Asia, Iran's Top Oil Buyer

As a top oil and gas producer in the world, Iran has always had a big share in global market. During years of sanctions, Iran's oil sale to European countries dropped sharply. However, Iran has its traditional customers. This time, it was Asian countries that lined up to buy oil from Iran.

Official data about Asian countries' crude oil imports in 2016 bear proof to this fact. Last summer, Asian buyers of Iran's oil raised their purchase by 47% year-on-year, while they bought oil 100% more month-on-month as the year was drawing to a close. These facts indicate that Iran has managed to regain its market share in Asian countries much sooner than expected.

China, India and South Korea Eye Iran Oil

India, China, South Korea and Japan were the main buyers of Iran's crude oil. When the US and the European Union toughened sanctions against Iran's oil sector, these countries were forced to reduce their oil purchase from Iran. Therefore, the removal of sanctions last January gave them a chance to resume their oil imports from Iran.

China, the world's second largest economy and a major buyer of Iran's crude oil, never halted its oil imports from Iran. However, it had to reduce the volume of its oil purchase from Iran. 

China's demand for foreign crude could touch new highs as state-run refiners start up new plants and as Beijing allows more independent refiners to import crude, with the country forecast to remain a key driver of 2017 demand growth.

State refiner Sinopec Corp and state-run oil trader Zhuhai Zhenrong Corp, the two biggest Chinese lifters of Iran's oil, are set to roll over annual supply agreements with National Iranian Oil Co (NIOC), with combined volumes of about 505,000 b/d, which equals half of Iran's total current crude oil exports.

Additionally, China National Petroleum Corp (CNPC) and Sinopec expect to lift more oil this year from two oilfields they operate under service contracts.

Sinopec signed a development deal for Yadavaran field in late 2007 with CNPC signing a deal for the North Azadegan field in 2009, after Japanese and European companies pulled out of the projects, both in the southwestern Iranian province of Khuzestan, due to sanctions over Iran's nuclear program.

Meantime, India's annual oil imports from Iran surged to a record high in 2016 as some refiners resumed purchases after the lifting of sanctions against Tehran.

The sharp increase propelled Iran into fourth place among India's suppliers in 2016, up from seventh position in 2015. It used to be India's second-biggest supplier before sanctions.

For the year, the world's third biggest oil consumer bought about 473,000 b/d of oil from Iran to feed expanding refining capacity, up from 208,300 b/d in 2015.

In December, imports from Iran trebled from a year earlier to about 546,600 b/d.

South Korea is also one of Iran's major oil customers. Seoul imported 14 million tons, or 281,187 b/d, of crude from Tehran in 2016, up 145.4 percent from 5.7 million tons, or 114,595 b/d, in 2015.

Figures also show that the world's fifth-largest crude importer bought 1.55 million tons of Iranian crude in December, or 367,317 b/d, compared with 207,629 tons a year ago and 1.73 million tons in the previous month. 

India, South Korea Up Imports

Last August, official data showed that Iran's oil sales had doubled owing to the lifting of the sanctions. That meant that Iran had clawed back market share it lost under sanctions. Iran exports 75% of its crude oil to Asian countries. According to Reuters, Iran's oil sales to China, Japan, India and South Korea were up 47.1% in June year-on-year.

Before sanctions were imposed on Iran in 2012, China was the largest buyer of Iran's crude oil. It was followed by India, Japan and South Korea. After the removal of sanctions, China and India remained top buyers, but South Korea overtook Japan.

Although Iran managed to bring its oil production back to the pre-sanctions level quickly, China did not show any inclination for more oil. But India and South Korea kept lifting their oil purchase from Iran. Japan, which ranks fourth among buyers of Iran's oil, has also increased its oil imports.

Asia More Than Double Iran Oil Imports

Imports of crude oil by Iran's four major Asian buyers in November more than doubled for a second straight month from a year ago. Meantime, purchases by India and South Korea more than four times higher.

Iran's top four Asian buyers - China, India, South Korea and Japan - imported 1.94 mb/d in November, up 117% on a year earlier, government and ship-tracking data showed.

That was just short of the 2016 peak of 1.99 mb/d hit in the previous month, which was the highest since at least 2010, according to data by International Energy Agency.

Iran's crude oil imports cost Japan an average $45.46 a barrel for November, which was the third cheapest after Mexico and Oman, customs-cleared trade data by Japan's Ministry of Finance showed.

Japan's trade ministry released official data showing its imports jumped 41.2% from a year earlier to 237,653 b/d last month.

India's imports grew more than four-fold from a year earlier to 620,000 b/d, topping China's imports for a third straight month. South Korean imports were nearly five times higher at 472,067 b/d.

Turkmen Gas Halt No Big Deal

Iran has seen its gas processing, transmission and distribution capacity rise to 700 mcm/d over the past three years. That is why Iran has not faced any problem with gas supply in cold season even after Turkmenistan halted its gas delivery to Iran.

Hamid-Reza Araqi, managing director of National Iranian Gas Company (NIGC), says Turkmenistan is emerging loser. He added that in case negotiations fail, the dispute between Iran and Turkmenistan would go to international arbitration.

Turkmenistan recently moved to unilaterally cut its gas delivery to Iran, regardless of its agreements.

"Turkmenistan supplied 1.5 to 2% of Iran's gas supply that was destined to northern provinces," Araqi said at a press conference.

Iran signed an agreement to import gas from Turkmenistan in 1995 when Akbar Hashemi Rafsanjani was president of Iran and Gholam-Reza Aqazadeh was serving as Iran's minister of petroleum. In Turkmenistan, Saparmurat Niyazov was president of the breakaway ex-Soviet republic.

Araqi recalled Turkmenistan's suspension of gas supply to Iran in winter 2008, saying: "At that time, the Turkmens held talks with NIGC and demanded that prices be multiplied and they even halted gas exports to Iran. Following talks, gas sales to Iran was subjected to a formula."

He said that during years of sanctions, NIGC used to send gold bars to dispatch cash to Turkmenistan to pay for gas imports.

"Dealers also received their commissions for the transfer of money to Turkmenistan, but after the removal of sanctions we settled with them through banking system," said Araqi.

He said that Iran paid 100 million euros to Turkmengaz just before gas deliveries to Iran were halted.

Araqi said the Turkmens were demanding the payment of their debts after President Hassan Rouhani took office.

"After the [removal of the] sanctions we managed to settle our debts partly through the banking system. We also reached agreement with them to settle the rest of our debt by barter and through Iranian companies' export of commodity and services to Turkmenistan, for a value of $2 billion," he added.

Araqi said: "Turkmens had announced that NIGC should pay back its debt within 6 months and we told them that we couldn't. We said that we could repay it within a year."

He touched on NIGC's negotiations with Turkmenistan in the past one month, saying: "Throughout talks with the Turkmens we told them that in case they cut their gas exports Iran will face no problem with gas supply, but the course of negotiations will definitely change. Therefore, continuation of talks depends on the persistence of gas supply."

Araqi said the Turkmens initially accepted Iran's condition, but "they unilaterally cut their gas exports to Iran."

"They imagined that if they do so, gas supply to northern provinces will face problems. But that did not happen," he said.

Araqi said that due to the export of commodities and services by Iranian manufacturers to Turkmenistan, the amount of Iran's debt to Turkmengaz remained unclear. "All these issues must be examined and then we can talk about it," he added.

"The procedure has started for Iran to file its gas complaint with court of arbitration against Turkmenistan. In case negotiations with Turkmenistan yield results, the complaint will not be lodged. Otherwise, we will take the case to the Switzerland-based court of arbitration," he said.

Araqi said Iran's increased gas production over the past three years gave the country a bargaining chip in its negotiations with the Turkmen side. "They imagined that we will run into difficulties after gas export halt, but they were mistaken and Iran faced no problem in this regard," he added.

After gas production hike in South Pars gas field, Iran's gas production capacity has exceeded 700 mcm/d. Furthermore, Iran recently launched Rasht-Sangar trunkline in a bid to supply gas to northern provinces. Next year, Damghan-Neka trunkline is to come on-stream and then we will have no problems with gas supply in this region.

Talks Continue on Gas Swap with Turkmenistan

Iran's geopolitical position and its access to high seas have made the country an important destination for oil and gas swap. The Turkmens have been attentive to benefit from this opportunity.

"Turkmenistan's gas swap with Azerbaijan via Iran's soil will remain in effect," said Araqi.

He said Turkmenistan would continue to swap 6 mcm/d of gas to Azerbaijan, noting that Iran would abide by its international obligations.

Iran-Turkey Gas Dispute

Araqi also referred to Iran-Turkey gas dispute, saying: "Turkey wanted Iran to cut the price of gas sale to this country. They also claimed that Iran has been unable to deliver gas to this country since 2005 and demanded $35 billion in penalties."

Noting that Iran has never shirked from its responsibility for gas delivery to Turkey, he said: "We did not accept this claim of turkey, at all. Even in winter an international arbitrator visited gas pressure booster stations and Iran's gas delivery. In the end, the court of arbitration ruled in favor of Iran."

"On the other hand, Turkey claims that the price of gas exports to this country from 2011 to 2016 must be reduced by 25%. Iran rejected this request and they finally limited the issue to the year 2013. The two companies agreed to reach a figure between 13.3 and 16%," Araqi said.

He said the Iranian and the Turkish sides were given six months to continue talks, adding: "In the end, on the strength of sufficient and documented evidence by Iran, this sum has reached its minimum; i.e. 13.3% which equals $900 million."

Araqi said Turkey was willing to receive this sum totally in cash, adding: "Following our talks with them this sum was agreed to be included in financial statements through delivery of gas."

JCPOA Benefits for NIGC

Araqi also touched on Iran's nuclear agreement with six world powers, known as the Joint Comprehensive Plan of Action (JCPOA), adding: "Before the JCPOA implementation, due to sanctions we had to purchase our needed commodities through intermediaries at much higher prices, but now we are buying directly from the source as intermediaries have been eliminated."

When Iran was under sanctions, Iran had to sell liquefied petroleum gas (LPG) and sulfur at a low price to buyers, said Araqi. "Now with the implementation of the JCPOA and the facility of navigation of international shipping lines in Iran, LPG and sulfur produced at refineries are being sold at a much higher price than during the time of sanctions."

He referred to transfer of technical knowhow as another achievement of the JCPOA, saying: "Currently hi-tech foreign companies are seeking more than ever to have partnership with Iranian companies."

70% of Energy Needs Met

Araqi said domestic capacity has been boosted for the manufacturing of commodities needed in the gas industry. "Soon, a national 25-Megawatt turbine manufactured by domestic companies will be unveiled," he added.

He also said that NIGC has so for managed to meet 70% of Iran's energy needs.

"Currently we have nearly 300,000 kilometers of trunkline and 21 million gas subscribers in the countr

Infographics of South Pars Phases 12, 15 and 16

South Pars gas field is the largest gas reservoir in the world. The field is jointly owned by Iran and Qatar. Iran sits atop 14 tcm of gas and 18 billion barrels of gas condensate in its sector of South Pars. That makes up around 7.5% of total world gas reserves and nearly half of Iran's total gas reserves. According to planning by the Iranian Ministry of Petroleum, South Pars gas field is being developed in 24 phases for a final output of 800 mcm/d. Ten phases of South Pars had already become operational when President Hassan Rouhani took office in 2013. Over these years, Phases 12, 15 and 16 have become operational. Iran is currently recovering nearly 500 mcm/d of gas from this giant gas reservoir.

Hassan Rouhani, President of the Islamic Republic of Iran:

With full development of South Pars, Iran would be earning $100 billion a year in revenue. With gas production hike, it will be possible to export gas to neighboring and even non-neighboring countries and Iran's interaction with the world will grow.

Bijan Zangeneh, Minister of Petroleum:

Phase 12 is the largest project that has ever become operational in the history of Iran's petroleum industry. It shows that Iran's petroleum industry has reached self-reliance.

Phase 12:

Phase 12 of South Pars is equivalent to three standard phases with 600 bcm of gas in place, which makes up 5% of South Pars total reserves.

Production Capacity: 81 mcm/d of sweet and rich gas, 120,000 b/d of gas condensate and 750 tons a day of sulfur

Number of Refineries: 6 trains of gas sweetening, 3 main trains and 1 train of gas condensate stabilization

Number of Offshore Platforms: 4

Number of Wells Drilled: 45

Value: More than $10bn a year

Investment: $7.746mn

Client: Pars Oil and Gas Company (POGC)

Contractors: Petropars, Iranian Offshore Engineering and Construction Company (IOEC), Iran Shipbuilding & Offshore Industries Complex Co (ISOICO)

Start-Up Date: March 17, 2015

Phases 15&16

Production Capacity: 56 mcm/d of gas, 77,000 b/d of gas condensate

Number of Refineries: 4 trains of gas sweetening, 2 trains of gas condensate stabilization, sulfur production unit

Number of Offshore Platforms: 2 offshore platforms each with a capacity of 25 mcm/d of gas

Number of Wells Drilled: 22

Value: Over $6bn a Year

Investment: $6bn

Client: Pars Oil and Gas Company (POGC)

Contractors: Arya Naft Shahab, SAFF Offshore Industries Co., Iranian Offshore Engineering and Construction Company (IOEC), Iran Shipbuilding & Offshore Industries Complex Co (ISOICO)

Start-Up Date: January 10, 2016

IOR Memorandums Signed with 18 Foreign Firms

Gholam-Reza Manouchehri, 60, joined Iran's Ministry of Petroleum in 2001 when Bijan Zangeneh was serving as minister of petroleum. Manouchehri served as CEO of Petropars Company for nine years up to 2010. At the same time he was in charge of managing developments phases 6, 7 and 8 of South Pars gas field. From 2010 to 2011 he was a senior advisor to the CEO of National Iranian Oil Company (NIOC) before becoming CEO of Sadid Industrial Group for two years.

Manouchehri was appointed CEO of the Iranian Offshore Oil Company (IOEC) in 2014. One year later, he was named deputy managing director of NIOC for engineering and development.

"Iran Petroleum" has interviewed this veteran oil manager about challenges and opportunities in petroleum industry and other development issues.

Q: As the first question, would you please tell us about petroleum industry's challenges and opportunities?

A: Under the current circumstances, enhancing recovery from oil fields in the country and applying relevant cutting edge technologies are among issues taken into consideration at the petroleum industry. According to BP estimates, Iran ranks the first in terms of oil and gas reserves together. That is why experts believe that Iran enjoys the highest capacity for oil investment in the world. Iran has the possibility of exports and oil swap and can serve as a center for energy exchanges. It is noteworthy that Iran's development is tied to the petroleum industry. Although we are witnessing quick developments in the energy sector like in solar energy, we will continue to see increased use of hydrocarbon reserves including oil and gas.

Q: How much is the current recovery rate of oil reserves? What are NIOC's plans for enhancing this rate?

A: As you know many oil fields in Iran are currently in the second half of their lifecycle and have seen their output drop. The current recovery rate of oil fields in the country stands between 25% and 27%, which can increase to 40%. Iran holds around 800 billion barrels of oil in place, which could add eight billion barrels of oil to the country's output capacity with a one-percent growth in the recovery rate. Based on current prices, that would amount to $400 billion. Enhancing the recovery rate in oil reservoirs is a must because some of these fields are jointly owned and some others see their recovery decline overtime. This issue is being pursued seriously by NIOC. In this regard, memorandums have been signed with domestic and foreign companies for feasibility studies on secondary development of hydrocarbon fields. Once studies and surveys have been concluded in hydrocarbon fields, enough investment has been attracted, new technologies and human resources have been available, oil recovery rate is expected to increase at a significant level in coming years.

Q: You highlighted the necessity of enhanced recovery from jointly owned fields. Would you please tell us about the rate of recovery from oil fields in the West Karoun area?

A: In the contracts signed for West Karoun, the recovery rate is forecast at 5.5%, while we can envisage 20% or even above 30%. Such enhanced recovery would depend more than anything else on new technology. What we refer to as transfer of knowhow and technology is in fact the ability to apply state-of-the-art technologies by Iranians. We need to have a theoretical understanding of technologies and identify necessary tools for their implementation.

In other words, technology is partly related to reservoir engineering and detailed geological knowledge of reservoir and the quality of fluid so that we would be able to identify our own reservoir layers and follow them. Then we can do extraction based on assessments before and after trial drilling. Of course, in this stage we need to have necessary tools and technology in order to deplete the layers. It has to be noted that these tools are not limited to the method of drilling. Injection of chemicals, water and gas as well as hydrocracking for releasing hydrocarbons trapped in the reservoir, are also part of these diverse technologies.

In the upstream oil industry, identification of hardware and software used in management systems, technical knowhow and the possibility of its implementation are known as the transfer of technology. Therefore, in case we could have successful partnership with big international companies, Iranian companies will also follow suit and will grow fast. For example, after [France's] Total stepped into South Pars and successfully managed and operated phases 2 and 3 of development of South Pars, Iranian companies grew alongside this French company and they followed the model of development applied to phases 2 and 3 to other projects and they proved quite successful.

for the development of deepwater oil fields in the Gulf of Mexico or development of unconventional shale oil and gas fields is hardly justified. Given the aforesaid points, with the current level of crude oil prices, the risk of investment in oil and gas fields in Iran is low. Oil and gas production costs in Iran are lower than many countries in the world. This issue has doubled the motivation of international companies for investment in the country's oil and gas industry. Meantime, given political tumults and insecurity in Arab countries in the Middle East, Iran's stable political and security situation is creating a proper venue for the development of investment.

Q: What are NIOC's plans for the second phase development of Yadavaran and North Azadegan fields? How likely is the awarding of these fields to Chinese companies?

A: Holding international tender bids for the second phase development of Yadavaran and North Azadegan oil fields is on the agenda. Chinese companies also need to bid for the projects to continue cooperation. China's CNPC is willing to go ahead with the development of North Azadegan oil field. But we have announced that in case of willingness it has to continue its cooperation under new-style contracts and run for tender bids. In the end they accepted this proposal. Regarding the presence of Chinese companies in the development of Yadavaran field we have had negotiations with China's Sinopec and a tender bid is planned to be held for the development of this field.

Q: Are you satisfied with the performance of Chinese company operating in North Azadegan?

A: Generally speaking they have had an acceptable performance. Of course the contract in effect involves only natural production from the reservoir. In future contracts, NIOC will naturally focus on the application of new technologies for enhanced recovery.

Q: Which oil and gas development projects are to come online by the end of the Iranian calendar year (20March 2017)?

A: We are poised to hear good news. In the oil layer of South Pars, wells and offshore facilities are ready for a daily output of 27,000 to 30,000 b/d. A Floating Production, Storage and Offloading (FPSO) unit is being prepared to be brought to Iran from China in February. This equipment has cost around $350 million and its construction has been done on schedule. Phases 17 and 18 development of South Pars are also to be operational before the end of the year. We have also started production from Phase 19. Platform 19C and the platform of Phase 21 are in production. Before the end of the year, Phase 19 of South Pars as well as Phases 20 and 21 would be ready for operation.

Q: Among projects you mentioned, what is the share of oil and gas?

A: By commissioning five standard phases, at least 100 mcm/d would be added to gas recovery from South Pars by the end of the year. After that, the volume of Iran's recovery from this jointly owned field will near Qatar's current gas recovery. In fact, around 120 mcm/d would be added to the South Pars gas production capacity, but we estimate it at 100 mcm/d at least. In the West Karoun area, around 100,000 b/d would be added to the country's oil production capacity. Yaran alone accounts for 30,000 b/d of this increase.

Q: Anything else that you would like to say in conclusion?

A: To sum up, I have to say that in my view we need to activate the Iranian economy. A major element of this economy is oil which needs to be worked on at a higher pace. We need to create national consensus in order to increase investment and work in the petroleum industry and benefit from our advantages particularly in the jointly owned fields and speed up the transfer of technology into the country. We have to accelerate job creation for the youth and persuade young engineers who have left the country in the past years to return.

No Change in Iran Oil Policy

The newly appointed director of international affairs at National Iranian Oil Company (NIOC) has said that Iran’s policy would not change and would go ahead with its current trend.

“Development of past activities and negotiations and accelerating them are on the agenda,” Saeid Khoshrou said.

He said that leading the NIOC international affairs was one of the toughest jobs during years of sanctions.

“Working under the current circumstances is definitely not as difficult as it was during that period,” he added.

Iran brought its crude oil sales to 2.3 mb/d before sanctions were toughened on Iran. Now, NIOC has brought this figure to 2.4 mb/d.

Khoshrou replaced Mohsen Qamsari who has recently retired.

Oil, Condensate Exports Hit Decades High

Iran’s first vice-president has said that oil and gas condensate exports have reached a record high since the 1979 Islamic Revolution over the past one year.

Es’haq Jahangiri was speaking on the occasion of the first anniversary of the implementation of Iran’s nuclear deal with six world powers, known as the Joint Comprehensive Plan of Action (JCPOA).

“Over the past years, under the pretext of Iran’s effort to acquire nuclear knowhow, heavy pressure was exerted upon the Iranian nation and the country experienced the toughest unjust sanctions in the final years of the previous administration,” he said.

“During years of sanctions, 1 mb/d of oil was exported, which was set to decline in case sanctions had continued,” he said, adding that Iran regained its market share post-JCPOA.

Jahangiri also said that Iran’s shipping restrictions had been lifted. He said Iran’s exports and imports had exceeded 100 million tons.

Iran Oil Output Hits 4 mb/d

Iran’s petroleum minister recently said the country’s oil production reached 3.9 mb/d by January 25.

Bijan Zangeneh also said that Iran would be earning $41 billion from oil and gas condensate sales by 21 March 2017 when Iran’s calendar year ends.

“Iran has no crude oil storage floating on water and it has only gas condensate which will be sold up by the end of the [Iranian] year,” he said.

Zangeneh said Iran was receiving its oil money regularly and its petrodollars faced no hurdle.

He added that Iran’s oil production capacity in the West Karoun area was expected to increase by the end of the current Iranian year.

The minister said National Iranian Oil Company (NIOC) had signed documents for cooperation with foreign companies including a consortium of France’s Total, China’s CNPC and Iran’s Petropars for the development of Pahse 11 of South Pars gas field and also with Persia Oil and Gas Industries Development Company for the development of Yaran, Maroun and Koupal oil fields.

“Furthermore, a memorandum has been signed for studying five oil fields with a company affiliated with Khatam al-Anbia Construction HQ,” he said.

Zangeneh said Azadegan oil field is set to be put out to tender soon. Iran shares Azadegan with Iraq.

Noting that 11 phases of South Pars have been developed under the administration of President Hassan Rouhani, the minister said phases 17, 18, 19, 20 and 21 of the giant reservoir would become operational in coming months.

Japan Receives Iran Condensate

Iran has started exporting condensate – some sort of ultra light oil - from two newly launched phases of its giant South Pars gas field to Japan.

Pirouz Mousavi, the managing director of the National Iranian Oil Terminals Company (NIOTC), said the consignment sent to Japan contained 160,000 barrels of condensate from South Pars Phases 20 and 21.

Mousavi added that a 300-ton Japanese vessel had taken the consignment from Phases 20 and 21, as well as another from Phases 2, 3, 4 and 5.

Mousavi further added that the vessel – named Fujikawa – was also to load 650,000 barrels of crude oil from Iran’s Forouzan oil field before leaving for Japan.

Iran Mulls $55bn Petchem Investment

Iran’s deputy petroleum minister says the country needs to attract some $55 billion worth of investment to develop its thriving petrochemical sector.

“We hope to reach the 150-million-ton production capacity within 10 years. We need nearly $55 billion worth of investment in the petrochemical industry to implement new projects and expand output capacity,” Marzieh Shahdaei said.

“To complete unfinished petrochemical projects, we need $20 billion worth of investment,” the head of National Petrochemical Company noted.

Tehran has already unveiled plans to become the leading producer of petrochemicals in the Middle East by significantly expanding the range and volume of its petrochemical output.

Iran exported some $4.3 billion worth of petrochemicals during the first six months of the current Iranian calendar year, which started on March 20, 2016.

Iran Oil Exports to Europe Up 10%

Iran shipped 767,000 b/d of crude oil to its European customers in December month-on-month, inching closer to its pre-sanctions export levels to the continent.

The major OPEC producer stepped up Europe-bound exports by 10% in December or roughly 76,000 b/d, the Ministry of Petroleum stated in a report.

Turkey and Italy were the top importers at 190,000 b/d.  Spain and Greece each bought 97,000 b/d.

Iran used to sell around 800,000 b/d to European buyers before the tightening of international sanctions in 2011 and 2012.

Tehran has staged a strong rebound in oil output and exports after sanctions were lifted in January 2016.

French energy company Total S.A., Italian oil majors Eni and Saras, Greek refiner Hellenic Petroleum, Russia's Lukoil, Spanish refiner Cepsa, Royal Dutch Shell, Hungary’s MOL and Turkey's Tupras are on the list of Iran's crude oil customers.

East Asia Firms Briefed on New-Style Contracts

A workshop was held in Tehran to brief E&P companies from East Asian countries about the new model of oil contracts in Iran.

It was the second such workshop after the first one was held to brief Russian companies.

This time, representatives of companies from China, Indonesia, Malaysia, Japan and Thailand attended the event.

“Companies operating in exploration and production in East Asian countries were willing to be informed of the framework of new model of our oil contract in such workshop,” Gholam-Reza Manouchehri, deputy head of National Iranian Oil Company for development and engineering, said.

During the workshop, Manouchehri explained about advantages of investment in Iran after the removal of sanctions.

In November, a 35-member delegation of Russian energy companies, including Lukoil, Gazprom, Rosneft, Gazprom Neft, Zarubezhneft and Tatneft, got a first-hand glimpse of IPC in a one-day presentation in Tehran.

NIOC recently approved 29 foreign companies for bidding in several dozen oil and gas tenders.

The list consisted of several Asian corporations, including China National Offshore Oil Corporation (CNOOC), China National Petroleum Corporation (CNPC), Sinopec Group, Indonesia's state oil and gas company Pertamina, Malaysia's Petroliam Nasional Berhad (Petronas), Japan's Mitsubishi Corporation, Inpex, Japan Petroleum Exploration, Mitsui Group and Itochu Corporation, as well as Posco Daewoo and Korea Gas Corporation (KOGAS) and Thailand's PTT Exploration and Production Public Company Limited (PTTEP).

Iran, Iraq Eye Oil Deals

Tehran and Baghdad are in talks to conclude deals on developing two joint oilfields, a senior Iranian official has said.

Deputy Minister of Petroleum for International Affairs and Trading Amir-Hossein Zamani-Nia said that during his recent visit to neighboring Iraq, the two sides discussed avenues for establishing ties in the oil sector and cooperating in the development of jointly oil fields.

The delegation, which was led by Zamani-Nia, included representatives of National Iranian Oil Company (NIOC), National Iranian Gas Company (NIGC), Iranian Oil Pipeline and Telecommunication Company (IOPTC).

One of the deals will pertain to the development of joint oilfields: Parviz and Khorramshahr, said Zamani-Nia.

The other memorandum of understanding (MoU), he said, will be on cooperation in other oil-related areas such as manufacture of items, gas export and renovation of Iraqi refineries by Iranian private contractors. He said it will pertain to Abadan-Basra crude oil pipeline.

Iran, he noted, is now ready to export gas to Iraq and Baghdad is also ready for to receive the fuel.

He said the gas export pipeline to Iraq from Iran is now filled with gas but the required L/Cs for sending the item to Iraq is not ready yet. "Gas flow to Iraq will begin as soon as financial issues are resolved."

He said the L/C will open parallel with the Iraqi delegation's visit to Tehran in the near future.

Zamani-Nia also said that Iran’s Mohammad Mousavi and Iraq’s Jabbar Qasim are to represent the two countries as members of Iran-Iraq joint committee.

Persian Gulf Star Refinery Sells 1^st Naphtha Consignment

Iran has sold its first consignment of naphtha produced at the Persian Gulf Star Refinery to the UAE as the countdown nears for the operation of the world’s largest condensate refinery.

The cargo of 280,000 barrels of naphtha was delivered to the Emiratis recently, with the second shipment being loaded for export.

There is already a strong demand in Asia for naphtha which is used to produce products such as ethylene and propylene, the building blocks of plastics. Strong economic growth in countries such as India is expected to generate fresh interest in the product.

The exports mark a turning point in the imminent operation of the Persian Gulf Star Refinery.

The 360,000-barrel-a-day refinery, being built with 3.5 billion euros ($4.7 billion) of investment, is set to turn Iran into a net gasoline exporter.

It will produce around 36 million liters a day of gasoline, with its first phase expected to come online at a capacity to process 12 million liters which will make the country self-sufficient for gasoline. The remaining two phases are projected to start operation by the end of 2017.

The Persian Gulf Star refinery is the most important refining project in Iran, meant to process the condensate from South Pars in Assaluyeh. Condensate is some sort of light crude oil produced in association with natural gas.

Karoun Petchem Rivals Shell, BASF

Toluene Diisocyanate (TDI) and Modified Methyl Diphenyl Diisocyanate (MDI) are two strategic products in the petrochemical industry. They are raw materials for flexible and inflexible sponges. They are used in upholstery, car manufacturing, thermal and insulation industries. Given global demand for these products which require sophisticated technologies and big investment, few countries and companies have engaged themselves in producing TDI and MDI. Iran's petrochemical industry, which recently joined producers of TDI and MDI, is now rivaling companies like Shell and BASF.

Karoun Petrochemical Plant is among petrochemical plants located in Mahshahr Special Economic Petrochemical Zone. It has managed to produce TDI and MDI for the first time in the Middle East.

Ali-Reza Seddiqizadeh, CEO of Karoun Petrochemical Co., said the first phase of this plant was launched in collaboration with Sweden's Komator for an annual production of 40,000 tons of TDI.

"Several years have passed since the first phase of this plant started work and currently this phase is running at full production capacity," he said.

Seddiqizadeh predicted that 70% of TDI produced at the Karoun plant would be enough to meet domestic demand for this product, adding that the remaining 30% would be exported to other countries.

He said that a large number of Asian countries particularly in the Middle East and West Asia regions, and several European, African and American countries are among buyers of the Karoun plant's products.

"For instance, I can refer to Italy, Germany, Sweden, Russia, Greece, India, Turkey, Pakistan, Iraq, Kenya, Nigeria and Peru," he said, adding that Iraq is the main destination for Karoun's exports.

Thanks to the operation of the first phase of Karoun Petchem Co., Iran had not been importing MDI and TDI over the past two years.

Phase 2 on Trial Run

Seddiqizadeh said the second phase of the petrochemical plant had started tentative production with an output capacity of 40,000 tons of MDI a year.

"This product is being produced for the first time not only in the Middle East, but also in West Asia," he said. He added that commercial production of MDI was to start next year.

Seddiqizadeh said Phase 2 of this plant would be also producing 30,000 tons a year of aniline as a middle product and pre-feedstock for MDI. He said that Iran would be also able to export aniline.

He said 350 million euros would be invested for designing, building and launching both phases of Karoun Petchem Plant. He added that Iranian specialists handled a significant part of the second phase of the project without the presence of foreign experts.

Continued Cooperation with Licensers

Seddiqizadeh touched on cooperation with Komator, particularly after Iran's nuclear deal with six world powers took effect in January 2016. The deal is known as the Joint Comprehensive Plan of Action (JCPOA).

"At beginning, Komator was licensor and also owned a 30% share of Karoun Petchem Co., but some four years ago it transferred all its shares to Bandar Imam Petrochemical Co.," he said.

"But generally speaking our relations with this Swedish company, as the licensor of Karoun units, have been on the right path both during years of sanctions and post-JCPOA and we have had no problems with receiving technical services from this company," he added.

Seddiqizadeh said although Iran faced restrictions in procuring catalysts and spare parts during years of sanctions, this problem was resolved after sanctions were lifted due to the JCPOA implementation.

He said that the second phase of this petrochemical plant would come online in February, adding that sustained supply of MDI would start in the first half of next Iranian year which starts in March.

Seddiqizadeh said MDI has eight grades, adding that Karoun was supplying three grades demanded by market.

He referred to Shell and BASF as two rivals for Iran in MDI and TDI production. "Given the quality of petrochemical products supplied by Karoun we can rival these companies in world markets," he said.

$300mn Annual Savings

Seddiqizadeh said Iran had ended importing these two products due to its self-sufficiency in production, adding: "With the domestic manufacturing of these products and ending their imports, $300 million is saved annually in the country."

He highlighted some environmental measures and savings at this plant, saying: "The process of our production is such that we have the highest consumption of catalysts and since the catalysts we consume are mainly precious metals (palladium and platinum), we are under heavy costs."

"Therefore, in a bid to reduce catalyst consumption and save hard currency, we developed a project with the help of domestic specialists, which enabled us to recycle a significant portion of consumed catalysts through reverse engineering," said Seddiqizadeh.

"We are also seeking to replace palladium and platinum with nickel in catalyst production in order to reduce costs, as do Shell and BASF," he added.

"Our main objective is to bring both phases of Karoun Petrochemical Plan to their full capacity this and next year, and in the future we will definitely move to enhance our production capacity given the safety of margins and demand in the market," said Seddiqizadeh.

Foreign Partnership in Iran Refineries

Iran's oil refining and distribution industry has regained hope in recent years owing to the entry into force of the Joint Comprehensive Plan of Action (JCPOA). Success in the revival of incomplete projects of the refining industry and success in acquiring a bigger share in the trading of oil products and entry of the country into the club of petroleum exporters after 110 years could be all viewed as the immediate results of the JCPOA's role in Iran's refining and distribution industry. Removal of international sanctions was the most valuable diplomatic gift awarded by the administration of President Hassan Rouhani to the oil industry. After the JCPOA took effect, Iran's oil diplomacy became active and the country managed to sign six agreements worth $11 billion with foreign companies, particularly Asian companies. Meantime, negotiations have been held with companies from South Korea, China and Japan for the financing of the renovation of refineries in Tehran, Bandar Abbas, Tabriz, Abadan and Isfahan.

Today, with the development of gas industry and replacement of oil products with gas in household and industrial sectors, Iran could use petroleum products for export purposes. As the surplus production capacity of fuel oil, liquefied gas and gas oil has increased the export of these petroleum products has seen a significant jump this year. On average, 400,000 b/d of petroleum products including gasoil, fuel oil, liquefied petroleum gas and liquid fuel has been exported to world markets. Furthermore, Iran's gasoil exports have registered a 430% growth this year from the year before, going from 3.5 million liters to 13 million liters.

Construction of new refineries, implementing projects to enhance the output of existing treatment facilities, expansion of infrastructure for pipelines and storage facilities for oil products as well as development of capacities for oil product exports have been the dominant approach in most activities of refining industry in recent decades.

Traditionally in recent decades, National Iranian Oil Refining and Distribution Company (NIORDC) had focused on domestic supply of fuel particularly gasoline and gasoil in the light of the rapid growth of consumption of petroleum products. Ageing refineries in Isfahan, Tabriz, Tehran, Bandar Abbas and Abadan need a total of $14 billion in investment in order to provide products up to euro-4 standard and cut the share of fuel oil production to below 10%.

7 MoUs Signed with Asians

In the aftermath of the implementation of the JCPOA, Iran has signed seven memorandums and agreements with Chinese, Japanese and South Korean companies in the refining and distribution of petroleum products sectors. These agreements are aimed at building new refineries, renovating existing ones and development of their operation in the country.

At present, reducing fuel oil output, building new refineries and improving the process of production of petroleum products in existing refineries constitute the main three quantitative and qualitative plans of Iran's oil refining industry. Iran's oil refining capacity has reached 1.85 mb/d, which will definitely cross 3 mb/d once the aforesaid three plans are materialized.

In a bid to reduce fuel oil production at Bandar Abbas oil refinery, Iran has signed agreements with the two Japanese companies of Marubeni Corporation and Chiyoda Corporation. Furthermore, an agreement has been signed with South Korea's SKS for reducing fuel oil production at Tabriz oil refinery. Apart from these, a memorandum has been signed with South Korea's Daelim in order to improve the production process and reduce fuel oil production capacity at Isfahan refinery. The memorandum signed for Isfahan refinery expands on four

four years for an investment of $2 billion. In this project, Daelim would be a foreign partner to domestic contractors and National Iranian Oil Engineering and Construction Company (NIOEC).

China Develops Abadan Refinery

Iran's traditional partner China became more serious in its negotiations and trading cooperation with Iran after the JCPOA entered into force in a bid to preserve Iran's market. China's Sinopec is set to sign an agreement in February for the first phase development of Abadan oil refinery. The necessary letters of credit for this project have already been opened. The project for Abadan refinery's capacity development and stability is aimed at stabilizing the refining capacity of Abadan refinery, supplying products based on euro-5 standards, reducing environment pollution, increasing gasoil and gasoline production by improving production technology, reducing fuel oil production and phasing out decrepit installations and storage tanks. Abadan refinery has currently a production capacity of 400,000 b/d of crude oil, 250,000 b/d of which is refined in three distillation units which are more than 70 years old. There is no problem with the implementation of this agreement and this project would be engineering, procurement, and construction (EPC) one. Relevant engineering activities started several months ago and they are nearing end. The major objective behind the implementation of this project is to enhance the output of the refinery and build a refinery that would be compatible with global standards. Meanwhile, some units at Abadan refinery are decrepit and they will be removed. Fuel oil production will be cut to below 25% and all products of this refinery including gasoline, gasoil, kerosene and liquefied petroleum gas will meet international standards from now onwards. The timeframe set for the implementation of this project is 3.5 years from now.

Japan to Develop Bandar Abbas, Tehran Oil Refineries

Iran's refining industry officials blieve that the most important opportunities for investment in post-JCPOA Iran's oil refining industry is to develop and optimize treatment facilities and reduce fuel oil production. Therefore, senior managers of oil refining and distribution industry in Iran recently announced that agreements were to be signed with two leading Japanese companies for the optimization and improvement of the procedure of production at Bandar Abbas and Tehran oil refineries. Negotiations with JCCP and JGC are near finalization.

Iran to Help Brazil Build Refinery

A memorandum of cooperation was recently signed with a Brazilian company that would result in the construction of a 300,000-barrel-a-day refinery in South America. According to the agreement, the refinery will be fed solely with crude oil. Moreover, the construction of this refinery will guarantee long-term security of demand for Iran's crude oil.

Iran-Brazil trade is currently limited to agriculture and livestock. The two countries have capacity to expand their relations in technical and labor services. The economies of Iran and Brazil are complementary to reach other and they have potential for expanding activities between themselves.

Iranian and Brazilian companies can consider joint projects in the oil and gas sector in order to cooperate in oil and gas trading and construction of refineries and petrochemical plants. The project for the construction of Marayan refinery could be a starting point for further cooperation between the two countries.

Talks with Italy for Shiraz, Tabriz Refineries

Iran has started serious talks with Italy's Eni for the construction of Pars gas condensate refinery in Shiraz with a capacity of 120,000 b/d. Furthermore, during President Hassan Rouhani's visit to Italy, a memorandum as signed for cooperation in major oil and gas projects in Iran. Saipem agreed to renovate and upgrade Pars and Tabriz refineries.

Iran is set to see a 70% growth in its refining capacity after Persian Gulf Star Gas Condensate Refinery (360,000 b/d), Siraf refining park (480,000 b/d), Anahita refinery (150,000 b/d), Bahman Ganou refinery (300,000 b/d) in Jask Port and Pars refinery (120,000 b/d) become operational.

JCPOA Facilitates Oil Product Exports

In the aftermath of the implementation of the JCPOA and the ensuing improvement in the country's processing procedures, Iran has for the first time become a net exporter of petroleum products with a record 400,000 b/d of such products. Today, NIORDC is proving a strong presence in regional market for petroleum products. It exports more than 60 million liters a day of gasoil and fuel oil, accounting for 13.5% of petroleum product exports in the Middle East. If liquefied petroleum gas (LPG) exports are also included, the figure would go higher.

This record has been achieved at a time when the current capacity of the company for boosting exports stands at 500,000 b/d. This target has not yet been achieved due to restrictions in loading and exports. But there has been planning for raising this figure to 600,000 b/d.

In parallel with the National Iranian Oil Company (NIOC), NIORDC has become an important source of hard currency revenue for the country. Selling more than 400,000 b/d of petroleum products to a variety of markets requires access to international maritime and land transportation system, international monetary system, insurance coverage ,and above all trading partner's trust now that Iran's nuclear dispute has been resolved.

Without JCPOA and its ramifications in international trade, Iran could have never achieved the 13% of Middle East petroleum products' exports. When the sanctions were still in force, Iran could not reach this figure because foreign buyers did not interact with Iran. But today, Bandar Mahshahr is facing congestion of oil tankers.

For the first time, Iran has reached a status of sustained petroleum product exports and it faces no restrictions for payments.

Kazakhstan Oil Challenges and Perspectives

Kazakhstan is the largest oil producer in Central Asia. Over recent years, it has made big investment in oil production. However, oil price slump has negatively affected the Kazakh economy, like other producers. Consequently, Kazakhstan has seen its national currency and economic indicators plunge. This issue would be challenging in the long-term for Kazakhstan which seeks to dominate the Central Asia region. That is why it joined OPEC's oil production cut scheme in a bid to bring prosperity back to its economy. The present article aims at reviewing Kazakhstan's oil policy which is of high significance for its future economy.

Kazakhstan is the largest oil and gas exporter in Central Asia. This country is ranked 11^th among countries which hold crude oil reserves. At its current level of output, Kazakhstan will be able to continue exporting oil for 60 years.

According to data released by the US Energy Information Administration (EIA), Kazakhstan is the largest holder of offshore oil reserves in the Caspian Sea. Holding 31.2 billion barrels of crude oil, this country sits on the largest proven gas reserves in the land-locked sea. Furthermore, Kazakhstan's gas reserves in the Caspian Sea are estimated at 104 tcf. Kazakhstan's oil production capacity stands at 1.387 mb/d and its gas production at 1.05 tcf a year. Kazakhstan, whose crude oil production was on an upward trend for one decade, due to numerous reasons suddenly saw its output decline in 2015 and 2016.

Energy-Reliant Economy

Over recent years, oil has been instrumental in the Kazakhstan economy. Crude oil makes up some 58% of Kazakhstan's exports. Dependence on petrodollars has exacerbated the impact of oil price fall on the economy of Kazakhstan. For instance, the sharp decline in oil prices has slashed the country's gross domestic product (GDP). A review of the current situation in Kazakhstan and the impact of oil revenues on its economy indicate that over coming years the Kazakh economy's dependence on revenue from energy resources would go up. There are several reasons for such a prediction.

First and foremost, Kazakhstan's economy has over recent years become dependent on revenues from energy sales, and finding a proper alternative would not be possible in the short run. This is specifically because the government has not made good use of oil revenues for investing in infrastructure and industry. Like any other rentier government, the Kazakh government has merely spent petrodollars on day-to-day affairs.

Second, the Kazakh economic dependence on revenue from energy sales could give rise to fundamental challenges for the government with regard to the distribution of rents between elites and a specific class of people. That could trigger riots and cause opposition to the government.

Third, the decline in energy revenues following the oil price slump in global markets has been challenging to the Kazakh economy; therefore, its government would not have a chance to envisage long-term planning. In other words, the government has no option but to allocate portions of its revenue to aforethought sectors in a bid to leave behind the current crisis.

Fourth, economic crisis in Russia and its impact on Kazakhstan do not allow structural reforms in this Central Asian country in order to wean its economy off oil and gas revenues.

These points indicate that Kazakhstan's economic dependence on oil and gas revenues will continue in coming years. That could turn the Kazakh economy into a rentier government at national level.

Kazakhstan Status in Future Markets

The issue of energy has taken up added importance in Kazakhstan's foreign policy in recent years and has further pushed this country into bold relief. The Kazakhs were hopeful of being placed among top 10 producers and exporters of oil in the world. To that end, the Astana government had focused on the strategy of diversifying hydrocarbon products, expanding export markets and increasing hydrocarbon product exports. Kazakhstan enjoyed an important status in the world energy market due to its huge oil and gas reserves. Therefore, all projections agreed on the point that Kazakhstan would become one of the most important producers and exporters of oil and gas in the world over coming years. However, ongoing trends in Kazakhstan's energy sector and oil production indicate that previous estimates by economic bodies and major oil companies were incorrect and therefore their approach vis-à-vis the Kazakh economy would change.

Also, maintenance or reduction of oil production in Kazakhstan could reduce to some extent the importance and position of this country in the world energy markets. Besides, due to populist policies, the government's decision to keep the price of oil products low in the country would not encourage foreign investors to eye projects there and they prefer to be involved in Kazakhstan's oil exports. This issue could also affect Kazakhstan's future oil production.

The current trend of developments indicates that the Kazakh government would most probably be not able to attract more investment into its oil sector because it cannot make investment itself and would need foreign investment. Foreign investors do not see new investment cost-effective either in the light of oil price fall. In addition to this all, even if the government manages to find a new investor their investment will not yield results in the short-term; therefore, the trend of oil production in Kazakhstan is forecast to remain unchanged in coming years.

-Platform Sets Sail for Trinidad and Tobago

The platform for the BP Trinidad and Tobago-operated Juniper gas project is on its way for installation 50 mi (80 km) offshore.

The Juniper project comprises a platform made up of jacket, piles, and topsides, and corresponding subsea infrastructure which will be installed in 360 ft (110 m) of water. The Juniper facility will take gas from the Corallita and Lantana fields.

As bpTT’s first subsea field development, Juniper will have a production capacity of about 590 MMcf/d, which will be sent to the Mahogany B hub via a new 10-km (6.2-mi) flowline.

This is the sixth platform that bpTT has fabricated in Trinidad and Tobago. The topsides were fabricated at the TOFCO fabrication yard in La Brea, Trinidad, and measure 145 ft (44.2 m) tall to the top of the helideck and weigh about 5,100 short tons. The jacket and piles, fabricated at Gulf Marine Fabricators in Aransas Pass, Texas, sailed to Trinidad in December 2016. The jacket measures 389 ft (119 m) tall and weighs roughly 5,200 short tons.

The platform installation is being handled by the Thialf, the largest deepwater construction vessel operated by Heerema Marine Contractors.

The Diamond Ocean Victory semisubmersible rig began drilling the five subsea wells in May 2015. First gas is expected this year.

The Juniper project is a $2-billion investment in Trinidad and Tobago and one of BP’s largest start-up projects in 2017.

Norman Christie, bpTT regional president, said: “The Juniper project is significant for both BP and T&T. At the peak of the project, there were over 750 workers on-site at TOFCO -- 95% being Trinidadian and more than half from the surrounding La Brea community.

“The gas from Juniper will be the largest volume of gas brought into the country in several years. I look forward to seeing this project starting up and bringing much needed natural gas that can help alleviate the supply and demand imbalance in T&T.”

Loan for Ghana Subsea Systems

Britain’s export credit agency UK Export Finance (UKEF) will provide $400 million to support a GE Oil & Gas contract for the Offshore Cape Three Points (OCTP) project in Ghana.

Total value of the contract, which will sustain jobs at GE sites in the Aberdeen and Bristol areas, is $850 million.

GE is manufacturing subsea production systems to develop the OCTP oil and gas discoveries 60 km (37 mi) offshore western Ghana. Following start-up in 2018, the fields are expected to continuously supply gas to the country’s thermal power plants for more than 20 years.

This will reduce the country’s reliance on energy imports, at the same time sustaining Ghanaian industrial development.

According to UKEF, it is the first time a European export credit agency has supported a financing structure of this kind, and it is also UKEF’s first direct loan for a project in Africa.

2-Russia Was China's Top Crude Oil Supplier in 2016

Russia overtook Saudi Arabia in 2016 to become China's biggest crude oil supplier for the first year ever, customs data showed, boosted by robust demand from independent Chinese "teapot" refineries.

Russian shipments surged nearly a quarter over 2015 to about 1.05 mb/d, the data showed, with Saudi Arabia coming in a close second with 1.02 mb/d, up 0.9 percent in 2016 versus the previous year. China is the world's second-largest oil buyer and the fastest-growing major importer.

While Saudi Arabia counts on China's state oil firms as backbone clients through long-term supply contracts, China's independent refineries - nicknamed "teapots" due to their smaller processing capacity - saw Russia as a more flexible supplier.

For the teapot plants, authorized to import crude oil for the first time in late 2015, shipments from Russia's eastern ports are easier to process, coming in smaller cargo sizes at a closer proximity.

Russia may be able to maintain the top spot in 2017 as it expands exports of its East Siberian-Pacific Ocean (ESPO) pipeline blend crude. Saudi Arabia, meanwhile, is set to shoulder the lion's share of supply cuts agreed to last year by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers.

"OPEC cuts means Persian Gulf producers take a hit in terms of market share, even though most of their cuts are to Europe and US ...Russia has an ESPO expansion coming up as well as supplies via Kazakhstan earmarked for China," said Michal Meidan of consultancy Energy Aspects.

State-run Saudi Aramco is expected to look to a new refinery under state-run CNOOC to lift sales.

For December, Russia also held the top spot with supplies up 4.8 percent from the same month a year earlier at 1.19 mb/d. Meanwhile, Saudi sales dropped nearly 20 percent from a year earlier to 841,820 b/d, data from the Chinese General Administration of Customs showed.

Total crude oil imports in December hit a record as refiners stepped up purchases ahead of a deal by oil-producing countries to reduce supply and bolster prices.

For the whole of 2016, imports gained nearly 910 tb/d over 2015, the strongest annual growth on record and mostly driven by teapot buying.

Angola shipped 13 percent more crude last year versus 2015, while Iraq recorded similar growth.

China also boosted imports from South American producers last year, with growth of 37.6 percent from Brazil and 26 percent from Venezuela, the data showed.

Imports from Iran expanded nearly 18 percent last year to a record 624,260 b/d, as Chinese state oil firms started to lift barrels from their investments in Iranian oilfields in addition to term supply agreements.

-Iraq to Triple South Gas Liquids Exports

Iraq expects to more than triple exports of liquefied petroleum gas, and to double exports of gas condensates in 2017 as it collects more of these fuels at its southern oilfields, the head of the state-run South Gas Company said.

LPG exports are set to increase to 100,000 tons this year, from 30,000 tons in 2016, South Gas director general Ihsan Abdul Jabbar said in an interview with Reuters.

Gas condensate exports are set to rise to 400,000 cubic meters this year, from 200,000 cubic meters in 2016, he said, speaking at the company's headquarters in Basra, southern Iraq.

He gave no figures for the value of the exports.

Iraq started exporting gas liquids, processed by the Basrah Gas Company, a joint venture between South Gas, Shell and Mitsubishi, last year. Abdul Jabbar is also chairman of Basrah Gas.

The company collects gas associated with oil produced from fields in southern Iraq, processing it into fuel for power plants, cooking gas and liquids for exports.

Basrah Gas will be able to capture more associated gas as the government has resumed payments to the company for the fuel purchased to supply the local market, Abdul Jabbar said.

The government payments will allow the company to invest in expanding its gas capture and processing capacity, using more of the gas that is currently being flared.

The Iraqi government, which relies almost exclusively on oil income, has struggled to pay its bills since crude prices dropped in 2014, the same year ISIS militants seized a third of the country’s territory.

Total gas production from southern Iraq should exceed 900 million cubic feet per day by the end of the year, from 700,000 million cubic feet per day at the end of 2016, Abdul Jabbar said.

Statoil Reports Refinery Accidents

Operational mistakes and a lack of maintenance led to near-fatal accidents at Norway's Troll field and at the Mongstad refinery, operator Statoil said.

A number of incidents at Statoil's offshore and onshore installations last year prompted several investigations by the company and authorities. In November, unions and Norway's safety watchdog warned that cost-cutting in the industry due to low oil prices could affect safety.

The latest two investigations by Statoil looked into an incident on Oct. 15 involving the loss of control on the Songa Endurance drilling rig of a well in the North Sea Troll field, and a hydrogen leak that occurred on Oct. 25 at the Mongstad oil refinery.

"This is among the most serious well-control incidents we've had," Statoil's head of technology, projects and drilling, Margareth Oevrum, told a news conference, in reference to the accident at Troll.

The well control incident led to a gas leak that pushed seawater more than 30 meters up the derrick, before the well was closed by the blowout preventer (BOP) about one minute later. A derrick supports the drilling apparatus on an oil rig.

A gas leak due to a break in a corroded pipe socket at the Mongstad refinery led to the facility's shutdown and evacuation.

The link between the incidents at the drilling rig and the refinery was a lack of understanding of the risks, not efficiency improvements or cost cutting, a Statoil spokesman said.

"Maintenance is decided by technical conditions, not economic considerations," he said.

Norway's biggest union of oil workers, Industri Energi, said cost-cutting was to be blamed, however, because it had resulted in laying off skilled workers and a fall in competence.

"This is not just about two isolated incidents, but it shows how cuts and reduction in competence and resources impacts health, environment and safety in all areas," the union's secretary, Haakon Aasen Bjerkeliveien, said in a statement.

Nobody was injured but Statoil said both accidents could have led to the loss of life if the safety equipment had failed or if the gas had been ignited.

"If the gas had caught fire, this incident could have caused fatalities," the head of Statoil's Marketing, Midstream & Processing unit Jens Oekland said, referring to the event at the Mongstad refinery.

Two people were in the vicinity when high-pressure hydrogen-rich gas was released.

Statoil said its investigation showed maintenance at Mongstad was wrongly prioritized due to lack of understanding of the risk and it would step up maintenance in the next two years.

"In this case, our risk management was inadequate. We made the wrong priorities," Oekland said.

Statoil also said it would not use the downhole valves, which were unintentionally opened during the well control accident at Troll, as barriers against the reservoir.

Norway's Labor Minister has appointed an independent commission to investigate the link between cost-cutting efforts and industry accidents.

In December, Statoil released reports on two other accidents, one of which injured five people, including two students on work placement, but the company said it had not found evidence linking those events to its cost cuts.

Shell's Exploration Boss to Step Down

Royal Dutch Shell's head of exploration Ceri Powell will step down next month, capping seven years in the role marked by sharp cutbacks in the company's search for new oil and gas reserves amid the industry's deep downturn since mid-2014.

Powell, a geologist who joined Shell in 1990 and a vocal supporter for strengthening female involvement in the sector, will depart on February 13 and become managing director of Brunei Shell Petroleum the following month, according to a Shell spokeswoman.

Her departure is part of a broad reshuffle of senior positions following the completion of Shell's $54 billion acquisition of BG Group in February 2016.

Those include the appointment of Jessica Uhl as chief financial officer, who will replace Simon Henry in March as well as the appointment of Gerard Paulides, who oversaw the BG merger, as head of investor relations.

Powell will be replaced by current upstream strategy vice president Marc Gerrits, who started his career in Shell in 1986 as an exploration geologist in Australia.

In an interview with Reuters last month, Powell described Shell's shift away from complex and costly exploration projects in "frontier" areas such as Alaska to areas closer to the company's existing production such as Malaysia and Brunei.

Last year, Shell angered investors when it wrote down $7 billion after failing to find any oil or gas in the Chukchi Sea off Alaska's northwest coast.

This followed years of complex work and a rig accident that drew heavy criticism from environmental activists.

Following the sharp drop in oil prices since mid-2014, Shell slashed its exploration budget to less than $2 billion a year from around $5 billion.

Halliburton N America Revenue Growth May Beat Rig Count Rise

Halliburton Co, the world's No. 2 oilfield services provider, said its revenue growth this year would meet or outpace the increase in the number of drilling rigs in North America.

However, Halliburton's revenue growth in North America in the latest quarter lagged the increase in rig count, sending the company's shares down as much as 4.5 percent to $53.93.

"They are really kind of throwing some cold water on North America pricing picking up in the first half of the year," Barclays analyst David Anderson said.

The company's fourth-quarter revenue from North America increased 9 percent compared with the previous quarter, while the average U.S. rig count jumped 23 percent in the same period.

"We expected a little more in terms of revenue growth just given what the rig count did," Edward Jones analyst Rob Desai said.

The reason for the difference was Halliburton's decision to forgo unprofitable contracts, Chief Executive Dave Lesar said on a post-earnings call.

That helped the company post its first quarterly operating profit in North America in a year and report an adjusted profit that topped analysts' expectations.

Rising oil prices are prompting producers to put more rigs back to work in low-cost shale fields in North America.

"Animal spirits have broken free and they are running," Lesar said. "Customers are excited again and our conversations have changed from being only about cost control to how we can meet their incremental demand."

To meet that demand, Lesar said Halliburton would start reviving hydraulic fracturing equipment it had idled when oil prices were slumping.

However, Halliburton expects the reactivation costs to weigh on margins in the near term.

Oil producers are more focused on North American shale fields than on expensive deepwater drilling and mature oilfields in international markets.

Halliburton said there would not be an "inflection" in international markets until the latter half of 2017, echoing larger rival Schlumberger NV.

"It is important to remember that our world is still a tale of two cycles," Lesar said. "The North America market appears to have rounded the corner, but the international downward cycle is still playing out."

Net loss attributable to Halliburton rose more than fivefold to $149 million in the latest quarter. Its adjusted profit of 4 cents per share was double analysts' average estimate, according to Thomson Reuters I/B/E/S.

Revenue fell 20.9 percent to $4.02 billion, slightly shy of analysts' estimate of $4.09 billion.

Global Oil and Asian Product Market, January

Oil prices continued to rise on expectations that OPEC will cut output in 2017. OPEC agreement has been still underpinning the market and the price rose to its 17 month high during January. However, the global crude and condensate surplus is expected to move towards seasonal peak in April and decrease in the prices. Moreover, growing supplies of light crudes from the Caspian, Libya, and Nigeria as well as positive supply and investment news in the North Sea may have put some structural pressure on the crude prices. On the other hand, producers of shale oil are seeking to increase output to take advantage of higher crude price.

At the beginning of January as usual in each month, Saudi Aramco pricing adjustments for term crude loading in February was announced. It showed quite a marked divergence between Atlantic Basin markets  compared to Asia. The positioning of prices in Europe and Asia can be seen as a reflection of the changes in the regional crude balances.

According to the news, Ras Laffan 2 started commercial production at the end of December. The refinery is planned to ramp up to full capacity of 146 kb/d very soon. Its feedstock is the Qatari condensate which is called Deodorized Field Condensate (DFC). As a result, the region will miss a considerable amount of  condensate which will support market of its Iranian fellow. Iran South Pars Condensate is produced  from the world's largest gas field, shared between Iran and Qatar. Iranian S.P. Condensate is expected to witness boom days in the coming months on the back of Qatari supply limitation and Iranian new production, as well. The development plan of the rest of the phases of the S.P. gas field  is aimed at promoting the position of Iran to be the leading market in supply of condensate.

Asian Product Markets

Light Distillates (gasoline, naphtha)

Lighter products had strengthened relative to the bottom of the barrel over January. Naphtha market mostly supported by technical problems at 146,000 kb/d Ras Laffan 2 refinery. The refinery was supposed to add 61,000 barrels of naphtha per day to the market in December. However, there was some delay for the refinery to come under operation. Apart from January naphtha market, in the year 2017 the balance of regional naphtha is likely to tighten due to the expected increase in demand. Naphtha demand will be supported due to the Sadara and PetroRabigh.

Gasoline market improved slightly over January. This situation is mostly a seasonal norm in gasoline market. Looking ahead in the year 2017, the big event in gasoline supply would be Persian Gulf Star refinery in Iran. The distillation unit of the Persian Gulf Star Refinery came on stream in October, gasoline producer unit is planned to start its operation in the coming months and will convert Iran from an ongoing importer of gasoline to balance.

Middle Distillates (gasoil)

Gasoil refining margins rose as demand emerged from Vietnam, Indonesia, Sri Lanka and Kenya. The market was strong during January. However, the outlook for the year 2017 is bearish. It is expected to see more supply than demand in the region tightening the margins.

Jet fuel market rose slightly due to the firm gasoil market. Its fellow middle distillates product helped the market to improve. Moreover, seasonal buying in January and Lunar New Year holiday in China supported the market more.  

Fuel Oil

The January fuel oil market weakened slightly. The expected high volumes heading from Europe to Singapore created a bearish sentiment, while additional pressure came from an increase in Singapore stocks over the month. However, the forward curve remained in backwardation, indicating strong prompt fundamentals.

World in Oil Shadow

Although the world is distancing itself from consuming fossil fuels the decisions taken about oil are still effective in the world. That is why the world is still affected by OPEC decisions, albeit passively. However, major changes are always likely to occur. During 2017, all oil producers and consumers will have their eyes turned on these decisions.

OPEC last decided to cut its production ceiling as of January this year in a bid to prop up prices. The Organization of the Petroleum Exporting Countries has recently released its monthly report for December 2016. Indonesia left the oil producer group and OPEC has now 13 members.

The OPEC output was reported at 33.08 mb/d in December 2016, down 220,900 b/d month-on-month. It happened after OPEC saw a 175,000 b/d output hike in November. Therefore, one can note that OPEC's total production was down only 46,000 b/d on a monthly basis.

In its last ministerial meeting in November, the Organization agreed to cut its output by 1.2 mb/d, starting from January. According to secondary sources, OPEC's crude oil production was down 221,000 b/d in December from the previous month which was 33.08 mb/d.

Iraq, Angola and Libya account for the bulk of oil production, Saudi Arabia, Nigeria and Venezuela cut their output more than fellow member states.

A review of OPEC data shows that the organizations' December 2016 output was the highest in history.

The present article is aimed at reviewing OPEC member states' oil output in the final months of last year.

Iran

International sanctions were lifted on Iran in January 2016 and Iran was able to raise its production. Iran was exempted from OPEC's output cut decision. Its production reached 3.98 mb/d in October, which increased to 3.99 mb/d the following month. According to official data, Iran's oil production grew 18.8% during the first nine months of 2016, year-on-year. Iran's September oil output was the highest since the late 1980s. Iran's Minister of Petroleum Bijan Zangeneh had announced earlier that the country would bring its oil production back to the pre-sanctions levels.

Algeria

Algeria has increased its production at a slow pace. It produced 1.171 mb/d of oil last October. Its production reached 1.184 mb/d in November and 1.149 mb/d in December.

Algeria’s state energy producer Sonatrach Group plans to increase output of natural gas and crude oil by 20% in the next four years as new projects start up.

Algeria is Africa’s biggest natural-gas producer and a member of the Organization of Petroleum Exporting Countries. Its crude production increased to 1.16 mb/d in November, the highest since 2013, after three years of declines and no change in 2015, according to data compiled by Bloomberg.

The nation hosted the 15th Ministerial Meeting of International Energy Forum (IEF) and OPEC Extraordinary Conference in November when they agreed to the outline of a deal to cut production for the first time in eight years. Brent crude has rallied 48% this year as OPEC will cut output as of January 1 amid a global glut.

Sonatrach will produce 69 million tons of oil equivalent this year, up from 67 million tons last year, according to company data.

Angola

Angola's oil output stood at 1.507 mb/d in October 2016. But it significantly increased its production in the last two months of the year. Its production reached 1.688 mb/d in November and 1.639 mb/d in December.

Angola saw its oil price gain ground in the run-up to January 1 when OPEC was to start cutting its output. In the first month of the year, Angola was selling oil at $54.5 a barrel, up 0.9% month-on-month. The price was up 102.3% year-on-year.

Ecuador

This South American country maintained its production in the final months of the year. Ecuador produced 542,000 b/d of oil last October and it added only 2,000 b/d to its production in November and December.

Ecuador was among oil producers whose economy was damaged by oil price slump. That is why it is much willing to be able to supply its oil on the market at a much higher price.

The Ecuadorian government depends on oil for 30% of its revenue. Petrodollars also make up 50% of Ecuador's exports.

Gabon

Gabon joined OPEC several months ago, but its production is so low that it would not affect OPEC's total output significantly. There is not complete data available about Gabon's oil production. However, its production was unchanged at 210,000 b/d in January, February and March last year. Gabon is the fifth largest producer of oil in Africa.

Iraq

But Iraq was among countries that nobody imagined would increase its production suddenly. Iraq's oil minister agreed with oil production cut, but its output in December was 4.63 mb/d and many analysts believe that Iraq would not cut its production.

Kuwait

A leading OPEC oil producer, Kuwait kept its production unchanged in November and December. Kuwait's economy was seriously affected after oil prices sharply fell to below $50 in mid-2014. The Kuwaiti government was forced to sharply cut big subsidies it paid to its citizens. The energy sector in this country was also forced to axe jobs. According to OPEC data, Kuwait produced 3 mb/d of oil in October 2016, but it cut its production to 2.9 mb/d in November and to 2.844 mb/d in December.

Libya

Libya is still grappling with political chaos. It has so far failed to boost its output significantly due to persistent tensions across the country. Analysts believe that Libya's oil production would keep rising but at a slow pace. Undoubtedly, Libya will announce that it will continue to raise output to reach the pre-chaos levels. Libya produced 528,000 b/d of oil last October. Its output reached 577,000 b/d in November and 608,000 b/d in December.

Nigeria

Nigeria's oil production dropped in December and it failed to raise its output due to political unrest. Analysts say Nigeria's January production of oil depends on the government's success against rebels rather than on OPEC's production cut accord.

Nigeria produced 1.39 mb/d of oil in October 2016 and lifted its output to 1.538 mb/d in November and 1.94 mb/d in December. The Nigerian government had predicted to bring its output to 2.2 mb/d.

Qatar

Qatar is also among countries that seriously need oil price hike in a bid to make up for its major budget deficit. Official data show that oil production in this country in 2016 fell compared to 2014 and this trend will continue.

Qatar's oil output was 639,000 b/d in October 2016, which reached 646,000 b/d in December.

Saudi Arabia

Saudi Arabia is the largest producer of oil in the world, and its economy heavily depends on black gold. The Saudi government has embarked on economic reforms; however, its economy remains dependent on petrodollars. Its output was 10.626 mb/d in October 2016, which was up to 10.72 mb/d the following month. However, in December Saudi Arabia's oil production was down to 10.465 mb/d.

UAE

The United Arab Emirates saw its production fall by 6,300 b/d in December month-on-month. But in November, it had increased its oil output by 82,000 b/d from the preceding month. The pace of changes in the Emirati oil production was insignificant in the final months of the year. In October, UAE produced 3.188 mb/d of oil, which reached 3.195 mb/d in November and 3.22 mb/d in December.

Venezuela

In addition to oil giants in the world, Venezuela might have been the country that suffered the most from oil price slump. A staggering 700% inflation rate and political unrest in the country due to oil price fall has pushed the country to the brink of collapse. Ever since oil prices started falling in 2014, Venezuela has been leaving no stones unturned to find a solution to contain the oil price decline. Venezuela's output in January 2016 was 2.558 mb/d, which was down to 2.316 mb/d in October. Its production was 2.274 mb/d and 2.27 mb/d in November and December 2016, respectively.    

Foreign Firms Join Iran Oil Geomechanics

Maximum efficient recovery from an oil field and enhanced recovery require a proper and comprehensive knowledge of the reservoir in question. Geomechanics could be of great help in this regard.

[Geomechanics is the geologic specialty that deals with understanding how rocks, stresses, pressures, and temperatures interact. This understanding is used to solve oilfield problems, such as optimizing hydraulic fracturing treatments of shale reservoirs. Geomechanics specialists typically work with experts in geophysics, geology, petrophysics, reservoir engineering, drilling engineering, and rock physics to solve geomechanical problems and address production challenges in shale reservoirs.]

Due to lack of geomechanical studies in Iran, there is no comprehensive databank about big oil fields in the country. Therefore, Iran's petroleum industry is trying to boost its geomechanical knowledge. Over recent years, some steps have been taken. Holding a conference on Iran's petroleum geomechanics was one of these steps.

Iran held its second conference on petroleum geomechanics on January 24 under the title of "Reducing Exploration and Production Risks". The conference was attended by Saleh Hendi, director of exploration at National Iranian Oil Company (NIOC), Habibollah Bitaraf, deputy minister of petroleum for research and technology, Ebrahim Alavi Taleqani, deputy head of NIOC for Research and Technology and a group of foreign guests.

In an opening speech, Hendi said long way was lying ahead of Iran's petroleum industry in applying geomechanics.

"Given the positive and abundant effects of petroleum geomechanics, this important issue must top the agenda as quickly as possible. In this regard, the scientific and academic communities have fulfilled their roles in this regard and it is now NIOC's turn and private companies to seriously focus on this issue," he said.

Europeans Ready for Cooperation

Dr Jorg Herwanger, a senior member of the European Association of Geoscientists and Engineers (EAGE), was among the guests. He represented MP Geomechanics where he is a director.

He said it was the first time he visited Iran. Noting that he specializes in 3D and 4D petroleum geomechanics, Herwanger said he has already had negotiations with NIOC for future cooperation. He added that he was also in talks with several other companies for cooperation.

Regarding the possibility of renewed activity in Iran in the wake of the removal of sanctions, he said: “At present, different countries particularly Europeans are happy with Iran’s sanctions relief and they are ready for cooperation with Iran.”

Herwanger said it was difficult to have access to information about Iran due to international sanctions.

“I started my work with Schlumberger and it was very difficult for me to obtain data about Iran. When I was with the UN we were told specifically that we could not work in Iran due to the sanctions. Therefore, I do not have much information now, but I am studying to update my data,” he said.

Willingness to Work with Iran Firms

Tony Addis of "Rockfield" also participated in the conference. This British company has long been involved in oil industry service and has been providing geomechanical software for oil companies.

“Generally speaking, IOCs with powerful geomechanical sections are our customers. Our company also provides consultation. Production of documents and whatever dependent on oil production, development of oil field and production of oil from it are also among our activities,” he said.

Addis believes that Iran is a major market for his company’s activities. “Due to the complexity and diversity of different oil fields, Iran is an ideal place for geomechanical activities. Of course other technical issues make our software and technologies profitable in this country.”

“In my view, there is no problem with cooperating with Iran. A reason behind my visit to Iran was to examine requirements for cooperation with Iran’s domestic companies. As a small-sized foreign company, we are willing to cooperate with domestic companies like Dana Energy,” he said.

Addis said his company is active all across the world. It has already cooperated with BP, Shell, Chevron and Total. It has also operated projects for Saudi Aramco in the Red Sea and in northeastern Iraq. It is now looking for a way to expand its business in Iran.

Addis has been active in the Middle East for six years. He is well familiar with geomechanical challenges in this region.

“In this region, there is too much hydrocarbon. One challenge pertains to carbonated rocks. One problem is that in the past decades oil companies underestimated this issue and they ignored its complex aspects. Of course, one reason was the lack of necessary tools to analyze data,” he said.

Addis said technology has now helped conduct a precise geomechanical analysis of natural fractures in carbonated rocks.

“We can now overcome these challenges more easily and realize what would happen after reservoirs are depleted,” he said.

Addis also said that another challenge facing this region is a trend which has started from North America.

“Many are looking to extract gas. Countries like Oman are after importing technologies from the US in order to extract gas. But in fact the geology of this region is much more complicated than that of North America. Therefore, in order to apply the North American technology we have to adapt it to regional needs,” he said.

Energy Opportunities Exhibited in Kish

The 13th Kish International Energy Exhibition was held early January in this Persian Gulf Island in a bid to put on display Iran's potentialities in the oil, gas, water, electricity and renewable energy sectors. A total of 180 Iranian and foreign companies participated in the event. Senior officials from National Iranian Oil Company (NIOC) and its subsidiary oil and gas firms, as well as energy experts visited the exhibition.

Around 40 foreign companies or their representatives were in attendance in the exhibition which was held on 18,000 square meters of land and was aimed at introducing investment opportunities and potentialities, as well as achievements of manufacturers and producers of oil, gas, petrochemicals, water, electricity and renewable energies.

Foreign companies expressed happiness with the lifting of sanctions on Iran, particularly in the energy sector, and described presence in this round of this exhibition as an opportunity for benefiting from the experiences of Iranian specialists and the presence of leading Iranian and foreign companies for exchanging knowhow and sharing experience.

Several British companies, with two centuries of experience in the energy sector, were present in the exhibition. They said sanctions relief for Iran was a new opportunity for investment, noting that Iran's market enjoys good potential for investment, transfer of technology and development.

Among countries represented in the exhibition in Kish Island were Austria, Germany, United States, Spain, Russia, Ireland, Switzerland, Italy, France, United Arab Emirates and Iraq.

During the four-day event, energy experts and businesspeople exchanged views and shared information about specialized issues, while Iranian and foreign companies put their technical capabilities and innovations on exhibit, interacted with those involved in the energy industry and got to know opportunities for investment.

Chief among the objectives of Kish international energy exhibition were introducing the country’s potentialities in different production, commercial and service-providing sectors related to oil, gas, petrochemical, water and electricity, highlighting weaknesses and problems in this industry, preparing the ground to encourage potential investors to finance projects and benefit from existing capacities and create a healthy competitive atmosphere between producers.

Furthermore, materialization of such objectives as getting familiar with products, innovations and capacities, familiarizing with the consumer market demand, identifying exemplary production units, underscoring the role and effect of products on safeguarding the country’s assets and capitals, saving assets, boosting exports to other countries, optimal use of domestic resources and making efforts for business prosperity were on the agenda of the 13th energy exhibition of Kish.

Meanwhile, an international oil and energy seminar was held on the sidelines of the exhibition on the second day of this important event.

The 13th international energy exhibition in Kish, as an industrial and business event in Iran in the oil, gas and renewable energies sector, was a good opportunity for companies operating in the energy sector to put their latest products and achievements on display to experts of this industry.

World Top Hydrocarbon Deposits

The deputy managing director of National Iranian Oil Company (NIOC) for development and engineering said at a forum on “investment in oil industry” on the sidelines of the exhibition that Iran held the highest amount of hydrocarbon reserves in the world.

“Experts believe that Iran is the most appropriate place for investment and has the most capacities for oil investment in the world. It has also the possibility of exporting gas and swapping oil and it can become a center for energy transactions,” said Gholam-Reza Manouchehri.

Regarding close links between development of Iran and petroleum industry growth, he said: “Although we are witnessing rapid changes in the energy sector like solar energy, we will continue to witness growing use of hydrocarbon reserves including oil and gas. Iran’s oil production has neared 4 mb/d and with more gas recovery from South Pars gas field, the share of gas in the country’s energy mix has reached 70%.”

Lucrative Projects

Manouchehri touched on the recovery rate of oil reservoirs, saying: “The current recovery rate of oil fields in the country stands at around 25%, which should increase to 40%.”

He said that Iran holds around 800 billion barrels of oil in place, which would add 8 billion barrels to the country’s output with a one-percent increase in the recovery rate.

He noted that the issue of enhanced recovery from oil reservoirs was very important, noting that some fields are shared with neighbors while some others have been damaged overtime.

70% Share of Domestic Manufacturing

Manouchehri pointed to the development of employment in Iran in case of investment in the upstream oil industry, saying: “According to plans, $200 billion should be invested in the petroleum industry, some 70% of which for domestic sector.”

He highlighted the low experience of the country in new technologies developed for enhanced recovery from oil reservoirs, saying: “We can apply state-of-the-art techn

Iran Hosts 2nd Petroleum Conference

One year after Iran's nuclear agreement with six world powers, dubbed the Joint Comprehensive Plan of Action (JCPOA), entered into force, foreign companies and investors are no longer stranger to Iran's petroleum industry. Many of them travelled to Tehran last year to consider conditions for investment. World energy industrialists have taken each and every opportunity to gather more information about Iran and investment in the country. Conferences and seminars held over the past one year bear proof to this fact.

Iran hosted second Petroleum Conference with focus on development of investment, transfer of technology and international business in upstream and downstream sectors of oil, gas, refining and petrochemicals industries. The event ran from January 30 to February 1. The conference provided foreign companies a chance to get more information on Iran's petroleum industry, as well as the investment potentials in different sectors.

The opening of the conference was attended by officials, private sector managers and managers of foreign companies.

Addressing the event, Gholam-Reza Manouchehri, deputy head of National Iranian Oil Company (NIOC) for development and engineering, highlighted Iran's 1st rank in global gas reserves and its fourth rank in oil reserves.

"Over recent years, we have had significant oil and gas exploration in the country, which will be announced soon. These explorations increase the country's oil and gas reserves to a significant level. We are in talks with international companies for implementing new exploration projects in the country," he said.

Manouchehri went on to highlight attractions of Iran's petroleum industry, saying: "The Middle East region is endowed with important capacity for growth in the petroleum industry. This issue has caught the attention of international firms."

He added: "Currently, the three countries of Iran, Iraq and Mexico are attractive to international companies. Iran, as the most stable country in the region, will have a good future in the oil and gas industry."

Manouchehri said: "If we can invest $30 to $40 billion in upstream oil industry every year up to 70% of these resources would be turned into job opportunities in the contracting, labor service and purchase sectors inside the country."

According to the NIOC top official, the presence of international companies in Iran did not mean sidelining Iranian companies; it rather meant providing a new atmosphere for domestic companies.

Phase 18 of South Pars Operational

Manouchehri said Phase 18 of South Pars gas field has already become operational, adding that more phases were expected to come online soon.

He referred to restrictions Iran was faced with in its communications with international companies during years of sanctions, saying: "During years of sanctions, our communications with many international companies were limited and even cut. We made achievements under sanctions, but we faced restrictions and problems as far as new technologies were concerned."

"But after the JCPOA was implemented, establishment of communications with international companies became possible. For this reason, the issue of transfer of new technologies to domestic companies with the objective of implementing projects and enhancing domestic manufacturing standards is taken into account in new-style oil contracts," said Manouchehri.

He referred to cooperation with Iranian universities, saying: "We are cooperating with 10 universities in the country for studying oil reservoirs. We are supposed to cooperate with them for the transfer of technology under new oil contracts."

"The new era of activity of petroleum industry is the era of growth of Iranian companies in the oil and gas sector and we need to help Iranian companies promote their status from second-rank partners to first-rank partners," Manouchehri said.

Switch From Raw Materials

Gholam-Hossein Shafei, head of Iran Chamber of Commerce, Industry, Mine and Agriculture, also addressed the opening of the conference.

He said that the private sector was ready for cooperation with different sectors of the petroleum industry, including transit and swap of petroleum products.

Shafei said the JCPOA had created good opportunities for attracting foreign investment and bringing in new technologies. He noted that Iran's huge gas reserves provided a good opportunity for supplying feedstock to petrochemical plants and developing the petrochemical industry.

"The current 64-million-ton petrochemical production capacity will increase to more than 120 million ton by the end of the 6th Five-Year Economic Development Plan," he said.

Shafei underscored the significance of the private sector in development, saying: "In no other economic timeframe, has the unity between legislative, executive body and the private sector been such important. To shift from selling raw materials we need a realistic and intelligent private sector."

"Iran's economy is currently in the process of switching from a government-oriented raw selling economy to a market-oriented product selling economy. Experience has shown that governments are not good traders. Therefore, the private sector can advise regulatory and executive bodies with a view to improving the business environment," he added.

Shafei said the private sector must prepare itself for cooperation with foreign companies in the light of transparency of financial statements, structural reforms in countries and ranking by international agencies.

He said that there have been positive developments in recent years with regard to economic blossoming, business environment improvement, interaction with world and attracting foreign investment.

"Raising the country's oil production to the pre-sanctions levels and a 250-mcm/d growth in gas production, access to 18-million-ton petrochemical and 500,000-barrel petroleum product exports are among these achievements," said Shafei.

Foreign Investment

Hamid Hosseini, member of Iran Chamber of Commerce, was the secretary of the conference.

He said that Iran's private sector had voiced its firm determination for developing downstream oil, gas and petrochemical industries based on Article 44 and the principle of resilient economy and was now ready for partnership with foreigners.

Hosseini said the 10-year formula defined for petrochemical feedstock price was a positive development towards economic prosperity.

"Introduction of new-style oil contracts and world oil giants' welcoming cooperation and partnership with NIOC, qualification of 30 foreign and 11 domestic companies, 45% oil price growth emanated from cooperation with non-OPEC countries and the possibility of government guarantee for the financing of non-governmental projects through development banks and organizations are among other effects of economic developments," he added.

Iran VRU Project Open to Foreign Investment

National Iranian Oil Products Distribution Company (NIOPDC) developed a vapor recovery unit (VRU) project in 2008 in a bid to prevent the emission of gasoline pollutants. This project is known in Persian as KAHAB, which stands for the Persian equivalent of conducting, transmitting and recovering gasoline vapor throughout different stages of loading and refueling.

In addition to its economic and environmental advantages, this project could be also attractive to investors because 3,400 fuel stations must be launched in strategic oil storage facilities so that gasoline recovery waste throughout different phases of storage, transmission and distribution would decline. Therefore, it is necessary to take into consideration its economic development.

NIOPDC is running the project, but it welcomes domestic and foreign investment in it.

Ali Qanei, director of KAHAB project at NIOPDC, has given the following interview to "Iran Petroleum".

Q: Would you please first tell us about the status of KAHAB project and the reasons for its protracted operation?

A: The KAHAB project is now 29% complete. Due to the extent of the project and hostile sanctions over the past years we faced problems. At present these problems have been largely resolved and it was finally decided that the project would be completed by 2020. Therefore, we have only three years left to do the job and we had no option but to carry it through during the remaining time.

Q: This project is being implemented in the three sections of oil storage, gas stations and oil tankers. How have oil storage facilities been equipped?

A: Based on an assessment of the market in countries like Italy, Germany, France and the Netherlands, we concluded that we could equip oil storages by applying one of these three options: refrigeration, absorption and membrane. Until three years ago, three storage facilities in northern Iran including Kan oil storage northwest of Tehran was equipped through refrigeration, Isfahan oil storage facility through attraction and Karaj storage facility with membrane. Equipment of oil storage facilities in Arak, Tabriz, Mashhad and Ahvaz with Italian systems by applying attraction has already been put out to tender and the relevant contractor is in the stage of equipping workshop for the storage facilities. After that, equipment of oil storage facilities in Rey, Qazvin, Hamedan, Sari, Rasht, Kerman, Fars and northeastern Iran would be put to tender.

Q: In addition to the Karaj and Isfahan oil storage facilities which have been equipped with the Kahab necessities, what other facilities are prioritized for that purpose?

A: Of 92 oil storage facilities, eight are located in big cities. Three are in the complementary phase; four cases are in the stage of workshop equipment (Arak, Ahvaz, Tabriz and Mashhad). In the next phase, three cities which are not big are to be equipped. They are Yazd, Kerman, Sari, Rasht, Qazvin, Hamedan, Chalous, Miandoab, Gorgan, Sanandaj, Shahroud, Semnan, Zahedan, Torbat Heydarieh, Urmia, Ardebil, Mahshahr, Bushehr, Rafsanjan, Sirjan, Darreh Shahr, Zanjan, Sabzevar, Qom, Khorram-Abad, Azna, Kermanshah, Shahr-e Kord and Gonbad.

Q: Is any specific technology needed for applying these methods?

A: Sure! Because the storage tanks in Iran and their operational procedure are different from other countries. For instance, in some European countries internal floating-roof and dome-roof storage facilities are used to significantly reduce vapor production. Foreign manufacturers and investors must take such issues into consideration so that their products would be acceptable.

(Note: Fixed roof tanks are meant for liquids with very high flash points, (e.g. fuel oil, water, bitumen etc.) Cone roofs, dome roofs and umbrella roofs are usual. These are insulated to prevent the clogging of certain materials, wherein the heat is provided by steam coils within the tanks. Dome roof tanks are meant for tanks having slightly higher storage pressure than that of atmosphere (e.g. slop oil).

Floating roof tanks are broadly divided into external floating roof tanks (usually called floating roof tanks: FR Tanks) and internal floating roof types (IFR Tanks).)

Now if an investor is willing to invest in equipping our oil storage tanks he would be provided with required technical data about the storage facilities so that it would be taken into consideration in the design of the tanks. The final product would comply with national

and international standards, meet safety requirements and would be attractive enough in terms of rate of return of investment.

Q: How much will be saved after storage facilities are equipped with VRU system?

A: Around IRR 13 billion has been invested in equipping three oil storage facilities in Isfahan, Kan and Karaj. This amount of investment will return after vapor recovery. For example, carbon active vapor recovery project is to become operational this year at Shahid Montazeri oil storage facility in Isfahan. More than 177,000 liters of vapor has been recovered during a three-month period and investment has returned over this time.

Q: Given the fact that four oil storage facilities have been equipped and 30 have been put out to tender, don't you have any plans to finance projects for equipment supply?

A: No for the moment. It has been financed by the government and investment return will be done after the implementation of the project. But it would become possible if any recommendable and considerable proposal is received. But as far as the equipment of gas stations is concerned, if companies propose any model to be also attractive for gas station owners , we will welcome it. Given the fact that control and expert examination of projects lie with NIOPDC we have to take into account all parameters of implementation of this project. For instance, companies should take into account temperature changes throughout refrigeration because this sector is effective in producing gasoline vapor.

Q: How much investment do you estimate to be needed for equipping oil storage facilities with KAHAB system?

A: A total of some IRR 240 billion would be spent on equipping four oil storage facilities. Companies are currently in the phase of purchase of equipment and they would receive credit based on the level of progress. If we consider the equipment price for each facility at approximately IRR 60 billion, we will need roughly IRR 1,600 billion for equipping 30 storage facilities. This issue could be attractive for investors.

Q: What measures have you taken at gas stations?

A: In the wake of instructions on gasoline vapor emission cap at gas stations by the HSE and civil defense units, gas stations are required to install necessary equipment for reducing gasoline vapor emission. Of 3,400 gas stations, 97% have been equipped in stage 1. The remaining three percent has been delayed for technical reasons, but will be completed soon. Equipment of gas stations comprises two stages. Stage 1 involves controlling gasoline vapor exit from underground and its return to tanker from storage tank. Stage 2 involves installation of a system for gasoline vapor transmission throughout refueling. There is no problem with executing Stage 1, but Stage 2 will most probably be assigned to brand companies that have been endorsed by the Ministry of Petroleum. A job description envisaged for brand companies in this stage. We welcome domestic and foreign investment in Stage 2, as long as they could meet our technical requirements. Furthermore, their investment return will be taken into account. Therefore, any company willing to get involved in this sector has first to examine the technical aspects of gas stations and get familiar with the strengths and weaknesses of gas stations.

Q: How will be the return of investment?

A: In any case, 3,400 gas stations need to be equipped in Stage 2. The investment will return shortly after the project is implemented. There is very good potential for investment in gas stations in Iran. However, this job needs high finance and companies willing to bid should take into account the issue of timeframe for the return of investment. It would be very important for companies to execute Stage 2 at gas stations in a short period of time. At present, a domestic company has conducted feasibility studies on gasoline vapor recovery and is in the final phase. The price it has offered is one-fifth of what we have received from foreign companies. This manufacturing company is ready to invest in all of our gas stations. Therefore, if foreign companies are willing to bid for this sector they have to propose fully competitive price and have sophisticated technology.

Q: What standards do you apply to KAHAB?

A: The standards applied to design and equipment in this project are clearly known. The domestic manufacturing company has announced it has acquired necessary standards which include NFPA, NFPA30, NFPA30A, BSEN13012, BSEN16321, DIRECTIVE 94163 (two versions) and California's CARB. Domestic manufacturers have been requested to take into consideration new standards in this sector.

Q: What measures have been so far undertaken for oil tankers?

A: For the time being, 4,600 oil tankers have been renovated. We intend to equip 10,000 oil tankers with KAHAB system over the coming two years. In this sector, we are looking for a method to install the top operators on the tankers so as to prevent the emission of gasoline vapors. Four domestic manufacturing companies are currently active in this sector. They have to present us with a model that would allow modifications to the tankers at minimum costs. We have to see what modifications need to apply to oil tankers in order to avoid the emission of vapor in the environment.

Q: How much will be saved on gasoline consumption after full implementation of this project?

A: With the full implementation of KAHAB project we will save IRR 2,250 billion in gasoline consumption.

Q: Is the equipment used in KAHAB project domestically manufactured?

A: The equipment used in Stage 1is domestically manufactured, but we do not have domestic equipment for oil storage equipment now. The equipment used in pilot projects has been purchased from Italy and Canada.

Q: Can foreign companies bid for KAHAB project?

A: There are no restrictions for the presence of foreign investors in this project. We will definitely welcome investors who would be able to implement this project at minimum costs and in the shortest possible time. Foreign companies would be able to bid for the equipment of remaining storage facilities, equipment of tanker trucks and also stage 2 and stage 3 gas station equipment. For instance, two domestic companies have submitted proposals for procurement of the equipment of the top operators of tanker trucks and gas stations. We look forward to receiving more proposals before choosing the best one.

Iran Opens Petroleum Museum

Preparations for launching petroleum museums in Iran started in March 2014 based on the instruction of Minister of Petroleum Bijan Zangeneh. In compliance with Minister Zangeneh's instructions, preparations have been made for launching petroleum museums in five spots in the country: Museum of History of Petroleum Industry in Masjid Soleyman, Museum of Petroleum Industry and Sacred Defense in Abadan, Museum of Petroleum Industry in West Iran in Kermanshah, Museum of Petroleum Industry in East Iran in Mashhad and Museum of Science and Technology and Petroleum Industry in Tehran. Construction of more museums is under study.

Abadan Gasoline Museum, 1st Petromuseum

Abadan Gasoline Museum recounts untold stories of long time ago. This museum puts on exhibit old documents and objects that take every visitor back to many years ago.

This museum tells the story of distribution of oil and oil products since the 1920s in the oil-rich city of Abadan.

Iran's first petrol station was constructed in 1927 in Abadan's city center by Britain's BP. It was initially used for the distribution and sales of kerosene. With the turn of time and the entry of cars in Iran, it turned into a gas station.

At this distribution center, oil products were first stocked in depots to be hand-pumped into recipients before being delivered to consumers.

After Minister Zangeneh agreed with the idea of petroleum museum in Abadan, five historical spots were chosen for establishment of museum. They include a power plant at Abadan refinery, Akvan crane and jetty, Artisan School, luxury houses and the first gas station.

Studies and research on the project and collection of old objects and documents about Iran's petroleum industry from across the globe concluded in December 2016. Then, the project entered an operational phase.

A Glimpse at Abadan Service Station

After one year of decorative work, this place has become totally different. Gone are those mothballed buildings with dark rooms filled with wastes and dusty doors and windows. This old gas station is now surrounded by locally grown trees and plants, particularly towering palm trees.

With an area of 1,856 square meters, the gas station museum is located in the city center and just in front of Abadan City Council. Adjacent to the museum's main entry which opens to the Municipality St. is erected a sign indicating the first gas station in Iran. Alongside this sign is an old image of the first structure of this gas

gas station.As soon as one steps into this museum he runs across a captivating combination. Traditional and modern elements, local plants and lighting with tunnel lamps which were once used in the petroleum industry installations are seen. In the western part of the place visitors can see gas pumps marked with the date of manufacturing. Among them is a graduated hand pump built by a British company in 1925. Nearly a dozen objects are on display at this museum. They are mainly made in Britain, US and Japan. There are also German, Australian and Indian products among them.

On the eastern part is erected a security post. The northeastern side is envisaged to house a café for visitors to take a rest. At present, a number of old photos illustrating petroleum industry devices are on display.

A brick building in the north bears the signs of "BP Service Station", "Only Consume National Products", "Use Only Pure Pars Gasoline" and "1927". An old red Opel, a dummy service station worker and a model of the oldest gasoline pump in the world are installed in front of this building. The whole scene in the museum simulates fuel supply during that period of time and gives some sort of dynamism to this museum. A sign carrying "BP Companies House" distinguishes a building from others.

This building, which is the main building of the museum, has two rooms where certain objects are on display. At the entrance to the building, on the wall of the eastern side hangs a sign reading "Introduction to Gas Station's Building". That provides visitors with comprehensive information about the gas station's building, its architecture and significance.

A dummy worker is measuring kerosene in the corner of the room. There are a variety of barrels, funnels, pictures and more interestingly a metal hand pump which was once used for distributing oil products. There is also a metal basket for carrying oil bottles.

The second room has walls covered with black and white images taking visitors' minds to long time ago. At that time, animals were the only vehicles for carrying oil. In another image our ancestors are seen queuing to receive oil. There are also scales and graduated recipients and 20-liter tin containers used for carrying fuel and oil products from Kermanshah refinery. The small space of the room, windows that let light in, and geraniums installed in niches stir the visitors' nostalgia.

After leaving the building from the back door we step into a small yard where two tall storage tanks are seen. A parcel of land there is also covered with glass to show rusty pipeline which was once used to carry oil from these storage tanks to the distribution center. This is the way the museum organizers are showing a segment of this old pipeline.

The storage tanks held here have their own story. When the service station was built, kerosene was transported in 20-liter recipients before being distributed via funnel. But it was a tough job and so it was decided to build a storage tank. And since there was no welding technology in Iran, the storage tanks were riveted.

A narrow corridor leads us to the back of the adjacent building where three old fuel tankers are on exhibit. There are also photos showing different stages of fuel transfer from beginning to end. The photos of oil tankers also provide visitors with useful information about the distribution of oil.

We then head to the adjacent building. This building is 60 years old now. It was first used to house the distribution center. After the distribution center was moved to another spot, this building was used for bodybuilding for some time. Some two decades ago, it turned into a depot as it was no longer usable. But now when one looks at it he sees a restored building which no longer shows any sign of abandonment.

This building comprises four rooms. In the first room are held kerosene-burning household and industrial appliances, banknotes and stamps of petroleum industry. There are also a variety of lamps, lanterns and cookers, which remind everyone of old warm houses. The equipment and tools on exhibit here may not be known to the current generation.

The second room, which has been separated from the first room, is used for exhibiting heaters. There are images of recipients of lube oil and other petroleum products distributed at service stations, fuel distribution voucher, old newspaper ads and service workers.

The newspapers published in the early 16^th century were filled with ads about oil products. They were aimed at attracting people, as medics believed that using those products would help prevent diseases. The ads all promised a good and modern life.

It might be interesting for visitors to know that the kerosene–burning heaters on display are mainly made in Britain. After nationalization of oil industry, Iran faced the challenge of restrictions on purchasing these kerosene–burning heaters from Britain. Therefore, then Prime Minister Mohammad Mossadeq, the architect of oil nationalization movement, thought of an alternative for Iranians. In the end, Mr. Aalinasab managed to develop heaters under a brand known as Alaeddin.

Among other old documents on display in this room is a small old book printed in 1951. Part of this book shows the map of Abadan. It contains information about different districts and places in Abadan, including the service station.

Explaining the components of gas pumps, service stations in Iran, components of dispensers, clichéd messages engraved on oil products' recipients, fire extinguishers and other safety tools are on display in the third room of the adjacent building. In this room which is more of a training workshop, one can get acquainted with the components of a gasoline distribution pump.

The fourth room which is a shop at the museum sells cultural and artistic products engraved with the museum emblem. Visitors can purchase hats, T-shirts, glasses, wristwatches, handbags, etc. at quite low prices.

Sports and Social Responsibility

Sport is viewed as an essential issue at Iran's Ministry of Petroleum. This ministry has been among the most successful in recent years through its involvement in different disciplines. The ministry has managed to take important steps in championships. But at the same time, attention to the issue of health and application of healthcare to sportsmen at this ministry is good news.

Gholam-Rea Shah-Karami, director-general of health, physical exercise and social responsibility affairs at the Ministry of Petroleum, has provided in-depth explanation about activities related to physical exercises at the ministry. The first part of the interview is printed in this issue.

Q: Iran's Ministry of Petroleum has been among the most active ministries in sport activities. What's the reason behind such an attention?

A: Sport has become an inseparable part of the petroleum industry staff. If you take a look at their everyday life you will see that they are among those who attach great significance to their physical exercise. The emergence of physical exercise at the petroleum industry dates from the time the first oil well was drilled in Iran. By that time, many sport disciplines like football, golf, ball and water-related sports were introduced by Britons. Therefore sport at the ministry of petroleum is century-old now. Oil has ever since been the main driver of the economy, but it has always prioritized sport. Depending on different circumstances, oil has been a major element in sport activities. As much as oil is deeply involved in macro-policymaking for economic issues in the country it has been instrumental in sport activities. By the time state organs earmarked one percent of their budget to sport and 30% of the activities done today was at the hands of then Physical Exercises Organization up to now we have always supported sport.

Q: An issue that has been largely ignored is the Iranian Ministry of Petroleum's contribution to sport structures. Would you please explain that?

A: I can tell you with certainty that more than 90% of sport structures in the country have been done by the Ministry of Petroleum or have benefited from the contribution of the ministry. Over the past 100 years, we have had a leading role in providing sport facilities in exploration/production operation areas like Gachsaran, Aghajari, Ahvaz, Lavan, Kharg, Sarakhs, Bushehr, etc. In fact we have fulfilled our social responsibility in sport and we have now other projects on the agenda.

Q: One of major plans pursued by your department has been attention to health. What has been done in this regard?

A: One of our fundamental plans is to manage health-related issues at the petroleum ministry. We have had numerous rounds of talks with leading oil companies like Total, Shell, BP and Aramco because we wanted to know where sport lied in the structure of these companies. We got useful information. We concluded that there was no procedural relationship between them. Therefore we focused on the issue of sport at the Health and Treatment Organization, alongside social assistance affairs. In 2011, we started procedural communications with ministerial bodies dealing with health affairs and pushed ahead with macro policies and strategies. After Mr [Bijan] Zangeneh took over as minister of petroleum, this issue picked up speed. His precise and technical view of sport and his special support resulted in the adoption of more accurate decisions on the issue of health at the Supreme Council of Sports at the Ministry of Petroleum. Generally speaking, everything helped us bring sport to the position it deserves, regardless of the background we just talked about.

First and foremost, I have to say that our policies our different with those of the Ministry of Sport and Youth Affairs. Given the risky nature of activities of the Iranian Ministry of Petroleum and the sport ministry's policy of nursing champions and collecting medals, you can see the contradiction. We seek to fulfil our social responsibility in sport. One of our main talking points regarded health and treatment. We have industrial medicine with which certain tests are done for the petroleum industry and these tests cost high. For treatment, we pursue our own agenda for prevention. In this regard, HSE conducts tests on people to tell us which risks are carried by people working in different operating areas. We are focusing on these tests and we have developed sport prescriptions, alongside medical prescriptions, against such diseases as diabetes, high blood pressure, obesity, fatty liver, etc. This plan is close to being implemented.

Q: These tests are carried out mainly for the Ministry of Petroleum, right?

A: Yes, since 2015 the petroleum industry sport activities have turned to health-oriented activities. It means that everyone has to be involved in sport activities throughout the time he is in office. Even in hiring manpower, we define sports based on the age and physical and environmental features of people working in different areas and issue them sport certificates. It is evident that someone who has joined National Iranian Oil Company (NIOC) at the age of 22 and has been playing football will not be able to play football at 50 and we consider other sport disciplines for him. These are our classifications and we even plan to implement it for petroleum industry retirees.

Saadabad Palace, a Chapter in Iran History

Iran’s capital Tehran which is located at an altitude of 1,190 meters is surrounded by mountains and desert off Mount Alborz.

Tehran is confined by Mounts Rey and Bibi Shahrbanou, and Shahryar and Varamin deserts to the south. Touchal is the tallest summit north of Tehran.

Tehran became the capital of Iran under the Qajar Dynasty. That is why most monuments and tourist attractions in the city date from post-Qajar period. Some of them are luxurious palaces like Saadabad and Golestan.

Saadabad Palace

Saadabad historical and cultural compound houses 18 small and large palaces dating from the Qajar and Pahlavi dynasties. It is one of the most important museums in Tehran and entire Iran. Two important palaces are Green Palace (Shahvand) and Palace of Nation (White). There are also 12 aquifers running there. Eight entries were available for the king and the court.

Saadabad is located near Darband area in northern Tehran.

Green Palace (Shahvand)

The most ancient palace in Saadabad is Green Palace. With a built-up area of 1,203 square meters, it used to house Reza Shah. It is one of the most beautiful royal palaces in Iran. Construction of this two-storey building started in 1922 and ended six years later. An outstanding feature of this palace is the similarity of the carpet’s motif with what is drawn on the ceiling. It took carpet weavers in Mashhad seven years to weave this silk-woven carpet.

Tajrish Market

Tajrish which is located in northern Tehran is among the old districts in Tehran. An old market is among tourist attractions in this district. The bazaar which is roofed and connects two districts there has preserved its ancient structure. It is a small example of Tehran market.

Fuel Supply in Tehran, Gigantic Task

Iran's capital, with a population of 10 million, is the most populated city in the country. Fuel supply to Tehran Province is one of the toughest tasks in refining, transmission, stockpiling and distribution of petroleum products. The location of the most important political, social, cultural and economic organs in this province has added to the toughness of fuel supply.

Fuel distribution in Tehran Province dates back to 88 years when National Iranian Oil Products Distribution Company (NIOPDC) was established. That coincided with the establishment of the Tehran branch of NIOPDC.

Keramat Veis-Karami, head of the Tehran branch of NIOPDC, says this office has been distributing petroleum products across Tehran Province and even in some neighboring provinces for 88 years.

He said that among 37 zones of NIOPDC in Iran, the Tehran zone is the most important as it deals with fuel distribution in Tehran where important political organs are located.

This zone has three big storage facilities: Rey Storage Facility with a capacity of 830 million liters, Kan Storage Facility with a capacity of 220 million liters and Qouchak Storage Facility with a capacity of 200 million liters. Except for Rey, other storage facilities only store euro-4 gasoline, gasoil and kerosene.

The Rey facility dates from 50 years ago, said Veis-Karami. "Over the past years, renovation and reconstruction of this storage facility has always been a priority. At present, such projects as retrofitting of storage sites, upgrading technical standards for IRR 1,000 billion and optimization of installations for IRR 800 billion are under way. Subprojects for optimization have been suggested and they can provide an opportunity for investment in this sector."

"Given the amount of liquid fuel consumption in the Iranian capital, we face no necessity now for developing storage facilities to stock products. The storage capacity of these sites totals 1.2 billion liters," he said.

Noting that euro-4 gasoline is being distributed in 282 gas stations across Tehran Province, which covers a total 78%, he added: "Meantime, Tehran and Rey are fully distributing euro-4 and premium gasoline."

"There are currently more than 8,000 major and minor consumers in Tehran Province. Moreover, fuel supply to four power plants, four cement factories and two airports are also up to the Tehran zone of NIOPDC," Veis-Karami said.

He said 33 million liters a day of fuel is being distributed across Tehran Province, noting that more than 1,060 tankers are involved in distribution.

"Over the past ten months this year, 14.6 ml/d of gasoline has been consumed in Tehran Province. This figure stood at 14 ml/d and has now grown 4%. This year also, 5.8 ml/d of gasoil has been distributed, showing a decline," Veis-Karami said.

Touching on branding of fuel supply stations in Tehran Province, he said: "Owners of brand companies have been approved by NIOPDC and they have held talks with Tehran Municipality to build gas stations. The already constructed stations and those under construction are not required to be covered by branding."

"At present, more than 150 stations are operating in Tehran city. Given the growing number of cars it is a must to invest in construction of gas stations. In case of investment in this sector, a profitable return is predicted," said Veis-Karami.