil and gas industry, Turkmenistan plans to increase annual natural gas production to 250 bcm and oil production to 110 million tons in 2030.

Venezuela's PDVSA Slams Ratings Agencies

The president of Venezuelan state oil company PDVSA has slammed ratings agencies as "professional speculators" who were contributing to a negative reception of a $7.1 billion bond swap proposal meant to improve the company's finances.

Standard & Poor's said PDVSA's swap plan was "tantamount to default" if carried out, while Fitch Ratings said PDVSA's 2020 bond to be issued as part of the swap had a "real possibility of default."

Moody's said that "if executed as planned, (the exchange) would be a credit positive event ... reducing the risk of an immediate payment default."

PDVSA President Eulogio Del Pino slammed the ratings agencies on Union Radio, a Caracas-based network.

"Speculators are trying to generate a climate of tension so that (bondholders) will get rid of their bonds at a lower price," said Del Pino. "These ratings agencies are always playing this game, they always have, and they are professional speculators."

S&P and Fitch did not immediately respond to emails seeking comment.

PDVSA is offering investors a new 2020 bond in exchange for the 2017N VE055409692= bond maturing in November 2017 and the 2017 VE029436410= bond maturing in April, with shares of its Citgo Holding Inc, the owner of PDVSA's U.S. refining unit Citgo, serving as collateral on the new bond.

Wall Street analysts have expressed concern that the operation is not sufficiently attractive to convince bondholders to join a swap operation.

Del Pino said the plan had been subjected to a "smear campaign"

Socialist-led Venezuela frequently accuses Wall Street and businesses of seeking to sabotage its leftist administration.

"What we're seeing is a political war against our country, against our operation, trying to grind our operation into the ground," said Del Pino, urging bondholders to "carefully evaluate what we are offering you."

PDVSA says it will continue to make payments on outstanding bonds even if investors turn down the swap offer.

Despite market concerns earlier this year that PDVSA could default, investors broadly believe that PDVSA and Venezuela will continue servicing debt to avoid being cut off from the international financial system.

President Nicolas Maduro dismisses default talk as a campaign by adversaries seeking to weaken his government.

Kazakhstan to Continue Green Energy Development

Kazakhstan will continue the active development of renewable energies in the decades to come regardless of oil prices, said KanatBozumbayev, the Kazakhstani Minister of Energy, at the Future Energy Forum in Astana.

The Minister emphasized that the Kazakhstani government started to develop green energy when oil prices were at $120 per barrel ,and it would continue its efforts, even if prices fell to $ 20 per barrel.

"Kazakhstan will be gradually integrating renewable energy sources into the national energy mix until 2020. From 2020 through 2030, the country will be following a more active approach. To achieve this, we have created a regulatory framework, clear indicators that will help us monitor the development of the state planning system and technical instruments to gauge the potential," said Mr. Bozumbayev.

"The Republic already has 48 operating renewable energy facilities with a total capacity of 252.37 MW (hydroelectric power plants - 122.99 MW; wind power plants - 71.87 MW; solar power plants - 57.16 MW; biogas units - 0.35 MW) generating 0.94% of the electric energy produced in Kazakhstan," added another Forum participant, MagzumMirzagaliev, the Deputy Energy Minister of Kazakhstan. By 2020, the Republic's authorities intend to commission 23 solar power plants, about 20 wind power plants, over 10 hydroelectric power plants and a number of mini hydroelectric power plants.

According to the Ministry of Energy, Kazakhstan has determined the level of its contribution to reducing emissions of greenhouse gases from 2021 through 2030: 15% as an absolute target and 25% as a hypothetical target by 2030 as against 1990.

Moreover, by 2020, the volume of gas production will reach approximately 65 billion cubic meters a year. This year, production is estimated at about 43 billion cubic meters.

"Besides boosting the export of gas, an increase in production will enable us to utilize gas in the domestic market more actively and to develop gas-fired generation instead of coal-based technologies. This will help mitigate the environmental impact of the national energy system and reduce greenhouse gas emissions into the atmosphere," stressed Mr. Bozumbayev.

Nigeria Sues ENI, Chevron, Other Oil Firms

Nigeria has filed a lawsuit against Italian energy firm ENI, U.S. major Chevron and other international oil firms over some crude exports, ENI, Chevron and a government official said.

"The claim dates back to last March and refers to a request to our subsidiary in Nigeria for a payment of about $160 million," ENI said by email.

"ENI believes the claim has no ground and shall resist in court," it said. "Similar requests have been put forward to several other international oil companies operating in Nigeria."

Chevron said: "This matter is the subject of ongoing litigation before the court in Nigeria. We will not comment further on the matter since it is already before the courts."

A Nigerian government official, asking not to be named, confirmed the lawsuit but said he had no details. State oil firm NNPC could not be reached for comment despite repeated attempts to call its spokesman.

Nigerian newspaper Vanguard's website said Nigeria had sued ENI's unit Agip and France's Total for $635 million for allegedly undeclared crude cargoes between 2011 and 2014. It cited court documents.

The lawsuit might further sour the mood of oil majors which have been hit by militant attacks in the Niger Delta oil hub, reducing crude output by a third.

 

 

 

Global Upstream Oil, Gas Spending to Fall 24%

Global upstream oil and gas investments are expected to plummet 24 percent this year, with little signs of improvement for 2017, the International Energy Agency (IEA) said.

This year's dip will come on top of a 25 percent drop in spending in the sector recorded in 2015 with its total of $583 billion, the IEA said in a report.

"The total fall exceeds $300 billion over the two years – an unprecedented occurrence," the report said, adding two consecutive years of reduced upstream oil and gas investment had not been seen for 40 years.

"Furthermore, there are no signs that companies plan to increase their upstream capital spending in 2017," it said.

A total of $900 billion was invested in oil, gas and coal in 2015, down 18 percent on 2014.

Total global investment in all forms of energy fell 8 percent to $1.8 trillion last year, the report said.

The largest drop in investment came in the North American upstream oil and gas sector, which also helped China to take top spot for total energy investment after three previous years of dominance by the United States.

Oil prices have halved over the past two years due to a glut of production, while global gas prices have made a similar retreat.

The IEA said shrinking investment could help the markets to rebalance.

"At its current level, investment may be insufficient to maintain oil and gas production, indicating tighter markets ahead … Oil markets are likely to rebalance before gas markets, with low-carbon investment putting a lid on gas demand," the report said.

The IEA said, in a separate report, the global crude oil market would be oversupplied through at least the first six months of 2017.

Investment in low-carbon renewable energy reached $315 billion in 2015, making up 17 percent of the total.

Over 90 percent of the renewable investment went to power generation technologies, with the rest going to solar, thermal heating installations and biofuels for transport, the report said.

Last year, more than 190 countries agreed at climate talks in Paris (COP21) to curb greenhouse gas emissions to help limit increases in global temperatures to well below 2 degrees.

Despite the rise in renewables investment, the report said the current pace of decarbonisation of power generation remains insufficient to meet the Paris Agreement goal.

Investment in energy efficiency projects, such as insulation in buildings, rose to around $220 billion, up 6 percent on 2014 and making up 12 percent of the total energy investments.

RussiaLPG Domestic Price Up

Russia's Federal Antimonopoly Service (FAS) is studying the recent surge in LPG prices on the domestic market, an official said at a Moscow industry conferenceorganized by Commodity Market Analytics Consultancy (ATR).

"We are analyzing the situation," AlexandrGolub from FAS said.

LPG prices in Russia rose more than Rb4,000/mt ($61.50/mt) over the past two months.

Market traders cited various reasons, including maintenance at Lukoil'sLokosovsky gas processing plant, which is due for restart in the fourth quarter, but also overall reduced supply due to run cuts at Russian refineries.

The supply crunch appears to have also dented Russian exports.

Northwest European LPG traders reported increased buying from ARA and Germany into Poland and Ukraine due to the lower Russian flows.

Russia produces around 15 million ton LPG annually of which 43% is exported, primarily to Poland and Ukraine. Some 22% is used as motor fuel, 25% in the petrochemical industry and 7.5% by households, according to data presented at the Moscow ATR conference.

Apart from the usual supply and demand, domestic prices are also influenced by export netbacks, Anna Bondarenko from Gazprom Gazenergoset told the conference.

But the LPG market is increasingly looking at the LPG prices formed on the exchange floor as an indicator, she added.

Late in 2014, Russia set out the conditions for the trading of LPG used as auto-gas and by households on exchanges, requiring 5% of the monthly volumes as the minimum amount to be sold on exchanges.

At present, the 5% mark has not been reached, although the past year had marked "a substantial increase" in the traded volumes, Alexei Rybnikov, president of the St. Petersburg International Mercantile Exchange (SPIMEX) told the conference.

All the main LPG producers apart from Sibur are trading on the exchange floor, but "we are looking forward to see Sibur" in order to develop a representative indication, Rybnikov said

Nord Stream-2 on Track

Pipes to build Moscow's Nord Stream-2 are expected to start being supplied in December or January, in a sign the gas project is going ahead, Ivan Shabalov, owner of Pipe Innovation Technologies (PIT), told the Reuters Russia Investment Summit.

The plan, designed to double the capacity of the existing pipeline on the bed of the Baltic Sea from Russia to Germany, has irked the European Union, which is trying to cut the bloc's dependency on energy supplies from Moscow.

Russian natural gas supplies to Europe, where Kremlin-controlled Gazprom owns a 31 percent share of the market, have become increasingly politicized since 2014 when Moscow annexed Ukraine's Crimea region.

Although Shabalov's firm does not supply pipes for Nord Stream-2, one of his companies plans to provide cement coating for some of the pipes which are being used in the project and Gazprom is its customer.

Shabalov, who founded his firm in 2006 and also heads the Russian pipe-makers association, said he expected construction of Nord Stream-2, which was due to start in 2018, to go ahead as planned as production of the pipes had already begun.

"Supplies are seen starting in December-January," he told the Reuters Investment Summit at the Reuters office in Moscow.

Some 2.2 million tons of steel pipes will be supplied by EuropipeGmbH, a consortium which includes Salzgitter, with 40 percent of the contract and Russian companies OMK (33 percent) and Chelpipe(27 percent).

Last year Gazprom and its European partners, including E.ON, Wintershall, Shell, OMV and Engie, agreed on Nord Stream 2, which will double the 55 billion cubic metres per year of the existing pipeline.

Demand from Gazprom's domestic projects will fall to 1.2-1.3 million tons of large-diameter pipes (LDP) this year - valuing them at $1.8 billion - from a peak of more than 2 million tons in 2015, Shabalov said.

Gazprom is seeking to bypass Ukraine, a key transit route for Russian gas to the EU and is also pushing on with the plans to build a gas pipeline to Turkey and beyond to Southern Europe.

The company also plans to complete the Power of Siberia pipeline to China in 2019-2020, part of Moscow's push for closer ties with Asia despite many analysts questioning its economics.

Pakistan Upbeat on WinterGas Supply

Pakistan’s Ministry of Petroleum and Natural Resources has shown optimism that there would be improved supply of natural gas to consumers in the upcoming winter season after import of liquefied natural gas (LNG).

The gas situation is improving gradually, especially after arrival of imported LNG and 84 new oil and gas discoveries. So, this winter the supply will be better as compared to the previous years, officials informed APP.

They; however, said the government is making all-out efforts to keep the gap between demand and supply of gas at the lowest level at peak of the winter season, adding that the load management would also be observed on need basis.

They said currently uninterrupted gas supply is being made to domestic, commercial, industrial, fertilizer and CNG sectors. Commenting on oil and gas exploration activities, the officials said the oil and gas exploration companies operating in different parts of the country made 84 discoveries during the last three years.

Following these, around 631 million cubic feet per day (mmcfd) gas and 27,359 barrels per day (bpd) crude oil production have been added to the system, they added.

Imported LNG is playing a major role in meeting the energy needs, as regular shipments of the commodity are arriving, after Pakistan signed the LNG import agreement with Qatar last year.

The officials said the government has initiated different gas-related projects worth Rs800 billion to steer the country out of the energy crisis and, Pakistan will have surplus power due to effective policies of the present government by 2018. It is the Pakistan Muslim League government that took a bold initiative to import LNG, as the previous governments could not take any practical step in this regard.

The officials highlighted the importance of LNG, saying it would have a great significance in strengthening the national economy even after arrival of gas through Iran-Pakistan and Turkmenistan-Afghanistan-Pakistan-India pipeline projects.

With the import of LNG, they said, Pakistan that was importing one million tonsfertilizer, now has 1.5 million tons surplus fertilizer. All gas-based power plants are in running condition, CNG sector is back to its business and industrial sector is getting full supply, they said.

The Sui Northern Gas Pipelines Limited and Sui Southern Gas Company Limited would spend Rs71.043 billion on the upgradation of transmission and distribution network across the country during the current fiscal year, the officials added.

 

 

RIPI Developing Environment Technology

One of the major challenges of petroleum industry all across the globe is environmental pollution. International instances are not rare in this regard; oil spills in the Gulf of Mexico or slicks in the Chinese coasts are just cases in point.

Therefore, alongside manufacturing of petroleum products, producers have always sought to develop approaches for curbing contamination of the environment. To that effect, Iran’s Research Institute of Petroleum Industry (RIPI) has taken measures. This knowledge-based institute, which specializes in developing technologies required for the upstream and downstream sectors, does not ignore environmental issues and seeks scientific methods for minimizing the environmental pollution resulted from exploration, extraction and production.

Contrary to the imagination of producing countries neighboring Iran or developed countries, Iran has found solutions to its environmental challenges pertaining to its petroleum industry. The European Association for Green Management recognized one of Iran’s projects as the best one ever developed by Iran.

In order to get further familiar with RIPI’s environmental activities, "Iran Petroleum" has conducted an interview with Ebrahim Alaei, director of environment and biotechnology research center of RIPI.

Q: One of the most important environmental activities of RIPI is wastes management. Would you please explain further in this regard?

A: As far as the major environmental issues of National Iranian Oil Company (NIOC) are concerned several aspects which are being focused upon are of importance. Management of water and industrial wastes is among them. Given limited water resources, it is necessary to avoid wasting water and instead recycle wastes. It means that we need to reduce water extraction, and rather than that focus on water consumption management. Another issue of importance here is the management of carbon and greenhouse gas emissions and the ensuing warming. It is of course a global issue which was discussed at a conference in Paris. Participants at the conference pledged to reduce greenhouse gas emissions in line with obligations they agreed upon. Therefore, the issue of management of carbon and emission of greenhouse gases must be seriously dealt with.

Another important issue is the production of wastes and their management. On the issue of wastes, there are three major sectors in the petroleum industry. [One of them is] the upstream sector which covers exploration and recovery of oil and gas from reservoirs. Exploration activities and extraction are carried out through drilling numerous wells and that causes considerable volumes of waste. The bulk of wastes that need to be managed and treated are released from this sector’s activities. Therefore, wastes released during drilling and after that are of high significance. Alongside wells, there is always plenty of drilling cuts or mud. Usually some holes are dug near these wells in order to hold wastes. Over recent years, national and international regulations have brought about requirements for the wastes management and minimization.

As the first step, there must be mechanisms in drilling mud process in order to minimize mud during production. In the second step, we have to minimize its possible poisonous impacts on the environment based on the physical and chemical properties of the waste and its harmful compounds.

Q: Have you implemented any projects in this regard?

A: Since a number of our colleagues are active in the oil biotechnology sector they have carried out various research projects on how to benefit from the potential of microorganisms for reducing or eliminating the impacts of pollutants on the environment. The necessary technical knowhow has been presented to be applied to industrial and operating areas. The requirement for the application of developed technologies would be to identify microorganisms in every drilling area and hole and we suggest bioremediation procedure for these sectors based on ecological and geographical conditions.

Q: Has this project been implemented in operating areas?

A: These biotechnologies have been implemented in several operating and industrial areas, including some Persian Gulf islands in the south of the country. Another certain case was in the drilling of wells in Khangiran area in eastern Iran. For the first time, we developed biopile process by using domestic potentialities and facilities and decontaminated 10,000 tons of polluted drilling mud whose poisonous substances included oil and other organic materials by using the microorganism capacity of the area. Environmental processes are normally too long, but we managed to fully decontaminate the soil within five months by selecting an appropriate technology. It is noteworthy that this technology is being used and implemented for the first time in the country.

Q: Would you please explain further about the function of this process?

A: Bioremediation process is such that the level of contamination is reduced from high to lower degrees with the help of microorganisms through a three to four-month period. In order to fully eliminate contamination, we apply phytoremediation as a complementary process. When soil pollution falls to below 4 or 5 percent, some certain species are grown from an area that could fully combat pollutants and fully eliminate contamination.

By applying these two methods, which result from biotechnologies, two important targets are met. First, contamination is fully eliminated. That would happen in two steps; in the first step, it is done by microorganism and in the following step when the contamination level falls below four percent local nutrient elements are engaged. Second, since phytoremediation is applied, the area which was supposed to be landfill site is now transformed into green space. That is to say, besides cleansing, an ecosystem has also been created to help improve conditions in the area. These.

processes are also effective with regard to oil slicks generated by release of substances. I have to recall that in addition to these methods, there were other processes like solidification. In the process of solidification, the waste is turned into solid blocks with a series of additives that include special cement and costly silicate glue. Contaminants are confined within these blocks are transferred into garbage dump sites known as landfill. However, this method has numerous problems and is costly. Furthermore, only contaminants confined in the block are released and after a 10 to 15-year period, in case the landfill has no control it will be released into the environment again.

Q: Where can this process be implemented?

A: In Iran, there are thousands of kilometers of oil transmission pipelines that carry oil from origin points to refineries. Some of these transmission pipelines are 50 to 60 years old and are decrepit and exposed to natural disasters. Landslides and other natural disasters like earthquake and floods have damaged these pipelines and subsequently oil slicks leak into the surroundings. Therefore, the main element of the environment, which is soil, is contaminated. Phytoremediation is also applied to these environments. Also for the first time, we have conducted phytoremediation on the contaminants produced from wastes stockpiled in Siri Island during the last 20 years.

Q: In Siri Island, what have you done for the removal of wastes?

A: Sometimes in oil storage tanks, certain sludge or sediments are gathered which need to be taken out of the reservoir and stored in a depot. In Siri Island, there was a spot for the stockpiling of contaminant sludge, oil wastes and contaminated soil. Two procedures were conducted in this regard: First, some of this oil sludge whose hydrocarbon content was more than 50 percent was separated. We also cleansed 4,000 tons of contaminated soil through another process known as land farming. Moreover, by using this procedure, another project is currently under way in Gavzard area of Gachsaran. There is oil waste in this area and we had to apply land farming in a different form. The final stage of elimination of contaminants is done with the help of plants and we have to apply methods of growth like irrigation in order to preserve the plants. This job was done with the help of a new unmanned system.

Q: Have you had any activities in the field of cleansing water contaminations?

A: A number of helpful technologies have been developed in this sector. Soil vapor extraction (SVE) is a physical treatment process for in situ remediation of volatile contaminants in vadose zone (unsaturated) soils. (It is based on mass transfer of contaminant from the solid (sorbed) and liquid (aqueous or non-aqueous) phases into the gas phase, with subsequent collection of the gas phase contamination at extraction wells. The soil vapor extraction remediation technology uses vacuum blowers and extraction wells to induce gas flow through the subsurface, collecting contaminated soil vapor, which is subsequently treated aboveground.)

In this case, we can extract the contamination in the form of vapor and turn it into biomass with the help of biofilteration and use of certain microorganisms. (A variety of treatment techniques are available for aboveground treatment (EPA, 2006) and include thermal destruction (e.g., direct flame thermal oxidation, catalytic oxidizers), adsorption (e.g., granular activated carbon, zeolites, polymers), biofiltration, non-thermal plasma destruction, photolytic/photocatalytic destruction, membrane separation, gas absorption, and vapor condensation. The most commonly applied aboveground treatment technologies are thermal oxidation and granular activated carbon adsorption. The selection of a particular aboveground treatment technology depends on the contaminant, concentrations in the offgas, throughput, and economic considerations.) Biomasses are not poisonous or harmful and they can even act as fertilizer if they are recycled into the environment. In this technology, contaminants of underground water are released into air through several stages before being transformed into a biomass through biofiltration technique. This project was such significant that the European Association for Green Management selected it as the best environmental project in the country in the Iranian calendar year 1394 (which ended March 2016).

Q: Do you have any plans for exporting this technology to other countries?

A: These activities are done on an industrial scale and are no pilot. They have been done at national level. Some neighboring countries also asked us to implement such a project for them. For instance, a company in Kazakhstan was very eager to cooperate with us in this sector and has contacted us, too. This company produces mineral adsorbents and after observing our techniques they realized that this process rather than absorbing contamination, microorganisms are used for eliminating contaminants and that is why they want to use our knowhow. Furthermore, Commonwealth of Independent States (CIS) countries are interested in this technology. An Anglo-Spanish company has also visited our projects. They first thought that we are merely consumers, but they found out that we have gone beyond mere consumption and they expressed interest in using our technologies in other oil-rich countries, too.

Q: What have you done for the treatment of urban wastes?

A: For urban wastes, we have developed a process for compost conversion. Siri Island has been envisaged as the hub for this purpose. The proposal regarding urban wastes was to gather them completely because the islands are poor in soil. It was our proposal to establish a factory there. Of course, this project needs heavy financing; therefore, we are waiting for the endorsement of talks. In case this project is implemented, we will also consider procedures for urban wastes.

However, we have good projects in the sector of management of urban and industrial wastes. The water obtained from wastewater treatment projects has certain properties and could be released into the environment. This is part of the project. Suspended materials are separated from the treatment facility. There is also some sort of inactive sludge which is voluminous.

To resolve this problem, we have proposed a process through which the wastes from the treatment facility are transformed into substances of high value in complementary procedures. The wastes are first dewatered and transformed into solid. Then, a series of nutrients are added to it and in the end a valuable fertilizer is produced to be used for green space. We carried out this project at the RIPI and the wastes are currently being solidified.

South Pars Eyes Pro League

South Pars soccer team which is owned by Pars Special Economic Energy Zone (PSEEZ) is among clubs administered by companies affiliated with Iran’s Ministry of Petroleum. South Pars was formed several years ago. Thanks to proper planning and enough investment, it has managed to join the group of pro league clubs in the country.

Last year, South Pars delivered a tremendous performance in the second league matches and found its way into the first league. It is now making efforts to reach the pro league. Under conditions that the first league matches have been tougher than in previous years in Iran, the job will be more difficult for reaching pro league. Managers of this club are determined to send another team of the petroleum ministry to the pro league. To that end, they have picked Mehdi Tartar, a young football coach, as their trainer. Tartar has the record of playing in and training Tehran Persepolis.

Tartar has so far gone through one-third of the way towards the first league and he has met expectations. His team currently stands at top of the table. He hopes to celebrate his team’s historic ascension in the matches.

The head coach of South Pars team is happy with the club managers for their support and hopes to make a brilliant performance.

Here is the full text of the interview Mehdi Tartar gave to "Iran Petroleum":

Q: You have accepted to steer a newly formed team into the first league. How come you reached this conclusion?

A: I received proposals at the start of the season of matches and even a pro league team proposed to me, but due to conditions prevailing in South Pars and the good conduct of the managers of this club I decided to choose the first league. After I reviewed their conditions my motivation got stronger for leading a good team into Iran’s football pro league.

Q: Are you happy with your choice?

A: Sure I am. In our club every facility is ready and there is no problem. We have  focused on technical issues and since we have no concerns we can do our job in the best way.

Q: One of the major challenges the first league and even pro league teams often grapple with are financial issues. How about South Pars football club?

A: Unfortunately, economic problems give rise to financial challenges for all clubs. You can see that Esteghlal and Persepolis are Iran’s top teams, but they face financial problems. But as I mentioned, at South Pars club everything is in order. I am really grateful to managers who did not let any concern dominate us. When a coach or player has financial problems he would not be able to fulfill his task. But in our team all payments are made on time and there is no specific problem in this regard. At South Pars team all conditions are ready for our future success.

Q: What about the conditions of the team?

A: We are in good conditions. Our results have not been bad and we have been on a satisfactory course thanks to the management’s efforts and the players’ endeavors. We currently hold top ranks in the table and I hope that we would be able to continue this trend and reach further success in the future.

Q: An outstanding feature of the South Pars team has been the recruitment of young and talented players. Is it aforethought?

A: Through a regular planning, we tried to hire young and talented players from southern cities. Alongside these people, we will need several experienced players to share their experiences with younger players. We have grouped competent players and their main objective is success. South Pars is a well- managed group in which everyone is working for success. The success of the club in future competitions is our main objective.

Q: In the light of certain problems and the weak performance of old teams in the pro league in recent years, the first league is witnessing tough competition. Have you felt this toughness?

A: In Iran, the first league has always had its hardships. At the time I was a football player and even during my service as coach I had the experience of working in the first league; therefore, I know how we can succeed. As you said strong teams are present in the first league this year. Some teams like our team have just made progress. Some teams like Malavan and Fajr Sepassi are deep-rooted and are willing to make a comeback to the pro league. Some other teams are already in the first league. We are facing tough conditions, but we are looking for success.

Q: So do you see any chance of progress for your team?

A: If you look at the rankings, you will see how tight the competition is. For instance, the third team has three points over the tenth team. These conditions show that we are facing a tough task. All teams can claim to be seeking to reach the pro league, but we are trying to reach a good position and make our supporters satisfied.

Q: You referred to fans. Apparently you have been welcomed warmly. Right ?

A: Yes, I feel obliged to offer my special gratitude to the fans in the city of Jam. They were always supportive of us. We are also supported by neighboring cities like Kangan. I am really grateful to them. I hope that this trend as well as supports, would continue up to the end of the season, so that we would achieve a satisfactory result.

I would also like to offer my gratitude to veterans in the city of Jam. They supported us through their guidelines. That is great.

Q: Anything else you would like to say?

A: I would like to thank the club manager, Mr Rezaeian, and the esteemed governor of Jam as well as all those who are involved in the club affairs. The club has been of great help to us over this time. The South Pars team has just made its way into the first league and it has faced tough conditions, but the club managers did their best so that we would not feel any shortcomings and we would be able to spend our efforts on our work and focus on technical aspects. I also offer my gratitude to the Iranian Ministry of Petroleum because of its investment in sports. Ministries are often unwilling to manage so many teams in different disciplines. I wish the esteemed minister and his colleagues success, and I offer my gratitude

Kermanshah is located along Iran’s border with Iraq. It houses one of the most ancient civilizations, the Medes.

Kermanshah, whose locals call it as Kermashan in their ethnic language, is ranked the 17th among Iranian provinces in terms of largeness. It comprises 31cities, 31 districts and 86 rural districts. Historical inscriptions and monuments show that this province has been home to people incessantly during different periods of history.

Kermanshah was a strategic point in ancient Persia due to its location on important routes like Royal Road and Silk Road.

Kermanshah was a center of the Sassanid Dynasty during their reign in Iran. This province is the home to a number of monuments from different periods. In ancient time, this province was of such significance that some historians referred to it as Asia Gate. Currently in this province, around 3,000 monuments have been registered, 716 of which are national monuments. Bistoun enjoys international fame.

There is climate diversity in this province and four seasons are experienced there. It would be no surprise to see that the province pulls the bulk of its income from agriculture. The area is full of green pastures and trees, as well as colorful fruits under blue sky.

Taq-e Bostan

Taq-e Bostan is a site with a series of large rock reliefs from the era of Sassanid Empire of Persia, the Iranian dynasty which ruled western Asia from 226 to 650 AD. This example of Sassanid art is located 5 km from the city center of Kermanshah in western Iran. It is located in the heart of the Zagros Mountains, where it has endured almost 1,700 years of wind and rain. Originally, several sources were visible next to and below the reliefs and arches, some of which are now covered.

The carvings, some of the finest and best-preserved examples of Persian sculpture under the Sassanids, include representations of the investitures of Artaxerxes II (379–383) and Shapur III (383–388).

Bistoun Inscription

Bistoun is a multilingual inscription and large rock relief on a cliff at Mount Behistun in the Kermanshah Province of Iran, near the city of Kermanshah in western Iran. It was crucial to the decipherment of cuneiform script.

Authored by Darius the Great sometime before 522 BC, the inscription begins with a brief autobiography of Darius, including his ancestry and lineage. Later in the inscription, Darius provides a lengthy sequence of events following the deaths of Cyrus the Great and Cambyses II in which he fought nineteen battles in a period of one year (ending in December 521 BC) to put down multiple rebellions throughout the Persian Empire. The inscription states in detail that the rebellions, which had resulted from the deaths of Cyrus the Great and his son Cambyses II, were orchestrated by several impostors and their co-conspirators in various cities throughout the empire, each of whom falsely proclaimed kinghood during the upheaval following Cyrus's death.

Taq-e Gara

Taq-e Gara is a stone structure in Iran, situated in the Patagh Pass in the heights of what is known as the gate of Zagros in Kermanshah Province.

There are conflicting views as to the time of its construction. Parthian and Sassanid eras have been proposed, but most archeologists and historians believe that it has been built during late Sassanid Empire for a variety of reasons.

The monument is located on the old road from Kermanshah to Qasr-e Shirin with the new road overlooking it. It is about a five hundred meters walk away from the main road.

Experts attribute the structure to Sassanid Era because the interior sections of the walls are filled with gravel and plaster mortar--a style prevalent during that period.

The floor of the structure measures 1.20 square meters while the arched opening stands at 5.92 meters at its highest point and the height of the entire structure is 11.7 meters.

At the time, all caravans entering Iran from the west were controlled at Taq-e Gara.

Piran Waterfall

Piran waterfall or Rijab waterfall is one of the tallest waterfalls of Iran, situated in Kermanshah’s Jalekeh village. The waterfall leads to Piran village after crossing Houneh Valley. More precisely, the waterfall lies 10 kilometers northeast of Sar Pol-e Zahab. Opposite to Piran lies another beautiful waterfall.

Piran is 100 meters tall and therefore it is impossible to climb rocks there.

It’s a three-floor waterfall that the upper two floors are very tall but the bottom floor is shorter; and it’s covered by trees so can’t be seen from the top. The overall height of the waterfall from the top of the rocks to the lowest point is about 150 meters.

At the bottom of the waterfall, Piran village is situated in a beautiful green valley with its orchards full of fig, apricot and pomegranate trees.

Kermanshah; Oil & Gas Pipes on Silk Road   

Iran’s western area is one of 11 areas covered by the Iranian Oil Pipelines & Telecommunication Co. (IOPTC). This area is tasked with delivering crude oil and petroleum products through routes measuring 21, 127, 171 and 236 kilometers long in western Iran. The center for coordination of operations is the city of Kermanshah where an oil refinery is located.

The main task of this pipeline is to feed the Kermanshah refinery with crude oil. Other obligations are supplying fuel products to Kermanshah and Kurdestan provinces, supplying linear alkyl benzene (LAB) to petrochemical plants, feeding the combined cycle power plant of Sanandaj, providing services to Sorkheh, Dizeh, Gama Kuh and Naftshahr telecommunications bases, providing services to the power distribution company of Kermanshah, maintenance of all systems at the oil transmission centers and related facilities.

There are numerous transmission centers in this area. A subsidiary of West Ethylene Pipeline (WEP) is an oil delivery center named after martyr Parviz Qamari. It is located in a no man’s land area and 236 kilometers west of the city of Kermanshah. Every day, between 15,000 and 20,000 b/d of crude oil is transferred from an oil field, which Iran shares with Iraq and which is run by West Oil and Gas Production Company, via Naftshahr pipeline.

Furthermore, Paytaq oil transmission center is located at a foothill and an ancient area. This center handles the delivery of 17,000 b/d of crude oil.

Bardaspi oil delivery center is located 46 kilometers from Kermanshah. It is the first center in Iran to use rotary electropumps. Each electropump has a capacity of transmitting 823 cubic meters of liquid fuel per hour.

Another center located west of Kermanshah refinery is tasked with transferring kerosene, gas oil and gasoline to facilities in Sanandaj. This center transmits 49,000 b/d of petroleum products to Sanandaj facilities.

In June 2011, a pipeline was launched to transfer gasoil to Sanandaj combined cycle power plant. The first delivery measured 13.757 million liters.