OPEC Solidarity

On November 30, the ministerial meeting of the Organization of the Petroleum Exporting Countries (OPEC) ended in a historic agreement. After the agreement was announced, oil market took a sigh of relief. What was highlighted in headlines was a simple sentence: "Iran won." This simple phrase was analyzed from different standpoints with regard to Iran's petroleum industry under the administration of President Hassan Rouhani. Despite last year, speculation is optimistic this year. Iran proved during the OPEC Conference that it was able to regain its market share in addition to negotiating with its rivals.

The output cut accord reached in the meeting had not been forecast by market. Ahead of the meeting, member states' ministers had expressed optimism about the outcome of the negotiations; however, some analysts and observers had cast doubt on the OPEC meeting.

OPEC oil ministers sought to inspire hope into the market, but the fact that changed the views of analysts about the meeting was remarks by Iranian, Saudi and Iraqi oil ministers.

Before leaving for Vienna, Iran's Minister of Petroleum Bijan Zangeneh made it clear that the country would by no means cut its oil output but would remain committed to OPEC decisions. He also said that he had good proposals for the meeting to reach an accord.

Russia's Energy Minister Alexander Novak had said that Russia, as the top non-OPEC oil producer, was ready to cooperate with the oil producer group in a bid to help prop up oil prices. The Saudi energy minister, Khalid al-Falih had stressed the need for an agreement. Iraqi Oil Minister Jabbar al-Luaibi also said Baghdad would get along with OPEC. Following remarks by the Iraqi minister, the market trend changed, and oil prices gained 8.7% to $50.43 a barrel, an unprecedented increase since February.

1.2mb/d Cut

In its 171st ministerial meeting, OPEC decided to cut 1.2 mb/d from its oil production. Iran was authorized to raise its output by 90,000 b/d over the coming six months, the period of applicability of this production cut.

"That is to say we would be able to increase our production much more than this in the final months because in the first months our production may not increase," said Zangeneh.

After OPEC's agreement was made public, Russia's Novak said his country was ready to slash its oil output by 300,000 b/d in the first half of next year.

"Russia is ready to join the OPEC agreement. Following its recent talks with major OPEC and non-OPEC producers, this country is ready to gradually cut its oil production because a sudden cut in output would cause technical problems for Russia," he said.

Novak expressed optimism about the OPEC deal and said it was a historically important day for his country.

Brent at $53

As soon as news of OPEC deal spread through media, oil prices experienced a big jump. On December 1, North Sea Brent crude prices reached their 16-month highs.          

The agreement for OPEC production cut, the first since 2008, pushed Brent prices up to $53.69 per barrel. The West Texas Intermediate (WTI) crude oil also gained 3% to reach $50.91. The OPEC oil basket price rose to $44.8 a barrel. It was the first time OPEC member states were working in coordination with non-OPEC producers like Russia and the Republic of Azerbaijan.

Energy Firms' Stocks Grow

The effects of OPEC's agreement were not limited to the increase in oil prices. Other markets were also affected. Immediately after the agreement was reached, gasoline prices increased in Britain. Analysts in this country warned that fuel prices were likely to grow in coming months and a 5-seated car would cost 5 pounds to gas up.

Market Watch also announced that the shares of energy companies had gained in the stock markets. The energy index hit its highest market in one year.

Victory for Iran

International media showed positive reaction to this deal and described it as Iran's success in realizing its objectives. Fox News reported that 14 member states of OPEC changed into reality the agreement they had reached in September to cut output. OPEC produces one-third of world oil production. Iran, Nigeria and Libya would be exempt from the production cut agreed in the OPEC meeting.

This exemption marks a big victory for Iran. Iran has long been saying that it plans to raise its production in a bid to regain the market share lost during years of international sanctions.

Over recent weeks, Iran's rival Saudi Arabia had to change its position. It agreed to reduce its output by half a million barrels a day. But it asked Iran to freeze its output at 3 mb/d.

Bloomberg said this victory was the result of cooperation between Iran, Saudi Arabia and Russia.

Quota Cuts

Under the OPEC deal, each country would have to reduce its output at a specific level. Saudi Arabia would slash its production by 486,000 b/d, Iraq would cut 210,000 b/d from its output, the United Arab Emirates would account for a 139,000 b/d cut in output, Kuwait for 131,000 b/d, Venezuela for 95,000 b/d, Qatar for 30,000 b/d, Algeria for 50,000 b/d and Angola for 87,000 b/d.

3 West Karoun Oil Fields Output at 300,000 b/d

West Karoun area, the name given to the western bank of Karoun River in western Iran, is now a familiar word in Iran. The reason is that it houses several jointly owned oil fields like North Azadegan, South Azadegan, Yadavaran, North Yaran and South Yaran.

Many experts believe that Iran’s new oil civilization would take shape in West Karoun area. This zone enjoys high potential to make a revolution in Iran’s oil production capacity.

Thanks to follow-up efforts by the Ministry of Petroleum in the administration of President Hassan Rouhani, as well as endeavors by Iranian oil service workers, the first development phase of North Azadegan, Yadvaran and North Yaran became operational recently in the presence of President Rouhani.

The Iranian president travelled to the southwestern oil-rich province of Khuzestan to launch several projects.

Addressing the inauguration ceremony of the three major oil projects, Rouhani referred to the positive ramifications of Iran’s nuclear deal with world powers, dubbed the Joint Comprehensive Plan of Action (JCPOA), and said: “In the first phase of the JCPOA, the Iran's Ministry of Foreign Affairs as well as other entities and bodies shouldered the burden. But after Iran-West agreement and the signature of the JCPOA, other state organs started efforts for the JCPOA objectives to materialize. In this regard, the main burden was upon the Iranian petroleum industry.”

He said the success of Iran’s petroleum industry in bringing the country’s oil production and exports level back to the pre-sanctions era, shortly following the implementation of the JCPOA, surprised the world as much the JCPOA’s signature had done.

Rouhani heaped praise on all petroleum industry staff and managers, saying: “Oil industry made maximum benefit from post-JCPOA atmosphere. Furthermore, the presence of big oil companies and signature of contract with them are among other post-JCPOA instances of success.”

Noting that using science and capital is a necessity, the president said: “The government had reached the stage of production in some West Karoun fields with a production of around 65,000 b/d. Now, three years after the 11th administration took office, with the startup of the first phase development of North Azadegan and Yadvaran and the development of North Yaran, more than 250,000 b/d of oil is being produced from these jointly owned fields. The oil fields in West Karoun area have a crude oil production capacity of 300,000 b/d, which must increase.”

Rouhani highlighted Iran’s limited capital and the petroleum industry’s need for new technologies particularly for oil recovery enhancement, and stressed the need for the use of investment and technology for enhancing West Karoun’s output.

“West Karoun area currently holds 67 billion barrels of oil in place. Even with a one-percent increase in the recovery rate, we will see increased production and also higher revenue for the country’s economy,” he said.

The Iranian president said qualified domestic and foreign companies equipped with capital and technology should be welcomed.

“The important point would be to prevent fall-off in the oil and gas wells by applying new technologies,” he added.

Rouhani said the JCPOA meant breathing fresh air and a new experience, adding: “All state-run organizations and bodies are obligated to benefit from this new atmosphere and take faster steps for the realization of the country’s objectives.”

$20bn Investment Needed

Iran’s Minister of Petroleum Bijan Zangeneh said production capacity of the three oil fields has now reached 300,000 b/d, much higher than 65,000 b/d during the early years of the administration of President Rouhani.

Noting that the West Karoun fields are among the most important assets in the country, Zangeneh drew a parallel between West Karoun oil fields and South Pars gas field.

“Our most important issue with regard to the development of jointly owned fields is to enhance recovery rate. For this purpose, we need sophisticated technology. In the meantime, we need to observe environmental issues and interaction with local residents,” he said.

Zangeneh said some $7 billion had been invested in the West Karoun fields under buy-back deals, adding: “The West Karoun fields are able to produce 1 mb/d and we will need $18 to $20 billion in fresh investment in coming years in order to reach that level of output and have sustainable production.”

He noted that while oil fields are developed and the new model of oil contracts is applied the issue of enhanced oil recovery (EOR) should be also taken into account.

“For instance, most of our fields in East Karoun are currently in the second half of their lifespan and their recovery rate needs to enhance,” he added.

Zangeneh said the new model of oil contracts would seek to enhance oil recovery, adding: “If Khuzestan Province is set to be developed the oil engine must be started there.”

The minister also said that three percent of new investments in the oil sector is to be allocated to the welfare of people in oil-rich areas. “That would improve people’s welfare, while after oil output hike the value chain will be also completed.”

Zangeneh said so far IRR 10,000 billion budget has been approved for social responsibility plans in oil-rich southern areas.

North Azadegan, North Yaran and Yadavaran are currently producing 85,000 b/d, 30,000 b/d and 115,000 b/d, respectively. Their output totals 230,000 b/d.

North Azadegan oil field is estimated to hold 5.6 billion barrels of crude oil, 279 barrels of which would be recoverable with a 5.6% recovery rate.

Development of this field under a buy-back deal was done for capacity building, processing and transfer of 75,000 b/d of crude oil in the first phase through drilling 58 wells, including 50 production wells and 9 waste disposal wells.

Development of North Azadegan is envisaged in two phases with an output of 75,000 b/d of crude oil plus 39 mcf/d of gas for each phase.

Yadavaran oil field’s development has been designed in three phases, the first of which has now come online. In the first phase of this development project, the objective would be to attain an 85,000 b/d production ceiling after drilling 49 new production wells, 3 appraisal wells and 3 extra water injection wells. Oil production from this field has now reached 115,000 b/d, up 30,000 b/d month-on-month.

In the second phase of development of Yadavaran oil field, the objective is to reach 180,000 b/d of crude oil. The third phase development of this field is projected to produce 300,000 b/d of crude oil.

The recovery of 30,000 b/d of oil from North Yaran oil field started recently.

This field is located 130 kilometers west of Ahvaz and along Iran-Iraq border.

Located west of North Azadegan and north of South Yaran oil field, North Yaran is estimated to produce oil with an API gravity of 16 to 18.

Khuzestan Province is set to be developed the oil engine must be started there.”

The minister also said that three percent of new investments in the oil sector is to be allocated to the welfare of people in oil-rich areas. “That would improve people’s welfare, while after oil output hike the value chain will be also completed.”

Zangeneh said so far IRR 10,000 billion budget has been approved for social responsibility plans in oil-rich southern areas.

North Azadegan, North Yaran and Yadavaran are currently producing 85,000 b/d, 30,000 b/d and 115,000 b/d, respectively. Their output totals 230,000 b/d.

North Azadegan oil field is estimated to hold 5.6 billion barrels of crude oil, 279 barrels of which would be recoverable with a 5.6% recovery rate.

Development of this field under a buy-back deal was done for capacity building, processing and transfer of 75,000 b/d of crude oil in the first phase through drilling 58 wells, including 50 production wells and 9 waste disposal wells.

Development of North Azadegan is envisaged in two phases with an output of 75,000 b/d of crude oil plus 39 mcf/d of gas for each phase.

Yadavaran oil field’s development has been designed in three phases, the first of which has now come online. In the first phase of this development project, the objective would be to attain an 85,000 b/d production ceiling after drilling 49 new production wells, 3 appraisal wells and 3 extra water injection wells. Oil production from this field has now reached 115,000 b/d, up 30,000 b/d month-on-month.

In the second phase of development of Yadavaran oil field, the objective is to reach 180,000 b/d of crude oil. The third phase development of this field is projected to produce 300,000 b/d of crude oil.

The recovery of 30,000 b/d of oil from North Yaran oil field started recently.

This field is located 130 kilometers west of Ahvaz and along Iran-Iraq border.

Located west of North Azadegan and north of South Yaran oil field, North Yaran is estimated to produce oil with an API gravity of 16 to 18.

Petroleum Ministry Delivers on Output Hike Pledge

Nouroddin Shahnazizadeh,

CEO, Petroleum Engineering and Development Company (PEDEC)

Iran holds the top rank in terms of recoverable oil and gas production in the world. This sentence has been frequently heard. It would not be difficult to prove it. According to official data, Iran sits atop 157 billion barrels of crude oil and 34 tcm of natural gas – that is to say a total of 369 barrels of oil equivalent.

Azadegan, the 7^th largest oil field in the world, is in Iran with around 10% of the country's total recoverable reserves.

Oil and gas are assets for Iran, but that would become of higher value when necessary infrastructure would be ready for tapping these valuable reserves. This issue could not materialize in recent years due to the toughness of international sanctions imposed on Iran, particularly in the oil sector. Iran also lost its status among holders of oil and gas reserves in the world. But after the administration of President Hassan Rouhani took office, the Iranian Ministry of Petroleum focused on oil and gas production capacity increase as its top priority. To that effect, development of oil fields which Iran shares with its western neighbors was prioritized.

Today, this pledge has been delivered on, thanks to Ministry of Petroleum and National Iranian Oil Company (NIOC); a promise whose fulfilment did not seem possible in the light of tight sanctions.

Owing to endeavors by Iranian oil officials, engineers and staff, this objective was achieved and production from West Karoun oil fields, shared by Iran and Iraq, started.

North Azadegan oil field came on-stream under a buy-back deal with China's CNPC. It started production within 72 months with an investment of $2.55 billion.

According to available data, this field holds 5.6 barrels of oil equivalent in place. With an estimated 6% recovery rate, it has 330 BOE of recoverable reserves. This field has been developed in order to generate capacity for production, processing and transfer of at most 75,000 b/d oil in the first phase through drilling 58 wells, including 43 horizontal production wells, two vertical appraisal wells, a key vertical well, two waste disposal wells and 10 wells for semi-industrial enhanced recovery plans.

The production capacity of North Azadegan field has now reached 85,000 b/d. The fields located in the West Karoun area have a total production capacity of 300,000 b/d. Therefore, the Iranian Ministry of Petroleum has fulfilled its pledge for the current calendar year to March 2017.

It is noteworthy that North Azadegan oil project was developed during years of sanctions and maximum use of domestic capacity has been observed in it.

39 Rigs in West Karoun

Last calendar year, 39 drilling rigs were operating in West Karoun (South Azadegan, North Yaran and South Yaran fields). In case a decision is made for the second phase of Yadavaran as well as North Azadegan fields this year, the total number of rigs operating in this area will increase significantly.

Iran Oil Civilization in West Karoun

North Azadegan Development Manager

It is a great pleasure that after years of making efforts, we have reached a point where we can speak about West Karoun civilization. Work started in West Karoun oil civilization from South Azadegan field. But the first contracts were signed for the development of North Azadegan and Yadavaran fields.

Challenges

Development of North Azadegan, which is the last buy-back contract in Iran, was assigned to China's CNPCI when Iran was under sanctions. The project faced numerous challenges which led to delays in the development of the field. The primary challenge was the location of the bulk of the field in Hoor al-Azim Lagoon. It took more than one year to get permit from the Department of the Environment (DOE). But that was not the end of the job because the project was halted on numerous occasions by the DOE under different pretexts. The contract got frustrated with these issues.

Cluster Drilling

A total of 58 wells were drilled for the development of North Azadegan field. They include 50 wells envisaged for production. The remaining 8 wells are for enhanced oil recovery (EOR), improved oil recovery (IOR) and waste disposal. Notwithstanding certain problems pertaining to drilling operations, we are happy with the project as drilling was over after one year and a half by two Iranian and one Chinese companies. Meanwhile, more than 67% of drilling operations were conducted by Iranian contractors.

I have to recall that drilling operations in North Azadegan had their certain characteristics. Due to the location of the bulk of this field in Hoor al-Azim field, we were deep 4 to 5 meters in water in certain spots. Due to necessity of observing environmental considerations, cluster drilling was conducted in order to spare the lagoon any harm. In fact, 58 wells were spudded in 21 drilling basins.

Another point with drilling was the utilization of a new system for moving derricks. Since pony base system could not be effective in this area, Iranian engineers managed to design and manufacture automatic system for moving heavy onshore drilling rigs.

Technical Specifications

The contract for the development of North Azadegan field is a buy-back one (buyback, 2nd generation). It could be even referred to as the third generation buyback due to changes in the financing clause. This contact was an open tender deal aimed at producing 75,000 b/d of oil in the first phase. The API gravity of oil in this field varied between 17 and 19. In addition to crude oil, 35 mcf/d of gas was also recovered from the first phase of this field.

The operator of this field is Arvandan Oil and Gas Production Company and reimbursement will be carried out during a period of 4 to 6 years. Due to policies of the Ministry of Petroleum we had no early production at North Azadegan field.

2nd Phase Development

Development of Azadegan field was foreseen in two phases. Under the contract, the second phase is also up to the contractor of the first phase. But the Chinese contractor has to submit his proposal first to win approval before starting the second phase development.

For the second phase development too, a buyback contract is envisaged with a production target of 75,000 b/d. Since we had no early production from North Azadegan there is no precise information available about the behavior of the reservoir and the production of wells. The contractor has submitted a conservative proposal for the second phase development, including 25,000 b/d output and a high price. This proposal has not been accepted by senior Iranian officials.

Relying on the experience of North Azadegan field and the lifting of international sanctions, a lower price should be suggested. If the Chinese contractor pulls out of the second phase development, we will be able to put the development of this field out to tender under new-style oil contracts.

I also highlight the government's support for the development of this project, which resulted in a faster achievement of the objective. The government's support for such projects must be target-oriented, regulatory and facilitative. In the future, after the new model of oil contracts enters into force, the government's role will be very influential.

Of course when the contract was being signed for the development of North Azadegan field, the government's policy was based on foreign investment, and due to international sanctions against Iran's petroleum industry Chinese contractors were hired. Due to their inexperience in this sector, the Chinese contractors acknowledged that their technology would be less advanced than the technology of American and European companies. Having known all this, we signed the contracts for the development of North Azadegan and South Azadegan oil fields.

Irrespective of all problems, we are finally happy with the performance of the Chinese contractor because they finished the job. We are happy because Chinese companies willing to work with us in this sector need to boost the level of their technology to reach to that of international firms. We have many choices and they will need to prove their capabilities to win projects in Iran.

Another plan we pursue in the development of North Azadegan field for the objective of development of technical knowhow in the country is to apply the latest achievements in subsurface studies and smart assessment of reservoirs. We invited top professors from US and Europe and held regular training courses in Iran and we trained our manpower at Petroleum Engineering and Development Company (PEDEC) in order to hire them in this project.

Outstanding Features

One of the outstanding features in the development of Azadegan field is that the entire CPF is seen from one spot despite limited space. The sections separating oil, separating gas and water, desalting, gas and GTG (power plant) are planned next to each other. All safety considerations have been taken into consideration and we have had 40 million hours of work without any life-threatening or mutilating incident. The processing plant of this project was built based on the state-of-the-art technology with a capacity of 82,000 b/d. We will develop it in the second phase.

More than 230 kilometers of drilling have been done in this project while 5,000 buttresses have been installed. The capex for foreign investment is $2.55 billion and we will not exceed the capex.

I also refer to PEDEC public interest projects. First local manpower has been hired within the framework of job creation policy. The contractor has been tasked with providing its required manpower at 80% from local residents.

North Azadegan, Turning Point in Iran-China Relations

After Western governments imposed sanctions against Iran, forcing big oil companies to pull out of Iran's projects, China became a strategic partner for Iran's oil and gas industry. To that effect, development of North Azadegan oil field was awarded to China National Petroleum Corporation (CNPC) and Yadavaran oil field development was awarded to China's Sinopec.

Despite all challenges and obstacles, Chinese companies, in cooperation with National Iranian Oil Company (NIOC) and Iranian petroleum industry specialists, managed to operate these projects.

Mr. Chang, a CNPC manager in the North Azadegan project, has said that the oil field development is a turning point in the relationships between Iran and China and also between CNPC and NIOC.

"Under the aegis of the Iranian Ministry of Petroleum and NIOC and CNPC's efforts, did this project come on-stream in spite of numerous complicated problems," he said.

He said that North Azadegan oil field is no different from other oil fields in the county in terms of technical aspects and reservoir structure.

He said that the most important point with this field was its location in Hoor al-Azim Lagoon.

Furthermore, he said, North Azadegan contains heavy crude oil, whose extraction is more difficult than extracting light crude. CNPC has already the experience of extracting heavy crude oil in Sudan, but the API gravity of Sudanese oil is different, said Chang.

"The third feature of North Azadegan field that makes the job a bit difficult is that the initial map was available based on the data of a well. As you know, to get the primary plan, drilling must be done in several spots in order to glean necessary data for the primary map. In this case the percentage of error and risk also declines, but in North Azadegan field we had to draw up the primary map based on the data of a first spot and that was very hard job," he said.

"Due to investment and operation in Iran, the US exerted heavy pressure on the Chinese government, but we did not retreat and we continued the job in order to prove the capabilities of CNPC. The Chinese government also announced that the contract for the development of this field had been signed before the sanctions; therefore, we had to remain committed to doing this job," added Chang.

He noted that the development of North Azadegan field involved political issues in addition to economic and investment issues.

"In some cases, political issues were even more important than economic issues because there were many problems on the way of development of this field. Such problems as insufficient data, high risk, sanctions, lack of commodity and equipment, transfer of financial resources through banks and unpredictable events that constantly halted operation in this field. Therefore, our objective in this project was not merely economic motivations," said Chang.

"All our activities in this sector were done via Kunlun Bank of China. That is why this bank was blacklisted by the US and due to accepting this project it lost many investment opportunities," he said.

Chang said the North Azadegan development project was based on a buy-back deal.

"In my view there are some problems with this kind of contract. That is why the Iranian Ministry of Petroleum has been revising the contracts and developed IPC," he added.

"Despite all problems, in the light of 10 years of CNPC's record in Iran and their mutual knowledge as well as the lifting of sanctions, CNPC is willing to cooperate with the Iranian Ministry of Petroleum. I have to note that over these 10 years, CNPC has received support from the Ministry of Petroleum, NIOC, Petroleum and Engineering Development Company (PEDEC) and the Iranian people and we managed to bring the North Azadegan project to fruition despite all problems. Based on the experience gained for both parties, it seems that we have learnt how to deal with the problems and resolve them."

West Karoun Fields Are Unique

Shu H., head of CNPC operation department, said that oil fields located in the West Karoun area are unique in the world.

"Some wells drilled in this area produce more than 1,000 b/d of oil, while similar wells in the world produce around 100,000 b/d. Even in Sudan, where this company has long experience in oil fields, there are not oil fields as good as North Azadegan," he said.

Shu noted that the wells in North Azadegan oil field have a lifespan longer than wells in other oil fields in the world. But, he added, the North Azadegan reservoir is homogenous which poses challenges to production.

He also referred to location of North Azadegan in Hoor al-Azim Lagoon, saying: "This issue made it difficult to work in this field. CNPC was finally forced to conduct many plans in order to spud wells in compliance with environmental regulations of Iran and the world. The existence of this lagoon naturally slowed down the development of the field. Therefore, we had to drill directional and horizontal wells in different spots in order to save time and safeguard the environment."

"For safeguarding the environment in Hoor al-Azim Lagoon, we transferred the substances coming out of well to predetermined spots. Furthermore, the water coming out of the wells was recycled to be used again. We had to respect the PEDEC environment obligations. The canals dug beneath access roads to the oil wells were instructed by PEDEC. The client firmly supported CNPC throughout the development project," said Shu.

He said that CNPC's involvement in the Azadegan project coincided with the toughening of unilateral sanctions by the Western governments against Iran. Therefore, he added, procurement of certain commodities like turbines, pumps and turbo-compressors faced delays and caused problems for financial and drilling affairs.

Record Set in Surface Operations

Shu-dong Chen, a CNPC manager, highlighted technical differences between North Azadegan and other oil fields in the world, saying: "The main feature of this field is its crude oil which is heavy. This category of crude oil has a high BSW, and sophisticated procedures are needed in order to convert it to the light crude oil desired by the NIOC. These procedures start from the extraction stage up to surface facilities and entry into the main pipeline."

Since North Azadegan is jointly owned by Iran and Iraq, and the Chinese company was aware of the strategic importance of this field for the Iranians and the necessity of its development, it was very important for CNPC to go ahead on schedule without any delay, said Shu-dong, adding that the company undertook certain measures to accelerate the project.

"Initially, the supply of our necessary items was supposed to be up to Western vendors, but following the imposition of sanctions, they pulled out of the project and we had to order key items like compressors ourselves. We drew up a list of Chinese vendors and ordered them the items after direct negotiations with them. We also tried to respect Iran Petroleum Standards. We also appointed GL representatives in the factories manufacturing commodities and equipment in order to supervise manufacturing," he said.

Under the deal, he added, 51% of commodities and equipment had to be supplied by domestic manufacturers.

"I don't have any estimate in this regard, but we tried our best to use domestically manufactured equipment. In certain cases we even helped Iranian vendors in terms of engineering and technique so that they would offer products of higher quality. Here I have to highlight the capacities of some Iranian contractors that helped us learn better methods. For instance, pipe laying operation methods applied by Iranians were faster than CNPC's methods," he added.

Shu-dong referred to a 40% progress in surface installations of this project over one year, adding: "This issue is a record and in my view three factors were involved; first, our monthly meeting with partners and stakeholders of this project, second, our weekly meetings at the site with senior PEDEC officials and finally pressuring manufacturers to accelerate manufacturing of commodity and equipment."

More on North Azadegan Field

Among oil fields in the oil-rich West Karoun area, Azadegan enjoys special conditions mainly due to its size and being shared with Iraq. It is one of largest oil fields in the world that was discovered in the 1990s. Azadegan is a main oil exploration in Iran over the past quarter a century.

The fields jointly owned by Iran and Iraq on the western bank of Karoun River stretch from Koushk to Hosseinieh areas.

According to latest estimates, there are 70 billion barrels of oil in pace in West Karoun. This figure is very significant for petroleum engineers in the world. That is why Iran's future petroleum industry plans for oil production enhancement would be focused on the development of these fields.

Meantime, the shared status of these fields is of high significance for our country. At present, international oil companies operating in Iraq are highly willing to recover oil from these fields.

Geologically speaking, Azadegan is overall an oil field. But it was divided into North Azadegan and South Azadegan following talks with Japan's Inpex some 15 years ago. The Japanese firm agreed with National Iranian Oil Company (NIOC) to develop South Azadegan. But the northern section, which is located in Hoor area, remained undeveloped until it was awarded to Chinese companies. Therefore, North Azadegan and South Azadegan were just divisions for development project.

Cluster Drilling

An outstanding feature of South Azadegan oil field development is the location of a large segment of this field in Hoor al-Azim area. The reason is that most of oil wells spudded in this field are offshore. If access was supposed to be provided to each and every of 58 wells drilled in Phase 1 development of this field in order to install an independent derrick the lagoon would disappear. Therefore, in a bid to prevent the destruction of the environment in this area, huge efforts were put into the project. A good measure in this field was cluster drilling of wells. That is to say, in a location, instead of drilling a single well, five directional wells were spudded with a distance of 50 meters from one another. That was meant for the development of North Azadegan field with minimum destructive impact on the environment. In the end, 58 wells were drilled in this field in 23 spots. The important point that must be taken into consideration when drilling rigs are to be located is that no section's access to water should be cut when access roads are being constructed.

In West Karoun area, sedimentary layers and formation of oil fields and reservoirs are geologically uniform. In other words, Gadvan, Gajdami, Sarvak and Fahlian are similar sedimentary layers in this area. Sarvak layer, containing 90% of the total reserves of this area, has the heaviest crude oil in the least deep layer in the area. It might be interesting to know that the depth of this layer is below 3,000 meters.

There are important vertical and horizontal geological changes when we move from south to north in North Azadegan oil field. Due to these changes, we have API 16 oil in Sarvak layer in the south of the field and API 24 oil in the northern part of the field. But generally speaking the viscosity of crude oil in this field is on average below 20.

The existence of crude oil in this field makes processing, desalting and its transport more complicated than in other fields. According to plans made for Phase 1, all oil would be produced from Sarvak layer.

Azadegan oil field expands on a total area of 45 kilometers in length and 30 kilometers in width.

Outstanding Features

It might be interesting to take a look at measures that were first undertaken in West Karoun. One of major activities that might have been unprecedented for an oil field in the country has been the establishment of semi-industrial pilot for enhanced recovery in North Azadegan field. For that purpose, three wells were drilled, and in case the findings are supportive this system will be put into operation in the next phases of the field, too.

Another special measure with regard to the Phase 1 development of North Azadegan field was the record set for the duration of drilling. The time envisaged for drilling of each well was 120 days. The average time needed for drilling each well is 115 days. There were for example wells whose drilling lasted 82 days and those whose drilling lasted 120 days. Generally speaking, the average drilling time in North Azadegan was five days earlier than the time initially envisaged for that purpose. The wells spudded in North Azadegan are horizontal, vertical and directional. In horizontal drilling, a new system known as gas lifting was applied and the gas pressure in the reservoir was managed.

Environmental Requirements

All environmental requirements were observed. Through insulation, we prevented the flow of oil wastes into Hoor al-Azim Lagoon. No drilling cut was buried well-head and all cuts were taken to spots specified by the Department of the Environment. In certain cases we had to lengthen the drilling so that more wells would not be needed to be drilled. The Chinese contractor was obligated to apply an appropriate system for the management of wastes and we even delayed the project several months in order to receive some permits from the Department of the Environment.

Another important event with regard to North Azadegan was the compilation of a new master development plan (MDP) for boosting and covering Phase 2 development plan. Although the foreign contractor was obligated to handle this task, Iran's Petroleum Engineering and Development Company (PEDEC) set up a committee to handle this job. With the help of Iranian and foreign experts, PEDEC drew up a comprehensive MDP for Phase 1 and a roadmap for Phase 2 development, which were endorsed by the CEO of NIOC. An advantage of this MDP was that the Chinese contractor accepted to keep production stable for five years.

Regarding commodity and equipment, efforts were undertaken to observe the petroleum industry standards and more than 50% of the needs of the project were supplied by Iranian manufacturers and contractors. For drilling, in addition to a Chinese contractor, National Iranian Drilling Company (NIDC) and Dana Energy company were called in.

JMC Role in North Azadegan Development

An important issue which largely contributed to the development of West Karoun oil fields, particularly North Azadegan, was the establishment of Joint Management Committee (JMC). This committee is tasked with managing the project. Like the Board of Directors, it can make decisions for the project. But such decisions need the approval of the NIOC Board of Directors and have to respect a ceiling. JMC advises the NIOC Board of Directors on a variety of issues like Capex and MDP. It also settles disputes that might arise between the client and the contractor.

JMC was largely involved in the development of North Azadegan field. For instance, open capex was a major issue in this development project that was based on a buyback deal.

By the end of every year, JMC holds meetings in a bid to make an assessment of costs throughout the year and estimate the budget needed for the follo

Yadavaran Output at 115,000 b/d

Yadavaran oil field, jointly owned by Iran and Iraq, is located in West Karoun area. It lies 70 kilometers southwest of Ahvaz and north of Khorramshahr. The contract for its development was signed with China's Sinopec under a buyback deal. Its first development phase started in 2008.

Development of Yadavaran oil field was initially envisaged in three phases. The first phase has already become operational for a production ceiling of 85,000 b/d of crude oil. The first phase involves the drilling of 49 new production wells, 3 appraisal wells and 3 wastewater disposal wells. Recovery from this field has reached 115,000 b/d, up 30,000 year-on-year. The second development phase requires a production ceiling of 180,000 b/d of crude oil and the third phase calls for 300,000 b/d.

In the second phase development of the field, Yadavaran would be producing 180,000 b/d, which is forecast to be realized in four years. The master development plan (MDP) of this phase has been finalized and the project is set to be awarded to Sinopec.

According to initial estimates, Yadavaran was said to be holding around 12 billion barrels of oil in place. Now, this figure is estimated at 31 billion barrels. Therefore, it is likely that fourth and fifth development phases would be also envisaged for this field.

The oil in Fahlyan layer of Yadavaran is of light category with an API gravity of around 40. But the layer of Sarvak contains heavy crude with an API of 24.

Domestic manufacturing companies' share of Yadavaran development is more than 50%.

Under the second phase, 105 wells need to be drilled. Meantime, pipeline and two trains would be added to the treatment facility so that the 180,000 b/d target would be achieved.

According to plans, the third phase would require achieving the output ceiling of 300,000 b/d of oil.

North Yaran Output at 30,000 b/d

North Yaran is the only oil field whose development contract has been signed under a buy-back deal with an Iranian contractor (Persian Oil & Gas Industry Development Co. (POGIDC)). Officials at the Petroleum Engineering and Development Company (PEDEC) have offered an acceptable assessment of POGIDC's performance in this field. Recovery of 30,000 b/d of oil from North Yaran oil field recently started in the presence of Iranian President Hassan Rouhani.

North Yaran is located in the southwestern oil-rich province of Khuzestan. It is about 130 kilometers west of the provincial capital of Ahvaz and near Iran-Iraq border.

North Yaran lies west of North Azadegan and north of South Yaran fields with an API gravity estimated at 16 to 18.

Iranian companies and manufacturers hold a 70% share in this project and the focus has been on the utilization of domestically manufactured commodities and equipment. The items whose manufacturing and procurement in Iran were impossible have been purchased mainly from European countries. Drilling operations for the development of North Yaran field have been conducted by Iranian contractors.

Development of North Yaran has been envisaged in more than one phase, but according to new studies there is a plan for boosting crude oil production by 10,000 b/d in the southern section of this field. It is currently in the primary stage of studies and its contract is expected to be signed by March 2017.

Early production from this field started in February 2013 with a capacity of 5,000 b/d. Up to September, more than 1 million barrels of oil had been produced from this field.

North Yaran holds 998 million barrels of oil in place, 52.48 million barrels of which is recoverable.

Paying attention to health, safety, environment (HSE) issues has been a top priority in the development of North Yaran field. Construction of exclusive 18-kilometer-long roads leading to wells, building 55 two-meter watercourses to keep water running and protect aquatics living in Hoor al-Azim Lagoon, monitored by the Department of the Environment, are among the most important measures undertaken by PEDEC.

An HSE advisor has been hired for this field. All sections of Yaran field are covered with plants. As soon as precipitation starts, the lagoon will be revived and water entry into this field will not be blocked. The advisor monitors environmental affairs with the help of five patrolling and inspection groups.

The deepest well in this field is Well No. 7, which is a horizontal when with a depth of 1,600 meters. Drilling 160 meters a day has been a record set throughout the development of this field.

60 Companies Keen on Working with NISOC

More than 60 Iranian and foreign companies have expressed willingness to negotiate with the National Iranian South Oil Company (NISOC) about a framework of contract developed by this company.

Hamid Daris, director for technical affairs of NISOC, said: "We have had talks with 33 companies and 28 more companies are waiting for an appointment to meet with the NISOC."

He said the NISOC-designed framework of contract was a domestically developed one backed by Iran's Minister of Petroleum Bijan Zangeneh. He added that a group of experts and technicians have developed this model.

"The minister of petroleum and the then CEO of National Iranian Oil Company requested the NISOC's viewpoints about the new model of oil contracts and we presented our views in different fields," he added.

Daris said Minister Zangeneh spent a lot of time on studying this framework of contract.

Linde Eyes Investment in Bandar Imam Petchem Plant

Opportunities for investment in Bandar Imam Petrochemical Plant were discussed with experts from Germany's Linde.

Reza Amiri, CEO of Bandar Imam Petrochemical Company, said: "In the light of the reopening of Linde's office in Iran, during the visit to Tehran of the CEO of this company, [the company] expressed its readiness for investment in and transfer of technology to projects at Bandar Imam Petrochemical Plant."

He said that following the implementation of Iran's nuclear deal with six world powers, dubbed the Joint Comprehensive Plan of Action (JCPOA) Linde had re-launched its activity in different sectors, including petrochemical sector.

Amiri said Linde experts voiced interest in renewed presence in BIPC and contribution to BIPC projects. Linde's experts also suggested their proposed models of cooperation.

BIPC and Linde also exchanged views about investment opportunities and the removal of technical and production bottlenecks.

Marzieh Shahdaei, CEO of National Petrochemical Company (NPC) had already welcomed the return of foreign companies post-JCPOA.

"Immediately after the JCPOA [implementation], Linde presented different proposals on EPC and investment in order to start its activity in the petrochemical industry," she said.

Last August, a contract, with 34.96 million euros, was signed between Kian Petrochemical Company and Linde for granting technical knowhow to and basic engineering of olefin, butadiene, benzene and hydro-di-alkylation.

Iran Becomes Japan's 5^th Oil Supplier

Japan's oil imports exceeded 200,000 b/d during the first eight months of the current Iranian year which started on March 20. Iran is now the fifth largest supplier of oil to Japan.

In 2014 and 2015, Iran was the 6^th supplier of oil to Japan with a 5% share of its oil market. Over the past eight months, Iran has accounted for 6.5% of Japan's oil needs.

The top suppliers of oil to Japan are Saudi Arabia (exporting 1.155 mb/d) and the United Arab Emirates (818,000 b/d). Saudi has a share of 34.6% while the UAE has a 25% share of Japan's oil market.

During the 8-month period, Iran was exporting 214,000 b/d of oil to Japan.

In 2016, Japan imported 2.95 mb/d of crude oil from the member states of the Organization of the Petroleum Exporting Countries (OPEC). OPEC member states have an 88% share of Japan's oil imports.

Qatar and Kuwait are the third and the fourth largest suppliers of oil to Japan. Iran and Russia come in the 5^th position.

Zangeneh, Slovenia Minister Hold Talks

Iran's Minister of Petroleum Bijan Zangeneh met with Slovenia's Minister of Economic Development and Technology Zdravko Počivalšek in Tehran.

They discussed ways of cooperation between the two countries. Počivalšek travelled to Tehran as part of a delegation led by President Borut Pahor. The Slovenian minister said in the meeting, that his country was ready to jointly manufacture equipment with Iran to be exported to regional countries.

Separately, Pahor and Iranian President Hassan Rouhani signed three documents of cooperation in economic, communications and nanotechnology sectors.

Pahor's visit to Tehran was the first by a Slovenian head of state in 25 years. During the visit,Slovenia reopened its embassy in Tehran.

Slovenia is proprietor of technology in electronics, mechanics, communications and power plants particularly dam sluices.

Iran, Poland Ready for Marine Transportation Cooperation

National Iranian Tanker Company (NITC) and Polish company CIECH Trading SA, a subsidiary of Ciech SA, are willing to sign an agreement aimed at transporting Iranian crude oil, LNG and petrochemicals as well as bunkering of ships.

Based in Warsaw, CIECH Trading was established in 1987 and currently is the largest Polish distributor of raw materials, chemical products and reagents.

"We are eager to begin joint investment in a wide variety of fields like bunkering as well as carrying of petrochemical products and liquefied natural gas," said Tomasz Grzela, managing director of Ciech Trading SA after a round of talks conducted in Tehran on November 17, 2016, between representatives of the both companies.

He also proposed that a joint venture company might be established for development of cooperation between the two companies.

"The ground has been paved for the expansion of collaboration with Polish firms in a wide range of sectors, including marine transport and shipping liquefied gas and petrochemicals," said Sirous Kian Ersi, the CEO of NITC, adding that the Iranian company is planning to increase the number of ships to carry liquefied gas, including LNG and LPG.

Kian Ersi also said that Iran welcomed the initiative to establish joint venture companies between the two countries.

"We are ready to launch joint cooperation with Warsaw in the field of liquefied natural gas transport," he said, referring to Iran’s plan of increasing LNG exports.

Iran intends to establish small-scale and floating LNG production units with output capacity of 10 million tons per year, which would help to break into the international LNG market that reportedly has a 30% share in the total global gas trade. According to reports, Iran is negotiating with a foreign company to set up an FLNG unit in the Persian Gulf.

Norway's DNO to Study Changuleh Field

Iran has signed an agreement with Norway’s DNO to study the development of a key oil field which is believed to be jointly shared with Iraq in a yet another sign that shows Western companies are already welcoming the country’s lucrative post-sanctions investment opportunities.  

The agreement – which DNO signed with the National Iranian Oil Company (NIOC) - involves studying Changuleh oil field which sits on Iran’s border with Iraq in the western province of Ilam.

Based on the agreement, Norway’s fourth largest oil and gas company will study Changuleh within six months – a crucial move that could enable it to win a deal to develop the field once the related talks with the NIOC succeed.  

NIOC Director for Engineering and Development Affairs Gholam-Reza Manouchehri told reporters after signing the agreement with DNO’s Managing Director Bjorn Dale that the field could be linked to another nearby field named Azar. 

Iran had previously announced that Azar, itself, was linked to Iraq’s Badra oil field.   A domestic company – Sarvak Azar Engineering and Development Company – is already pushing ahead the development of the field with a target production of 65,000 b/d.  The target production of Changuleh is 50,000 b/d. 

Azar and Changuleh were discovered in 2005 as a result of explorations conducted by a consortium comprising Russia’s Lukoil and Norway’s Statoil.  Both fields – together with Iraq’s Badra – are believed to hold in-place reserve of about 3.5 billion barrels.     

NISOC Signs Deal with Consortium

The National Iranian South Oil Company (NISOC) has signed its first confidentiality agreement with a consortium of foreign companies based on a newly developed framework.

The agreement was signed for conducting studies on Karanj oil field (Asmari, Pabedeh and Khami reservoirs) and Shadegan oil field (Asmari and Bangestan reservoirs).

The non-disclosure agreement was signed between Bijan Alipour, CEO of NISOC, and three representatives from PERGAS consortium of 11 European, Canadian and Asian companies plus Sharif University of Technology.

The consortium will have up to 6 months to submit the findings of its studies. In case it manages to present the preliminary plan for the development of the envisaged fields, it will be examined.

NISOC said the study project would be assigned to other companies or consortiums, and finally the most qualified one will be chosen for developing each field.

NISOC-developed framework of agreement is modeled on Iran's new model of oil contracts. Details depend on the conditions of fields and the technical structure of NISOC. This model is to be implemented for the first time in the petroleum industry.

Upon the endorsement of Iran's petroleum minister Bijan Zangeneh, Parsi, Karanj, Rag Sefid and Shadegan oil fields, which include nine reservoirs, are set to be developed based on the NISOC model.

London-based PERGAS (active in engineering and management of investment in the petroleum industry), Norway's AGR (involved in drilling and engineering design), Middle East's SPEC (involved in building production plants), Oilserv (active in upstream operations), Britain's LOOBY (involved in equipment manufacturing), Philippine National Oil Company (PNOC), Britain's Standard Handson (involved in financing and investment) and Sharif University of Technology form the consortium led by PERGAS.   

Turkmenistan-Azerbaijan Gas Swap to Generate Revenue for Iran

The deputy head of Ghadir Investment Company for investment and business development, Mansour Kan'ani, has said that Iran would be gaining IRR 1,000 billion in revenue from a deal signed for Turkmenistan to swap 5 mcm/d of gas with the Republic of Azerbaijan via Iran's soil.

The location of big oil and gas producers in the region and the existence of a vast energy consumption market have created appropriate conditions for Iran to become the route of oil and gas swap and transit in the region.

The largest oil and gas reserves in the world are in Iran or neighboring countries. Iran could make great contribution for transferring them to consumption points.

Iran's northern neighbors deliver part of their oil, gas and oil products to destination markets via Iran. The unique geographical location of Iran gives the country the status of a secure route for energy transit.

The Republic of Azerbaijan has been swapping gas with Nakhichevan autonomous republic for years, but recently Turkmenistan started gas swap with Azerbaijan.

Kan'ani said the gas companies of Azerbaijan and Turkmenistan have agreed on the transfer of 5 mcm/d of gas via Iran between the two countries.

He said that the volume of gas swap between Turkmenistan and Azerbaijan via Iran is planned to increase to 7 mcm/d.

By delivering Turkmenistan's gas to Pakistan, Persian Gulf and Europe, Iran plans to stabilize its foothold in the energy market.

Russia's gas is also planned to be taken by Iran to consumers in the Persian Gulf. Relevant talks are yet to be finalized.

In addition to gas swap, Iran has also plans under way for oil swap. After resolution of international problems and provision of necessary infrastructure, Iran would be bringing the capacity of crude oil swap and transfer from northern neighbors to consumers to 2.5 mb/d.

Golden Change for Danish Firms

Danish Ambassador to Tehran Danny Annan has said that cooperation with Iran is a golden opportunity for Danish companies.

"Companies active in the energy sector in Denmark are interested in investing in South Pars gas field," he said.

Annan was speaking during a visit to South Pars gas field along with a Danish business delegation. The Danish delegates toured South Pars development and then attended a meeting with Pars Oil and Gas Company (POGC) to exchange views about cooperation in the energy sector.

Annan was surprised at Iran's significant progress in the development of South Pars gas field, adding: " All representatives of Danish companies and I did not expect such progress and we were caught by surprise."

He said that it would be a golden opportunity for Danish companies to be involved in the South Pars development. He expressed hope that grounds for cooperation would be provided.

He added that Danish companies active in the energy sector were willing to invest in South Pars gas field.

The Danish ambassador highlighted the low cost of oil and gas extraction in Iran, compared with North Sea, as a competitive advantage in Iran. He said that his advantage was pushing Danish firms to invest in Iran.

Annan said drilling operations as well as oil and gas extraction in Iran are in appropriate conditions, noting that many international companies have been convinced to show interest for investment in Iran's oil and gas sector.

"Given our knowledge of this zone and this company during this visit, in case of Iran's eagerness we will introduce companies to negotiate for the start of cooperation," said the Danish diplomat.

During their stay in Iran, the Danish business delegates also held talks with Iranian petroleum industry officials.

Iran Eyes Europe, Africa Offshore Oil Projects

The CEO of Iranian Offshore Engineering and Construction Company (IOEC) has announced plans for Iran's participation in offshore oil projects in Europe and Africa.

"There are equipment and experiences in offshore oil projects in Iran. They are unique in the region; therefore, it would be possible to export these services to other countries. In this regard, we have reached agreement with a Dutch company in order to use one another's equipment in the projects if need be," Abdol-Qasem Rahmani said.

"Talks have been held with a number of international companies for operating projects in the Black Sea (Europe) and Nigeria (Africa)," he said.

He noted that these agreements were yet to be finalized, adding that final talks have not yet been held.

Regarding projects under way overseas, Rahmani said: "A project which is to come online in 2017, is related to offshore pipe-laying for a gas pipeline in Europe."

He also referred to IOEC's plans to participate in African oil projects, saying: "One project concerns construction of 500 kilometers of oil pipeline. We are now in talks for its finalization and startup. Of course for operating projects in Nigeria there are some security issues which we are examining."

Iran used to depend on other countries in its offshore industry and for implementing offshore oil projects like the construction and installation of oil platforms and building offshore pipelines. But now the country has become self-sufficient in this industry.

Development of both onshore and offshore phases of South Pars has improved the offshore industry and over recent years several new platforms were installed and launched in different phases of South Pars in recent months.

The latest gas platform launched in the country belongs to Phase 21 of South Pars gas field. With a capacity of 1 bcf/d of gas, this platform became operational by Iranian experts.

The offshore technological growth in Iran has reached a stage where many countries have shown willingness for partnership with Iran, particularly after international sanctions were lifted on Iran.

Return of Giants to Iran

On November 8, the National Iranian Oil Company (NIOC) signed the first international heads of agreement based on new-style oil contracts was with a consortium of France's Total, China's CNPCI and Iranian Petropars for the development of Phase 11 of the giant offshore South Pars gas field. Therefore, efforts made for bringing back oil giants to Iran came to fruition.

The signature of this HOA came just two years after Iran's Ministry of Petroleum developed a new model of oil contracts. Over the past two years, the text of the new type of oil contracts was revised time and again so that the finalized text would secure Iran's interests and be attractive to foreign investors.

The agreement for Phase 11 was signed while there are still fears of penalties by the US. That, along with falling oil prices, had made oil market analysts predict that Iran would face problems in cooperating with foreign companies.

But the signature of the agreement on Nov 8, draw a line on all prejudgments about cooperation between Iran and international oil giants.

Another achievement of development of Phase 11 under the new format of oil contracts would be the obligation of the contractor to fully account for the financing of the project. That would bring in billions of dollars at a time many economic projects in Iran are grappling with financing problems.

Meeting Phase 11 Needs

Phase 11 of South Pars is the only remaining undeveloped phase in South Pars, which is the largest gas field in the world. France's giant Total will be steering the consortium for the development of this phase. It is forecast that $4.8 billion in foreign investment would be brought into Iran's petroleum industry.

As Iran's Ministry of Petroleum had promised, the file of Phase 11 of South Pars was closed under the 11th administration.

With the development of Phase 11, 56 mcm/d of gas would be added to Iran's production capacity from a field it shares with Qatar.

Enhanced oil recovery through application of modern and advanced technologies is one of advantages of Phase 11 development. In this regard, for the first time in South Pars, a giant platform is planned to be constructed in order to boost pressure.

Total would be leading the consortium with a 50.1% share in the project. Petropars holds a 19.9% share while the Chinese party to the contract will have the remaining 30%.

As per the HOA, Total will start preparations for a tender bid which would be held in 2017.

Development of Phase 11 of South Pars would have a capacity of 1.8 bcf/d of gas, scheduled to start in 2020. The duration set for this contract is 20 years and the first gas production should start after 40 months. The development phase includes construction of two wellhead platforms, drilling of 30 wells and two subsea pipelines for onshore gas processing units. But according to the NIOC estimates, three years after the start of gas production from this phase, the reservoir pressure will fall off. That is why pressure booster facilities must be envisaged now. Total has agreed to install pressure booster platform alongside the main platform. The Total-led consortium will design and install onshore installations for gas pressure boosting in a bid to keep the production level unchanged several years after the start of operations. The consortium plans to spend $2 billion on the development of the first phase of this project.

Operations for designing, building and installing gas pressure booster facilities at Phase 11 of South Pars should be over after five years. After that, the consortium will be remunerated by the NIOC.

Under the new model of oil contracts, Total will be paid back all its costs after the end of the project. Over the first five years, the main capital invested by Total will be paid back, and fees will be paid by the end of the 20-year period. Therefore, it would not be logical to consider a longer period for the project.

As per the HOA, the share of domestic manufacturing in this gas megaproject must be up to 70% of the value of the contract. All stages including subsea pipe laying, construction of wellhead platforms and gas pressure booster installations must be done in Iran.

One of important points that have been taken into consideration in the new model of oil contracts is the issue of transfer of state-of-the-art technologies to Iran. In this project too, transfer of technology is done at several levels.

Longtime and Strategic Partners

Of course Total and CNPC have both long history of activity in Iran. Total was active in Iran even before sanctions were imposed. Since the 1990s, Total has been one of key investors in Iran's energy sector. It was instrumental in the development of Siri Island and South Pars projects. It was also involved in different projects including preliminary studies for several phases of South Pars. But it had to pull out of Iran due to

pull out of Iran due to international sanctions. Total was among the last foreign firms to leave Iran in 2010, but it never closed its office in Tehran. The sanctions also called for a halt to Total's cooperation with Iran in liquefied natural gas (LNG) projects related to Phase 11 of South pars.

CNPC came to Iran after big companies like Royal Dutch Shell and Spain's Repsol withdrew from Iranian oil and gas fields due to the sanctions. That was the time China became a strategic partner for Iran in the oil and gas industry. Development of North Azadegan oil field was awarded to the Chinese company and the first phase of the project recently came online. The Chinese are still in talks with the NIOC for the second phase development of North Azadegan and Yadavaran oil fields.

North Azadegan, one of oil fields shared by Iran and Iraq, holds 6.5 billion barrels of oil in place. Development of this field is envisaged in two phases with a production capacity of 75,000 b/d in each phase.

The financial resources of big Chinese companies and strategies of development of cooperation between the two countries require Iran's petroleum industry to take advantage of this opportunity with a view to maximizing national interests.

Western Media Feedback                                                       

The news of signature of agreement was reflected in Iranian and foreign media.

"For Total, the deal would open the way for its return to Iran six years after the French oil major exited the country amid international tensions over Tehran’s efforts to make a nuclear bomb. It would also highlight Total’s hunt for new sources of growth in spite of persistent weakness in the oil market," wrote Financial Times.

It described the agreement as "the first major agreement with Iran for the development of its gas fields since the loosening of international sanctions in January."

The Wall Street Journal wrote: "The agreement with the French oil giant could be a harbinger for the return of more Western companies to Iran’s vast energy industry, and represents a step forward for the Islamic Republic’s goals of ramping up production of oil and gas over the next several years."

It said the agreement "would mark the first Western energy investment there since international sanctions were lifted this year."

“This agreement will be encouraging” for other companies to do business with Iran, particularly those with little activity in the U.S., said Mehdi Varzi, a consultant who advises companies on Middle Eastern investments.

Total was long one of the most active Western oil companies in Iran and its executives have said they were eager to return to a country with the fourth-largest reserves of oil in the world. Total kept an office open in Iran throughout sanctions from 2010 until earlier this year, and was the first European oil company to buy Iranian oil, and ship it to Europe after the restrictions were lifted.

Other Western companies have also made headway in Iran. Last month, BP PLC bought its first oil shipment from Iran while Royal Dutch Shell PLC has signed a preliminary deal to help develop a petrochemical plant there.

The country has said it needs $30 billion of foreign investment to reach its oil-industry goals. Among those aims is ramping up its production of crude oil to six million barrels a day over the next decade, a target that, if reached, would make it the world’s fourth-largest producer behind only Russia, Saudi Arabia and the US, according to the Journal.

For its part, Al-Monitor described the signature of the HOA as a major stride towards materialization of Iran's objectives, saying foreign oil giants were returning to Iran.

Key Step for Technology Transfer

Iran's Minister of Petroleum Bijan Zangeneh was present at the ceremony of signature of the agreement. In his address to the ceremony, he expressed hope that international companies would set aside their doubt about investment in Iran's petroleum industry.

Regarding Total, he said: "Total has been one of leading companies involved in Iran's industry."

He expressed satisfaction with CNPC's involvement in the Phase 11 development of South Pars, saying: "We will never forget Chinese companies that are strategic partners and our cooperation will continue on the long run."

Zangeneh expressed hope for the return of international oil companies to Iran.

"I hope that following the signature of the HOA for Phase 11 development of South Pars gas field, international companies would set aside their doubt for investment in Iran's petroleum industry," he said.

The minister referred to Petropars' 20% share in the Phase 11 development project, saying: "After the signature of this agreement, Petropars will be standing in an important position and it has to benefit from the potentialities of this position for transferring technology in different sectors including management of project and reservoir."

Zangeneh said recovery from jointly owned fields and enhancing the recovery rate of reservoirs were the two main objectives of the Iranian Ministry of Petroleum in its new-style oil contracts. He added that realization of these objectives would amount to protecting and safeguarding national assets.

He once more said that Iran's upstream oil sector needed around $130 billion in investment in order to realize its objectives under the country's 6th Five-Year Economic Development Plan.

"The country's daily oil production should reach 4.5 million barrels by the end of the 6th Plan, part of this enhanced recovery would hinge on applying enhanced recovery methods," the minister said.

Total Eyes Long-Term Cooperation

Stephane Michel, Total's director for Middle-East & North-Africa Total Exploration & Production, referred to the longtime presence of the French company in Iran, saying: "This company has so far cooperated with Iranian companies in a large number of oil projects."

"All of us know that Total reached production in Phases 2 and 3 of South Pars in 2002 and 2003. This French company has cooperated with Iranian companies in Balal and Doroud fields," he said.

"In the past years, Total has not been so active in Iran due to the sanctions, but we have always sought resuming our activities in this country," he said, adding that Total managed to make a return following the implementation of Iran's nuclear agreement with six world powers.

Michel said Total first signed a memorandum for resuming its business in Iran when Iranian President Hassan Rouhani visited Paris in January.

He said the HOA signaled a new beginning for Total's operation in Iran, while expressing hope that it would prepare the ground for long-term cooperation between Total and Iran's energy sector.

Michel said development of Phase 11 of South Pars would give Total a chance to expand its presence in the Middle East region.

Darkhoein 3rd Phase, West Karoun Investment Opportunity

Iran plans to raise its crude oil production by 1 mb/d from 11 oil fields in West Karoun area within four years. Darkhoein field is one of them with an envisaged contribution of more than 200,000 b/d.

Darkhoein is located in Khuzestan Province, 45 kilometers north of the city of Khorramshahr and 100 kilometers south of the city of Ahvaz. It is currently producing on average 160,000 b/d of crude oil. After development and the launch of its third phase, its output is expected to exceed 220,000 b/d.

Darkhoein is one of 49 oil fields introduced for investment by foreign companies under new model of oil contracts.

Discovered in 1964 following the drilling of an exploration well, Darkhoein is estimated to hold more than five billion barrels of oil in place, 1.3 billion barrels of which is recoverable.

The oil in Darkhoein field is light, with an API gravity of 39. The oil produced in Darkhoein is delivered to Ahvaz-Abadan oil pipeline.

According to estimates, $1.5 billion in investment would be needed in the third phase development of Darkhoein oil field. In this phase, two new reservoirs of this field – Ilam and Sarvak – as well as undeveloped Fahlian reservoir are to start operation. To that end, water and gas will be injected into Sarvak while gas will be injected into Fahlian.

Other activities pertaining to the development of Darkhoein include the drilling of 31 oil wells, 6 gas injection wells, and construction of surface facility for processing crude oil like stream pipelines, gas pressure booster stations, and infrastructure like crude oil storage facilities, repair posts and roads.

The first and the second phases of this field were developed by Italy's Eni under buyback contracts. The state-of-the-art technology for oil production and simultaneous injection of associated gas is being applied to the reservoir.

The contract for the third phase development was signed in August 2011 with an Iranian consortium. Eni refused to work in the third phase due to international sanctions against Iran. However, the Iranian consortium failed to handle the project and now it is among the projects offered for investment by international firms under new-style oil contracts.

In the first and second development phases of Darkhoein field, oil has been recovered from Fahlian formations. In the third phase development, in addition to Fahlian, oil will be also recovered from Ilam and Sarvak layers.

The first development phase of this oil field was launched in June 2005. For the second phase development of this field with an investment of around $1.3 billion, widespread demining operation was conducted on 7.5 square meters of land.

The second phase of Darkhoein development with a production capacity of 160,000 b/d of crude oil became operational in February 2010 with Eni's participation.

The third phase of development of the field was planned to come on-stream in five years. Now more than three years have passed since development operations began. But it is still far from full operation.

According to plans, in the first phase, 14,000 b/d of light crude oil and in the second phase, 46,000 b/d of heavy crude oil would be produced from Ilam and Sarvak layers.

The third phase of development of Darkhoein hinges upon heavy oil layers of Ilam and Sarvak as well as the undeveloped Fahlian layer. Eni was given the go-ahead to conduct feasibility studies, and the company has already submitted its findings.

These findings showed that it was possible to recover heavy crude from Ilam and Sarvak layers. It was agreed to start the third phase development after the end of the second phase.

Due to its heavy crude oil, this phase is totally different from the first and the second phases of Darkhoein development. Therefore, with a view to developing the third phase, negotiations with foreign companies and consortiums of Iranian and foreign companies were placed on the agenda.

According to initial forecasts, crude oil recovery from Fahlian, Ilam and Sarvak stands at 293 million barrels. In the first phase of development of this layer, 14,000 b/d of crude oil would start being produced 18 months after the project becomes operational.

The preliminary production from the second phase of development of Sarvak and Ilam layers would be 42,500 b/d of crude oil over 54 months after the contract takes effect. Twelve months later, production will reach 60,000 b/d.

The crude oil produced in Ilam and Sarvak reservoirs will be gathered in clusters before being transferred to new processing units which include separators, desalting units and stabilizer tower.

Salman Oil Field Needs EOR Technology

Salman (Sasan) oil field is jointly owned by Iran and the United Arab Emirates in the Persian Gulf. Discovered some 45 years ago, the offshore oil field has high-pressure gas layers too. Salman is located in Hormuzgan Province and more precisely 144 kilometers south of Lavan Island.

Given the fact that some 70% of oil and gas layers of this field lie in Iran's territorial waters and in light of the issue of its joint ownership, development of Salman field has always topped the agenda of Iran's petroleum ministry. In the 2000s, the platforms of this field that had been seriously damaged during the imposed war (1980-1988) were renovated. However, its share of national production remains insufficient.

Managers of Iranian Offshore Oil Company (IOOC) that handles the development of Salman field have introduced five fields – Soroush, Norouz, Doroud, Salman and Forouzan – for investment within the framework of new-style oil contracts. According to these managers, development of Salman is more important than others.

Given the long history of production in Salman field, it seems that the main objective of Iran's petroleum industry with regard to ageing fields like Salman has been to apply cutting edge technologies for maximum efficient recovery and enhancing the rate of recovery.

Despite the high recovery rate in Salman oil field, some layers of this jointly operated field have not yet been depleted; therefore, it would be possible to raise production from this field.

The oil recovered from Salman field is light, with API gravity ranging between 33 and 37. Three oil layers of this field are already producing 47,000 b/d of oil. If the field undergoes development again it would be able to offer more than 70,000 b/d. This figure could still increase in case enhanced recovery is applied.

Salman oil field comprises an asymmetrical anticline with dimensions of 11 and 14 kilometers.

Salman also contains Khouf gas layer. It was discovered by Lavan Petroleum Company in the 1960s. Its first exploration well was drilled in June 1965 and it started production three years later.

According to the latest figures, Salman oil field currently has 44 oil and 10 gas wells. According to studies currently under way,gas production from this field could increase to 700 mcf/d. The UAE holds only 33% of the field and there is no precise data about this country's production from this reservoir.

Salman oil field's recovery rate is more than 51%. The oil extracted from Salman is transferred to Lavan Island via a subsea pipeline, measuring 22 inches in diameter, to undergo final processing in onshore facilities before being stored for exports or feeding Lavan refining facility.

Salman is an ageing oil field in Iran; however, its reserves are assessed as satisfactory.

Five platforms are currently operating in this field. Timely development of this field could help increase production from this field.

From among three production reservoirs in Salman, the Arab layer situated 10,000 feet undersea is of high significance because it produces 70% of Salman's oil. Two other layers located 8,000 and 5,000 feet undersea account for respectively 20 and 10 percent of Salman's oil production.

Salman is estimated to hold around 4.5 billion barrels of oil in place, 1.6 billion barrels of which are recoverable. So far, 1.1 billion barrels have been extracted from this field; therefore, half a billion barrels of oil still remain to be extracted.

Iran started signing buyback contracts for the development of oil fields in 1999. Since then, studies have been conducted on Salman oil field by Petroiran Development Company and Petroleum Engineering Company. At present, Tehran Energy Consulting Company and France's Frans-Basic are currently in charge of this study.

The primary processing of crude oil is conducted in the platform before being delivered to Lavan through a 144-kilometer pipeline for secondary processing, storage and exports.

Every day, 80 million cubic feet of gas produced in Salman is injected into oil fields by compressor for oil lifting. Two drilling rigs are conducting downhole workover. Nine gas wells in this field are producing gas which is delivered to Siri Island by a pipeline measuring 36 meters in diameter.

According to Iran's Minister of Petroleum Bijan Zangeneh, enhanced oil recovery is a key element in the new-style contracts. Therefore, enhanced recovery from Salman is a

Euro-4 Gasoline at Lavan Refinery

In the strategic island of Lavan, morning starts sooner than in other cities. When the Sun rises service workers at Lavan oil refinery have already started work.

Built in 1976 as a distillation facility, this old refinery recounts sweet and bitter memories of the history of petroleum in Iran. This distillation unit was in fact part of Shiraz refinery and ran at a capacity of 20,000 b/d or crude oil. Its main feedstock was supplied from Salman and Balal oil reservoirs.

During the imposed war (1980-1988), when most big refineries in the country stopped production, Lavan was extended as it was the supplier of fuel to the Iranian Navy. After the end of the war, this trend continued up to the half the 2000s. When sanctions were imposed on Iran and gasoline imports were reduced, all Iranian refineries including Lavan started supplying domestic needs for fuel.

But that’s not all. Lavan refinery was not content and it operated projects in order to upgrade the quality of its product and reach a higher profitability. Production of euro-4 gasoline is one of these projects. Mohammad-Ali Akhbari, CEO of Lavan oil refining company, has said that the inauguration of a new gasoline production project, known as isomerization unit, and increasing the capacity of Lavan refinery to 2.8 ml/d by next March are being pursued.

After startup of the isomerization unit, the gasoline production capacity of Lavan refinery will rise from 2.1 ml/d to 2.8 ml/d. Furthermore, its quality will increase from euro-2 grade to euro-4 grade.

After these projects are operational all oil and gas products will be conformed to euro-4 standards.

Akhbari said the catalysts of this unit became available to the refinery last March, adding that they were being loaded in the run-up to the startup of the facility up to next March which marks the end of Iranian calendar year.

This project has been delayed on several occasions. The complexity of under-license projects, restrictions for the purchase of equipment and its delayed import are to blame for the long delays in the startup of the project. However, an output capacity enhancement project is under way at the refinery. According to Akhbari, the progress made, has been good. Once this project is implemented the octane number of gasoline will increase while the sulfur content of gasoil and other petroleum products will be cut.

Furthermore, after the implementation of the isomerization project, liquefied petroleum gas (LPG) production will increase 200,000 tons, gasoline output will grow 3 ml/d, jet fuel will increase 1ml/d, while fuel oil output will see a 3 ml/d output hike. Therefore, after launching capacity enhancement projects and upgrading the quality of Lavan refinery products, the isomerization process would be used for converting light oil to isomerite.

Akhbari said the main idea behind this process was to enhance the octane number of feedstock, adding: "By launching this unit, the main section of product quality enhancement, i.e. isomerite gasoline production, will be ready and gasoline production will increase up to 700,000 l/d."

Referring to the costs of projects, he said: "The cost in rials for the construction of under-license units adds up to IRR 599.5 billion, while the hard currency costs amount to 108.61 million euros. Moreover, construction of the utilities is estimated to cost more than IRR 801 billion plus 83 million euros."

Sour Naphtha Output

Of course, this is not the sole achievement of Lavan refinery. Lavan refinery was a state-owned facility up to 2013 and one of low-value products of this refinery was fuel oil. Therefore, the refinery's was not profitable. But after its privatization in 2013, this refinery decided to broaden its activities and produce high-value products in a bid to increase its profitability.

Last March, it added its feedstock mix by adding gas condensate. The refinery shifted its focus from fuel oil to other products after around 900,000 b/d of condensate was added to its feedstock mix. Therefore, in addition to gasoline, sour high-density naphtha started to be produced by this facility. The condensate used in the refinery is supplied from Assaluyeh, Kangan and Kharg to Lavan.

Fuel oil production had a share of more than 24% in 2014. After gas condensate was fed into the refinery, the share fell to below 17%. Akhbari said that these figures showed that fuel oil production in Lavan was lower than in other refineries in Iran.

He also referred to the details of fuel oil reduction plan, saying that during the first half of the last Iranian calendar year, some 385,000 ton of fuel oil was produced. But, he added, fuel oil production fell to 285,000 tons during the first half of the current calendar year and the rest was converted into products of higher value.

Bitumen to Replace Fuel Oil

Two other basic projects have been envisaged for Lavan in order to be able to supply special products and generate more value-added for the refinery's fuel oil. Distillation unit and bitumen production unit are the two projects whose relevant feasibility studies have been conducted. The company has so far used domestic financial capacity for operating these projects. Akhbari said some 30 companies have so far voiced their readiness to invest in this project. Initial estimates put the cost of this project at $30 million. "We plan to carry out this project by using domestic banking facilities. Since the return of investment in such projects is often quick, we estimate that investment in the construction of this project would return in one to two years."

He said that fuel oil would be converted to bitumen, lube-cut and gasoil.

Energy Saving

Another project at Lavan refinery has been the manufacturing of back-pressure turbines. Different degrees of steam at different refineries have their own specific consumption. In older systems, water steam has a pressure of around 600 pounds. Therefore, when it is to be used in other sections which would need lower pressure, the steam pressure declines and such a process would waste a large amount of energy. Therefore, it was decided that turbines would be used for reducing pressure and generating electricity.

This method is estimated to generate 7 to 8 megawatts of electricity to be used at the refinery.

Lavan refinery has received a certificate for capping environmental pollution. In addition to helping the protected Shidour island, the refinery has installed sensors on the chimneys of furnaces in a bid to keep a tab on the level of pollution.

Lavan refinery has also made huge efforts for reducing wastes. According to the latest data, the refinery wastes amounted to 0.036%, much lower than 1.93% a year ago.

These figures show that the objective pursued at Lavan refinery is to avoid environment pollution. Another activity to that effect that would also help save energy has been to prevent the gas flaring. Flare gas is converted to liquefied gas. The wastes are minimized and liquid fuel consumption is increased.

Europe Offers €12 bn Credit to Iran Petchem

Iran is estimated to need $50 billion in investment for developing its petrochemical industry as the country is benefiting from post-sanctions opportunities. Efforts for achieving this objective started as the administration of President Hassan Rouhani took office in 2013. However, they were accelerated after sanctions were lifted on Iran.

Negotiations in rapid succession as well as change in the direction of development of petrochemical products of higher value-added have come to fruition. Recently, National Petrochemical Company of Iran (NPC) signed an agreement with Linde.

Hossein Ali-Morad, director of investment at NPC, has said that Japan plans to release a €10 billion credit line for financing economic projects including petrochemical projects, in Iran. Furthermore, talks are under way for the opening of a €3 billion by Germany.

Iran's installed petrochemical production capacity stands at 63 million tones, which would rise to 130 million tones with the attraction of new domestic and foreign investment.

Regarding a €10 billion credit line by Japan, he said that this credit line was considered to be used for financing different economic projects including petrochemical projects.

Japan had earlier opened a €320 million credit line for Persian Gulf Petrochemical Industries Company. At present, talks are under way for a €640 million credit line by Japan.

But Iran's efforts made for attracting investment did not end here. In parallel, negotiations were under way with European countries, China and South Korea for opening other credit lines.

The Europeans' interest in Iran's petrochemical industry is not limited to a single country. A German company plans to invest €6 billion in Iran's petrochemical sector. Another European company also plans to invest €6 billion in Iran's petrochemical projects. Therefore, Europeans plan to invest a total of €12 billion in Iran's petrochemical industry.

"Two senior officials from one of the largest German petrochemical companies will soon travel to Tehran to finalize the previous talks and conduct economic feasibility studies on Iran's proposed petrochemical projects," said Ali-Morad.

All these efforts are aimed at bringing new technologies to Iran which has been denied cutting edge technology during years of sanctions.

Europe Banks to Finance Projects

The NPC insists on using different methods for the financing of projects. Therefore, in a bid to accelerate financing by European banks, a meeting was recently held with the German insurance company Hermes.

Ali-Morad said the European banks presented proposals for financing one or two projects. In the next phase, the banks will finance private petrochemical projects.

Another method of financing of petrochemical projects is credit line by European banks. In this regard, he said: "Even if we manage to activate a €100 million credit line from Germany's Hermes for Iran we will be able to change the international atmosphere and prepare the ground for bigger credit lines with other countries."

Regarding prioritized projects for this purpose, Ali-Morad told Iran Petroleum: "At present we are studying different projects so that we would introduce our projects as soon as the share of petrochemical sector is decided upon. In any case, we are trying to attract foreign investors that offer products of higher value-added and better price. The proposed projects get permit for investment after assessment and approval by the NPC."

He said that the implementation of government guarantee mechanism for attracting German investors would require the endorsement of NPC balance sheets by top European auditing companies.

"Furthermore, among investors and stakeholders of holdings and the NPC there must be transparency," he added.

Investment without State Guarantee

The process of attraction of investment and financing of petrochemical projects requires time. According to Ali-Morad, the NPC must take maximum benefit from the opportunities created following the implementation of Iran's nuclear deal with world powers with a view to attracting foreign investment and facilitating the transfer of technology. The nuclear agreement is officially referred to as the Joint Comprehensive Plan of Action (JCPOA).

"Lots of activities have been carried out after the implementation of the JCPOA and they are coming to fruition gradually," he said.

Following an instruction by Minister of Petroleum Bijan Zangeneh, all domestic and foreign investments in petrochemical projects must be done through the NPC.

"We cannot disregard the impacts of political and international developments on the trend of investment in Iran," Ali-Morad said.

He also referred to another important point with regard to the attraction of investment for the petrochemical industry. He said that "throughout talks we try not to create financial burden for the government; therefore, we attract investments without state guarantee."

Ali-Morad recalled that a recent visit to Germany by an Iranian petrochemical delegation was aimed at attracting investment and financing projects. Top managers of companies and holdings involved in Iran's petrochemical industry as well as representatives of German banks, companies and insurance agencies were in attendance.

IPC Details Needed to Be Outlined

Wintershall Holding GmbH is Germany's largest crude oil and natural gas producer. A wholly owned subsidiary of BASF, it posted a net profit of 2.4 billion euros in 2011.

Wintershall has started talks with a view to investing in Iran's energy sector as the country is opening up thanks to the removal of sanctions.

“Iran Petroleum” has conducted an interview with Martin Bachmann, who heads

Exploration and Production at Wintershall AG since March 2010. He has experience in projects in the Middle East and North African countries.

Q: Mr. Backmann! What do you think of investment in Iran's oil and gas sector under the present circumstances?

 A: From what I have heard from the BP man and also from Chinese representatives, this is a difficult time for oil industry right now. The oil price is very low. So investing is hard and we are thinking very carefully before investing. So we are thinking very carefully what's the best place to invest and whether it's good for us or not. Maybe 5 years ago when the oil prices were very high people we would rush to do so but now is different. They are a little bit careful and want to be sure.

I think IPC (new format of Iran's oil contracts) is fine. It’s a great start, but we should know all the details of a specific project also.

Q: Have you reviewed the IPC text?

A: No. The real important thing is the details. And that will of course take time to evaluate. The two sides need to talk to each other and find out what's possible and what's not. IPC is a framework. It's good that government has done that. But it’s not easy to find investment for oil as it was five years ago.

Q: What do you think of Iranian oil and gas companies and collaboration with them? Have you seen any opportunity to that effect?

A: I think there is always an opportunity when you bring professionals together. And Iran has been in the oil industry from the start. It's not new to that field. When you go to countries like this you meet a lot of people with great experiences so that create an opportunity which makes it easier to talk to each other. But I think there is long time that foreign companies couldn’t come to Iran. So we need some time to know each other and talk and understand each other.

Q: An important element in the IPC text is the duration of contracts for 20 years along with special privileges.  Can this tempt foreign companies to invest in Iran?

A: Let's face it that 20 years is not long time in the oil industry. Our projects normally got much longer than that. For which reason we make contracts for 40 years. This is something we need to talk about.

Q: Which elements in a contract can attract foreign companies to Iran?

A: In the end it depends on the project. Some projects can easily be done in 20 years. I think there should be a mechanism to make the contracts' length adapt to a specific project. If it’s a long-term project which takes a long time to generate profit, it should be reflected in the contract.

Q: According to remarks by the BP vice president in a recent conference in Tehran, enhanced recovery and field exploration are attractive for foreign companies. Is that attractive to your company, too?

A: I think both are attractive. The easiest oil is the one which is there. You just need to get more out of reservoir. But there is so much oil that has been found in the past and has not been developed. So investing in these fields is attractive as well. I think NIOC knows that too and is focusing on that two areas in parallel.

Q: What do you think of Iran's gas industry?

A: I have said the oil market is difficult right now but the gas market is even more difficult. Because the international market is over supplied. The gas is a more long time business than oil. I think Iran should tackle the challenge of internal demands and also international one. In the end you should consider that: Can you be competitive in the gas global market? At the present time it’s difficult. But on the other hand if you look at South Pars, it’s the biggest gas field in the world and there is huge potential for that to export.

Q: What will happen to the oil market?

A: We all agree that the oil market should be stabilized. In the long term, 50 dollars per barrel is not enough to make investment to be made to guarantee future supplies. As I said we are in a long-term business. We need to invest now to produce oil four or five years later. So I think we should get to a place where the oil price is stabilized and then we can invest for future or otherwise we will have a problem.

Q: Is Wintershall operating any project in the Middle East?

A: We have a project in the Emirates. Also we are looking to other projects in this region. We are quite active in Libya and North Africa. We had long projects in these countries. We want to make a long and deep relationship with our partners. We have a great record. We always try to separate politics from the economy.

Trump & Oil: Conflicting Policies

After months of political bickering and tug-of-war, Donald Trump was elected the 45th president of the United States. All eyes are now fixed on the political and social aspects of the ramifications of Trump's election win. An issue that would largely contribute to the US's future relations with many countries is oil, and Trump's oil policy.

Trump's oil policy would easily result in closer relationship between the US and oil producers or consumers or even give rise to differences between them.

This article aims at reviewing Trump's oil policy in a bid to highlight some possible consequences of his election victory for the oil market.

With the victory of Donald Trump in the US presidential election, stock markets' indices nosedived across the globe. But oil markets were up. This rise in oil prices was not due to Trump's oil policy, but emanated from his shock win in the race for the White House. Therefore, Trump's election could not be interpreted as the cause of increase or decline in the oil price. However, in order to study the future of oil market, it is necessary to examine Trump's oil policy.

In his election campaign, Trump expressed several important points about his oil policy. These remarks would lay bare his possible policy and challenges lying ahead in the energy sector.

Halt to Saudi Oil Imports

One of Trump's election pledges in the oil sector was to call a halt to oil imports from Saudi Arabia. This promise is unlikely to come true for a variety of reasons.

First, if Trump intends to lead the US towards independence of Saudi oil the relations between Washington and Riyadh will go towards degradation. This is the case while over the past decades the US has been looking at Saudi Arabia as its close ally in the Middle East. Any degradation of Washington-Riyadh ties could cause a major change in the US Middle East policy. That is largely unlikely at least in the short and medium-term.

Second, Saudi Arabia is the largest supplier of oil to the US in the Middle East and the US significantly depends on oil imports from this country. Therefore, the US is not able to cut its dependence on Saudi oil overnight. Even if Trump desires to embrace such a policy, he will need long time to find an alternative to Saudi oil. For example, if Trump is serious in following up on the resumption of the construction of Keystone Pipeline, whose construction was halted by President Barack Obama in 2015, he will draw the dire of many groups particularly environmentalists.

The Keystone Pipeline System is an oil pipeline system in Canada and the United States, commissioned in 2010. It runs from the Western Canadian Sedimentary Basin in Alberta to refineries in Illinois and Texas, and also to oil tank farms and an oil pipeline distribution center in Cushing, Oklahoma. The pipeline came to a greater prominence of attention when a planned fourth phase, Keystone XL, attracting growing environmental protest, became a symbol of the battle over climate change and fossil fuels, and in 2015 was rejected by the Obama administration.

Keystone Pipeline would be able to carry 800,000 b/d of oil to the US, which would halve the US oil imports from the Middle East; however, that would not happen in the short run and the US will continue to remain dependent on Saudi oil.

Third, Trump who has a long background in business will not ignore the advantages of importing oil from Saudi Arabia. In other words, the business advantages of oil imports from Saudi Arabia will convince Trump, like his predecessors, to keep buying oil from this Middle Eastern Arab state.

Full Oil Independence

One of Trump's campaign pledges was to bring about full oil independence instead of importing crude oil from those whom he described as enemies and oil gangs. It seems that in case Trump plans to live up to his promise of US's energy independence of any oil rival and cartel and moves towards making US energy independent he will run into numerous challenges with oil giants that could hinder his efforts. For instance, generation of energy distribution crisis or price hike are among approaches which oil cartels may adopt vis-à-vis such a policy. ExxonMobil and Chevron, which are to major oil companies in the US, seem to be determined to resist Trump's plans and not allow him endanger their influence on and interests in international markets. Therefore, materialization of this election pledge by Trump will be facing problems and challenges.

Higher Shale Output

Trump also promised to raise shale oil production. Shale oil producers, who were facing tough environmental regulations under outgoing President Barack Obama, are poised to experience new conditions after the victory of Trump who advocates energy independence in the US.

It seems that Trump's election pledge for increasing shale oil production with a view to creating thousands of jobs and cutting oil dependence on other countries is facing challenges. The US may be the third largest producer of oil thanks to its shale oil deposits, but this trend has run into trouble in recent years due to the sharp decline in oil prices. The perspective of shale oil production and expansion is now shrouded in ambiguity. Although Trump promised to increase shale oil production, this policy will not succeed in case oil prices do not grow. The current oil price is not economical for shale oil production and this issue poses an obstacle to increased oil production.

Therefore, even if under Trump restrictions for drilling federal lands are lifted to help the US become independent in energy supply the US will still face challenges for shale oil extraction.

Conflicting Policies

A study of Trump's oil pledges and policy indicates that their materialization would be facing numerous challenges. That would hamper US energy policies for some time. Of course it seems that such a trend will not last long and will be as short-lived as Trump's election win shock. In the US, Trump has vowed to spend revenue from energy generation for building schools and public infrastructure. That would probably lead to higher oil supply and subsequently lower prices. However, it would not last long because it would reduce the profitability of shale oil production.

Trump is likely to reduce the growth of global demand for oil in the world by pursuing his specific economic policies. For instance, Trump maintains that the banking interest rate in the US is very low. In case he moves to raise the banking interest rates the world will witness a growth in the dollar index. As a result, such commodities as oil that are traded in the US dollars in global markets will cost higher for non-American customers. In the end, demand for oil will decline and oil prices will drop.

Meantime, Trump is likely to adopt new international policies in a bid to increase oil prices. In this regard, one of Trump's likely policies would be lack of commitment to Iran's nuclear deal with six world powers, dubbed the Joint Comprehensive Plan of Action (JCPOA). That would create tensions at international level and affect global oil prices.

The policies announced by Trump are somewhat contradictory. Some of them would boost supply and reduce prices while some others would reduce supply and boost prices. Now, one has to wait and see how Trump would push ahead with policies he announced in the run-up to the November 8 presidential election. Each policy would drive global energy markets to a different situation.

Furthermore, another point that must be taken into consideration is that Trump or any other US president would not be the sole determining factor in the world energy markets. In other words, changes in the US will only be one of factors affecting global energy markets and there are other factors involved in this sector.

For instance, in case oil surplus supply goes on the outcome of US presidential election would not largely affect the price of this commodity. In return, in case OPEC developments and its proposed output freeze are followed up on seriously they will be more influential on world markets.

1-Offshore Well Spudded in Liberia

ExxonMobil Exploration and Production Liberia Ltd. has begun drilling the deepwater Mesurado-1 exploration well, according to partner Canadian Overseas Petroleum Ltd. (COPL).

Using the Seadrill drillship West Saturn, the well is targeting oil in Late Cretacous sands. It is in about 2,500 m (8,202 ft) of water.

Mesurado-1, located about 50 mi (80 km) offshore on block LB-13, is said to be Exxon’s first well operated offshore Liberia. The company negotiated its entrance into the Liberia block in 2011 from COPL’s wholly-owned subsidiary, Canadian Overseas Petroleum (Bermuda) Ltd.

Block LB-13 comprises more than 625,000 acres (2,500 sq km), 18 mi (30 km) offshore Liberia in water depths ranging from 250 to 10,000 ft (75 to 3,000 m).

Canadian Overseas Petroleum (Bermuda) Ltd. holds a 17% interest in block LB-13.

2-ONGC Finds More Oil, Gas Offshore India

ONGC has drilled three new discoveries offshore western and eastern India.

Well B12C-2(B-12C-A), drilled in shallow water on the B-12 (Dahanu) prospect in the Western Offshore basin, tested gas at 229,297 cm/d from the Upper Oligocene Daman formation, and 383 b/d of condensate.

Another well, B157N-1(B-157N-A), in the shallow-water Bombay Offshore area of the same basin flowed 640 b/d of oil and 31,050 cm/d of gas from a clastic interval in the Panna formation.

The result has broadened the scope for future exploration in the area north of the B157 concession, ONGC said.

In the KG shallow water offshore KG-PG basin off Andhra Pradesh state, well GS-71-1(GS-71-AA) on the GS-15/23 PML block produced 7.8 MMcmoe of oil and gas through a 12/64-in. choke; oil and gas in the Vadaparu formation via a 16/64-in. choke; and condensate and gas from the Ravva formation through a 16/64-in. choke.

However, ONGC has yet to determine the commerciality of this find.

3-More Workovers Planned in New Zealand

The Maari field offshore New Zealand now has a total of 10 producers and one water injector in service, according to partner Cue Energy.

No further drilling is currently planned, with the priority being to maximize production by optimizing up-time and deliverability of the wells.

The sole naturally flowing well is MR6A, which is now exhibiting increased water cut and which accounts for a large portion of the field’s declining production rates.

All other nine producers rely on electric submersible pumps for continued production and operator OMV is optimizing use of these and topsides facilities to enhance production.

OMV is also adding additional perforations in producing wells to improve production, as was the case with MR8A, where action lifted output by 1,600 b/d.

A similar job in MR9 has added around 500 b/d incremental production. The MR2 well is currently undergoing a workover, with similar activity scheduled for MN1.

The only planned shutdown over the next year will be in December to repair the water injection line. Once this work is complete water injection will be reinitiated, providing pressure support to some of the producers and thereby increasing production and ultimate recovery.

Otherwise, Cue has withdrawn from its three remaining licenses offshore New Zealand.

4-Offshore Mexico Group Lines Up Block 7 Well

Premier and its partners have completed their technical evaluation of block 7 offshore Mexico, including the amplitude-supported Zama prospect.

The company expects to soon receive an option notice to increase its equity interest in the license to 25%, with the first well set to be drilled in mid-2017.

Offshore Brazil, Premier has secured an extension of the first-phase exploration period for two operated licenses to 10 July 2019. The extension will help the company draw up cost synergies with other operators in the Equatorial Margin which plan to begin drilling during the second half of 2018.

In the offshore North Falkland basin, front-end engineering and design continues on the Sea Lion project with technical definition of the project well advanced, and the current breakeven price estimate at $45/bbl.

Premier anticipates further reductions through market engagement.

Offshore Indonesia, the company is targeting a final investment decision in 1Q 2017 on the Bison, Iguana, and Gajah Puteri gas field developments, to support long-term gas contracts to Singapore and Indonesia.

Finally, production from the Premier-operated Chim Sáo field off Vietnam has improved following an intervention campaign that included reservoir stimulation of three oil wells and a water injector.

The company says it has identified upside at Chim Sáo and plans further intervention work and two infill wells during 2017 to help sustain production levels.

5-North Sea Ravenspurn Well to Test Deeper Gas Play

Premier will participate in an exploration well on the Ravenspurn Deep North gas prospect in the UK southern North Sea.

Operator Perenco plans to test the deep Carboniferous play underlying the Ravenspurn field.

Premier has a 50% operated interest in the undeveloped Tolmount discovery in the same sector. The company is working with contractors to reduce the project’s capex and is targeting a concept selection at the end of this year, to be followed by front-end engineering and design in 2017.

There could be further upside in the Tolmount East and Tolmount Far East structures, with combined prospective resources of 400 bcf.

In the UK central North Sea, the company now estimates capex for the Catcher project at $1.7 billion, 24% down on the originally sanctioned figure, partly due to sterling’s weakness against the dollar (55% of the remaining expenditure is denominated in sterling).

Final tie-ins for the subsea spools were completed earlier this month, concluding the planned 2016 subsea campaign. All that remains next year is tie-in of the wells once available from the drilling program, and to support commissioning operations once the FPSO has arrived from Singapore and has been installed.

Work continues to assess the possibility of reducing the overall well count without impacting production. Well delivery is ahead of prognosis in terms of reservoir quality and flow rates and the first well (VP2) on the Varadero template, completed earlier this month, flowed 8,000 boe/d on clean up.

At the Keppel yard in Singapore, 12 of the 13 topsides modules have been lifted onto the FPSO, with the final module lift expected later this month.

As for the Premier-operated Solan field west of Shetland, which came on-stream earlier this year, the second producer well (P2) entered service in mid-August. While initial production capacity from the field was good, output is currently constrained at 10-13,000 boe/d due to lower than anticipated water injection capability, linked to underperformance from P2.

Various options are under consideration to increase water injection into the reservoir, necessary to maintain voidage replacement and to sustain reservoir pressure at higher production levels.

Norway Oil Companies Lower 2017 Spending Plans

Norway's oil companies have lowered their 2017 investment plans, a Statistics Norway survey showed, raising the chances of a central bank interest rate cut in the coming months.

Norway's biggest industry has curbed spending in the wake of a more than 50 percent fall in oil prices over the last two years, bringing the economy to a near standstill.

The country's oil companies plan to invest 146.6 billion crowns ($17.21 billion) next year, the survey showed, down from 150.5 billion crowns when surveyed in August by Statistics Norway.

"The decline is mainly due to lower estimates for exploration and shutdown and removal (of platforms). Exploration wells and removal projects originally planned for 2017 are now postponed," Statistics Norway said in a statement.

Plans now point to a 10 percent cut versus 2016, economists at Handelsbanken said, much deeper than the approximately 4 percent cut expected by the Norwegian central bank.

"This suggests that the offshore oil sector will continue to drag down Norway's industrial sector and economic activity next year, by maybe more than we thought," Handelsbanken Chief Economist Kari Due-Andresen said.

The oil sector accounts for 20 percent of the Nordic country's economy.

Due-Andresen expects the central bank to leave its key policy rate unchanged at 0.50 percent on Dec. 15 but she said the bank could cut its rate path, or outlook.

Norges Bank has said since September that it expects the key policy rate to stay at 0.50 percent "in the period ahead".

Kyrre Aamdal an economist at DNB Markets, agreed that the central bank would likely leave the rate untouched as it worries about overheating in the housing market.

However, "the downside risk is high and has increased after the oil investment numbers," Aamdal said.

The crown had weakened to 9.0700 against the euro by 0755 GMT from 9.0501 just ahead of the data.

Nigeria Oil Minister Summoned Over Deals

Nigeria's parliament summoned the country's oil minister to clarify details of oil and gas infrastructure agreements worth $80 billion with Chinese companies and a $15 billion deal with India.

Nigeria, which relies on crude sales for around 70 percent of its national income, is in recession for the first time in 25 years largely due to low global oil prices.

The country's oil and gas infrastructure needs updating. Its four refineries have never reached full production due to poor maintenance, causing the OPEC member to rely on expensive imported fuel for 80 percent of its energy needs.

Oil Minister Emmanuel Ibe Kachikwu was in China in June for a roadshow aimed at raising investment. Nigeria's state oil company said memorandums of understanding (MoUs) worth over $80 billion - to be spent on investments in energy infrastructure - were signed with Chinese companies.

On a trip to India last month, Kachikwu said a $15 billion cash-for-oil pact with that country was likely to be signed by the end of this year.

The Senate, the upper house of parliament, passed a motion on "the need for a detailed explanation" of the deals and said Kachikwu would appear before a committee on petroleum upstream, gas and foreign affairs at a date to be arranged.

"The essence of the motion was to ensure transparency in a matter that involves future investment in the oil and gas sector of the country," said Senate President Bukola Saraki.

Algerian Parliament Endorses Spending Cuts

Algeria's lower house of parliament endorsed a 2017 budget that includes new taxes on goods and fuel subsidy cuts as part of government efforts to offset a fall in energy revenues.

Next year's budget provides for a 14 percent cut in spending, following a 9 percent reduction in 2016, as the OPEC member remains cautious about any recovery in global oil prices.

Oil and gas account for 94 percent of exports and 60 percent of the state budget. Attempts to diversify the economy have largely failed.

The budget is widely expected to get final approval from the Algerian Senate.

Lower oil prices have hit state finances hard. Authorities have used hydrocarbon revenues to subsidize almost everything from food to fuel and medicine to maintain social stability under President Abdelaziz Bouteflika, in power since 1999.

"There are certainly increases (in taxes) ... but, on the other hand, there are a lot of provisions that are there to improve, boost and enhance economic growth," Finance Minister Hadji Baba Ammi told parliament.

Under the new finance law, prices for unleaded gasoline, premium gasoline and regular gasoline will increase by 13.08 percent, 12.94 percent and 14.11 percent per liter, respectively and the diesel price by 7.85 percent.

Earlier this year Algeria began to implement its first fuel price increases in more than a decade, though domestic prices for energy products remain very low by international standards. Diesel is currently 18.23 dinars a liter (16 U.S. cents).

The new budget provides for a rise in value-added tax (VAT) of 2 percent, while taxes on domestic property rentals will increase by between 7 and 10 percent and tobacco prices by between 60 and 100 percent.

Prices for appliances such as air conditioners and washing machines will go up by between 5 and 60 percent, and the cost of advertising for foreign products by 10 percent.

Lawmakers also approved a new 10 percent tax on alcoholic beverages. But they gave the green light for a 65 percent reduction of electricity bills for residents and farmers in southern desert provinces.

Opposition lawmakers, who represent a small minority in parliament, boycotted the budget vote. Some held up placards in parliament that read: "Starving the people" and "Undermining the social nature of the state".

"The government is blaming citizens for its mistaken policies over the past two decades. It has punished citizens several times," said Lakhdar Benkhellaf of the opposition Justice and Development party.

The government expects energy revenues to reach $35 billion in 2017, up from a projected $26.4 billion this year.

Russia LNG Giant Seeks Japanese Partnership in Arctic

Russian natural gas giant Novatek expects Japan Inc. to lend a hand in its Arctic Circle liquefied natural gas business, CEO Leonid Mikhelson said in an interview with The Nikkei.

Novatek's LNG business is expected to be a core part of the eight-point economic cooperation plan between Japan and Russia.

Novatek is planning a new large-scale project known as Arctic LNG 2, which targets annual production of 12 million to 16 million tons of LNG, with operations aimed to start by 2025. Mikhelson expressed a desire to see Japan be a cooperative partner at every step of the plan, from gas production to liquefaction plant construction and management, all the way to sales. It was also made clear that should Japanese enterprises cooperate, the country could expect a portion of the output.

The participation of Japanese enterprises in the gas project would go a long way toward fulfilling the energy portion of the eight-point cooperation plan, Mikhelson said. The Japan Bank for International Cooperation, or JBIC, is considering a jointly financed loan with European financial institutions, totaling 1 billion Euros ($1.05 billion), to a current Novatek Arctic project called Yamal LNG. Mikhelson believes that the best way forward, and a doable goal, would be for the loan to be definitively agreed upon in time for Russian President Vladimir Putin's visit to Japan Dec. 15-16.

Japan and Russia have agreed to prioritize implementing roughly 30 areas of economic cooperation by Putin's visit. Mikhelson's statements hinted at the possibility that LNG projects involving Novatek could well figure into these 30 priorities.

Kashagan Oil Field Starts Commercial Output

The Kashagan oil field has started commercial output, Kazakhstan's energy minister said, marking a milestone for $55 billion project which is more than a decade behind its original production plan.

The offshore field in the Caspian Sea has produced about 0.5 million tonnes (3.8 million barrels) of oil since test pumping began on Sept. 28, Kanat Bozumbayev told parliament, and daily output has exceeded 75,000 barrels since Nov. 1.

Kashagan has recoverable oil reserves estimated at 9-13 billion barrels and is one of the world's biggest discoveries in the last 40 years, according to the Kazhak oil ministry.

The former Soviet republic expects Kashagan to produce up to 1.1 million tons of oil this year and 4.0-8.0 million tonnes next year, helping to offset declines at mature fields in the country.

Discovered in 2000, the field was named after a 19th century Kazakh poet, Kashagan Kurzhimanuly. With its production difficulties, the field has lived up to its name which means "restive, uncontrollable."

Production, originally due to begin in 2005, did not start until 2013 and then was halted shortly afterwards due to technical problems with gas pipelines.

Costs have also ballooned. The initial estimate was $57 billion for the project's 40-year lifetime, but it has already cost about $55 billion to develop, according to analysts' estimates.

The NCOC consortium developing Kashagan comprises China National Petroleum Corp, Exxon Mobil, Eni, Royal Dutch Shell, Total, Inpex and KazMunaiGas.

The field is set to ramp up output further during 2017 thanks to reinjection of sour gas into its reservoir, which will increase production to more than 150,000 bpd in 2017 and 230,000 bpd in 2018. Kazakhstan's total production this year is forecast at about 1.6 million barrels per day.

Kazakhstan, whose economy is dominated by oil, is keen to push up production, but further expansion may be delayed if oil prices remain low, some analysts have said.

---SOCAR, Total Sign Gas Field Deal

Azerbaijan’s state oil company SOCAR and French company Total signed a framework agreement on the principles regulating the program of development of the Absheron gas field in the Caspian Sea, SOCAR said in a message Nov. 21.

The agreement was signed following a meeting between SOCAR President Rovnag Abdullayev and Total CEO Patrick Pouyanné in Baku, according to the message.

During the meeting, Abdullayev said the effective cooperation between SOCAR and Total as part of the joint oil and gas projects plays a special role in regional and international energy security.

In his turn, Pouyanné expressed interest in further cooperation with Azerbaijan, which has broad prospects, the message said.

Total follows closely the projects implemented in Azerbaijan and will continue to study new investment opportunities, as well as invest in oil and gas operations in the country, said Pouyanné.

During the meeting, Total expressed intention to take advantage of participation in other oil and gas projects in Azerbaijan, including the development of the potential Umid-Babek structure.

According to forecasts, the first gas from the Absheron gas and condensate field, discovery of which was announced in 2011, will be received in late 2021 and early 2022.

Absheron field’s reserves are estimated at 350 billion cubic meters of gas and 45 million tons of condensate, according to SOCAR.

Participants of the Absheron project are SOCAR (40 percent), and French companies Total (40 percent) and Engie (20 percent).

NITCthroughout History

National Iranian Tanker Company (NITC) was established in 1955 in order to distribute petroleum products in the Persian Gulf islands and ports and ship out oil from Iran. The raison d'etre of this company dates back to struggles by then Prime Minister Mohammad Mossadeq against the British government and the Anglo-Iranian Oil Company, which later become BP.

Following the nationalization of oil industry in Iran, the British government imposed one of the toughest ever embargoes on Iran in terms of oil sales and transport. Britain imposed a ban on Iran oil sales. Moreover, Britain's Mauritius warship had closed off the Strait of Hormuz to prevent the transit of oil by international tankers.

The government of Mossadeq was not a match for the Royal Navy. Therefore it sealed all oil wells in Iran and Iran's oil exports were halted totally. Following the 1983 coup and the overthrow of the government of Mossadeq, the Shah regime decided to establish an Iranian oil transport company in a bid to stave off the consequences of such incidents in the future. This company was established in 1955 was administered under Pahlavi Foundation.

Due to the facility of registration of tankers in Monrovia Port, National Tanker Company (NTC) was registered there. NTC ordered a number of vessels to the Netherlands and assigned the administration of vessels to a German company. The German company hired Chinese staff and installed them on the vessels. After some time, the Pahlavi Foundation found that NTC's dependence on other countries would not be a good gesture and it would be more appropriate to bring NTC under control of National Iranian Oil Company (NIOC). It transferred all its shares gradually to NIOC. In 1970, all shares of NTC had been transferred to NIOC. For several years, NIOC was running NTC as a subsidiary and not as an independent entity. After several years, NIOC realized that NTC needed to become independent.

In 1975, exactly 20 years after its establishment, NTC became independent and it was officially renamed National Iranian Tanker Company (NITC). New articles of association were drafted for it. Under this new statute, all shares of NITC belonged to NIOC, but it was run by an independent management. It signed two agreements for establishing two major oil transport companies; one was with England under the name of Iran-England joint shipping company, and one was with South Africa. But the second agreement was never activated.

The idea behind the establishment of NITC was to transport crude oil destined for export, stockpile oil, transport petroleum products between ports and islands, distribute imported petroleum products and provide services to oil platforms.

In 2000, given changes in economic conditions and the necessity of activation of the private sector in the economy, NITC was ceded to State Pension Fund, Social Security Investment Company and Oil Pension Fund to be run pursuant to the law governing private companies.

Wartime Crises

The former Iraqi dictator Saddam Hussein intensified its airstrikes on Iran in 1985. He started targeting oil facilities, refineries, jetties and tankers in an attempt to inflict maximum damage on the Islamic Republic.

Wartime conditions on one hand and the necessity of Iran's strong presence in high seas and the shortage of navigation fleet on the other, prompted NITC to add new vessels to its fleet.

In 1985, two new vessels were added to NITC fleet. One year later, 20 new vessels were purchased to bring the total number of NITC vessels to 32. The new vessels added more than 6 million tons to the capacity of NITC fleet.

Equipping oil tankers with missile diversion system, establishing new oil export terminals in Siri and Larak islands and conducting transshipment loading and offloading operations were among measures conducted during the Iraqi war to avert a halt to the export of crude oil and petroleum products. Loading and export of oil and petroleum products by NITC did not stop even a single day during eight years of imposed war despite all problems created for Iran's oil transportation system. It is one of biggest sources of honor for NITC. It might have even been unprecedented in the history of wars in the world.

During the imposed war, commercial vessels navigating in the Persian Gulf were effectively struck 381 times. Oil tankers were targeted 283 times while 58 strikes were carried out against NITC-owned vessels. In total, 189 vessels were damaged and 151 NITC staff, both Iranians and non-Iranians, lost their lives.

Post-War NITC Fleet

After the war ended in 1988, it was time that the NITC repaired its damaged tankers and vessels. Heavy costs were imposed on the company. The NITC had to spend $65.3 million on replacing seven second-hand vessels and $91.5 million for repairing vessels and tankers that had been damaged. Furthermore, the period during which a vessel was being repaired imposed a $94.5 million cost.

The war ended after Iran signed a UN-brokered resolution calling for ceasefire between Iran and Iraq. It was now time for post-war efforts. The top priority for the NITC was to develop itself, an objective which had been thwarted due to eight years of devastating war. The issue of NITC development was dependent more than anything else on the equipment of the NITC fleet. The number and the capacity of the vessels had to reach an internationally acceptable level in order to catch up with global technological developments. Then came the issue of expansion of administrative, technical and welfare facilities in parallel with equipment and installations and training of staff. When such activities are coupled with reasonable management the NITC would be placed on the path of desired progress and development.

NITC, Leading Tanker Company

With more than 60 years of offshore activity, the NITC is one of the biggest tanker companies in the world with 69 vessels and a capacity of around 15.5 million tons. The NITC vessels carry Iranian crude oil to markets across the globe. It also carries oil cargoes from Royal Dutch Shell, France's Total, Saudi Aramco as well as oil companies of Kuwait and Abu Dhabi.

Post-JCPOA Delisting

Like many other real and legal persons, the NITC was blacklisted in October 2012 after the European Union imposed tough sanctions against Iran. The NITC filed lawsuit with the EU General Court and won the case in September 2014 when the court ruled out the sanctions had to be lifted. Once more in 2015, the EU blacklisted the NITC under baseless pretexts. This time, Iran's nuclear deal with six world

powers, dubbed the Joint Comprehensive Plan of Action (JCPOA), came to its help. The JCPOA was signed in July 2015 and implemented in January 2016. The NITC is currently on no sanctions list of Europe and the US and any such punitive action against this company would amount to a flagrant violation of the JCPOA.

Iran's Deputy Minister of Petroleum for International Affairs and Cmmerce Amir-HosseinZamani-nia has said that Iranian oil tankers are facing no problems with regard to their insurance cover and that the NITC activities are under way as usual.

During years of sanctions, the NITC managed to diversify its revenue mix. During those years, Iran's oil exports faced no problem and the country's revenue mix was diversified as gas was included.

Sirous Kian-Ersi, CEO of NITC, says: "This company left behind the period of sanctions on a successful note. Fairly speaking, this period was more difficult that Iran-Iraq war. This time, it was hard for the management and staff of this company to overcome problems."

The growing and reasonable trend of Iran's oil production at 4 mb/d requires reliable transportation system. Over these years, the NITC has proven to be able to handle such a job.

In the post-JCPOA period, there are numerous opportunities for Iran's petroleum industry to engage in interaction. Sanctions against Iran's oil sector have been lifted although some countries in the region are making every effort to close the new horizons that have opened for Iran's petroleum industry, but the Iranian Ministry of Petroleum's insistence on Iran's right to bring its oil output back to the pre-sanctions levels will thwart any attempts against this strategic industry of Iran. 

Cooperation with Poland

Recently, NITC held talks with Poland's CIECH Trading S.A., voicing its readiness for cooperation with Poland in the shipment of oil and gas products.

Iran is planning to increase its liquefied petroleum gas (LPG) exports. During the talks with the CEO of CIECH Trading, the NITC announced that it would be ready to cooperate with Poland in the shipment of LPG as well as liquefied natural gas (LNG).

The Polish party also said it was ready for cooperation with the Iranian side in joint projects like bunkering (refueling vessels) and transferring petrochemicals and LPG. The Polish party also expressed its readiness for the formation of a joint company with the NITC for the development of cooperation.

Cooperation with Singapore

The NITC and a Singaporean firm signed a memorandum of understanding for the transfer of technological knowhow for repairing turbochargers of the main and the diesel-fueled engines of ship generators in the country.

According to this MoU, the Singaporean firm would in the first step move to hold a technical-training workshop in Bandar Abbas in southern Iran in cooperation with Azar Pad, which is a subsidiary of the NITC.

Since it is not currently possible to repair the turbochargers of the main engine of vessels in the country, we may expect the transfer of technology, indigenization of reparation of vessels' equipment and the entry of domestic companies in this field.

Cooperation with Navy

The NITC signed anMoU with the Iranian Navy in order to help materialize the policies of Resilient Economy and cooperate in maritime security and intelligence sharing, handle technical issues and reparation, procure equipment and provide logistics.

The CEO of the NITC has said that this company managed to deliver Iran's oil cargoes to destinations in cooperation with the flotilla of the Iranian Navy even under sanctions and make contribution to economic growth in the country.

Kian-Ersi said synergy and cooperation between these two bodies would be effective in the country's economic growth and efficacy due to the existence of effective and efficient potentialities and the existence of expert and qualified people.

LNG Trading Eyed

With its 69 vessels and a capacity of around 15.5 million tons, the NITC currently enjoys the largest oil navigation fleet in the world. This company has certain plans under way for the quantitative and qualitative development of its fleet. Some of them are entry into the new LNG markets in partnership with international companies.

The NITC chief said targets have been set for Iran to join the LNG trading in cooperation with international companies, adding: "At present, we are preparing the largest navigation of oil tankers in the world to make a strong return to European markets and new international arenas."

Kian-Ersi also said the NITC planned to expand its fleet of LPG transfer, adding: "Although this company is equipped with LPG carrying vessels this fleet has to develop in the global LPG markets with the objective of strengthening the country's presence in global markets."

FLNG Industry

The NIOC Investment Department recently set up an LNG working group at the Ministry of petroleum to assess all FLNG and mini-LNG projects after being assigned to the National Iranian Gas Export Company (NIGEC). Floating liquefied natural gas (FLNG) refers to water-based liquefied natural gas (LNG) operations employing technologies designed to enable the development of offshore natural gas resources. While there are no FLNG facilities in production, there are multiple FLNG facilities in development.

Kian-Ersi underscored the necessity for the development of FLNG industry, saying: "The NITC has plans under way in this regard, which we hope will materialize after conditions are prepared and negotiations come to fruition."

NITC Fleet Upgrade

The NITC navigation fleet comprises numerous vessels for carrying crude oil and petroleum products. Renovation of this fleet is now on the agenda. A five-year plan has been devised for expanding the NITC fleet. Under this plan, the country's tanker fleet has to be renovated and upgraded in order to help enhance presence in world markets. Of course, there is no plan for boosting the capacity of the NITC fleet. Rather, the company is trying to renovate its fleet and replace old and clapped-out vessels with new ones over five years.

Renting Out 12 Tankers to Int'l Firms

The number of Iranian oil tankers has been on the rise following the 1979 Islamic Revolution. Today, NITC vessels number 69 with a capacity of more than 15.5 million tons. Therefore, the NITC is now the largest oil shipping company in the world. So far, the NITC has rented out 12 of its vessels to foreign companies. Due to the willingness of foreign companies to hire NITC vessels this figure is set to increase in coming months.

All NITC vessels enjoy insurance coverage and have international certificate. This company started its work in 1955 by taking delivery of a 35,000-ton tanker.

The incidence of economic crises during oil nationalization and the imposition of embargo on Iran's oil by colonialist governments had led to the establishment of an independent navigation fleet for entry into international oil markets. Meantime, the necessity of acquisition of the necessary share of oil transportation caused Iran to assume an appropriate role in this sector in order to make necessary arrangements for oil sales under normal conditions and also during crises in addition to winning toeholds in global markets.   

Khuzestan Exhibits Iran Manufacturing Potential

Khuzestan Province's eighth specialized petroleum industry equipment exhibition was held Nov 7-10 in the oil-rich provincial capital Ahvaz. Sponsored by National Iranian South Oil Company (NISOC) and Khuzestan International Exhibitions Company, the event brought together 250 domestic companies from 12 provinces. Domestically manufactured equipment like BB3 pump, GEC turbine rotor and Elliot compressor rotor was unveiled. Furthermore, contracts were signed with domestic manufacturing companies and specialized seminars were held.

In a message to the conference, Ali Kardor, CEO of National Iranian Oil Company (NIOC), said the 8th exhibition was a proper opportunity for further interaction with domestic manufacturers.

"Iran, as a growing country rich in oil and gas reserves and enjoying potential energy resources, is in a very special standing in the world in terms of energy exchanges thanks to its proximity to the energy resources of the Caspian Sea and the Persian Gulf and also access to high seas," read the message.

"Organizing relevant exhibitions creates a very good opportunity for Iranian and foreign managers, experts and specialists as well as economic delegates to get further familiar with the potentialities, capacities and opportunities of this sector.

Khuzestan petroleum industry exhibition, which is being held in the cradle of Iran's oil, provides a good opportunity for further convergence and interaction with domestic manufacturers of oil equipment.

"Today the country's oil industry is in a special stage of development and a return to oil production ceiling, making effort for a return to the pre-sanctions levels and the startup of important and big oil projects, preparing a list of 10 groups of strategic and widely consumed commodities in the oil sector for indigenization, and transfer of state-of-the-art knowhow and technology through cooperation between Iranian and foreign companies present domestic companies, both state-run and private, with a good opportunity to play an effective role in the development of the country's petroleum industry."

"The participation of National Iranian Oil Company in this exhibition and its holding by National Iranian South Oil Company clearly indicate the special attention attached by the Ministry of Petroleum and National Iranian Oil Company to the issue of capability of and support for domestic companies," said the message. "By introducing more than 40 projects for oil and gas field development, NIOC has prepared good potential for domestic and foreign investors. By relying on domestic companies and their valuable experience through partnership with leading international firms which own knowhow and cutting edge technology, we hope to see daily growing development of this influential and important industry in the country."

3 mb/d Output

Bijan Alipour, CEO of NISOC, said the company's oil production stood at 3.07 mb/d, gas condensate and naphtha included.

He added that the output was expected to increase by 40,000 to 50,000 b/d by the end of the current calendar year in March 2017.

Alipour said NISOC supplies 83% of oil and 16% of gas requirements of the country while it is the sole supplier of feedstock to petrochemical plants in Khuzestan Province.

He added that between 110 and 200 mcm/d of gas is planned to be injected into oil reservoirs in order to keep their pressure stable.

Regarding NISOC's plans for domestic manufacturing, he said 6,000 items were being manufactured.

He said that 41% of equipment needed by petroleum industry is being manufactured in Khuzestan Province. "Many manufacturing companies have become active in the country and except for a limited number of commodities, other commodities needed by the petroleum industry are manufactured domestically."

He added that equipment like BB3 pump, GEC turbine rotor and Elliot compressor rotor have been manufactured for the first time in the country.

Alipour also referred to plans for capping environment pollution, saying: "41 projects worth IRR 7,500 billion are under way to avoid the flaring of associated gas."

Regarding the development of some projects of this company based on new-style oil contracts, he said: "As per the NIOC's announcement, four NISOC-run oil fields – Karanj, Parsi, Rag Sefid and Shadegan – are planned to be developed based on the new model of oil contracts. To that effect, talks have so far been held with 23 domestic and foreign companies including European countries, Russia, China and Britain's BP."

"If we do well with regard to the awarding of these fields the steering of development of some of these fields will be awarded to NISOC," he said.

Alipour also referred to NISOC's plan for enhanced recovery from reservoirs, saying six cooperation agreements have been signed with Sharif University of Technology, University of Shiraz, Islamic Azad University, Petroleum University of Technology, and Enhanced Oil Recovery Research Center for the transfer of technology and enhanced recovery from Ahvaz, Bibi Hakimieh, Rag Sefid, Karanj, Mansouri and Ab Teimour fields.

7 Strategic Equipment Unveiled

On the first day of the exhibition, seven domestically manufactured strategic oil equipment was unveiled in the presence of Deputy Minister of Petroleum for Research and Technology Mohammad-Reza Moqaddam.

This equipment includes rotary blowout preventer, processing pumps, flame tube for gas turbines, cement truck pump, waste injection pumping package, Elliot compressor rotor and GEC turbine rotor.

Rotary Blowout Preventer

Rotary blowout preventer is an important wellhead component of blowout control used at oil and gas fields. It makes possible modern methods of rotary drilling.

This system is able to seal different drilling strings, joints and casings throughout drilling operation.

Rotary blowout preventers function like a dam. They are installed between drilling equipment and drilling platform in order to direct the flow of fluid from inside the well at a safe distance from the derrick. By changing the direction of formation gases and fluids, it creates favorable and balanced conditions for safeguarding the staff all throughout the drilling operation.

BB3 Processing Pumps

Since BB3 pumps are among hi-tech pumps and classified under the category of strategic commodities a specialized working group was established to draw up a list of potential manufacturers to design and manufacture such pumps after launching a tender and si

Cutting Edge Technology, Achilles ' heel of Iran Petchem

Look at objects around you at home or in your office. You may conclude that some 80% of whatever you find around you is directly or indirectly petrochemical products.

As science and technology are being developed the role of these products is coming further to the limelight from day to day. Therefore, one can say that a country that would be able to acquire a value chain for petrochemical products and master state-of-the-art technology will be the real winner in petrochemical economics.

Technological changes are happening at a high speed and very clearly in harmony with the needs of global community in the petrochemical industry. A brief review of some products developed by leading companies and their changes over the past one decade bear proof to this fact.

For instance, Basel, which is one of the largest producers of polyolefin in the world, has enhanced the diversity of its products from 600 to 1,100 grades over a period of five years. Basel has dropped more than 200 grades off production cycle and instead offered nearly 700 new polyolefin products. This issue applies not only to Basel and polyolefin but also to other petrochemical products and petrochemical producers. Such changes are happening on an almost daily basis all across the globe. In a bid to diversity products permanently and even daily one cannot opt for purchasing new licenses or even upgrade the existing ones. In order to overtake rivals in the market and diversity the products the only way out would be to acquire technical knowhow for relevant products.

The current structure of Iran's petrochemical industry dates back to years following the imposed war (1980-1988). In the light of the existing infrastructure and potential facilities, the capacities of this industry have not been entirely used. Today, the bulk of petrochemical products made in Iran are exported and due to the absence of a petrochemical value chain in the country these products are processed in other countries before being sold at prices ten times higher to Iran in the form of equipment we use in everyday life. That means the loss of a golden opportunity in Iran. Many experts maintain that the lack of state-of-the-art technologies for converting raw materials into downstream products like propylene and its derivatives are among the reasons explaining the backwardness of downstream industries in Iran. If we manage to use oil and gas assets for the infrastructure and creation of new capital and value-added in the real process of manufacturing of products, we will be able to regenerate this capital. Therefore, it will be no longer important how we will be using oil and gas because we have launched a process which allows the regeneration of wealth. Petrochemical industry is one of sectors that could help us achieve this objective. By focusing on the petrochemical industry and relevant sectors we would be able to produce commodities to be sold on domestic market or be exported to earn Iran hard currency for industrial development.

Over recent years, the petrochemical industry has taken up added importance as it has contributed to creating opportunities for the generation of value-added and conversion of raw materials (oil and gas) to valuable products in the Middle East countries and particularly Iran which enjoys huge hydrocarbon reserves. Petrochemical products are used in manufacturing such products as tires, plastics, detergents, fertilizers, glues, acids, paints, poisons and artificial tissues, which all serve as raw materials for hundreds of other products.

In the upstream units of petrochemical sector, output is high and investment and production would become economically justified only in cases of high production tonnage. Manufacturers of these products are numerous and therefore rivals may have to opt for lower prices in a bid to maintain their market share. In the downstream units, the role of technology, apparatuses and machinery and specialized manpower comes further to the limelight. In this sector, the production tonnage stands low, but due to technical savvy and more sophisticated technology the products are of higher value-added than basic and preliminary products.

Paying Attention to Value Chain

Wolfgang Falter, manager of Roland Berger strategy consulting company, believes that no systemic approach has been adopted with regard to the development of petrochemical industry in Iran and that the value chain has been ignored. In his eyes, the industries in the final links of the value chain are quantitatively acceptable, but they stand at a very low level in terms of quality, competitiveness and customer relationship.

"Let me give you an objective example regarding value-added in the downstream petrochemical industry. During these days as oil prices are falling down you can see that the stock market has nose dived in many countries, but the stock market index in countries like India has even picked up. Why? Because India imports energy and it has completed its value chain and is an exporter of products. China enjoys similar conditions. The countries that have a complete value chain and are importers of oil are benefiting from the status quo. But countries that depend on oil revenue, like Russia and even the United States, are facing problems," he said.

Now what is the key to achieving value-added in the petrochemical industry and what should be done? In response, we should only refer to the role of state-of-the-art technology and investment. Today, many experts see commercialization of local technologies and acquisition of state-of-art technologies in the US and Europe as the Achilles' heel of this industry.

Lots of research studies have been conducted in Iran's petrochemical sector and some of them, which have been done in cooperation with the private sector, have already come to fruition and reached commercialization phase.

Iran's petrochemical industry, which is now 53 years old, has the production capacity of 64 million tons a year. But just a small segment is used as feedstock for downstream industries and the bulk of these raw materials are exported.

Propylene Chain Technology

Esmail Qanbari, CEO of Iran Petrochemical Research and Technology Company (PRTC), says in the light of the government's view of propylene chain Iran will definitely need technical knowhow to convert gas and methanol to such valuable products as propylene and other derivatives.

"Therefore, relying on its capabilities, this company has conducted many activities in recent years in this sector," he told "Iran Petroleum".

Qanbari said that Iran's petrochemical production capacity was expected to reach 7 million tons a year by the end of the 7th Five-Year Economic Development Plan.

"Therefore, given the one-million-ton production of this product in the country we have to acquire technical knowhow for this product. We have to do this job by ourselves or with the help of knowledge-based companies. Propylene is one of key petrochemical products used as feedstock for producing different polymers and intermediate products," he said.

He added that the most important derivatives of propylene include polypropylene, acrylonitrile, propylene oxide, phenol, exo-alcohol, acrylic acid, isopropyl-alcohol, oligomer and other intermediate products which are used in electronic industry, car manufacturing, construction and packaging.

Over recent years, PRTC has been involved in widespread activities for the procurement of technology needed for the production of propylene and its derivatives.

"In 2014, we acquired technical knowhow for producing propylene from methanol. Also in 2016, we focused on empowering Iran's petrochemical industry by producing polypropylene from propylene, and some two months ago we acquired this technical savvy at Arak Petrochemical Plant," he said, adding that Iran has already acquired technical savvy for producing methanol from gas, propylene from methanol and polypropylene from propylene.

Qanbari said Iranian specialists are currently working on technical knowhow for Ethylene Propylene Diene Monomer (EPDM) production and "it seems that we will be mastering the technical knowhow for this product up to early next [calendar] year" which starts in March 2017.

"Serious work has so far been done with regard to ethylene and products like urea and ammoniac. Today, propylene is one of strategic feedstock used in downstream petrochemical units in Iran," he added.

Qanbari said the most important challenge to petrochemical industry is the absence of depth in petrochemical production. "In fact, due to international sanctions, non-entry of technology and restrictions on the entry of foreign capitals into the country over recent years, this industry has failed to give any depth to its products. It means that capacity building has been mainly concentrated on primary products like methanol, ammoniac fertilizer, urea, etc. and not petrochemical products of high value like propylene. As a result, the chain of petrochemical products which consists of around 2,000 commodities in the world is limited to 63 items in Iran. This figure indicates that our diversity of petrochemical products is very low."

different polymers and intermediate products," he said.

He added that the most important derivatives of propylene include polypropylene, acrylonitrile, propylene oxide, phenol, exo-alcohol, acrylic acid, isopropyl-alcohol, oligomer and other intermediate products which are used in electronic industry, car manufacturing, construction and packaging.

Over recent years, PRTC has been involved in widespread activities for the procurement of technology needed for the production of propylene and its derivatives.

"In 2014, we acquired technical knowhow for producing propylene from methanol. Also in 2016, we focused on empowering Iran's petrochemical industry by producing polypropylene from propylene, and some two months ago we acquired this technical savvy at Arak Petrochemical Plant," he said, adding that Iran has already acquired technical savvy for producing methanol from gas, propylene from methanol and polypropylene from propylene.

Qanbari said Iranian specialists are currently working on technical knowhow for Ethylene Propylene Diene Monomer (EPDM) production and "it seems that we will be mastering the technical knowhow for this product up to early next [calendar] year" which starts in March 2017.

"Serious work has so far been done with regard to ethylene and products like urea and ammoniac. Today, propylene is one of strategic feedstock used in downstream petrochemical units in Iran," he added.

Qanbari said the most important challenge to petrochemical industry is the absence of depth in petrochemical production. "In fact, due to international sanctions, non-entry of technology and restrictions on the entry of foreign capitals into the country over recent years, this industry has failed to give any depth to its products. It means that capacity building has been mainly concentrated on primary products like methanol, ammoniac fertilizer, urea, etc. and not petrochemical products of high value like propylene. As a result, the chain of petrochemical products which consists of around 2,000 commodities in the world is limited to 63 items in Iran. This figure indicates that our diversity of petrochemical products is very low."

Iran Petchem Advantages

Thanks to efforts made by Iranian researchers, the technical knowhow for some catalysts needed in Iran's petrochemical sector has been indigenized. Some of them are catalysts used in dehydrogenation, acetic acid production, methanol conversion to dimethyl-ether and propylene, methanol synthesis, hydrogenation of acetone, dry reforming, PZ, and also catalyst needed in esfrylene unit and SAC catalyst as one of the most important catalysts used in high-density polyethylene.

Iran's petrochemical industry has made plans and taken measures based on the National Petrochemical Company (NPC)'s agenda in order to grant license to the country's petrochemical sector through elucidation of the process of commercialization of local knowledge and introduction of licenses needed by the petrochemical industry in the country. These measures include technical know-how for methanol and ammoniac production, production of propylene from methanol, high-density polyethylene as well as relevant catalysts and chemicals.

Production of dozens of new products related to research and technology has strengthened the economic policies of the country and therefore the valuable achievements could strengthen the pillars of Iran's petrochemical industry. At present, 30 cases of technical knowhow developed by Iranian researchers are ready for operation.

On its path towards self-sufficiency and pursuant to its objective of providing license to petrochemical projects under way, Iran's petrochemical sector has conducted research on processes and polyolefin catalysts for years and managed to launch the first semi-industrial unit for the production of high-density polyethylene (HDPE). The technical knowhow for HDPE production along with slurry processing has been devised completely by Iranian researchers.

Furthermore, Iranian petrochemical experts and researchers designed, developed and indigenized the new and advanced process of multi-modal-process-HDPE with technical and economic advantages over two-modal process for this semi-industrial unit. In 2014 Iran joined the club of countries granting license for HDPE production.

To deal with the aforesaid processes, Iran has developed SACIR 510 and SACIR 511 catalysts. SACIR 510 could meet 35% of demand (polyolefin catalysts) for around 500 tons inside the country and enjoys significant advantages over foreign prototypes including simpler production process, better control of polymerization process and production with higher value-added that would be used in pressure pipelines, strong tissues and injection products. Moreover, due to high activity and proper polymer mass density, it would be possible to increase the nominal production capacity of polyolefin units by more than 10%. But catalyst SACIR 511 has specifically been designed and developed for MMP-HDPE process and provides the possibility of producing multi-modal grades. According to findings of polymerization tests, three-modal polyethylene production catalyst enjoys appropriate features for this process, including retention time, responsiveness to hydrogen, level of wax and above all distribution of widespread molecular mass. Other achievements include the technology for methanol synthesis process and its catalyst, propylene-via-methanol technical knowhow, ethylene dichloride (EDC) catalysts, catalyst for PVM and many chemicals, production of polyethylene-based biodegradable materials along with starch and exo-peroxydants.

Over recent years, Iran's petrochemical industry has made great achievements in the downstream sector. In order to provide a variety of services to downstream units of petrochemical industry, completion of organizational infrastructure related to this sector of industry hit the agenda many years ago. This infrastructure includes equipment of refineries, leading units, operational plants and other necessary facilities for the development of activities, designing a management system and a transparent and integrated structure for effective and efficacious use of research potentialities, development of joint research cooperation based on the principles enshrined in the research code with domestic and international institutes, monitoring and updating scientific database, suggesting solutions for quality and quantity improvement, enhancing the output of products and selected processes, development of technical knowhow and new catalysts and indigenization of existing technologies.

On this basis, the result of active and close cooperation with downstream units of petrochemical industry has been the implementation of research projects, which has resulted in acquiring technical knowhow for PC/ABS compound used in household appliances, cars, etc. on the industrial scale, color master batches in different industrial-scale grades, industrial-scale biodegradable polyethylene, compounds with high light stability on semi-industrial scale, reformed polypropylene CPP-RCPP used in hot water pipes on semi-industrial scale, networkable polyethylene for cable insulation on semi-industrial scale, transparent polypropylene on semi-industrial scale, car bumper compound on semi-industrial scale, application of auxiliary processes for removing HDPE and LLDPE problems on semi-industrial scale, polyethylene foam on semi-industrial scale, mica-filled polypropylene compound on semi-industrial scale, polypropylene compound for thermoforming on semi-industrial scale, and flame retardant PC/ABS compound on semi-industrial scale.

Gachsaran Handballers Finish 4th in Asia 

Handball is one of sports disciplines in which Iranian Ministry of Petroleum is largely active. The ministry has got a top title in Asian handball championship. During the days when most sports groups are not ready to train their teams for handball pro league, the Iranian Ministry of Petroleum has been active in this sector through its Gachsaran oil and gas team. The ministry has shined in this field. Gachsaran oil and gas is playing in two separate sections of men and women in the pro league handball. In the men's team finished runner-up and found its way into the Asian games. Gachsaran oil and gas failed to reach the final due to bad luck; however it was not bad for it to reach the 4th position.

Economic problems have been overwhelming Iran's handball for the past couple of years and therefore the handball pro league matches have been shrouded in mystery. They often take part in the competitions with a few members. These problems existed last year too, but Gachsaran oil and gas managed to take care of the team under the aegis of Iran Ministry of Petroleum, with the objective of helping develop Iran's handball. Attracting several national handball players and investing heavily in this discipline have been on the agenda of this club and in the end Iran's handball did not make progress sufficiently. In last year's competitions, Gachsaran oil and gas found its way into the final, but on the day of competition it missed some of its main players and it faced bad luck. Therefore, it failed to win the championship title. It was just two points from the championship title and finished runner-up.

Iran Representative in Asia

While Gachsaran oil and gas failed to get the championship title in the handball pro league matches, it was introduced as Iran's representative to Asian games after Manyaziom Ferdows team pulled out. This team prepared itself for Asian competitions in the hope of flying Iran's national flag. It hired several famous players from national team and arranged trainings ahead of the Asian matches. The club managers also provided their support to this team in a bid to spare it any harm due to inexperience. However, due to administrative obstacles several players were not allowed to leave the country and join the Asian matches.

First Round Victory

Iran was drawn into a good group. Gachsaran oil and gas team had to face Al Jazeera of the United Arab Emirates and al-Jaish of Qatar. The first match was with Al Jazeera which managed to win the game. It happened while Iran's team was 5 points ahead of its rival until the last minutes. But due to lack of experience, it suffered a defeat. Gachsaran's win against Qatar and Jordan helped the representative of Iran go into the next round.

4th Position

In the semi-final competitions, Gachsaran oil and gas team played Saudi Arabia's al-Nour due to its background of championship in the continent. The Gachsaran team participated in the Asian matches for the first time and it failed to win in order to go to the final. It then faced a powerful team from Qatar. It tried its best, but it finally lost. Therefore, the representative of Iran finished in the fourth place in Asia.

Best Result for Iran Clubs in Asia

The acquisition of the fourth title by the Gachsaran team which had a quite young lineup is a big achievement. Being among the top four Asian teams was a good event for a club financed by the Iranian Ministry of Petroleum. This issue takes up added importance when we take into account the fact that no Iranian team had already managed to win this title.

ehran Keikhaei, Gachsaran handball head coach:

We Raised Eyebrows

Mehran Keikhaei is well known in Gachsaran. He has long served as the head of Gachsaran handball club. As the head coach of Gachsaran oil and gas club's handball team, he received honors.

Known for his tendency to hire young players, Keikhaei picked talented handballers for the Asian matches and he highlighted Iran's name in the best possible manner. Here is an interview with Mehran Keikhaei.

Q: Were you happy with the fourth position in the Asian matches?

A: We have to take into account the fact that it was the first time our team was participating in the Asian games. Therefore, ranking the 4th would be a good result. We fared well in international competitions and we won the praise of other countries in Jordan. That was a significant result. We played the host there and our performance was so good that everyone was surprised. If you review the game's film you will see that we never lagged behind the rival. From the very beginning we showed off our capabilities and proved ourselves as a candidate for the championship title.

Q: That was while some of your players were injured, right?

A: Yes, Mehdi Mousavi was injured in the forehead. Two other players had also minor injuries. However, they did their best. I thank all my players because of their excellent performance. They managed to spread the name of Iran there.

Q: Why did you fail to achieve better results in the final?

A: You should not forget that the three teams from Qatar and Saudi Arabia were among the best teams in Asia and we had to compete with them. These teams have already taken part in Asian matches and have won titles. Therefore, their conditions were incomparable with ours. It was enough for us to go into the final. That was a very good experience for us and we can benefit from this opportunity in the future and witness better conditions.

Q: What about the facilities? Were you supported sufficiently?

A: I thank Iranian petroleum ministry officials for their good support. For their part, the managers of Gachsaran Oil and Gas Club were also with us. They provided us with whatever we wanted before the Asian competitions. Several training matches also helped us prepare ourselves for the Asian games. We hired several competent players. Everything was ready here and that was of great help to us.

Q: What's your plan for the future? Do you think that Gachsaran Oil and Gas Club would be able to be among the top three in Asia?

A: There is definitely great potential in Iran's handball and this potential must be used. Undoubtedly with such support we can make progress and achieve better titles in Asia. In sports, everything is achieved by planning, effort and exercise. I hope that Gachsaran oil and gas would see better days in the future.

Q: Anything else you want to add?

A: I am grateful to Mey-Abadi, the secretary general of the federation, because he was of great help to us during the trip. Mr. Mey-Abadi helped our players a lot to be authorized to leave the country. Fortunately everything went ahead as planned. I grant this fourth title to people of Gachsaran who have been very kind to

Torbat-e Heydarieh & Gonabad; Ancient Land

Torbat-e Heydarieh is a county in Khorasan Razavi Province in northeastern Iran. It is the fourth largest city in the province after Mashhad, Neishabour and Sabzevar.

Torbat-e Heydarieh was initially known as Zavareh. It was later named Torbat-e Heydarieh to honor Qotboddin Heydar Touni.

Zavareh's history dates back to Ashkanian era. It is attributed to Zou Tahmasb. After Safavid dynasty came to power, Zavareh become a city.

Gonabad is located in the south of Khorasan Razavi Province and local residents refer to it as Jouymend. The oldest and the deepest water aquifer in the world is in Gonabad. In his epic book Shahnameh, Ferdowsi has referred to Gonabad as a battlefield.

Torbat-e Heydarieh and Gonabad have many tourist attractions. Some of them are as follows:

Shariat Domicile

Shariat Domicile is one of historical houses in Gonabad. It belongs to the Qajar Dynasty and was built based on an architecture compatible with deserts. This monument which bears decorations of four seasons is connected to the central yard. There is a windcatcher, an archway, a pool and dome-shaped ceilings in the complex.

Gonabad Jame Mosque

Gonabad Jame Mosque dates back to the final years of Kharazmshahian rule. Despite strong quakes and subsequent restorations, the building has preserved its original shape.

Among the main attractions of this mosque are inscriptions written in Kufi script and beautiful brickwork around the veranda. In the farthest part of the Kufi inscription is engraved the year 609 AH, which corresponds to 1212 AD, indicating the year of construction of the mosque.

This mosque is one of three mosques in Iran, built on two-veranda style. It has been preserved in better conditions than the other two.

Some attachments to the current building were added during the Ilkhanid dynasty.

Qotboddin Heydar Tomb

Qotboddin Heydar was an Uzbek prince whose family tree is rooted in the Turk Khaqans. He was captivated by Sheikh Abol-Qasemi who lived in Zavareh and set off for that place.

The tomb of Qotboddin Heydar houses a perched veranda and an archway at entry. This tomb dates back to the Teimouri era. It was established with a two-walled dome. It was restored during the reign of Shah Abbas Safavid in 1023 AH at the order to Khajeh Sultan Mahmoud Torbati, the then governor of Torbat, with stone and gypsum.

Gonabad Aquifer

Gonbad Aquifer is one of the oldest and largest aquifers (known as qanats in Persian) in the world built between 700 BC and 500 BC. It was first added toUNESCO's list of tentative World Heritage Sites in 2007, then officially inscribed in 2016 with several other quants under the World Heritage Site name of "The Persian Qanat".

According to Callisthenes, the Persians were using water clocks in 328 BCE to ensure a just and exact distribution of water from qanats to their shareholders for agricultural irrigation. The use of water clocks in Iran, especially in Qanats of Gonabad and kariz Zibad, dates back to 500BCE.

Gonbad qanat is currently supplying water at 150 liters per second. The scattered pottery near the wells indicate that the main canal of this qanat was dug during the Achaemenid dynasty.

Amini Domicile

Amini Domicile dates from the Qajar dynasty and is where used to live Amin at-Tojjar, a renowned tradesman in Torbat-e Heydarieh. Amini Domicile is adorned with brickwork, tilework and gypsum decoration, which are still beautiful after so many years.

It was possessed and then restored by the Cultural Heritage Organization in 2009. At present, the local office of cultural heritage, handicraft and tourism organization is housed in Amini Domicile.

Railroad Oil Product Exports to Afghanistan

National Iranian Oil Products Distribution Company (NIOPDC) has three distribution departments in Khorasan Razavi Province. One of them is located in Torbat-e Heydarieh County and has a storage facility of 230 million liters. It is tasked with fuel supply to South Khorasan, too.

This area is of high significance as the Iranian government is planning to build border railroad in order to carry petroleum products to Herat in neighboring Afghanistan.

Mojtaba Delbari, manager of the NIOPDC branch in Torbat-e Heydarieh, says petroleum products needed by Khorasan Razavi and South Khorasan provinces are supplied through a pipeline connected to Tehran Province. There are 257 kerosene distribution spots and 57 gasoline and gasoil distribution spots in this area. Furthermore, there are 40 posts for distributing compressed natural gas (CNG).

Delbari said that there are 860 major consumers of petroleum products in the area run by the Torbat-e Heydarieh zone of the NIOPDC.

"Given the existence of numerous mines and cement and mining plants in this area, consumption is mainly concentrated on mining industries. Every day, 1 million liters of fuel oil is carried in tankers to mining and cement industries," he added.

He referred to the consumption of petroleum products during the first seven months of the year in the Torbat-e Heydarieh area, saying: "Over this period, 140 million liters of gasoline has been consumed, up one percent year-on-year. Currently, 850,000 liters a day is being distributed all across this region. During Norouz new year holidays, consumption is doubled."

He said that the Torbat-e Heydarieh area of the NIOPDC is one of the main corridors for transportation from south to north of the country. Therefore, he added, fuel consumption in this area increases more than 60% in some months of the year.

Delbari said more than 20 million liters of kerosene was consumed during the first seven-month period of the current calendar year which started on March 20. He added that kerosene consumption has been down 14% year-on-year due to gas supply to households across the country.

"Over the same period, fuel oil consumption has been down 63% year-on-year to 2 million liters," he added.

Based on the current capacity of storage facilities, it would be possible to supply kerosene for 240 days, storage gasoline for 89 days of consumption and 89 days of gasoil consumption. Therefore, Delbari said, expansion of storage facilities would no longer be economical.

Regarding the Iranian government's plan for launching the Sangan border railroad stretching to Herat in Afghanistan, he said: "By launching this railroad, restrictions to petroleum products' exports are forecast to be removed. It seems that this project would be inaugurated up to the end of the [calendar] year and help open relationships between the two countries."