South Pars Re-Endowed with Hope

Four years ago when President Hassan Rouhani took office, rarely could one imagine that Iran’s comatose petroleum industry, a legacy of Rouhani’s predecessor, could be resuscitated so soon. In addition to making a strong return to oil market, Iran managed to arrange many hamstrung activities and make up for losses.

South Pars gas field is undoubtedly the most important venue to show the relentless effort and the strong will of Iranian oil service workers over the past four years. The result of these efforts has been the revival of the supergiant offshore reservoir which Iran jointly owns with neighboring Qatar.

When Rouhani took office, oil price was on the decline and Iran’s oil sales level had been slashed significantly due to international sanctions. Moreover, it was impossible to develop phases of South Pars. Had the same circumstances continued none of new phases of South Pars had reached the production stage. Therefore, the development phases were classified so that the projects could go ahead smoothly and quickly.

Therefore, financial discipline was instituted, resources were managed and relevant affairs were arranged. That is why five new development phases of South Pars are ready to come online.

What has happened in South Pars over the past four years is not a propaganda campaign; rather it is a herculean task based on reality. Regardless of political slogans and unfounded allegations, it proved that the petroleum industry would not welcome unskilled, unspecialized and novice individuals.

The petroleum industry needs managers who are familiar enough with the twists and turns of this mysterious industry. They are also required to be courageous enough and be obsessed with Iran’s glory.

Now hope is recreated in South Pars. The capabilities of Iranian specialists and industrialists provides them with the chance to prove themselves and South Pars is now open to Iranian and foreign investors.

Let’s hope for a better and brighter future.

Kurdistan Petchem Plant Operational

On the first working day in the new Iranian year, President Hassan Rouhani inaugurated a petrochemical plant in the western Kurdistan province with an annual production capacity of 300,000 tons of low-density polyethylene.

This project is the largest industrial investment in Kurdistan Province: €257 million plus IRR 3,800 billion.

In addition to developing downstream petrochemical industry and completing the value chain, this plant will create new export markets, create jobs and value particularly for western and northwestern Iran.

Built on a land with an area of 129 ha, Kurdistan Petrochemical Plant will receive 310,000 tons of ethylene from West Ethylene Pipeline and 1.5 million tons of propylene from Tabriz or Ilam Petrochemical Plant every year as feedstock. The products of this new plant are used to feed downstream units, produce polyethylene films, polyethylene foams, wire and cable coating and plastics. The plant supplied its first products in March.

Application of high-quality equipment and commodities in this petrochemical plant is an outstanding feature of the facility which is ready to meet the downstream needs of Kurdistan and neighboring provinces.

9.5mn-Ton Petchem Output Hike

Addressing the inauguration ceremony, President Rouhani said development of production, attraction of investment and job creation is a public task. He referred to increased petrochemical production capacity in Iran, saying: "A 9.5-million-ton increase in petrochemical production in the 11th administration, valued at IRR 27,000 billion, is a source of national pride because with the activation of each industrial and production unit the country moves on the path of progress."

The president also touched on efforts undertaken by all branches of government and entities to raise production and help youth employment, saying: "Twenty-one projects have already been inaugurated in Kurdistan Province and operation of four projects has started with a total value of more than IRR 27,000 billion."

Rouhani underlined the need for making efforts in favor of Iran's development and prosperity, unity and empathy, economic prosperity, national production, attraction of investment and youth employment.

3rd Petchem Hub

Iran's petroleum minister Bijan Zangeneh said construction of Kurdistan Petrochemical Plant was the biggest industrial investment in the history of this province, adding: "With the inauguration of this plant, in addition to the completion of the production chain and enhanced production, we are witnessing abundant job creation in this area."

He referred to the short distance between petrochemical plants in Kurdistan, Ilam, Kermanshah and Mahabad as a big advantage for petrochemical exports and a good motivation for the construction of more petrochemical plants in western Iran.

"With the development of downstream industry in these areas we will see increased exports and job creation," said Zangeneh.

After Assaluyeh and Bandar Imam, Iran's western region is becoming the third petrochemical hub in the country, the minister said. "Continued construction of petrochemical plants in Ilam, Kermanshah, Kurdistan, Mahabad and Lorestan create a big petrochemical power for the west. After that, construction of downstream industries will continue."

Zangeneh referred to the inauguration of Lorestan, Urmia and Mahabad petrochemical plants, Marvdasht urea and ammonia plant, Karoun, Takht-e Jamshid and Kurdstan plants over the past year, expressing hope that Morvarid, Phase 2 of Kavian, Marjan, Entekhab, Kaveh and Pardis petrochemical plants will soon become operational.

"With the inauguration of petrochemical plants over the past one year and other projects which are to become operational, some 9.5 million tons of products will be produced with a value of $5.5 billion," said the minister.

Zangeneh said a $5.5bn increase in the value of petrochemical products under the Rouhani administration is a big achievement.

"With the removal of problems, we hope that these products will be consumed in the country within the framework of resilient economy policies to complete the production chain," he added.

Zangeneh said it was easy for Iran to reach $40bn production from petrochemical industry in Iran, adding: "The most important thing to reach this objective is to supply feedstock. In this regard, the petroleum ministry is building a large number of LNG units in Assaluyeh in order to separate high-density crackings from associated petroleum gases that could produce low-cost feedstock at competitive prices for petrochemical plants."       

 

Post-Sanctions $85bn Investment Opportunities

After taking office in 2013, the administration of President Hassan Rouhani adopted the slogan of moderation and launched a new round of nuclear talks with six world powers to settle a long-running dispute. As soon as the framework of nuclear deal was agreed upon by both sides in April 2015, multinational and international companies expressed willingness to invest in Iran's oil and gas sector. Iranian officials have said that the country would need $130 billion to $140 billion in investment by 2020. South Pars gas field alone will need $30 billion. The International Energy Agency (IEA) estimates that Iran's oil exports to its four main Asian buyers last February hit a seven-year high. Thanks to Iran's nuclear deal with world powers, known as the Joint Comprehensive Plan of Action (JCPOA), Iran has brought its crude oil and gas condensate exports to 3 mb/d.

Recently, the Iranian Ministry of Foreign Affairs hosted a conference themed "Resilient Economy and JCPOA". The event mainly discussed the JCPOA ramifications for Iran's petroleum industry.

Addressing the conference, Iran's Deputy Minister of Petroleum for International Affairs and Commerce Amir-Hossein Zamani-Nia said implementation of the JCPOA has served the oil, gas, refining and petrochemical industry in Iran.

"This industry is currently in 25 counts of serious talks with foreign parties. In case they are finalized more than $85 billion will be invested in the industry. Fortunately, with the implementation of the JCPOA, Iran's oil exports have more than doubled compared with the pre-sanctions period," he said.

Zamani-Nia said Iran earned more than $34 billion from oil sales in the calendar year to March 2017 by exporting 2.6 mb/d of oil and gas condensate.

He said that France's Total has spent more than $20 billion after signing a heads of agreement for the development of Phase 11 of South Pars gas field.

"It seems that this company is making necessary arrangements for renewed presence in Iran's market," he added.

Zamani-Nia said the international community insisted on respecting environmental issues and using clean fuel.

"In coming years, gas will take up added importance as a clean fuel," he said.

Oil Industry and Optimal Use of JCPOA

Abbas Araqchi, Iran's deputy minister of foreign affairs for legal and international affairs said the JCPOA achievements for the petroleum industry made Iran's nuclear negotiating team happy following several years of tough talks.

"The objective behind the implementation of this agreement was to remove obstacles to economic growth in Iran. We managed to realize this objective. Of course I have to acknowledge that the Iranian Ministry of Petroleum has been one of the best state-run entities in Iran to have benefited from the JCPOA opportunity," he said.

"It was a breakthrough to see both production and exports increase in a year. Under conditions of sanctions, all buyers of Iran's oil had signed contracts with other producers of oil. The Iranian Ministry of Petroleum managed to win back its old customers and even attract new ones after the JCPOA implementation," said Araqchi.

Noting that both parties to the JCPOA have been implementing their part, he said: "Without JCPOA, Western politicians like US President Donald Trump would have organized an international consensus against Iran; while due to the JCPOA such an international consensus is anti-Trump."

JCPOA and Foreign Delegates

Hamid-Reza Araqi, CEO of National Iranian Gas Company (NIGC) said that JCPOA paved the way for travels in rapid succession by foreign delegations to Iran to discuss cooperation in gas industry.

"The industry was facing much more difficult conditions before JCPOA than during Iraq-Iran war. The reason is that during the war international companies told us how to purchase commodities because they felt that due to the Saddam invasion of Iran, the country needed their commodities to reconstruct its installations. But during pre-JCPOA years, foreign companies refused to get involved in Iran's oil and gas industry due to sanctions," he said.

Araqi noted that gas makes up more than 70 percent of Iran's fuel mix, adding that increasing gas production would be of high significance for the country.

"In order to reach a resilient and economic economy, it would be highly significant to guarantee energy security in the country. In the meantime, one of the pillars of economic resilience in Iran is to replace liquid fuels with gas to feed industries and power plants and even households, inject gas into oil reservoirs for enhanced recovery

and export gas," he added.

Araqi said that four plans had been designed for the gas industry to meet its target under resilient economy.

One of them, he said, was laying out a pipeline to carry gas from Iran to Iraq.

"Gas Exports to this country will start next year once assurances are received about the model of payment. On the other hand, based on an agreement we have with Iraq, aside from gas exports to Baghdad, Iran plans to start exporting gas to Basra Province in Iraq" this year, he added.

"Since interaction with neighbors is a clause enshrined in economic resilience, regardless of Turkmenistan's halt of gas supply to Iran in winter, NIGC has been handling Turkmenistan's gas swap with Azerbaijan," said Araqi, adding that Iran had to bow to a nine-fold price hike imposed by Turkmenistan in 2007.

The second plan, he said, was to expand gas delivery in Sistan Baluchestan Province and export gas to Pakistan.

"The implementation of JCPOA has undone many knots for this project like clearance of our purchases at customs in European countries," he said.

Araqi touched on the third plan as gas supply to cities and villages in order to minimize consumption of liquid fuel and safeguard the environment.

"Over the past three years, 48 cities and 3,000 villages have been connected to gas distribution network and operations for 5,000 more villages are under way. It may be interesting for you to know that supplanting liquid fuel with gas in power plants would save Iran $13.6 billion annually," he said.  "Currently 93% of power plants in the country are using clean fuel. By relying on its gas reserves, Iran has joined the club of exporters of petroleum products."

Araqi said that more than 300 gas pressure booster stations and 13 gas-fueled power plants are operating in the country.

$14bn Refining Projects Up for Investment

Abbas Kazemi, CEO of National Iranian Oil Refining and Distribution Company, said in the ceremony that the world had been moving towards reducing fuel oil in recent years due to environmental concerns. As a result, he added, fuel oil is now traded 25% cheaper than crude oil.

"Currently, Iranian refineries are not in good economic conditions due to producing a large amount of fuel oil," Kazemi said.

He said that huge efforts were undertaken in the early 2000s to upgrade oil refineries in Iran, but many projects were halted due to international sanctions. "Furthermore, maintenance of aging refineries had become difficult under conditions of sanctions," he added.

Kazemi said Iran had to pay extra costs for money transfer and purchase of equipment from dealers during years of sanctions, adding: "Oil refineries in Iran are currently purchasing European catalysts one-fourth lower than during years of sanctions."

"With the implementation of JCPOA, investment projects in refining and distribution industries have been revived. For instance, recently a $3bn project has been launched for reducing fuel oil production in Abadan refinery. With the implementation of this project with foreign investment this refinery will no longer be loss producing," he added.

Kazemi said Iran needed $14 billion for upgrading nine refineries, adding: "According to Vision Plan 2020, fuel oil production in this (Abadan) refinery must be lowered to below 10%. Southeast Asian countries like China, Japan and South Korea have expressed willingness for participation in this project."

He said that Iran was able to export on average 450,000 b/d of petroleum products thanks to gas supply expansion across the country during the first ten-month period of last Iranian calendar year which ended on March 20. He said the figure was set to reach 600,000 b/d in the current calendar year.

He said Iran would become a leading exporter as Persian Gulf Star Refinery is set to come online thanks to the release of Iran's money frozen in foreign banks following the entry into force of the JCPOA.

"With the implementation of the JCPOA, the process of clearance of Iranian refinery equipment at customs offices of Western countries went on an upward trend," he said, citing the example of equipment purchased for Persian Gulf Star Refinery.

"It might be interesting for you to know that a pipeline that used to carry products to center and north of Iran from Iranian ports is now delivering products to ports to be exported," said Kazemi.

"Currently due to desulfurization projects at refineries in the country, half of petroleum products are in compliance with euro-4 standards and Iranian people are enjoying better weather conditions," he added.

Petchem Output Up

Ms Farnaz Alavi, director of planning and development at National Petrochemical Company, said at the ceremony that 13 petrochemical projects under way had been designated as key to the realization of resilient economy.

"In implementation of these projects, NPC has always focused upon development of value chain because development of such projects, due to their engagement with the society, are seriously effective in both economic growth and job creation," she said.

"After full startup of these projects, the value of petrochemical products exported by Iran would reach $16.5 billion. Furthermore, Iran's petrochemical production capacity will cross 63 million tons," said Alavi.

She said that Iran's petrochemical industry had enhanced its cooperation with universities in the country in order to acquire more sophisticated technology in favor of resilient economy.

"We have now mastered the technology to convert methanol to propylene and we have many plans under way for its development. We have received necessary permits from Iran's Economic Council in this regard. We have also signed a memorandum with Air Liquide," said Alavi.

"With the implementation of the JCPOA, foreign companies that were banned from cooperating with the petrochemical industry came to Iran once more for negotiations and studying the feasibility of projects. Companies like Total, Linde, Shell and Air Liquide have signed memorandums with NPC," she added.

Alavi said foreign companies' demand for guaranteeing state investment and NPC's participation in petrochemical projects were among challenges to investment in petrochemical sector as Article 44 of the Constitution blocks such involvement.

"Setting up a joint credit line between Central Bank of Iran and European financial and credit centers, more independence of European financial centers and state guarantees to foreign investors is among approaches to facilitate petrochemical projects in Iran," she said.

South Pars Starts Oil Production

Oil extraction from South Pars gas field started on March 20, the anniversary of nationalization of Iran's petroleum industry.

Production from the oil layer of South Pars, the offshore supergiant gas field shared with neighboring Qatar, is expected to reach 35,000 b/d in the first phase.

Gholam-Reza Manouchehri, deputy managing director of National Iranian Oil Company for development and engineering, said activities were under way for launching floating production storage and offloading (FSPO) unit, wells and production platforms in the oil layer of South Pars.

"Naturally, recovery from each well will start at the rate of 5,000 b/d and we will gradually reach 35,000 b/d in five to seven days, and then this rate of production will be sustained," he said.

"As soon as the capacity of Cyrus FPSO, which gathers and refines crude oil, reaches a specific figure; oil tankers will dock for loading and we hope to have the first cargo for exports from South Pars oil layer very soon," he added.

Manouchehri noted that it was being done for the first time in Iran, adding: "Exports protocols and necessary arrangements for the export of the first cargo of oil from the oil layer of South Pars are already ready."

He said that the oil layer of South Pars was estimated to hold more than 14 billion barrels of oil in place. He noted that recovery from this oil layer would start from seven wells and a technologically sophisticated FPSO which facilitates centralized production, preparation, storage and exports.

The start of crude oil recovery from the oil layer of South Pars gas field is important from a variety of aspects, the most important of which being competition with Qatar.

After the FPSO unit is installed, the oil from South Pars would be injected into it via a pipeline, 12-meter diameter, to be delivered to tankers after being refined.

Iran is currently in talks with foreign companies to develop the oil layer of South Pars under the new format of oil contracts known as IPC.

Hyundai Engineering in $3.2bn Iran Deal

An Iranian investment fund signed a deal with Korea's Hyundai Engineering Co for a € 3 billion ($3.2 billion) petrochemical project.

A subsidiary of the Oil Pension Fund Investment Company signed the agreement which covers the construction of the second phase of Kangan Petro Refining Company.

"The financing of this project will be finalized within nine months at the rate of 95 percent by South Korean banks," said Asghar Arefi, head of Ahdaf Investment Company.

Arefi said the first phase of the Kangan project had 30 percent progress with an investment of nearly €120 million.

He said the second phase of Kangan Petro Refining Company would include four olefin, MEG, HD and LLD plants.

"The permit for feedstock supply to this petro refining plant has been obtained from the Ministry of Petroleum," he added.

"The start and execution of this project relies on 95 percent of the project's financing coming from Korean banks with full support from Hyundai Engineering Company in securing those funds," Arefi said.

Hyundai Engineering CEO Sang Ruk Sang said the Korean company had operated successful gas-fueled refinery megaprojects over the past 40 years.

"On this basis I commit myself to applying all my experiences in order to conclude the second phase of Kangan successfully," he added.

Phase II of Kangan Petro Refining Company is planned to produce 1 million tons of ethylene, 400,000 tons of high-density polyethylene and 350,000 tons of low-density polyethylene a year. It will be near Phase 12 of South Pars gas field.

Construction of Phase I of this project has already started and is now 30% complete. In this phase, ethane, propane, butane and naphtha are to be produced. Propane, butane and naphtha are sold while ethane goes to phase II of the petro refinery project.

Pergas Ready to Study Iran Oil Fields

Iran has agreed with Pergas, a consortium of international oil and gas companies, for the surveying of two oilfields, a consortium official has said.

Masoud Besharati, head of the Iran office of Pergas, said the consortium would cooperate with Iranian exploration and production (E&P) companies particularly in terms of technological knowhow transfer.

"This consortium comprises companies operating in a variety of fields. It is ready for investment, training and transfer of technology in Iran's oil and gas industry," he said.

He referred to a memorandum signed between Pergas and National Iranian South Oil Company (NISOC) last November, saying: "Based on this memorandum, we have Karanj and Shadegan fields under study."

Besharati also said Sharif University of Technology would cooperate in the surveying of Koupal field.

"Since Persia Oil and Gas Development Company has signed memorandum of cooperation with National Iranian Oil Company to development several fields including Koupal, we are in talks with the company about Koupal field," he added.

Besharati noted that major oil companies in the world follow political conditions in the world. "But this consortium has no political approach; therefore, we are not worried about [a possible] snapback of sanctions," he added.

Colin Rowley, CEO of Pergas, said this consortium would continue to cooperate with Iranian companies.

He said that Pergas investors are mainly European and Canadian, much willing to invest in Iran's petroleum industry.

Pergas Consortium, managed by Pergas, an international British engineering, procurement, construction company, includes Norway's AGR, a global oil and gas services company, Middle East SPEC, supplier of full range of production and processing technology equipment for upstream and downstream projects, OILSERV, oilfield services provider, the UK's ByrneLooby, an engineering consultancy, PNOC, the UK's Hanson Financial Planner as well as Sharif University of Technology.

South Pars Platform 19B Installed

The last offshore platform of South Pars gas field's Phase 19 has been successfully installed, the phase's contractor has said.

“Platform 19B, which weighs 1640 tons, was constructed at an estimated cost of $150 million. It has the capacity to extract 500 mcf (over 14.2 mcm) of natural gas per day,” Hamidreza Masoudi said.

According to the official, platform 19B is connected to platform 19A, and via an 18-inch pipeline will be fully operational by April.

"Platforms 19A and 19C with the capacity to extract 14 mcm/d and 28 mcm/d of gas, respectively have already been installed," he added, noting that as soon as the new platform comes on stream, the whole phase will provid 56 mcm/d of gas to a refinery located in the Pars Kangan region of Pars Special Energy Economic Zone (PSEEZ) where it will be processed and injected into the national gas grid.

Moreover, the phase will produce 75,000 barrels of gas condensate, 1 million tons of liquefied natural gas and 1 million tons of ethane per year.

Masoudi said that more than 7.2 million barrels of condensates, worth $1.4 billion, have been shipped to target destinations from Phase 19 during the past year.

The official added that Phase 19 was developed by a consortium of Petropars Limited, Petropars Iran and Iranian Offshore Engineering and Construction Company under an engineering, procurement and construction (EPC) contract.

According to Masoudi, Phase 19 complies with all health, safety and environment (HSE) protocols ratified by the National Iranian Oil Company.

Phase 19 is one of the few South Pars phases designed with advanced equipment for curbing associated petroleum gases that are flared.

Iran Rated Petrochem Output Up

Iran's nominal petrochemical production capacity is forecast to reach 72 million tons a year, the CEO of National Petrochemical Company (NPC) said.

"With the operation of all petrochemical projects, the rated capacity of petrochemical production is projected to reach 72 million tons a year," Marzieh Shahdaei said.

She added that Iran's petrochemicals exports would go beyond 59 million tons in the current calendar year (started March 21), which would be 18% up year-on-year.

Shahdaei said 23 million tons of petrochemicals were expected to earn Iran more than $11 billion in revenue this year.

She noted that the current calendar year would be vital as it marks the beginning of Iran's sixth Five-Year Economic Development Plan.

"Naturally, every measure will have a significant share in the realization of the major objectives of the 6th Development Plan," said Shahdaei.

Regarding plans for presence in international markets, she said: "The provision of a proper atmosphere for renewed presence in the Europe market has prompted Iran's petrochemical industry to regain its share of the market."

"Therefore, the country's petrochemical industry will concentrate its capacity on facilitating conditions for a stronger presence in international markets" this calendar year," she said.

 

 

Iran Oil Demand Surpasses Export Capacity

Iran's petroleum minister has said that demand for Iran's oil has surpassed the country's export capacity.

Bijan Zangeneh was reacting to remarks by an Indian source about New Delhi's decision to cut oil imports from Iran.

"[Even] if we face a decline in oil exports to India we will have no problem and there are many buyers whose demand [for Iran's oil] is much more than our oil export capacity," he said.

"Iran is willing to broaden ties with India. Even if New Delhi reduces oil imports from Iran we will have no problem," he added.

Zangeneh said Iranian President Hassan Rouhani had promised Indian Prime Minister Narendra Modi to give time to his country up to September 2016 to discuss the development of Farzad B gas field by India.

"But the Indians did not submit their proposal in the due time. However, we gave them more time until December 2016, but their proposals were still unacceptable," he added.

Zangeneh said a letter had been sent to the Indian side, adding: "The proposal submitted by the Indian side would have nothing for Iran over 30 years and the Indians would collect the entire production as remuneration and operation fees."

The minister said Iran's objective behind oil and gas field development was not limited to recovery. "Our goal behind development of this field is to make revenues."

"We are currently making arrangements for other parties to step in and envisage other methods for the development of Farzad B field," said the minister.

"Recently our colleagues have sent a last letter to the Indian side to express Tehran's readiness for negotiations with political officials in India," he said.

"Conditions must be reasonable. We cannot sign a 30-year contract under threat. Nothing will go ahead under threat. We are willing to broaden our cooperation with the Indians both in the sector of development of field and the transaction of oil and petrochemicals. The language of threat is not a good one and it would be better to speak with a language of fairness and within the framework of trade logic," said Zangeneh.

The minister also referred to the production of more than 150 mcm/d of gas in the country after the startup of six phases of South Pars gas filed. "Currently we have 21 phases under operation, which will reach 24" by next March, he added.

Zangeneh said a major development had transpired gas production in Iran, noting that the country's gas output had more than doubled.

He said that the oil layer of South Pars gas field would become operational shortly.

"Currently, more than 20,000 b/d of oil is being produced, which must reach 35,000 b/d for the first phase to become operational," said Zangeneh.

The minister also said that preparations were being made for Azadegan oil field to be put out to tender. "Companies to bid for the project have been chosen and the tender bid will be held shortly."

Zangeneh said Iran's crude oil and gas condensate exports averaged 2.8 mb/d during the last month of the last Iranian calendar year which ended on March 20.

"Iran's gas condensate exports during the month of Azar 1395 (which ended 20 December 2016) was 2.5 times the exports when the 11th administration took office [in 2013]," he said. "Iran's crude oil exports in December 2016 reached 2.3 mb/d, which was 2.4 times higher than the five-month exports in 1392 (which started on March 21, 2013)."

OPEC Deal Extension Likely

Iran's Minister of Petroleum Bijan Zangeneh said recently that OPEC and non-OPEC agreement is likely to be extended, but time was needed to discuss the subject thoroughly.

He made the remarks on the sidelines of a state visit to Russia by Iranian President Hassan Rouhani.

"It seems that most of the OPEC and non-OPEC (countries) are going to extend the agreement, but time is needed to evaluate the situation and to have face-to-face meetings and discussions with others," Zangeneh said.

Asked whether Iran would be ready to cut its own output under the possible extension, Zangeneh said: "I think it is necessary that all members comply with their commitments."

The Organization of the Petroleum Exporting Countries (OPEC) and other large producers, led by Russia, had agreed in December to cut their combined output by almost 1.8 mb/d to reduce bloated oil inventories and support prices.

Rouhani and Russian President Vladimir Putin said in a joint statement that the two countries would continue efforts to rein in oil production and stabilize markets.

"Russia and Iran will continue cooperation in this sphere (in oil output cuts) in order to stabilize the global energy market and ensure stable economic growth," the statement said.

The two presidents met in the Kremlin and also discussed Syrian crisis among other issues.

During the visit, Russia's geological holding company Rosgeologia agreed to conduct geophysical projects with National Iranian Oil Company (NIOC).

The head of Russian Ministry of Nature, Sergey Donskoy, said: “There is an agreement with one of the enterprises affiliated with Rosgeologia, which will carry out contract works for the Iranian state company. These are contractors for geophysical work."

He added that Rosgeologia also planned to conduct geological exploration of groundwater.

Birjand Oil Depot Launched

An oil depot with storage capacity of 105 million liters of fuel has been launched in the city of Birjand in South Khorasan Province.

The project, worth IRR 420 billion, came on-stream by Minister of Petroleum Bijan Zangeneh on the sidelines of a recent provincial tour by President Hassan Rouhani.

"The fuel storage tanks in Birjand's central oil depot are equipped with internationally standardized systems and full safety and environmental issues are respected," said Mansour Riahi, CEO of National Iranian Oil Products Distribution Company (NIOPDC).

He said the oil depot expands on 25 ha of land, noting that it had a capacity of storing 12 million liters of firewater, 20 loading and unloading platforms, 11,000 square meters of parking lots for oil tankers and 500 square meters of rest area for drivers.

Riahi said that it was possible to load and unload fuel at the depot simultaneously.

Describing it as one of the most strategic oil depots in Iran, he said that the facility would make petroleum products' exports possible due to its proximity to Afghanistan's border.

Oil Field Study Findings Submitted to NIOC

National Iranian Oil Company (NIOC) has so far received the findings of studies conducted on 15 Iranian fields by domestic and foreign companies, a deputy managing director of NIOC said.

"These studies indicate Iran's high capacity to increase crude oil production," said Gholam-Reza Manouchehri, adding that the major project for enhancing oil recovery in Iran would start this year.

He said that oil tenders are to be launched this year. "Letters of invitation have been sent to international companies and preliminary talks have been held for formation of consortiums to bid for projects."

Manouchehri said NIOC was in talks with Iranian and foreign companies to operate oil megaprojects.

"Implementation of these projects will open a new window to Iran's petroleum industry," he said, adding that the ground was prepared for Iran to start enhancing recovery from oil fields.

He also said that the projects were ready to come on-stream in South Pars gas field and its oil layer was valued at $20 billion.

"Increased oil and gas production will promote Iran's energy balance and status in the Organization of the Petroleum Exporting Countries (OPEC) in terms of competition in world markets," Manouchehri said.

Referring to relentless efforts under way at Iran's Ministry of Petroleum for enhancing recovery from oil reservoirs by applying cutting edge technologies, he said: "Based on recent studies conducted by domestic and foreign experts on oil fields, some of fields which are for instance producing 50,000 b/d could raise output to 300,000 b/d by applying new methods."

IGAT-8 Pressure Booster Stations Operational

Five pressure booster stations of Iran Gas Trunkline 8 (IGAT-8) have become operational in an official ceremony attended by First Vice President Es'haq Jahangiri, Minister of Petroleum Bijan Zangeneh and CEO of National Iranian Gas Company (NIGC) Hamid-Reza Araqi.

Jahangiri travelled to the central city of Kashan to inaugurate a gas pressure booster station there. Through videoconference, he also inaugurated booster stations in Naein, Safa Shahr, Jahrom and Khonj.

He also visited different sections of Kashan gas pressure booster facility and listened to a report by Minister Zangeneh about the booster stations.

The five stations, fitted with 25-megawatt turbocompressors, became operational after 30 months with an investment of around IRR 16,000 billion. The projects have been fully operated by Iranian consultants, manufacturers and contractors.

After these five stations came on-stream, the transfer capacity of IGAT-8 increased from 60 mcm/d to 110 mcm/d.

IGAT-8, which is more than 1,000 kilometers long, can carry 110 mcm/d of gas from South Pars gas field in southern Iran to central Iran.

IGAT-8 receives gas from phases 9, 10, 17 and 18 of South Pars to feed cities and industrial plants on its way. A total of 10 gas pressure booster stations are planned to be built on the IGAT-8 path.    

 

6 South Pars Development Phases Operational Post-JCPOA

The operation process of development phases of South Pars gas field under the administration of President Hassan Rouhani started with the inauguration of Phase 12. It continued as phases 15 and 16 came online. The developments were completed as phases 17&18, 19 and 20&21 came on-stream.

Development of South Pars is of high importance when it is known that the gas recovered from each phase would add one percent to Iran's gross domestic product (GDP), which means job creation and outdoing Qatar which jointly owns the field with Iran.

"Iran Petroleum" has conducted an interview with Ali Kardor, CEO of National Iranian Oil Company (NIOC), about South Pars development.

Q: Under the Rouhani administration, the Iranian Ministry of Petroleum prioritized South Pars development phases in a bid to accelerate the development of the giant offshore gas reservoir. Would you please explain about it? 

A: When the 11th administration took office, Bijan Zangeneh (Iran's minister of petroleum) visited the South Pars development phases to get to know how much had been spent on each phase and to learn about related issues. Anyway after the new administration took office crude oil prices had fallen, we were under sanctions and our oil exports rate had declined. Therefore, NIOC's financial resources had declined sharply and we could not develop all phases together. Had we done so none of these phases would have reached production. Therefore, we decided to prioritize the phases and we allocated financial resources in priority to projects with a higher rate of progress so that they could reach production faster. Other projects received less finance.

Q: A major problem with the development of phases was financial shortages. How did petroleum ministry deal with the issue?

A: The financing of South Pars development had been partly done under the 10th Iranian administration. Under the 10th administration, upon an instruction by Supreme Leader [Ayatollah Ali Khamenei], $5 billion was allocated to the development of five phases. The 11th administration was also looking for permits to finance development of this field. The Islamic Consultative Assembly also helped the government in this field and on the strength of their note the Iranian Ministry of Petroleum and NIOC guaranteed that contractors operating joint oil and gas fields including South Pars could benefit from the National Development Fund of Iran (NDFI). Therefore, we managed to provide other financial resources than the NIOC domestic resources to the South Pars development, so that the progress of phases would pick up speed.

Q: How much has been invested in the completion and operation of phases 17&18, 19&20 and 21?

A: The completion and operation of these phases of South Pars have cost more than $18 billion: nearly $7 billion in Phases 17 and 18, $5.5 billion in Phase 19 and $5.3 billion in Phases 20&21.

Q: Would you please also speak about the importance of South Pars and its economic interests?

A: Operating each phase of South Pars will add one percent to the country's gross domestic product (GDP). South Pars supplies gas in the country and provides welfare for people in the winter. Furthermore, enhanced production from this field will help natural gas replace petroleum products, which will in turn lead to more export of oil products and directly impact job creation, economy, etc. Any delay in bringing these phases into operation means funneling profits to Qatar's market.

Q: How did the atmosphere created following the implementation of Iran's nuclear deal with six world powers, known as the Joint Comprehensive Plan of Action (JCPOA), contribute to the development of South Pars?

A: Facilitation of financial transactions and the possibility of opening letters of credit played an effective role in completing the process of development of South Pars phases. The post-JCPOA lifting of the ban on [buying] some compressors, valves and other equipment used in the projects, which had been stuck in European countries, United Arab Emirates, etc. helped accelerate the implementation of the projects.

In the wake of the implementation of the JCPOA, 10 compressors including four off-gas compressors and six propane refrigerant compressors were received from Siemens to be used in the development of Phase 12 of South Pars.

Six Siemens-made compressors were delivered in March 2016 to be used in the development of Phases 17 and 18. A large amount of pipelines, joints and Inconel valves for SP17, 18, 20 and 21, and air blowers in the sulfur production unit of SP20 and 21, all made by top European companies, were among other commodities that were delivered to these two phases in the first months of the current [calendar] year (which began on 20 March 2016).

Placing an order for ethane recovery turboexpanders in the SP19, 20 and 21 development phases was another measure that would have been impossible without JCPOA.

Q: It seems that some phases of South Pars would face production decline in coming years. What’s your solution to deal with challenge?

A: That's true. That is why we have to use compressors and pressure-booster platforms in South Pars in order to avoid pressure fall-off. These platforms weigh 19,000 to 20,000 tons. Iranian companies can build platforms weighing up to 7,000 tons and the contractors' yards do not have the equipment to build pressure-booster platforms. Therefore, we have to apply special equipment and technology which Iranian companies lack. As foreign companies developed phases 2 and 3 of South Pars and the Iranian contactors were empowered in the next phases, Iranian companies could become more powerful throughout the construction of these platforms, and the technology for building pressure-booster platforms will be transferred into the country.

Q: How much gas will be added to Iran's output when SP17, 18, 19, 20 and 21 come on-stream?

A: According to the NIOC Directorate of Corporate Planning, in September 2013 when the 11th administration took office, SP17 and 18 had 78.53% progress. When the new administration took office, SP19 was 67.09% complete and SP20&21 was 51.87% complete. We are now witnessing their completion and operation. Their full operation will add more than 150 mcm/d to the South Pars output.

Q: How much has NDFI allocated to the South Pars development? Is it enough to rely on NDFI?

A: This [calendar] year, more than $3 billion was withdrawn from NDFI for the development of South Pars gas field. However, mere reliance on the NDFI resources is not a long-term and defendable approach. These resources will help the development of jointly owned fields until the way is cleared for attracting foreign investment.

NIOC is making efforts to apply a variety of investment attraction methods in order to reduce dependence on domestic financial resources. This company is facing numerous financial bottlenecks. In order to deal with development projects under such circumstances we need to develop skills to attract foreign investment and apply creative methods.

The profits gained from the issuance of NIOC bonds, which were printed last March, have been used for building utilities in the South Pars projects. In the integrated development plan for South Pars, enacted by the Economic Council, all activities needed for the development of remaining South Pars phases, except for Phase 11, have been envisaged.

Q: One of the largely used equipment, particularly in South Pars, is corrosion resistant alloy (CRA) coiled tubing. The grounds have recently been paved for the transfer of technology for manufacturing this type of tubing into the country. Would you please elaborate on this issue?

A: CRA coiled tubing is among the most consumed and the most expensive equipment used in the petroleum industry. Manufacturing this product requires access to state-of-the-art technologies and is among hi-tech industries. CRA coiled tubing has been imported to Iran ever since Iran's petroleum industry was born more than 100 years ago. The technology for its manufacturing is monopolized by several countries. Therefore, the tender bid for the procurement of 600 kilometers of CRA coiled tubing was recently held by Pars Oil and Gas Company. It was agreed that domestic and foreign manufacturers would cooperate to facilitate the transfer of technology for this widely consumed commodity into the country. The winner of the bids has been named and construction is set to start soon. NIOC is seriously pursuing the transfer of technology for building these tubings into the country and we hope to become CRA manufacturers in coming years.

Q: How do you assess the performance of Iranian contractors in the South Pars?

A: Naturally, domestic companies spend more time and budget than international companies to operate projects. Now imagine that international sanctions increased expenditure and prolonged the implementation of projects. But in the meantime, operation of these projects has resulted in more experience for domestic companies. We hope that after having acquired these experiences and through more interaction between Iranian and international companies we will witness in coming years lower costs and less time spent on the operation of projects by our contractors.

Q: What are NIOC plans for developing North Pars field?

A: Development of jointly owned fields is a priority in the petroleum industry and investments are now focused on these fields. North Pars is an independent field and we can develop it in the future, too. However, in case South Pars experiences pressure fall-off and pressure-booster platforms could not support necessary gas output we can use South Pars to make up for South Pars gas shortages. If not, we can use the North Pars gas for LNG and exports. Development of jointly owned fields remains a priority for NIOC and that is why all activities in South Pars are concentrated on maximum recovery from this field.

8 Iranian Contractors Operate 6 South Pars Phases

Eight Iranian contractors have made six development phases of South Pars gas field, which are all oil megaprojects, operational. That comes against the backdrop of tough sanctions against Iran's oil sector in the past years. International companies had pulled out of Iran and the country faced numerous problems in operating oil projects. Rarely could one imagine that Iran would be able to implement its major oil and gas projects without reliance on foreign companies. But under the aegis of the Iranian Ministry of Petroleum, Iranian companies have managed to implement South Pars development projects one after another and reach Qatar in gas recovery from the field shared by the two countries. As the Ministry of Petroleum had promised, three more projects including South Pars development phases 17, 18, 19, 20 and 21 would come on-stream before the administration of President Hassan Rouhani bows out later this year. In total, 11 development phases of South Pars would have become operational under Bijan Zangeneh as minister of petroleum.

Industrial Projects Management of Iran (IPMI) affiliated with Iran's Industrial Development and Renovation Organization (IDRO), Oil Industries Engineering and Construction Company (OIEC), Iranian Offshore Engineering and Construction Company (IOEC), Petropars, Petropars Iran, Iran Shipbuilding and Offshore Industries Complex Company (ISOICO), National Iranian Drilling Company (NIDC) and Energy Dana are eight Iranian companies tasked with operating three South Pars projects which are close to coming online. The bulk of their activities are summarized as follows:

SP 17&18

In development phases 17&18 of South Pars, a consortium of OIEC and IDRO has been in charge of onshore activities, while IOEC and ISOICO have teamed up for offshore operations. NIDC and Energy Dana have been in charge of drilling operations. The entire project has been steered by IDRO. It was the first time that all construction operations in South Pars were handled by Iranian companies. Afterwards, Iranian contractors were emboldened to handle the construction of refineries.

On behalf of IDRO, IPMI was in charge of non-processing activities like receiving sour gas, transferring sweet gas to national grid, building utilities, storage tanks and sulfur recovery units.

OIEC was tasked with operating processing units including four rows of gas treatment, gas sweetening under Worly Parsons license, dehydration, ethane recovery, gas liquid separation, propane refrigeration (using refrigerating compressors), as well as propane and butane sweetening.

IOEC built two main platforms at Phases 17&18, weighing 7,050 tons at Khorramshahr Yard, carried out onshore pipelaying on 10 kilometers and offshore pipelaying on 214 kilometers and connected onshore pipelines to the treatment facility. ISOICO handled the construction of two satellite platforms - 17B and 18B - each weighing 2,300 tons in Bandar Abbas Yard. This company managed to hit the record for installation and gas production in South Pars. This record was already set by Norway's Statoil at 6 months plus 15 days. But Platform 18B came on-line in 62 days by ISOICO engineers. ISOICO had earlier operated the platform of Phase 16 during a period of five months plus 10 days.

NIDC

NIDC spudded 22 wells in platforms 17A and 18A. These drilling operations started in 2010 by two drilling rigs. The operations ended in April 2014. The result was an overall drilling of 93,490 meters. This project created 400 direct jobs.

Dana Energy Co.

Dana Energy was in charge of drilling 22 wells in the platforms 17B and 18B with the help of three drilling rigs. The operations started in March 2013 and ended in June 2016. Overall, 91,000 meters was drilled. A total of 400 jobs were created directly and more than two million hours of work was registered.

Phase 19

Phase 19 development of South Pars was awarded to consortium of Petropars, IOEC and Petropars Iran. The project is led by Petropars.

Petropars

Petropars was tasked with drilling 21 wells and building a refinery on 216 ha of land. Supplying 52% of equipment used in drilling and 70% of equipment used in the refinery was handled by Iranian manufacturing companies. Among records set in Phase 19, the operation of three rows of treatment facilities within six months and launching a treatment facility with the help of domestic manpower with the presence of foreign companies.

IOEC

IOEC was tasked with three offshore platforms, 480 kilometers of pipelines (diameters measuring 4 inches, 32 inches and 18 inches) and building a single-point mooring. Hookup operations (following the installation of Platform 19C) started in nine days, Platform 19A was installed in three hours, Platform 19A was launched and gas was transmitted to national grid in 70 days, while the knowhow for SPM construction was mastered.

SP 20&21

Phases 20&21 of South Pars were developed by OIEC and IOEC. The project was led by OIEC.

OIEC

Drilling 22 wells with an overall 88,000 meters of drilling without accident and construction of refineries in phases 20&21 were up to OIEC. A total of 13 contractors were active in the refinery sector. Installation of 44,000 tons of structures, laying 6,400 kilometers of cables (equal the distance between Iran and Germany), pouring 307,000 cubic meters of concrete and using 37,000 tons of equipment, building fully Iranian control room and indigenization of equipment were among measures by this company in the development of Phases 20&21.

IOEC

IOEC was tasked with the construction of two gas platforms, each weighing 2,700 tons, laying 210 kilometers of pipeline (measuring 32 inches in diameter) and 210 kilometers of pipeline (measuring 4 inches in diameter). In total, 16,000 tons of structures and equipment were used in this project. Direct job creation for 600 people in Khorramshahr Yard, benefiting from Iranian engineers' expertise in designing, engineering, commodity supply, platform construction, transfer, installation and launch, building a system to control the platform, setting a 60-day record for platform construction, four-month record for laying 200 kilometers of offshore pipeline with an IOEC-owned vessel are among measures of this company in the SP 20 and 21 megaprojects.

 

Memorable Year for South Pars

Fifteen years have passed since Iran started developing South Pars gas field. Total recovery from this offshore field, which Iran shares with Qatar, stood at 280 mcm/d in 2013. But now it has reached 540 mcm/d. In other words, development of South Pars has picked up speed under the administration of President Hassan Rouhani. Iran has neared Qatar in terms of recovery from South Pars after the startup of phases 12, 15 and 16. Five phases (17, 18, 19, 20 and 21) became operational in the Iranian calendar year which ended on March 20. That breakthrough came while the Rouhani administration was facing international sanctions and financial shortages at the time it took office in 2013.

Project Delay Compensated

Mohammad Reza Chelipa, project manager at Phases 17&18 development, said the two phases included four platforms each with a production capacity of 500 mcf/d, two pipelines (32 inches in diameter) plus onshore facilities.

"With their startup we will see 56.5 mcm/d of gas recovery," he said.

Chelipa said the contract for phases 17&18 was finalized in 2006 and relevant operations started one year later. However, he noted, the project did not progress sufficiently due to changes of the contractors. The project was supposed to come on-line in 52 months, but repeated delays did not let that happen.

When the development project started seriously by contractors, Iran's oil sector was slapped tough sanctions, and faced serious problems for equipment procurement.

"The slow pace of work was under way in phases 17&18 until in 2013 the 11th administration's Ministry of Petroleum changed approach [vis-à-vis the project] and we witnessed progress following all-out support by the client and National Iranian Oil Company (NIPC) for contractors. As a result, the 30% delay in the project was made up for," Chelipa said.

He said that a main challenge in the development of these two phases was designing a treatment facility which would be different from other treatment facilities at South Pars.

"The difference lies in the fact that this treatment facility was initially designed by foreign companies, but we were then forced to change the basic design. As a result we gained new experience in designing and launching projects," he added.

Chelipa said in the phases 17&18 development, engineering sector accounts for 4% of work, equipment and commodity purchase for 59% with the rest going to manufacturing, installation and startup. Domestic sector makes up for 88% of engineering, 41% of commodity purchase and 99.4% of manufacturing, installation and startup.

"Therefore, one can argue that domestic share of implementation of this project is 65% and more than 180 million persons/hours of work have been done in this project," he added.

Chelipa said that in terms of weight 37% of activities related to the refinery was done over the past three years. He said that the first treatment unit in this project became operational in January 2015 to allow gas injection into national network. "That came under circumstances that even Ministry of Petroleum could not imagine that we would be able to inject gas into national network at a time the country was facing shortages," he added.

Chelipa said: "Statistics indicate that from January 2015 to February 2017 we injected a total of 12.6 bcm of sweet gas into national network and exported 374,000 tons of ethane and more than 14.3 billion barrels of gas condensate."

"During the ten years that have passed since phases 17&18 of South Pars became operational, one of our toughest days was still the first production from these phases, the time when Iranian contractors with little experience in running treatment facilities joined this part of the project," he said, adding: "At that time it was a new experience and making sure about gas transmission to the treatment facility in full safety and then injection into national network had doubled our responsibility. Apart from that, every unpredictable incident could happen at any time. But the refinery started work under safe conditions and we took a sigh of relief."

Chelipa said: "Today Iranian contractors have become so powerful in South Pars that the Ministry of Petroleum has endorsed their qualifications for activity in the exploration and production (E&P) sector and they can easily operate offshore and treatment facility construction projects – all this under conditions  that few companies can operate such megaprojects."

Prioritization and Phase 19 Development

Hamid-Reza Masoudi, project manager at Phase 19 development, said that development of Phase 19 was of high significance due to its location at demarcation point between South Pars and North Dome of Qatar. "That's because gas migration towards Qatar and delay in the development of this field will help Iran's rival recover more than Iran," he said.

"Iranian contactors started developing this phase at a time Iran's petroleum industry was under sanctions and financial restrictions and the blockade of entry of certain equipment [into Iran] for this project had intensified the problems," Masoudi said.

He noted that absence of finance and subsequently the failure to settle debts to manufacturers, impossibility of money transfer for the purchase of equipment and lack of cooperation with vendor lists were among problems related to the implementation of this project. "In certain cases we had to place a new order for the manufacturing of commodities and that meant delay in the work."

Masoudi said it would be no exaggeration to say that the 11th administration's policymaking with regard to prioritization of the project and allocation of resources to the South Pars projects, as well as implementation of Iran's nuclear deal with world powers contributed to

the recovery of 56.6 mcm/d of gas from this phase.

"Phase 19 operations that started during sanctions taught Iranian contractors valuable lessons about how to transfer currency and receive commodities," he said.

"On the other hand, one of the most difficult steps in implementing this project was coordination among divisions and sections in a balanced manner. Drilling, pipe-laying, platform construction and refinery building sectors were developed in a balanced way," said Masoudi.

He said that Phase 19, which Iranian contractors brought into operation, was the most leading project in newly-launched projects of South Pars. Within six months, three trains of treatment facilities in Phase 19 came on-stream, sweet gas was delivered to national network and gas delivery to treatment facility started in a record 70 days after the installation of Platform 19A. Furthermore, 10,000 jobs were created directly and all payments became regular.

Masoudi said 5 bcm of sweet gas had been injected into national gas network in February when 6.5 million barrels of gas condensate were also exported. "These achievements ahead of the startup of the project earned the country $890 million in revenue," he added.

"For me, South Pars is a like a child with whom I have passed most days of my life and I have closely watched contractors grow and increase their capabilities. Now I can say that through wisdom, foresight, prioritization and precise planning we will be able to operate very big projects in the country," said Masoudi.

Domestic Capabilities

Ali-Reza Ebadi, manager of Phases 20 &21 development, said these phases would lead to the recovery of 56 mcm/d of gas from South Pars.

"Implementing such megaprojects in the petroleum industry has only one meaning, that is the growth and dynamism of Iranians in operating oil projects," he added.

Ebadi referred to widespread activities under way for implementing this megaproject, both in the offshore and onshore sectors, adding: "For instance, 7,000 kilometers of cable has been laid out in the treatment facility of this phase, which is even 600 kilometers more than the 6,400-kilometer radius of the Earth. Or 300,000 cubic meters of concrete has been poured in this treatment facility, which is 14 times the concrete poured at Tehran's Milad Tower."

He noted that the amount of activities carried out in the offshore sector were less than that of the onshore sector and treatment facility building.

That is because platforms weighing several thousand tons along with their belongings have all been built onshore and are then carried offshore. However, the offshore sector often needs special equipment whose procurement makes the job more difficult than the onshore sector", he said.

Ebadi added: "However, onshore activities are by no means simple due to the high volume of work and had such activities as drilling, pipelaying, treatment facility and platform construction not been done in parallel, and simultaneously we could not have witnessed recovery and transmission of gas to national network."

He said that domestic capabilities had been used to maximum level in the implementation of this project and more than 65% of needed equipment had been supplied by Iranian manufacturers.

"For example, for the first time, an Iranian company manufactured the control system of onshore and offshore refinery of these phases or 200 processing pumps were provided by domestic manufacturers and all of them left behind successful experiences and registered a brilliant background," Ebadi said.

"Although the contract for the development of these phases was signed in 2020 and their implementation at the same time as the toughening of sanctions against Iran turned into one of the biggest challenges of the petroleum industry with regard to financing and equipment procurement which intensified the problems, it was a factor for reliance on and trust in domestic manufacturing for the supply of most of equipment and further confidence in domestic companies which displayed in the offshore and treatment facility building sectors that they deserved such a trust," he added. Ebadi noted that six more phases of South Pars would become operational before the next election is held, bringing Iran's recovery from South Pars to the same level as Qatar's.

"The importance of this issue will be known when we take into account that Iran's share of this 9,700-square km field is 3,700 sq km and the Qataris have a bigger share than Iran in this field," he said. "However, over the past three years through planning and prioritization of projects we have witnessed the revival of this project and fastness in the operations. Without precise planning and follow-up by the Minister of Petroleum we could not have seen early production from Phases 20&21 of South Pars."

South Pars, Indicator of Iranian Contractors

Gholam-Reza Manouchehri has experienced working  both  in offshore and onshore. He is well familiar with subsea pipelaying and refinery construction. He also knows sanctions and lack of finance.

Manouchehri has a brilliant background in companies like Petropars and Iranian Offshore Engineering and Construction Company (IOEC), both involved in the development of South Pars gas field.

He is now serving as the deputy managing director of National Iranian Oil Company (NIOC) for development and engineering.

The exclusive interview he has granted to "Iran Petroleum" is as follows:

Q: How do you see the future of South Pars gas field?

A: Except for Phase 11, other phases of South Pars are forecast to have been completed within two years or at most 30 months. Phase 11 development is expected to be finished in four years. South Pars will definitely play a major role in the supply of gas and condensate in the country. After remaining phases are developed in South Pars, gas condensate production in this jointly owned field will reach 1 mb/d.

Q: Could you name the future challenges to the South Pars development?

A: The pressure fall-off in gas and gas condensate will be one of the main challenges in this field.

Q: What could be done to cope with this problem?

A: Using pressure booster compressors could be an effective measure. Furthermore, reservoir studies must be carried out more seriously and more comprehensively. Changes in the condition and behavior of reservoir and forecasting future conditions are also important. Other layers of South Pars should be also studied. Transferring gas from adjoining fields in a way to avoid a quick fall-off in the gas pressure and volume of gas condensate production is also another measure. Pressure fall-off is a natural phenomenon, but we have to try to lengthen the production plan.

Q: So South Pars will need more efforts and activities in the future.

A: That’s true. Drilling in this joint field will be based on studies in the future. The type of drilling may change. Moreover, there is much sensitivity with regard to the jointly owned parts of this field. Since the Qatari side is recovering gas along with us we will naturally see more problems.

Q: Do you think there is technology for preserving production in Iran?

A: This technology is accessible and naturally in the future we will be able to increase the share of Iranian companies in implementing such projects. The more we go ahead, the higher gas and gas condensation will cost, and we have to recognize that production costs in South Pars will go up.

Q: How much does production cost in South Pars now?

A: Implementation of each phase of South Pars under the current circumstances is estimated around $2.5 billion and our production costs stand at two or three percent of the value of investment. It is a low figure, but will increase in the future.

Q: How much do you think this increase will be?

A:  It depends on the conditions of upcoming years and the amount of additional investment. But undoubtedly the costs of installations will increase. Therefore, we cannot announce any accurate figure. However, it will most probably be twice.

Q: Are you happy with the current management of South Pars output maintenance?

A: Regarding the maintenance of onshore facilities, NIOC is largely experienced and we have no serious problem in this regard. However, we need to improve standards of production, reduce flare gases and minimize environmental damage. For this purpose, we need investment. Moreover, in some refineries we need to implement a complementary procedure to eliminate flare gas.

Q: What about offshore maintenance?

A: In this sector we need to pay more attention and apply higher standards because in the offshore sector our operation models do not fully comply with international conditions. At the beginning, our platforms were designed to be unmanned, but they are manned now. Therefore, we have to take into account this fact that such facilities are exposed to more degradation and more difficult to accede. We have to run South Pars which has a 30-year to 50-year future.

Q: How do you assess South Pars’ role in empowering domestic contractors?

A: Iranian contractors became international thanks to South Pars. The fact is that South Pars has been instrumental in upgrading domestic industry and project management mechanism, development of contracting system and engineering services companies. In the past we often heard that Isfahan Steel Mill was a good model in terms of concrete pouring and molding. But South Pars has played a major role in developing EPC knowhow, petroleum engineering, refinery construction and equipment manufacturing. We cannot say that all this happened first in South Pars, but given the scale of work.

industrial plants, factories and contracting companies emerged and grew under the aegis of South Pars and then they spread across the country. I can say that South Pars improved technical standards and raised the expectations of managers with regard to the quality of work. Moreover, a valuable interaction was created between Iranian and international companies at different levels of activity.

In fact, after implementation of phases 1 to 8 of South Pars by Iranian and foreign companies, the top role in phases 12 to 16 was assigned to Iranian companies. Although we had problems with some of these projects due to high costs and delays, Iranian companies finally proved their capabilities in drilling, offshore and onshore operations and pipelaying.

Q: In case you are asked to name several Iranian companies that have been empowered through their activities in South Pars, which companies will you name?

A: Undoubtedly Petropars is at the top of them. This company managed to play the role of a developer. OIEC (Oil Industries Engineering and Construction Company) as an EPC company, IOEC in offshore EPC and some private companies are also among them. Sadra has also shown good growth although it delayed some of thes projects due to domestic problems and has so far failed to deliver platforms for phases 13, 14 and 22-24. Nevertheless, generally speaking, Iranian companies have fared well in the development of South Pars.

Q: Would you please cite some of the measures taken first in South Pars?

A: Drilling, deepwater drilling, subsea pipelaying, and project macro-management.

Q: Once South Pars phases have been completed, provided that unbridled consumption is contained, which role could Iran play in the gas market?

A: After completing South Pars phase development, we will have the chance to invest in LNG sector. Of course, it is already possible. [But] then we can enhance our gas exports to the region.

Q: What have been the challenges of South Pars in recent years?

A: Investment, project mismanagement, supply of equipment and commodities were among these challenges. But these problems have been resolved after the implementation of the JCPOA and the [ensuing] lifting of sanctions.

Q: How do you assess cooperation with foreign companies in the development of South Pars?

A: During years of sanctions, NIOC and its staff demonstrated their capabilities in developing oil and gas fields, particularly the jointly owned South Pars field. During this period, phases 12, 15, 16, 17, 18, 19, 20 and 21 were developed. Gas production capacity in South Pars currently stands at more than 480 mcm/d, which is expected to reach 580 mcm/d early next [calendar] year. As far as recovery from South Pars is concerned we have to continue producing gas and gas condensate more smartly. In order to have access to cutting edge technologies we need to cooperate with service companies and international oil companies (IOCs) so that they would bring capital, technology and management into the country.

Q: You were manager in both Petropars and IOEC and you have experience of offshore and onshore sectors. How do you assess your own performance at South Pars?

A: I thank God for my contribution to the development of these fields from the very beginning. I joined the project when Phase 1 was in its final day of development; I managed development of phases 6 to 8. I also managed development of Phase 12 half way, as I was CEO of Petropars and project manager. When I left this company all contracts had already been signed. The contract for Phase 19 of South Pars was signed when I was at Petropars. Furthermore, when I was IOEC manager, seven to eight platforms were finally completed and installed.

Q: Would you please name five influential people in the South Pars development?

A: Certainly Mr. Zangeneh (minister of petroleum) will occupy the ranks one to three. He is followed by Misters [Akbar] Torkan and [Mehdi] Mirmoezzi. But Mr. Zangeneh was the pioneer of South Pars and he was the one who brought about fundamental changes in the petroleum industry.

Tehran Oil Show, Good Chance for Iran E&P Firms

The Iranian capital will be hosting the 22nd International Oil, Gas, Refining and Petrochemical Exhibition from May 6 to May 9.  

This oil show is being held 18 months since Iran reached a landmark nuclear deal with six world powers, letting Iran's Ministry of Petroleum sign heads of agreement (HOA) and memorandums with foreign companies based on the newly developed model of oil contracts.

Iran is set to hold a first tender within the framework of new contracts soon. Now Tehran Oil Show provides a good opportunity for Iranian and foreign companies to learn about the latest developments transpiring the petroleum industry with a view to starting to cooperate with each other.

An outstanding feature of this year's exhibition is the presence of 11 Iranian exploration and production (E&P) companies. That could lay the groundwork for further cooperation between Iranian and foreign entities.

Mohammad Nasseri, manager of the 22nd Show, said the entire event would be held on more than 80,000 square meters of land. He noted that Iranian and foreign companies had demanded four times this area to showcase their products.

He said that arrangements had been made for the participation of domestic and foreign companies.

"The 22nd show will allow international companies, domestic companies as well as public and private managers to hold negotiations at any level and be kept abreast of the latest developments pertaining to the petroleum industry," said Nasseri.

1,300 Booths

Nasseri said due to space limitations companies had been allotted land below their demand.

"This year, between 1,200 and 1,300 booths have been provided to domestic and foreign companies. In some of these booths, some companies are attending as a holding," he said.

Nasseri said last year some 40 countries were present in the Oil Show, adding that this year 40 were to attend.

He named some of them as follows: Armenia, Austria, Azerbaijan, Belgium, Bahrain, Canada, China, Czech Republic, Finland, France, Georgia, Germany, Greece, Hungary, India, Italy, Japan, Malaysia, Monaco, Norway, Oman, Poland, Romania, Russia, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan, Thailand, the Netherlands, Turkey, United Arab Emirates, Britain and Ukraine.

Nasseri said South Korea, Austria, Finland, the Netherlands, Japan, Germany, France, Italy, Spain, Turkey and China would attend in pavilions.

E&P Firms

Nasseri highlighted Iranian private oil companies' potentialities and progress over recent years, saying: "Since under new format of oil contracts, foreign companies are obligated to cooperate with Iranian partners it was decided that 11 E&P firms be present in the main pavilion so that Iranian and foreign companies would know each other's partners."

Transfer of Technology and Investment

Nasser said the 22nd Oil Show calls for the transfer of technology and investment in petroleum industry.

He added that the oil show had become more significant in the aftermath of the implementation of the nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA).

"When domestic and foreign demand exceeds the space allotted for presence in the exhibition one can say that the exhibition is of high significance and many companies are willing to display their capabilities and learn about the latest developments," he said.

"The objective pursued by Iran in the 22nd Oil Show is to put domestic capabilities on exhibit and attract foreign investment. It seems that Iran has in recent years fared well with regard to communications with the petroleum industry, because many foreign exhibition organizers like those from the Netherlands, South Korea and Japan have expressed willingness to cooperate with Iran's oil industry exhibition," Nasseri said.

4 Petchem Projects Ready for Operation in Assaluyeh

The calendar year 1395 which ended on March 20 was exceptional for Iran's petrochemical industry. During that year, many petrochemical projects came on-stream. Some of them were Lorestan linear polyethylene with a capacity of 330,000 tons, Urmia sulfuric acid with a capacity of 50,000 tons, Mahabad linear polyethylene with a capacity of 330,000 tons, Shohadaye Marvdasht urea and ammoniac with a capacity of 1.8 million tons, Takht-e Jamshid polystyrene in Mahshahr Port with a capacity of 80,000 tons and Phase 2 of Karoun Petrochemical Plant. Four more projects in Assaluyeh – Phase 2 of Kavian Petchem Plant, Morvarid MEG Petchem Plant, Entekhab Petchem Plant and Takht-e Jamshid Petchem Plant – are ready to come online in order to enhance the production capacity of Iranian petrochemical plants and help Iranian Ministry of Petroleum get closer to its target of boosting petrochemical exports.

Kavian Supplies 770,000 Tons to WEP

Kavian Petrochemical Plant (Olefin XI), which has been exactly modeled on Arya Sasol petrochemical plant, is among the largest producers of ethylene in Iran. The ethylene produced by this plant is injected into West Ethylene Pipeline (WEP) for delivery to Lorestan, Kermanshah, Ilam, Andimeshk, Kordestan, Mahabad and Miandoab petrochemical plants. Currently, Arvand, Amir Kabir, Maroun and Ghadir are using ethylene supplied by Kavian Petrochemical Plant. Phase 1 of this plant came online in 2012 and Phase 2 is ready to become operational.

Ramezan Owladi, CEO of Kavian Petrochemical Plant, said Phase 2 of this plant was ready for operation, adding: "This plant has been built to supply feedstock to petrochemical plants which lie on the WEP route."

Each phase of Kavian Petrochemical Plant would need 128,000 tons of ethane a year to produce ethylene. It would receive this amount of ethane from Phases 4&5, 9&10, 15&16, 17 and 18.

Noting that implementation of Kavian started in 2006, Owladi added: "Phase 1 of this plant was inaugurated in 2012 and Phase 2, which reached production 6 months ago, will come online soon."

"All stages of construction of this plant, ranging from engineering, logistics and installation to startup have been handled by domestic technicians," he said.

Owladi said Kavian Petrochemical Plant was running at 60% of its nominal capacity, adding: "Both phases of Kavian Petrochemical Plant have a similar annual production capacity of one million tons of ethylene."

He referred to the 817,000-ton production of this plant from February 2016 to December 2016, adding: "Of this amount, 770,000 tons has been injected into WEP."

Petchems Exported to China, India

The mono-ethylene glycol (MEG) unit of Morvarid Petrochemical Plant whose output stands at more than 550,000 tons a year is also ready to become operational. This unit is becoming operational without any involvement of foreign experts.

The MEG unit is fed by 340,000 tons of ethylene and 368,000 tons of oxygen a year. Its products would be 500,000 tons a year of MEG, 50,000 tons a year of di-ethylene glycol (DEG) and 3,400 tons a year of tri-ethylene glycol (TEG). These materials are mainly used in artificial tissues, polyester, anti-freeze and solvents.

Hamid-Reza Eftekhar, manager of Morvarid Petrochemical Plant, put the capital needed for the MEG project at more than IRR 12,500 billion, saying: "For the implementation of this project, €172 million plus IRR 5,000 billion have been spent."

Noting that the MEG unit was ready to come on-stream, he said: "So far 430,000 tons of MEG has been exported from Morvarid Petrochemical Plant to China and India, earning nearly $300 million. Furthermore, 20,000 tons of products of this unit have been consumed domestically."

"This unit is among few that have been running at 90% of capacity since coming online. It has produced 450,000 tons of MEG during this time," said Eftekhar. He said that the project has been launched on 5.4 ha of land, adding that 7,500 man-hour of accident-free work has been done.

He said Morvarid's MEG unit was the fourth and also the largest one built in Iran.

He said that an outstanding feature of the project was that 90% of its fixed equipment had been manufactured in Iran. "The license of this project belongs to Royal Dutch Shell and its basic engineering has been done by Japan's Mitsui," he added.

Eftekhar said: "The global consumption of this product is forecast to grow 6 to 7 percent. Increasing the capacity of this unit augurs well."

Entekhab to Meet 70% of Iran Polystyrene Needs

The polystyrene unit of Entekhab Petrochemical Plant located in Assaluyeh is ready to become operational with a production capacity of 250,000 tons a year. This unit started production in October 2016 and is now running at 40% of its nominal capacity. It is forecast to reach 100% of its rated capacity by June. Polystyrene is mainly used in insulators used in electronics, packaging, disposable food containers and toys.

Mehran Tarbiat, CEO of Entekhab, said: "Before implementation of expansion, polystyrene was produced at Entekhab Petrochemical Plant, other domestic producers used to produce 30,000 to 40,000 tons of polystyrene a year, while 60,000 to 70,000 tons was being imported."

Referring to the Iranian domestic market's need for 100,000 tons of polystyrene, he added: "Entekhab Petrochemical Plant has set targets for next year in order to supply the market with 70,000 tons and export the remaining production up to 250,000 tons a year."

Tarbiat said the total investment made in this project stood at IRR 7,200 billion, adding that the project was currently valued at IRR 12,000 billion.

He said that a knowledge-based Norwegian-German company is the licenser of the petrochemical plant. The company is currently studying license for different EPS grades.

Tarbiat said trial production of polystyrene started at this plant last October, adding: "Currently this plant is running at 40% of its capacity. Its products have been exported to countries like China, Russia, Kosovo, Albania, United Arab Emirates, Azerbaijan and Uzbekistan."

More Destinations for Takht-e Jamshid Pars

Construction of Takht-e Jamshid Pars Petrochemical Plant started in early 2015 in order to produce polystyrene at different grades. It was launched six months ago and is now ready to come on-stream.

Mohammad-Reza Akhavan, CEO of Takht-e Jamshid Pars, said the plant's products had the best quality and had been exported to Turkey, China, Afghanistan, Pakistan, Azerbaijan, Greece and India.

"Currently, more than 50% of the nominal capacity of Takht-e Jamshid Pars Petrochemical Plant is in operation and it will reach 100% output capacity next year," he said.

He added that 64% of the plant's output had been sold domestically, while the remaining 36% had been exported.

Akhavan put at $60 million the total investment made in the project, noting that it would produce 65,000 tons a year of polystyrene.

"Throughout the construction and launch of the polystyrene unit of this plant, domestic capacity and manufacturing have had the biggest share," he said.

Polystyrene is a synthetic aromatic polymer made from the monomer styrene. Polystyrene can be either solid or foamed. General-purpose polystyrene is clear, hard, and rather brittle. It is an inexpensive resin per unit weight. It is a rather poor barrier to oxygen and water vapor and has a relatively low melting point. Polystyrene is one of the most widely used plastics, the scale of its production being several million tons per year.

Polystyrene can be naturally transparent, but can be colored with colorants. Uses include protective packaging (such as packing peanuts and CD and DVD cases), containers (such as "clamshells"), lids, bottles, trays, tumblers, and disposable cutlery.

As a thermoplastic polymer, polystyrene is in a solid (glassy) state at room temperature but flows if heated above about 100 °C, its glass transition temperature. It becomes rigid again when cooled. This temperature behavior is exploited for extrusion (as in Styrofoam) and also for molding and vacuum forming, since it can be cast into molds with fine detail.            

 

Azar Starts Production

Azar oil field which is one of the most challenging oil fields in Iran in terms of drilling and geological structure is located between the cities of Mehran and Dehloran in the western Ilam Province. Iran and Iraq jointly operate this field which is estimated to hold 2.5 billion barrels of crude oil.

The first phase of early production started in Azar in March with a capacity of 15,000 b/d. Iran's petroleum minister Bijan Zangeneh has said that oil recovery from this field must reach 100,000 b/d.

The project for the development of Azar oil field calls for 65,000 b/d of oil. This level of output is planned to be reached in 2018. In upcoming months, the field is expected to be producing 30,000 b/d. The oil extracted from Azar is light with an API gravity of 32 to 33. At present, the recovery rate of this field is estimated at 16%.

The depth of Azar hydrocarbon reservoir makes it a challenging field. Drilling in different oil formations and the sequence of high and low-pressure layers make drilling operations very sophisticated. However, Iranian specialists have for the first time been able to apply acid fracturing to this field in a bid to enhance recovery.

Output Hike

Addressing the ceremony organized to mark early production from Azar, Minister Zangeneh stressed the need for enhanced production from this field up to 100,000 b/d.

"Development of jointly owned fields and preserving the chain of production within the framework of implementing policies of resilient economy are being followed up seriously in Ilam Province," he said.

Referring to significant oil and gas deposits in Ilam Province and plans for development of these reserves, Zangeneh said: "On this basis, development of Azar, Changouleh, Cheshmeh Khosh, Danan, Paydar Gharb and particularly Tangeh Bijar is of high significance."

He underlined the need for the development of jointly owned fields, saying: "The process of development of Azar field has already started and it will continue until this field's production reaches 30,000 b/d in May and 65,000 b/d at the end of Phase 1 development."

Zangeneh said that associated petroleum gases would be sent to NGL 3100 plant once it has come online. He added that Dehloran petrochemical plant would be fed by NGL.

The minister said that international consultants have been involved in the development of Azar field, adding: "In the continuation of the process of development of this field we have to benefit from experienced consultants with a view to having optimal result and achieving an acceptable rate of recovery."

Zangeneh said Azar's recovery rate stood at 16%.

"Given 4 billion barrels of oil in place in Azar field, a one-percent increase in the recovery rate will result in $2 billion in revenue and a four-percent increase in the recovery rate will end in $8 billion in revenue," he added.

Zangeneh said enhanced recovery would be very beneficial for Iran's petroleum industry and any investment would be economical. "Therefore, there is no justification for cutting costs."

"We have to take maximum benefit from the opportunity created post-JCPOA. Given the petroleum industry's need for technology and investment, we have to take maximum advantage from foreign resources and domestic potentialities," he said.

In-Situ Deposits May Increase

Nouroddin Shahnazizadeh, CEO of Petroleum Engineering and Development Company (PEDEC), noted that Azar currently holds 2.44 billion barrels of oil in place.

"Studies show that it is possible to increase this amount of reserves to 3.5 to 4 billion barrels," he said.

Shahnazizadeh said one-third of this joint field lies in Iran's soil, adding that this development project's capital expenditure (CAPEX) stood at € 1.234 million.

"In the stage of early production of up to 30,000 b/d, 10 wells must be drilled, which will increase to 19 barrels by the end of development," he added.

Shahnazizadeh said that a temporary processing center had been planned for separating oil and water before the delivery of oil to Dehloran production unit. Once processed, the oil will be sent to Dehloran production unit via a 129-kilometer pipeline.

"After the end of early production stage, construction of a 63.5-kilometer pipeline to transfer oil from Dehloran to Cheshmeh Khosh and a 130-kilometer pipeline for transferring associated gases to a gathering center in Dehloran will be on the agenda. These gases will then be transferred to NGL 3100 which is currently under construction," said Shahnazizadeh.

He also referred to the geologically sophisticated structure of Azar field, saying: "This development project has shown defendable performance in safety, health and environment (HSE) sector."

Operations for the development of Azar field started in 2012. This project was awarded to an Iranian consortium comprising Oil industry Pension Fund Investment Company (OPIC) and Oil Industries Engineering and Construction Company (OIEC). Sarvak Azar Engineering and Development Company is tasked with construction operations.

In 2007, a Norwegian and another European company submitted a master development plan for the development of Azar. But finally the MPD presented by Kish Petroleum Engineering Company, an OIEC subsidiary, was accepted.

South Korea Energy: Opportunities &Challenges

South Korea is the fourth largest economy in Asia and the fifth top importer of crude oil in the world. This country lacks significant oil and gas reserves and it has no option but to rely on import to meet its daily growing demand. Studying South Korea's oil and gas industry, one can notice that the impact of oil price decline on this country's economy and its energy ties with Iran are important.

Due to insignificant oil and gas deposits, South Korean companies are mainly involved in investment overseas and development of modern technologies.

South Korea has four major oil companies, the most important of which is Korea National Oil Corporation (KNOC).

KNOC, which is a top industrial company in South Korea, holds a quasi-monopoly on the country's oil and gas industry.

Established in 1979, KNOC is operating oil and gas projects in Kazakhstan, Russia, Peru, Mexico, Indonesia, Vietnam, Mozambique, Libya, Nigeria, Yemen, Canada and certainly in South Korea. Other important energy companies in South Korea are SK Group, Hyundai Oilbank and S-Oil. SK Group, the oldest in South Korea, is the third cluster company there. It brings together 92 companies. SK Group is active in different industries like construction, transportation, marketing, telephone lines, Internet services, broad bandwidth and wireless Internet. However, it mainly focuses on oil and gas industry.

Hyundai Oilbank is mainly active in crude oil, gasoline, jet fuel, gasoil and petrochemical production. S-Oil mainly produces and refines crude oil and also supplies petrochemicals, chemicals and lubricants.

KOGAS is South Korea's gas company which was established by the Seoul government in 1983. It is a leading buyer of LNG in the world.

Oil Price Slump; Opportunity or Threat?

South Korea is among few Third World Countries to have managed to become a developed one in recent decades. Currently the fourth Asian economy, South Korea is suffering the slow price of exports. South Korean officials believe that globalization has largely affected this country, giving rise to problems in labor and wages. Growth and development are at large distance from each other and the gap between different classes is widening from day to day.

Under such circumstances, the fall in oil price in 2014 could be an excellent opportunity for South Korea because that could have helped cut production costs and boosted consumption. However, that was not of great help to South Korea's production on the long run because the main destinations of South Korea are countries whose revenues depend on oil sales. In case they see their income falling, they will have to reduce their purchase of Korean products. In the long-term, that does not augur good for South Korea.

Iran in South Korea Energy Policy

Iran has traditionally been enjoying a high status in South Korea's energy policy. Oil has always been a major sector in Iran-South Korea business ties. Iran is a top supplier of oil to South Korea. Given South Korea's daily growing demand for oil and Iran's huge crude oil reserves, Seoul was a buyer of Iran's oil even during years of sanctions. When the sanctions were in place, South Korea had cut its oil imports from Iran, but after the removal of sanctions, it significantly increased its oil purchase from Iran. During the first two months of 2017, South Korea imported 425,878b b/d of oil from Iran, 78.2% up from a year ago. At the same time, South Korea cut its oil imports from Saudi Arabia in February by 3.1% year-on-year to 944,793 b/d.

Iran and South Korea are willing to have technological cooperation and have mutual investment activities. South Korea has expressed its readiness to participate in the construction of a refinery in South Pars gas field. It indicates that South Korea prefers Iran to other countries in the region and is making efforts to bring the level of its cooperation back to the pre-sanctions level and even boost it.

In addition to oil, gas is also a field of cooperation between the two countries. After the implementation of Iran's nuclear agreement with world powers in January 2016, National Iranian Gas Company (NIGC) and National Iranian Gas Export Company (NIGEC) have signed two memorandums with KOGS on gas pipeline engineering and operation. LNG, mini LNG and subsea pipeline for gas export to Oman.

South Korea is determined to invest in Iran's gas industry and transfer technological knowhow to the country. It has already voiced its readiness to be involved in Iran's national gas trunkline and contribute to Iran-Oman subsea pipeline.

Iran and South Korea are to see their energy cooperation grow in coming years.

1-Total Starts up Moho Nord Offshore Congo

Total has started production from the Moho Nord deepwater project, 75 km (46.6 mi) offshore Pointe-Noire in the Republic of the Congo.

The production capacity is 100,000 boe/d.

“Moho Nord is the biggest oil development to date in the Republic of the Congo,” said Arnaud Breuillac, president, Exploration & Production at Total.

The development involves drilling of 34 wells tied back to a new tension leg platform, the first for Total offshore Africa, and to Likouf, a new floating production unit. Oil is processed on Likouf then exported by pipeline to the Djeno onshore terminal, also operated by Total.

The facilities have been designed to minimize their environmental footprint, with no routine flaring and all-electric systems that optimize the amount of power needed to run the installations. In addition, all produced water will be reinjected into the reservoir.

Total operates with a 53.5% interest, in partnership with Chevron Overseas (Congo) (31.5%) and Société Nationale des Pétroles du Congo (15%).

2-CNOOC Fulfils Production Targets

CNOOC achieved 14 commercial discoveries, and successfully appraised 25 oil and gas structures last year.

Oil and gas reserves from new finds offshore China continued to grow, and the company made breakthroughs in exploration in new areas.

Despite lower oil prices, CNOOC’s reserve replacement ratio (excluding economic revisions) was 145% for the year. At the end of 2016, the company’s net proved reserves totaled about 3.88 Bboe.

In addition, the company met its annual oil and gas production target despite further CAPEX cuts, producing 476.9 MMboe.

CNOOC’s four offshore projects planned for 2016 have started operations as planned – these are the Kenli 10-4 oilfield, Panyu 11-5 oilfield, Weizhou 6-9/6-10 comprehensive adjustment project, and Enping 18-1 oilfield.

Yang Hua, chairman and CEO, said: “In 2016, the company has maintained a strong cost competitiveness despite low oil prices and sluggish global economic growth.”

3-Further Oil Discovery Offshore Guyana

Exxon Mobil Corp. has confirmed a new deepwater oil discovery on the Stabroek block offshore Guyana.

The Snoek well, drilled by ExxonMobil affiliate Esso Exploration and Production Guyana Ltd., encountered 82 ft (25 m) of high-quality, oil-bearing sandstone reservoirs. Drilling targeted similar aged reservoirs as encountered in previous discoveries at Liza and Payara.

The drillship Stena Carron drilled the discovery well to 16,978 ft (5,175 m) in 5,128 ft (1,563 m) of water. The Snoek well is located about 5 mi (9 km) to the southeast of the 2015 Liza-1 discovery. The Stabroek block is 6.6 million acres (26,800 sq km).

Esso Exploration and Production Guyana Ltd. is operator and holds 45% interest in the Stabroek block. Hess Guyana Exploration Ltd. holds 30% interest and CNOOC Nexen Petroleum Guyana Ltd. holds 25% interest.

Following completion of the Snoek well, the Stena Carron has moved back to the Liza area to drill the Liza-4 well.

Steve Greenlee, president of ExxonMobil Exploration Co., said: “The latest discovery at Snoek demonstrates the continued success we have achieved in this technically complex play, which is just part of the significant exploraion province offshore Guyana.”

4-Eni to Drill Snadd-Goliat Wells

Eni Norge will drill two wells from subsea facilities on the Goliat field in the Barents Sea to start production from the Snadd discovery.

According to the Norwegian Petroleum Directorate (NPD), this will increase oil reserves on Goliat by 7.5 MMbbl to around 200 MMbbl.

The Snadd reservoir is between the two reservoirs from which Goliat is already producing (Realgrunnen and Kobbe).

It was also covered in Goliat’s original plan for development and operation (PDO), and the Norwegian authorities have approved Eni’s application for a PDO exemption.

The NPD says modifications on the Goliat platform are not necessary. One production well and one water injector will be drilled in Snadd, with start-up anticipated later this year.

Eni has identified other prospects in the area which if commercial could be tied in to Goliat.

“We also expect that the licensees on Goliat will drill more wells that can contribute to further improving recovery from the field,” said Tomas Mørch, NPD assistant director responsible for development and operations in the Barents Sea.

5-New Zealand Invites Bids for Offshore Blocks

Judith Collins, New Zealand’s Energy and Resources Minister, has launched the country’s Block Offer 2017 tender for petroleum exploration permits.

It includes five offshore release areas and one offshore/onshore release area, and encompasses acreage totaling 481,735 sq km (185,999 sq mi).

The launch follows extensive consultation with 146 native groups and 43 local councils on the proposals.

In the bid assessment process, the ministry will evaluate proposed work programs, the bidders’ technical and financial capability to perform the work, their compliance history, and their likely ability to meet New Zealand’s health, safety and environmental requirements.

Closing date for bids is Sept. 6, with permits likely to be granted in December. Areas offered include:

The Northland-Reinga Offshore Release Area (17NRN-R1) – 150,566 sq km (58,134 sq mi)

The Taranaki Offshore Release Area (17TAR-R1) – 64,978 sq km (25,088 sq mi)

The Taranaki North Release Area (17TAR-R3) – 1,475 sq km (569 sq mi)

The Pegasus - East Coast Offshore Release Area (17PEC-R1) – 49,630 sq km (19,162 sq mi)

The Hawke Bay Offshore Release Area (17PEC-R2) – 5,569 sq km (2,150 sq mi)

The Great South - Canterbury Offshore Release Area (17GSC-R1) – 204,928 sq km (79,123 sq mi)

 

BP Transferring Operatorship of Forties Pipeline

BP has agreed to sell its Forties Pipeline System (FPS) business in the UK central North Sea to INEOS.

The assets comprise the main Forties offshore and onshore pipelines and other associated pipeline interests and facilities.

Subject to approvals, operatorship of the FPS business will transfer to INEOS during 3Q on completion of the deal, which could eventually net BP $250 million.

Group CEO Bob Dudley said: “While the Forties pipeline had great significance in BP’s history, our business here is now centered on our major offshore interests west of Shetland and in the central North Sea.

“The pipeline has long been an important feedstock supplier to INEOS at Grangemouth [eastern Scotland]. We believe that through also owning FPS, INEOS will be able to realize greater integration benefits and help secure a competitive long-term future for this important piece of UK oil and gas infrastructure.”

BP opened the Forties pipeline in 1975 to transport oil from Forties, the UK’s first major offshore oil field. Today the FPS transports liquids from around 85 fields in the UK central and northern North Sea and several Norwegian fields, on behalf of around 40 companies: its throughput capacity is 575,000 b/d.

In 2003, Apache acquired BP’s interests in the Forties field.

The agreement will further expand the INEOS Upstream business following the company’s acquisition of the Breagh and Clipper South gas fields in the southern North Sea from Letter1 in 2015. The acquiring entity will be INEOS FPS.

INEOS chairman and CEO Jim Ratcliffe said: “The North Sea continues to present new opportunities for INEOS… We have a strong track record of acquiring non-core assets improving their efficiency and reliability, securing long-term employment and investment.”

Mark Thomas, BP North Sea regional president, said: “This allows us to further focus our North Sea business around our core offshore assets - bringing new fields into production, redeveloping and renewing existing producing facilities, and acquiring and exploring new acreage and interests through license rounds and farm-ins.

“As with our recent agreement with EnQuest, we believe this is a good example of having the ‘right assets’ in the ‘right hands,’ offering new opportunities for the assets and benefitting the UKCS, in the spirit of the government’s aim of maximizing economic recovery of the UK’s oil and gas resources.”

FPS is set to transfer to INEOS as a fully operational entity along with staff that operate and support the various elements of the business. Around 300 BP staff are involved with operating and supporting the FPS at Kinneil, Falkirk, Dalmeny, Aberdeen, and offshore.

The FPS system primarily comprises a 169-km (105-mi), 36-in. pipeline from the unmanned offshore Forties Unity platform to the onshore terminal at Cruden Bay.

From there a 36-in. overland pipeline transports the oil 209 km (130 mi) south to the Kinneil facilities, adjacent to the Grangemouth refinery and chemical plant, for processing and stabilization before being exported via the Dalmeny terminal and Hound Point loading jetty or sent onwards on to Grangemouth.

Ichthys FPSO, CPF Named in South Korea

The naming ceremonies for the INPEX-operated Ichthys LNG project offshore facilities were held recently in South Korea.

At the Samsung Heavy Industries shipyard in Geoje, Australian Minister for Foreign Affairs the Hon. Julie Bishop MP officially named the project’s central processing facility (CPF) Ichthys Explorer.

At the Daewoo Shipbuilding & Marine Engineering shipyard in Okpo, former Chief Minister of the Northern Territory of Australia the Hon. Clare Martin officially named the project’s FPSO facility Ichthys Venturer.

The CPF and FPSO will be permanently moored for 40 years of operation in the Ichthys field, located in the Browse basin about 220 km (137 mi) offshore Western Australia.

The 130-m (427-ft) by 120-m (394-ft) Ichthys Explorer is said to be the world’s largest semisubmersible platform. The CPF will receive well fluids from a subsea gas gathering system, located at a water depth of approximately 250 m (820 ft), within the Ichthys gas/condensate field.

Most liquids will be transferred from the Ichthys Explorer to the 336-m (1,102-ft) long Ichthys Venturer for offshore processing and condensate offloading.

The Ichthys Explorer will be linked to the onshore production facilities via the longest subsea pipeline in the Southern Hemisphere, 42 in. in diameter and 890 km (553 mi) in length.

Kawasaki Drops Offshore Structure Segment

Kawasaki Heavy Industries, Ltd. (KHI) will withdraw from the offshore structure market and revamp its merchant ship business, reducing its Japanese-based merchant ship business by 30% and relocating it to China.

The company said its offshore service vessel for Norway that is currently in progress will be its final offshore structure build.

In January 2014, KHI signed a shipbuilding contract with Island Offshore Shipholding LP to build a UT 777 mobile offshore drilling unit. Offshore has reached out for confirmation that this is indeed the aforementioned vessel.

“Although there is still no resolution of the excessive construction capacity in sight, we have judged that the growth in the demand for LNG and LPG and the strengthening of environmental regulations is a good opportunity for KHI,” the company said.

“Based on this recognition of the situation, we considered all options and judged that the most rational and feasible option to increase enterprise value is to shift merchant ship construction from Japan to China at the current time.”

In addition, a project risk management committee will be established to cover all of KHI. It will offer continuing follow-up support for projects and strengthen the checking function for orders before they are accepted, KHI said.

“Through these initiatives, we will actively take on the challenges of the projects while also eliminating the risks as much as possible and will also make an effort to reinforce risk management with a focus on prevention of the occurrence of losses, the early detection of any change in the situation and the prompt action,” it said. 

In moving its merchant ship construction business from Japan to China, the company said it will rescale its domestic business accordingly, by around 30%, reducing its number of orders. It plans to accept contracts mainly for gas-related ships such as LNG and LPG carriers, LNG-fueled ships, and others.

In a presentation accompanying the statement, the company said: “Based on the assumption that the severe shipbuilding market will continue for the time being, all possible options including corporate spin-offs, alliances etc. were considered.”

The company said it has experienced a slump in its Ship & Offshore Structure segment over the past few years, recording losses. The market moves prompted it to form a restructuring committee in October 2016 to fundamentally revise the segment’s business structure.

The restructuring was decided at the March 31 board of directors meeting.

Oman to Back OPE Oil Deal Extension

Oman is ready to back an extension of the current agreement between 24 oil producing countries to cut crude output to support prices, a senior Omani official said.

 "We support any initiative to strengthen and grow the oil price," Oil and Gas Undersecretary Salim al-Audi said at a press briefing in Muscat.

"If that means extending the agreement for another six months, we would not be a blocker of the agreement."

While complying with any such deal to extend output cuts, Oman would, however, continue to build its production capacity and reserves, Aufi added, putting the sultanate in a strong position to restore its total crude and condensate output to above 1 million b/d in short order, should the cap on crude production be lifted for any reason.

Oman, the largest Arab oil producer outside OPEC, last year produced an average 1.004 million b/d of combined crude and condensate, government data show. Before last December's agreement to cut output, 2017 production was expected to average 1.001 million b/d, Aufi said.

If the agreement were extended to cover the whole of 2017, the sultanate's total crude and condensate output should average about 970,000 b/d, he estimated. Oman in December 2016 agreed to cut monthly crude production by 45,000 b/d from October's near-record high of 923,000 b/d for six months starting January as its obligation under the unprecedented agreement between OPEC and a group of other major international oil producers to cooperate on limiting output.

That deal followed OPEC's November 30 decision to cut the group's total crude production by 1.2 million b/d, provided certain other producers, notably Russia, also agreed to throttle back output. In the wake of the OPEC agreement, Brent futures have rebounded to about $53/b from around $46/b, which is less than some of the organization's members may have expected.

Daewoo to Deliver 2 More Yamal LNG Tankers

 South Korea's Daewoo Shipbuilding expects to deliver two more ice-class tankers to lift liquefied natural gas (LNG) from Russia's Yamal LNG project this year, a company spokesman said.

Daewoo Shipbuilding & Marine Engineering (DSME), which has the world's largest volume of existing orders among shipyards, has got an order to build a total of 15 ice-class tankers for the Yamal LNG project.

The first tanker, named after Christophe de Margerie, the former chief executive of French oil company Total who died in an aircraft crash at a Moscow airport in 2014, made a test docking at the Sabetta port in Yamal.

A spokesman for Daewoo Shipbuilding said that the remaining 14 LNG tankers for Yamal are all due to be delivered by 2020, including two to be delivered this year.

The Yamal LNG project, which is scheduled to start production in October, is co-owned by local Russian gas producer Novatek, Total, China's CNPC and the Silk Road Fund.

The Yamal plant is expected to produce a total of 16.5 million tonnes of LNG a year at three production trains, with 5.5 million tonnes capacity each. LNG will be shipped to Asia from July to December and can be delivered to Europe year-round.

Already bailed out in the aftermath of the Asian financial crisis of the late 1990s and supported again in 2015, Daewoo Shipbuilding posted a record net loss of 3.3 trillion won ($3 billion)in 2015 and remained in the red in 2016.

South Korean state banks have said they are preparing a fresh $2.6 billion bailout for the company, which has racked up huge losses from offshore projects and risks missing debt repayments this year.

Concerning Daewoo's current liquidity situation, a company spokesman said, "an infusion of funds by the South Korean government and state-run banks are a given, so additional liquidity trouble is not expected." 

 

 

 

 

 

 

 

 

Kraken Moored in UK North Sea

EnQuest says the FPSO Armada Kraken for the heavy-oil Kraken development in the UK northern North Sea is securely moored at the field location, following hookup of the STP buoy mooring system and a full rotation test.

The risers and umbilicals have since been pulled in. Work continues in the turret area and on topsides commissioning. Once turret activity has been completed, subsea commissioning will start.

All drilling has finished on drill centers DC-1 and DC-2, with the rig set to transfer to DC-3. At start up (anticipated by mid-year), 13 wells will be available comprising seven producers and six injectors – these will be brought on-stream in a phased manner.

As for EnQuest’s already producing fields in the UK sector, at Thistle and Heather the partners are working on a program to abandon redundant well stock, the aim being to reduce risk and present opportunities in future for drilling further infill wells when circumstances allow.

Partial well abandonments already lined up at Thistle will continue through 2017, with work on well A05/25 having started in January.

The Brent pipeline system operator plans a further shutdown this year, which will likely lead to an enforced shutdown of Thistle in the summer and also at EnQuest’s Don fields complex.

Following the Thistle well campaign, the drill crew will move to Heather in the second half of the year to start a similar program of well decommissioning. In this case, removing legacy wells should safeguard the field’s high water injection efficiency, EnQuest says.

The Heather hub will likely be shut down for routine inspection and maintenance during 3Q.

At the Greater Kittiwake Area (GKA) in the UK central North Sea, this year’s focus will be on optimizing production, concluding remaining work related to tie-in of production from the Scolty/Crathes fields, and replacement of the associated gas compressor (A-Gas).

The Grouse field will also be offline during the gas system shutdown

Petrobras Pulls Karoon Deal

Petrobras has struck down a deal with Karoon Gas Australia Ltd. to potentially sell its participation in the Baúna and Tartaruga Verde oil fields.

Karoon said that Petrobras intends to reinitiate a sales process for the assets, adhering to its revised divestment process methodology which complies with the Brazilian Federal Accounting Court’s (TCU) requirements.

The transaction was part of the company’s plan to divest around $35 billion of assets during 2015-2018 to reduce its debt. It covered Petrobras’ 100% stake in the Baúna field, located in shallow-water of the postsalt Santos basin, and a 50% non-operated stake in the Tartaruga Verde field, located in deepwaters of the postsalt Campos basin.

However, in December 2016, Karoon said that court proceedings were initiated against the potential sale in the Federal Court of Sergpipe alleging that Petrobras did not follow the correct sale process. An injunction was granted in November 2016, suspending the potential sale.

Although it released a statement a few weeks ago confirming that the deal was still in play, Reuters reported at the end of March that Petrobras withdrew its appeal to the Supreme Court blocking the fields’ sale.

Karoon Managing Director Robert Hosking said: “It is disappointing that Karoon is no longer in exclusive negotiations relating to the acquisition of Baúna and Tartaruga. The court proceedings, which are yet to be heard, made the timing and outcome of the sales process uncertain.

“Reinitiating the divestment process under Petrobras’ revised methodology will help to reduce the risk of any future court action against a potential sale, providing greater certainty for the successful bidder. Karoon remains engaged with interested potential partners, and is committed to any future process relating to these assets.

“Based on Petrobras’ existing divestment program targets and the recent TCU ruling, Karoon believes any reinitiated process relating to these assets could be imminent.”

Maduro Wins Power Over Oil

The Venezuelan Supreme Court may have amended part of its explosive decision to take over the opposition-led congress, but it still gives embattled leftist President Nicolas Maduro broad new powers over the OPEC nation's vast oil wealth.

The reversal came after political leaders worldwide and street protestors at home accused the pro-government court of effectively making Maduro a dictator.

While the court backed off its decision to fully take over the legislative branch, it left in place sweeping new authority for Maduro to cut oil deals on behalf of PDVSA, the state-run oil company, without congressional approval.

Maduro's cash-strapped government now has the autonomy to sell stakes in Venezuela's oil fields, which contain the world's largest reserves, or launch new joint ventures with foreign firms.

The court action sets the stage for a protracted legal and political fracas that could spook foreign investors and further undermine the nation's efforts to stabilize PDVSA, said opposition lawmakers and industry experts. The state-run firm is already reeling from lower oil prices, a cash-flow crisis and chronic operational problems that have crippled its ability to serve customers worldwide.

The fight centers on a constitutional requirement that the National Assembly approve PDVSA contracts of "national public interest" with outside companies. In addition to Maduro's legislative opponents, Venezuela's attorney general - a longtime government ally - has called the court decision to bypass the assembly unconstitutional.

The legislature - which has been controlled by members opposing Maduro's government since late last year - has warned investors that oil deals would be invalid without assembly approval.

Opposition lawmakers slammed state-run Russian oil major Rosneft, for instance, after it paid $500 million last year to increase its stake in the Petromonagas joint venture, to 40 percent from 16.7 percent, without legislative approval.

Rosneft - a major PDVSA partner at a time when relations between Caracas and Moscow have grown increasingly cozy - said the deal was legal. But the episode underscored the potential legal quagmire for investors.

Following the court's action, opposition leaders vowed to continue challenging the validity of oil deals it has not approved.

"This is desperation for dollars," opposition lawmaker Elias Matta, the vice-president of the congressional energy and oil commission, told Reuters. "Let it be clear that any company created under this scheme will be null - totally null."

Venezuela's Information and Oil Ministries, along with PDVSA, did not immediately respond to a request for comment.

Hedge Funds Keep Liquidation

Hedge funds have continued liquidating their large bullish position in crude amid doubts about the pace and timing of any rebalancing in the oil market.

Hedge funds’ net position in Brent and WTI has been cut to 642 million barrels, down from a record 951 million barrels on Feb. 21.

The spread of risks between further long liquidation and new short covering now looks more balanced than at any point since OPEC’s production deal was announced at the end of November.

Hedge funds and other money managers cut their net long position in the three major futures and options contracts linked to Brent and WTI by a further 41 million barrels in the week to March 28.

Fund managers have cut their net long position for five consecutive weeks by the equivalent of 309 million barrels, according to an analysis of records published by exchanges and regulators.

Managers have reversed more than half of the extra 529 million barrels of net long positions accumulated between the middle of November and the middle of February.

Hedge funds have cut long positions by 170 million barrels over the last five weeks while adding 139 million barrels of extra short ones.

The result is that the ratio of long to short positions in Brent and WTI has fallen to 3.7:1, down from a recent high of 10.3:1 on Feb. 21.

The buildup of a record concentration of hedge fund long positions prior to Feb. 21 became a major downside risk to oil prices in January and February (“Hedge fund positioning in oil looks stretched”, Reuters, Feb. 7).

The liquidation of long positions and establishment of fresh shorts likely contributed to the sharp drop in oil prices starting on March 8.

But by the end of March 28, the previous congestion of hedge fund long positions in the oil market seems to have dissipated.

The squaring up of positions coincided with an easing of persistent selling pressure, with Brent and WTI prices staging a modest recovery from March 28 through March 31.

With most but not all long positions liquidated, and a moderate number of short positions already in the market, the outlook for oil prices now appears more balanced than at any time in the last three months. 

Siemens Sees $100mn Investment Opportunity in Iran

Peter Adam, Vice President for Oil & Gas in the Industrial Applications Division of Siemens, has been visiting Iran for more than two decades. He has conducted a large number of projects and he is well familiar with ups and downs in Iran's energy sector. He analyzes Iran's oil and gas sector very meticulously and unlike some analysts, he believes that Iran's lack of access to cutting edge technologies could not be attributed merely to international sanctions. He says the trend of investment in Iran has been a key factor in this regard.

In his view, Iranian companies would be able to flex muscles on domestic market after finding a rival in global market.

The following is the text of the interview of "Iran Petroleum" with Mr. Adam.

Q: How has Iran's oil and gas industry changed over recent years?

A: It is really regrettable that due to the sanctions we could not have cooperation with Iran for so many years. But now I think that if all companies are ready to start projects and financial and banking processes are back to normal, Iran will be flooded by investment.

Q: What is your estimate about investment in Iran's oil and gas industry?

A: I think that it might be more than $100 million. I have a simple reason to justify this estimate. I don't think that under current circumstances another country could present such big opportunities for investment like Iran to tempt oil companies. When a deep sea floater was to be built in the Gulf of Mexico, experts estimated that the oil price should hover around $85 a barrel in order to be able to build this structure. But as far as Iran is concerned, given technological progress such floater could be constructed at much lower costs with more profitability. Therefore, I think that many oil companies will invest in Iran. However, the quality of technology in Iran needs to be upgraded.

Q: Apart from that, what is the most important reason for investment in Iran?

A: We are really surprised by the quality of manpower in Iran. The quality of work and its details, as well as reasonable price of services in Iran are really extraordinary, when compared with other countries. Good quality, good price and efficient manpower make Iran an ideal place for investment by foreign oil companies.

Q: What do you think is the challenge lying on the way of cooperation with Iran?

A: In my view, Iran is a tightly bureaucratic country and it makes the work process difficult. However, the most important problem regarding cooperation with Iran pertains to financial and banking affairs. Iranian officials are willing to negotiate. The sooner we reach agreement the faster we can start our activities.

Q: A major problem faced by Iran over recent years is the issue of technology transfer. Technology was transferred into Iran very late due to sanctions. What method do you think should be pursued to make up for this loss?

A: I don't think Iran is behind other countries in terms of technology. Siemens recently signed an agreement with MAPNA on a new technology applied in other countries as well.

Q: Currently new technologies are being brought into Iran very fast. But during years of sanctions Iran faced other problems like aging wells and non-recovery from jointly owned reservoirs.

A: In my opinion, this problem has nothing to do with technology and mainly pertains to investment. Technology exists everywhere, but there was in fact no budget to purchase it. I know quite well that Iran's petroleum industry equipment is outdated and needs to be phased out. But to do so, budget and capital are needed.

Q: During years of sanctions many domestic companies started manufacturing parts and/or devices to provide services to different sectors of energy industry. That is why Iran has become self-reliant in this regard. In your view, how would it affect the future of operation of foreign companies in Iran?

A: We really hail technological progress by Iranian companies during years of sanctions. The problem with the sanctions was that after foreign companies pulled out of Iran, domestic companies tightened their monopoly; therefore, prices grew automatically. But currently as sanctions have been removed, domestic companies should reduce their costs as well as the price of their commodities and services in a bid to be able to compete in the market because in global markets competitiveness depends on the levels of prices. That is why Iranian suppliers must be powerful at global level before being able to take over Iran's market. Otherwise, customers will have to pay higher costs and that would not be acceptable to them. In my view, this process is done smoothly in Iran. As you can see in other countries, concentration on domestic markets has ended in failure. In these countries the government has tried its best to support domestic companies; therefore, they have become lazy while increasing the price of commodity and service. Such companies will be driven out of international cycle.

I think that by providing an acceptable level of quality and low prices, these companies are very likely to become active on international scene, too. Iranian suppliers will be able to compete with Chinese and South Korean companies.

Q: How much time do you think Iranian manufacturers need to be able to compete with Chinese and South Korean companies?

A: In the very near future.

Q: What projects has Siemens been involved in, in Iran? Does this company have any plans for future cooperation?

A: We are active in different sectors of the energy industry. We have signed an agreement for cooperation with MAPNA. We also intend to deepen our relations with this company. Moreover, we are ready to operate in other sectors and we have held talks to that effect.         

South Yaran to Commence Early Production

South Yaran is one of jointly owned oil fields in the West Karoun area in southwestern Iran. It has not been talked about too much. However, its development and operation are among priorities of the Iranian Ministry of Petroleum with regard to developing hydrocarbon fields shared with neighboring countries. North Yaran field has already started production and countdown has started for the development of the southern stretch of Yaran.

Yaran was divided into two sections, North and South, due to financial restrictions following the imposition of tough sanctions on Iran. North Yaran was awarded to Persia Oil and Gas Industries Development Company under a buyback deal in 2011. It recently became operational along with the first phase of North Azadegan and Yadavaran fields. However, pursuant to a decision by National Iranian Oil Company (NIOC), the field was assigned for development to Petroleum Engineering and Development Company (PEDEC) in 2013. It is to be noted that PEDEC runs all fields located in West Karoun.

Primarily, the objective behind the development of South Yaran was to recover 50,000 to 60,000 b/d of oil and 60 mcm/d of gas after drilling 30 wells. The recovery rate was announced at 13.5%. However, Homayoun Kazemeini, who manages the development of South Yaran, said when PEDEC started developing this field it had no idea about its reservoir; therefore, an appraisal well, which was similar to exploration well, was first spudded. The data gathered from drilling in 2015 showed that the Fahlyan layer of South Yaran had no production capacity. Therefore, the target envisaged for production from South Yaran was reduced to 25,000 b/d.

Kazemeini said new data caused changes in the plans devised for the development of the field because all plans had been worked out for 50,000 to 60,000 b/d output. Now according to new data, 21,000 b/d is expected to be extracted from Sarvak layer and 4,000 b/d from Gadvan layer.

Kazemeini referred to the conclusion of operations for the drilling of 18 wells in South Yaran, saying the completion and installation of completion strings in 15 wells were over.

"At present, three drilling rigs are operating in the Yaran area and the drilling operations for the 18 wells are projected to be over" by March, he said.

He referred to financial shortages and absence of reservoir data as reasons for the delay in operating South Yaran. He added that financial restrictions were over and after drilling completion, early oil production from South Yaran would start with a capacity of 10,000 b/d.

Oil Layers' Reassessment

Kazemeini also referred to the new mission of PEDEC for the reassessment of oil layers, saying: "In order to assess the Ilam, Sarvak and Gadvan layers, two wells were drilled in the north of the field. After testing the wells, the production capacity of these layers would be reexamined."

Due to the location of this field in Hoor al-Azim Lagoon, all activities are done in compliance with standards set by the Department of the Environment and in coordination with relevant bodies in Dasht-e Azadegan and the provincial environmental protection agency in Khuzestan Province.

The wastes from drilling rigs has fallen to zero and regular monitoring of contactors, keeping the lagoon untouched, placing landfills outside the area of the lagoon, drawing up PMAs and installation of culverts are among other measures conducted for the protection of the environment in Hoor al-Azim. All surface and subsurface activities are also done based on standards.

West Karoun which includes North Azadegan, South Azadegan, North Yaran, South Yaran fields as well as Yadavaran fields is estimated to hold 67 billion barrels of oil in place. Iran shares oil fields with Iraq in this zone.

Iran's Ministry of Petroleum is determined to increase the production capacity of fields located in West Karoun. To that end, in new-style oil contracts, memorandums are signed with domestic and foreign companies for assessing oil fields and their recovery rate.

$25bn Investment              

Iran was recovering 60,000 b/d of oil from the West Karoun fields until 2013. After the inauguration of the first phases of North Azadegan and Yadavaran oil fields and the development of North Yaran, the country is now extracting more than 260,000 b/d from these fields.

 Nouroddin Shahnazizadeh, CEO of PEDEC, has stated that the company was planning to bring production from the West Karoun fields to 1.15 mb/d.

He said that full development of these oil fields would cost $25 billion by 2022. So far, $7 billion has been spent on these development projects.

 

Forouzan Open to Investment

Forouzan oil field is shared by Iran and Saudi Arabia in the Persian Gulf. Iran's best-quality oil is recovered from this field which is located near Kharg Island. Forouzan was discovered in 1966. Estimated to hold 2.309 billion barrels of oil in place, Forouzan is known as Marjan in Saudi Arabia.

Development of Forouzan based on new-style oil contracts is an opportunity for investment.

National Iranian Oil Company (NIOC) signed a buy-back contract with Petroiran Development Company (PEDCO) in April 2002 for the renewed development of Forouzan field with a view to lifting recovery from it. Under the contract, PEDCO was required to add another 65,000 b/d to Forouzan's output which stood at 35,000 b/d. After some time, Iranian Offshore Oil Company (IOOC), which is affiliated with NIOC, announced that Forouzan was able to produce more crude oil. Therefore, the project description was modified and designs and installations changed anew. Due to these changes, Forouzan development project costs went up and the financing of the project hit snags. Upon a proposal by the Petroleum Engineering and Development Company (PEDEC), development of Forouzan was assigned to IOOC. Therefore, foreign oil companies and investors need to finalize their talks with IOOC for any planned contribution to the development of this oil field.

The objective is to bring crude oil output from Forouzan to 100,000 b/d, while Saudi Arabia is already extracting 450,000 b/d of oil from the same field. Iran also shares another oil field with Saudi Arabia. Iran's maximum output from Forouzan dates back to 1987 at 180,000 b/d. Production from this field dropped to 40,000 b/d in the early 2000s.

Development of Forouzan oil field is aimed at extracting more than 300 mb/d of crude oil over 25 years. This offshore field is also expected to produce 250 mcf/d of gas which would be carried to Kharg Island via a subsea pipeline.

At present, construction of offshore platforms for the development of this field has been assigned to Iranian Offshore Engineering and Construction Company (IOEC). In order to accelerate implementation of this project, this company has picked a foreign company to build topdrives for this field.

Despite financial shortages and the impact of sanctions, Iranian petroleum industry specialists have fared well with regard to recovery from Forouzan field. Up to the end of 2014, Saudi Arabia's recovery from this field was 2,260 million barrels, while Iran extracted around 763 million barrels. Iran has so far extracted 24% of its oil from this field, while Saudi Arabia has recovered 76% of its share. That shows NIOC has been working seriously in this oil field.

The share of countries jointly owning an oil or gas field is determined based on their geographical coordinates, the structural shape of oil reservoirs, water, oil and gas contact with water, geological calculations and reservoir engineering. As far as Forouzan is concerned, the geographical coordinates of Iran-Saudi borderline was decided on October 22, 1968 as per international rules and principles and was agreed upon by both countries. Reservoir and geological data for each party has been calculated after seismic testing like 3D seismic testing in 2002 and drilling of hundreds of wells in this field.

Calculations about recoverable oil have been done independently by both parties via well-known international consulting companies. According to results, Iran's share of Forouzan recoverable oil is 11% with remaining 89% belonging to Saudi Arabia.

Saudi Arabia recovered 176,000 b/d of oil from Marjan, according to reliable data. Furthermore, the capacity of processing installations for the development of Marjan has been at 400,000 b/d, which has reached 300,000 b/d after further development.

2015 was a turning point for Forouzan as platforms were built by IOEC. In that year, platform construction had 34% progress.

Transfer of the incomplete production platform of this field from South Korea to Khorramshahr Yard was decided by IOEC in order to accelerate the construction of these platforms. Furthermore, as far as structure, pipe laying, electricity, telecom and instruments are concerned in living quarter platform, progress has been 42%. The progress has reached 25% for structures. According to estimates made in 2008, 540 million euros is needed for completing the development of Forouzan field.

Forouzan field has two processing and production platforms, one residential platform and two platforms for flaring associated petroleum gas. There are also 12 satellite platforms in this field to transfer oil to processing platforms through subsea pipelines. Apart from that, the entire oil recovered from platforms after primary processing goes to Kharg Island via pipeline. In the new development project, designing and installing two new production platforms, one residential platform and subsea connection lines are envisaged for the transfer of oil and gas between platforms and also between platforms and Kharg Island.                    

Arvand Offers $135mn Investment Opportunity

Development of jointly owned oil and gas fields in Iran has seen a slowdown due to technical and financial shortages over recent years. However, hopes soared for renewed investment in the fields Iran shares with neighbors after international sanctions were lifted in the wake of the January 2016 implementation of Iran's landmark nuclear deal with six world powers. The nuclear agreement could help persuade foreign oil firms, which have sufficient money and technology, to envisage Iran for investment.

Due to financial restrictions and technological shortages, Iran has had to focus on the development of South Pars gas field and major oil fields in the West Karoun area in western Iran.

Iran has been mainly attentive to oil fields it shares with Iraq. Iran has recently started recovering oil from three of such fields in West Karoun.

All fields shared with Iraq have been placed on the list of reservoirs up for investment by foreign companies. Iran is putting them out to tender for new-style oil contracts.

One of these fields is Arvand oil field. Located in the southwestern Khuzestan Province, Arvand oil field is 50 kilometers south of Abadan near Arvandroud River. The field, which measures 42 kilometers long and 13 kilometers wide, is estimated to hold one billion barrels of oil with a recovery rate of around 15%. Arvand oil field also contains more than 14 bcm of dry gas and 55 million barrels of gas condensate.

Arvandroud, from Fahlyan layer, was discovered in August 2008. The bulk of oil in Arvand is found along Iran-Iraq border. The drilling of the first well in Arvand field started in 2006 and ended in 2008. The drilling was aimed at evaluating the hydrocarbon potential of formations in Khami and Bangestan groups. After conducting four well logging operations in Fahlyan Formation, the existence of oil and gas was proven 4,232 and 4,292 meters deep underground. Fahlyan contains light oil with the API gravity of around 44.

Arvand oil field is administered by Arvandan Oil and Gas Production Company (AOGPC) whose oil production is forecast to reach 1.4 mb/d by 2025. According to projections, AOPGC will have the highest oil and gas production rate in the coming decade.

An important measure undertaken in this area as part of infrastructure for oil production is the existence of 146,000-barrel processing unit. This unit was set up by National Iranian Oil Company (NIOC) during years of sanctions. A variety of oil categories could be processed in this plant. The most important attractive point with the fields offered by AOGPC for investment is its dependence on the processing plant. The duration of investment return is short, thanks to the existence of this processing plant. It is a favorable option for investors who are willing to use returned investment to continue to develop Arvand field. The short distance between Arvand field and the 165,000-barrel processing plant heralds good news for the development of this field in the near future.

The contract for the development of Arvand field was signed several years ago between AOGPC and Iranian Offshore Engineering and Construction Company (IOEC) several years ago. But due to restrictions, the agreement never turned into practice. According to AOGPC planning, Arvand is expected to produce 5,000 b/d in the first phase, which will reach 20,000 b/d of high-quality oil in the final phase. The investment envisaged for the development of this field totals $135 million, which is likely to increase. The API gravity of oil held in this field varies between 39 and 43. The oil extracted from Arvand would be carried away to Abadan oil refinery.

Iran and Iraq currently share eight oil fields with a total recoverable reserve of 14 billion barrels. Nine percent of Iran's crude oil reserves are contained in the reservoirs shared with Iraq.

According to unofficial statistics, NIOC has so far recovered more than 200 million barrels from the fields Iran and Iraq own jointly over the past century. Currently, the average output from these fields stands at 115,000 b/d.

 

NIOC's International R&D Interactions

In contemporary world, technology applied to oil and gas industry has been growing in accordance with increasing consumption of hydrocarbon resources. Today, knowledge of state-of-the-art technologies applied to petroleum industry is as important as the volume of hydrocarbon reserves. In addition to protecting God-given oil and gas resources, technology has managed to effectively reduce production and refining costs and increase willingness for investment in oil and natural gas exploration and production in remote areas. Iran already sits atop 159 billion barrels of crude oil and 34 tcm of natural gas. Therefore, it has to meet its growing need for cutting edge technology required for oil extraction.

Ebrahim Alavi Taleqani, director of R&D at National Iranian Oil Company (NIOC), said research was an important pillar which would guarantee progress and sustainable development in every country.

"Continuation of extraction, exploration, production, transfer and processing petroleum products, which is envisaged in the country's vision plan in a bid to win a toehold in regional and global markets and also safeguard Islamic Republic of Iran's petroleum industry in the unequal battlefield of international competition, requires formulating basic plans, attraction of necessary investment for maintenance, updating and developing knowhow for our country's petroleum industry," he said.

Alavi Taleqani said the most important factor in achieving success would be to precisely formulate and design plans and strategies in harmony with objectives.

"The NIOC Directorate of Research and Technology is seeking to turn this company from an operation-based to a knowledge-based one in line with development of technology so that it would regulate its activities and objectives on this basis. In the meantime, by elucidating 11 technology sectors NIOC seeks to realize the lofty objectives of the Islamic establishment for upgrading the level of technology and provide the necessary infrastructure for reasonable enhancement in oil and gas production," he said.

To that end, the NIOC Directorate of Research and Technology has since 2000 been pursuing activities and research projects related to upstream oil industry.

Formulating and working research and technology strategies at NIOC, institutionalizing and promoting research activities, preparing the ground for growth, creativity and innovation in the petroleum industry, designing study plans, guidance and supervision on upstream research projects, benefiting from universities, research centers, knowledge-based companies and technology parks are among research missions defined for the Directorate.

Alavi Taleqani said formulating a technology and research roadmap, examining and approving executive plans for research and technology projects, estimates on financial and human resources and their allocation, development and indigenization of key technologies, transfer of technical savvy in development projects, supporting commercialization, entrepreneurship, marketing, planning and designing mechanisms needed for scientific and technological networks are among tasks assigned to the Directorate.

Cooperation with Universities

R&D sections of NIOC offshoots, professional research centers (Research Institute of Petroleum Industry, Petroleum University of Technology and Research Center for Enhanced Oil and Gas Recovery), centers of excellence (universities, research centers, companies and professional academic teams), and international centers (oil companies, consulting companies and foreign universities) are among executive pillars of the NIOC Directorate of Research and Technology.

"The Directorate of Research and Technology is making efforts to change NIOC from an operation-based company to a technology-based one in a bid to pave the ground for the acquisition and development of technologies applying to exploration, enhanced recovery, wells' technology, production, oil and gas processing, environment and safety, efficient use of energy, etc. at the level of

of NIOC and its offshoots," said Alavi Taleqani.

The projects under way by the NIOC Directorate of Research and Technology are as follows: research projects with focus on the manufacturing of equipment and commodities, strategic studies, infrastructure and productivity, industrial and environmental protection, technological upgrade in drilling operations and services, integrated databank, and enhanced oil recovery.

Furthermore, the NIOC Directorate of Research and Technology, Pars Oil and Gas Company (POGC), Arvandan Oil and Gas Production Company (AOGPC), Iranian Central Oil Fields Company (ICOFC), Iranian Offshore Oil Company (IOOC), Khazar Exploration and Production Company (KEPCO), Oil Engineering and Development Company (OEDC), National Iranian Drilling Company (NIDC), Iranian Oil Terminals Company (IOTC), Iran Fuel Conservation Company (IFCO), Pars Special Economic Energy Zone (PSEEZ) and National Iranian South Oil Company (NISOC) have a variety of research projects focused upon the aforesaid fields under way.

Readiness for Int'l Cooperation

In order to realize the technological objectives of NIOC, the Research Institute of Petroleum Industry (RIPI) as a professional research center signed last year a memorandum of cooperation with a French company in order to acquire new experiences.

Noting that the NIOC is ready for any kind of cooperation to expand international cooperation, Alavi Taleqani said: "International technological cooperation and experience achieved from such joint cooperation could be a step towards upgrading technical knowhow."

He said commercialization of research projects was one of important plans of the Directorate, noting that "it is necessary for us to move towards generation of wealth through knowledge and technology."

"Research will prove effective once it becomes practical because merely writing an article or a book and ignoring the practicability of research will not be effective," he added.

Technology Transfer in IPC

Taking into consideration the condition of transfer of technology in the contracts and paying due attention to it for upgrading the level of technology has been a major objective pursued by those who developed the Iran Petroleum Contract (IPC) as a new model for oil contracts. Under IPC, foreign companies are required to help provide Iran with technological savvy pertaining to petroleum industry in addition to creation of value through development of oil and gas fields.

Alavi Taleqani said RIPI and the NIOC Directorate of Research and Technology have been conducting research on the "role of transfer of technology in new oil contracts".

"This important move has been evaluated from the standpoint of economic resilience. Based on research conducted in this regard, it was suggested that appropriate criteria be designed to measure the transfer of technology in a bid to assess the computability of technology with upstream contracts on exploration, development and production. The NIOC contract technology working group is tasked with designing these criteria and subsequently supervising the transfer and development of relevant technologies."

Practical Research

Alavi Taleqani said: "The most important event which we have witnessed over recent years at the NIOC research and technology has been the shift in paradigms. We have switched from 'research for research' to 'practical research'."

He also highlighted the new approach pursued by the Ministry of Petroleum regarding manufacturing of commodities and items needed by the petroleum industry.

"The ten groups of domestic manufacturers of petroleum industry commodities that have signed contracts with the Ministry of Petroleum are required to provide their capacities in manufacturing and also present a roadmap for their own technological upgrade. The NIOC Directorate of Research and Technology is tasked with assessing the technological maturity of manufacturers and watching their compliance with their roadmap," he said.

Field-Oriented Contracts Supervision

In a bid to implement the general policies of the 6th Five-Year Economic Development Plan regarding a continued increase in the rate of recovery from oil and gas reservoirs and meeting a one-percent target in recovery enhancement and also in order to implement the major policies of resilient economy in the upstream oil sector, NIOC envisages a project on the transfer and development of technology in the upstream sector, which includes enhanced oil recovery plus improved oil recovery (EOR/IOR) in 20 oil and gas fields (52 reservoirs) in cooperation with nine universities and research centers with the objective of paving the ground for the development of basic technological savvy.

These universities are required to fully study a reservoir and account for devising a roadmap and launching an EOR center, enhancing the rate of recovery on the long term, improving production operations and reducing its costs, transferring technical and technological knowhow via research and technology projects, reducing risks through application of modern technologies, training manpower specializing in reservoir management, preparing the ground for communications between industry and university, establishing consortiums of EOR/IOR technology comprising research advisors, foreign partners and knowledge-based companies and contractors at regional and international levels.

Research Commercialization

In order to orientate and arrange its activities to change the NIOC from an operation-based company into a knowledge-based one, the Directorate of Research and Technology envisages assigning purchase of equipment and products to knowledge-based companies for a limited period of time.

"The NIOC has signed agreements with the "Office of Vice President for Science and Technology" and the "Modern Technologies Development Fund" in order to commercialize research activities," said Alavi Taleqani.

The activities carried out since the signature of agreement include numerous technical and specialized working groups' meetings in the presence of experts and specialists to adopt instructions and assessment indicators, set up databank for the proposed projects of subsidiary companies, and determine priorities for the acquisition of technologies needed in the upstream oil sector.

According to Alavi Taleqani, after the removal of obstacles to the financing of contracts for the commercialization of technological achievements, the NIOC Directorate of Research and Technology will issue instructions for knowledge-based companies to start work.

Management of 208 Research Projects

Alavi Taleqani said the Directorate of Research and Technology has been supervising the performance of 208 research projects based on defined priorities. Of these projects, which are being conducted under contracts with universities, research centers, knowledge-based companies

Arrangements for D'Arcy Concession

One may argue that the fate has led efforts for industrial exploration and exploitation to be tied to politics in Iran. Nasser ad-Din Shah Qajar was the first ruler who attempted to benefit from the advantages of petroleum. In this regard, he awarded two concessions to Reuter and one concession to Albert Hutson of the Netherlands.

Some researchers studying Iran's contemporary history maintain that the awarding of concessions to foreigners resulted from the act of treason by Mirza Hossein Khan Sepah-Salar among others. Some researchers believe that Sepah-Salar drove Iran into modern world following encouragement by the king for communications with overseas. Sepah-Salar who was first Iran's plenipotentiary ambassador to Istanbul was well aware of recovery from oil reservoirs all across the globe including in Iran's neighboring countries.

Sepah-Salar, who was considered an influential person in the Qajar history, was familiar enough with the secrets of European civilization and the progress of Occident.

Nasser ad-Din Shah first named Sepah-Salar his minister of justice, but due to his competence in promoting justice and reforming affairs, he was promoted to the post of chancellor.

Sepah-Salar believed that the best solution for salvaging Iran was to familiarize the country's top man with progress in the West. To that effect, he used to encourage the shah to travel to Europe. That was so that he arranged the shah's first trip to abroad in 1290 AH. During his stay, the shah got to know manifestations of modern civilization including oil recovery in Baku and other places. When he heard about oil recovery and he was said that petroleum existed in southern Iran he was persuaded to award the concession.

The awarding of concessions for exploitation of mines and resources in Iran had also opponents. Iran's northern neighbor was sensitive, but there were also patriotic Iranians who felt committed to safeguarding Iran and its progress. Seyed Jamaluddin Assadabadi was one of them. He developed the important theory of rule of law, constitutionalism and justice for Iranians. In his articles, he had warned against the consequences of awarding concessions to foreigners to exploit Iran's mines and he made public opinion sensitive to the disadvantages of dictatorial regime in power.

When in May 1896, Nasser ad-Din Shah was gunned down by Mirza Reza Kermani, a disciple of Seyed Jamal, at a holy shrine near Tehran, many years had passed since the failure of the first oil concession. These concessions had been noted indirectly in the nightly distributed leaflets distributed against Qajar rulers had started four years before and therefore the public opinion had become sensitive to them.

The 49-year reign of the Qajar king ended while Iran was becoming gradually familiar with the advantages of oil and gas recovery on its soil. In the meantime, Iran was hearing news about oil extraction in Burma and Baku. Muzaffar ad-Din Shah, who succeeded his assassinated father, was also informed of oil news.

At that time, Iran was a pre-industrialized country and one of the most impoverished countries in the world. Its urban manpower was few and people were mainly working in traditional workshops. Workers were mainly daily paid. Unions were serving the interests of employers rather than those of laborers.

Muzaffar Shah came to power under such circumstances. He was the fourth son of his late father from Shokouh as-Saltaneh. When his father was killed he was based in Tabriz as heir to the throne under a Qajar tradition. Like his father, the new shah was very fond of travelling to Europe. He embarked on his Europe tour in April 1900. Many Qajar researchers believe that the Europe tour had been financed through giving customs outputs in northern Iran to Russia. Muzaffar's first visit to Europe lasted seven months. The fifth shah of Qajar visited Russia, Austria, Switzerland, Germany, Belgium and France. On his way back, he stopped over in the Ottoman country. During this visit, he was informed of the industrial use of oil, gas and bitumen and become more determined to exploit Iran's oil resources.

After Hutson failed in his attempt, Reuter decided to give a try to his chance for oil exploration in Iran. Reuter established a bank and purchased the shares of Hutson's company. Since exploration activities were limited to southern coasts, Reuter chose Qeshm Island for oil exploration, a 700-meter-deep wall was drilled in Qeshm, but no oil was found. After this failure, the operation ended automatically. Everyone was frustrated with the failed oil exploration operation in Iran. Western investors and economic policymakers and Iranian leaders of the Qajar era were both perplexed. The latter was also grappling with serious financial restrictions. Despite all this, Muzaffar Shah was determined to retry his chance in turning oil into an epoch-making substance. While he was giving concessions to foreigners he eased security measures and suppression in the country. He opened the country to liberal newspapers like Habl ol-Matin and Parvaresh which were printed in Calcutta and Cairo. He lifted the ban on travel and named a new ambassador to Rome. Above all, he encouraged the formation of unions and education associations.

Sometime after, director of Iran's Customs Antoine Ketabchi (of Georgian or Armenian origin) was assigned the mission to travel abroad and find an investor for Iran's oil. Ketabchi was apparently supposed to inaugurate an exhibition in Paris, but his meetings and negotiations showed that his main task was to find someone who would be willing to invest in Iran's oil.

Ketabchi met Reuter’s former secretary whom he had got to know when Reuter was exploring in Iran. Ketabchi, the secretary and de Morgan met the British ambassador

to Paris. The British ambassador had told them he knew a millionaire that could be of great help. The millionaire was William Knox D’Arcy.

Born in England in 1849, D’Arcy later immigrated to Australia and before investing in Iran’s oil, took the biggest risk of his life by purchasing an abandoned gold mine in Australia.

The mine was later found to have been full of gold. He became quite wealthy and was ready to use his wealth in another field. Therefore, he agreed to invest in Iranian oil exploration.

D’Arcy sent his secretary to Tehran in 1901 to study the terms and conditions for winning license to explore oil. His negotiations with the Shah of Iran paid off very soon. In the same year, D’Arcy was awarded the license for oil exploration in Iran. D’Arcy was allowed to explore, extract, process and export oil for 60 years on 480,000 square miles in southern Iran. The Iranian government was paid only 16 percent of the net revenues.

At the same time the Constitutional Movement was taking power in Iran.

Abadan Taekwondo at Pro League

Rarely can one find a sports field in which the Iranian Ministry of Petroleum has not invested. Most sports teams that bag medals take pride in belonging to clubs funded by the Ministry of Petroleum.

Over recent years, Iran's petroleum ministry has been investing in taekwondo. Abadan oil refining company, which is famous for supporting sports, has been providing backing to Iranian men and women taekwondo teams. Both teams are today experiencing very good days. The women's team has been ranked third in the pro league category and the men's team was recently authorized to compete in the taekwondo pro league matches. The following is a review of the Abadan oil company's taekwondo team activities.

The Cultural and Athletic Company of Abadan Oil Refining Company launched taekwondo eight years ago. This athletic institute started work in order to support young taekwondokas in Khuzestan Province, particularly in Abadan city. Over recent years, it has undertaken widespread efforts to push ahead Iran's taekwondo and introduce ambitious youth willing to be trained for taekwondo.

Last year, the company trained a team and finally managed to take part in the pro league matches. This achievement was made although the team was not fully equipped.

Influential Trainers

Over recent years, many trainers have been active in the taekwondo team of the Abadan company. Some of them are Ali Goudarzi, Ali Hardani and Ali Mohammad Bes'haq. Famous trainers of taekwondo have done their best in recent years to help promote the youth in Khuzestan. These trainers have been training different groups of age including minors, juniors and youth. They have also introduced qualified taekwondokas to Iran's taekwondo team. The names of these people will be remembered in the Abadan oil company for many years.

Youth Hiring

Unlike many other teams competing in the pro league, the Abadan team has not spent a lot on training taekwondokas and attracting qualified ones. It has always relied on taekwondokas it has trained for itself. Most of these young professionals have managed to find their ways into the national team. The Abadan club takes pride in training these youth.

Last year, the Abadan team stepped into the pro league competitions without having any star. Its team was fully young and it faced many problems throughout its work. However, the team members did not distance themselves from the objectives.

Historic Ascent

Like in previous years, the Abadan oil company team stepped into matches with a fully young lineup. The pro league matches were held between seven teams that comprised totally 104 taekwondokas. The Abadan team finished runners-up. In the final week of the Persian Gulf Cup matches, the Abadan team faced the team of Aras Free Trade Zone. The latter never imagined to be held by the former. Abadan thrashed Aras 5-3. The Abadan team finally finished in second place and found its way into the pro league matches. It was a great honor for the Abadan team to reach this status. This team is now making necessary plans to compete in the taekwondo pro league matches in the new season.

Bes'haq, a Valuable Trainer

The Abadan team was trained by one of the most famous taekwondo trainers in the last season. Ali Mohammad Bes'haq, who has been active in national teams for years, managed to record brilliant results in the previous season. He stepped into the matches with a young team which was not rich enough. He did not have even substitute taekwondokas for emergency conditions. Despite all this, he managed to set an excellent record for the team and lead the Abadan team into the pro league stage after finishing runners-up. After concluding his mission with the Abadan oil team, he joined Iran's national taekwondo team in the competitions held among Muslim states. He started his work as assistant to Fariborz Asgari. The presence of this trainer in the Abadan oil team could register more significant success for this team in the future.

Eying Better Position in Pro League

The Abadan oil company's team has many plans for its next year. This team will have to run in the pro league matches and the club managers would not like to be extras there. They are eying ambitious goals by benefiting from capable youth of Khuzestan.

Third in Women Pro League

The Abadan oil company also manages a women's taekwondo team. The women in this team have proven to be brilliant taekwondokas. This team has introduced a large number of taekwondokas to the national team. In the pro league matches, it finished third.

Hassan Mokhtari, CEO of Abadan Oil Refining Company Club:

We Seek Abadan Taekwondo Growth

One of reasons why Abadan's taekwondo team acquired such a big honor to join the pro league matches was its competent management. As the CEO of the club, Hassan Mokhtari has been faring well. Here is a short interview with him.

Q: Did you ever imagine finding your way into the pro league taekwondo matches?

A: In the season that passed it was the fourth year in a row we were vying in the pro league for youth and adults in the Naqsh-e Jahan Cup. Thanks to Ali Mohammad Bes'haq as the chief trainer we managed to finish runners-up and realize our long-term dream of participation in the pro league matches. We had long-term planning and our objective was nothing but this. I hope that we will have a better future.

Q: What are your plans for the pro league matches? Will you go ahead with the previous trend?

A: We have to make precise planning in order to create motivation for the youth in the city of Abadan. We have to push ahead with our plans so that we would see them compete in national and international matches.

Q: You have been mainly hiring local taekwondokas in recent years. Is there any specific reason to do so?

A: The reason for this has been to motivate the youth in the city of Abadan. Valuing these youths is of high importance to us and presence in the pro league will provide a valuable chance for us to show the competence of taekwondokas in Abadan. Of course we plan to hire non-local taekwondokas too for the pro league matches before hiring them.

Q: Do you eye finishing in high places in the pro league taekwondo matches?

A: Every team is definitely willing to stand on one of the platforms for the first to third ranks. But for the first year we mainly focus on presence and acquiring experience. Our objective is to help taekwondo grow in Abadan.

Q: Anything else you would like to say?

A: I would like to offer my gratitude to senior managers of Abadan oil refining company due to their support for us. We also try to join the pro league matches forcefully and respond to their trust.

 

Turkmen Sahra, Land of Wilde Horses

Turkmen Sahra is located in northeast Iran. This vast area covers the cities of Gonbad Kavous, Bandar Turkmen, Aq Qala, Maraveh Tappeh, Kalaleh, Simin Shahr, Gomesh Tappeh, Negin Shahr, Anbar Aloum and Dashli Boroun.

Turkmen Sahra and Gorgan Desert enjoy an ancient history. This piece of land was totally Persian up to the 17th century, but after Turkmen nomads settled there it turned into Turkmen-speaking area.

Turkmen Sahra is estimated to date back to seven millennia ago as archeological excavations indicate. Turkmen county enjoys significant historical characteristics.

Horse breeding has been common in Turkmen Sahra since long time ago. Turkmen purebred live in that area. They are mainly gray with a thin body. Unlike other horses, they have flat abdomen. Exporting these horses is forbidden.

Here we briefly review tourist attractions in Turkmen Sahra.

Equestrian Center

Gonbad Kavous Equestrian Center was built in 1961 in order to stage horse races and breed purebreds.

Covering 160 ha of land, it hosts horse races in spring and autumn. Horse racing is also held in Bandar Turkmen too. Horse tracks are among tourist attractions in this city. There are three horse tracks Golestan Province (Aq Qala, Gonbad and Bandar Turkmen).

 

Ashouradeh Island

Ashouradeh is the only Iranian island next to Turkmen Sahra. Over years, 800 ha of this island has been covered with water and it is now uninhabited. The island had initially an area of 1,200 ha. At present, the remaining 400 ha is usable. In most history references, Ashouradeh is known as an archipelago comprising three islands. As water level has come up two small islands have been submerged. This place was used for hunting during the Safavid rule. Therefore some fortresses were erected there. Massive flooding in 1993 led to the evacuation of this island.

Bandar Turkmen Jetty

The most attractive spot in Bandar Turkmen is its jetty. The Caspian Sea and Bandar Turkmen tourist jetty lie west of the city. Therefore coastal markets selling colorful handicraft.

Bandar Turkmen

Bandar Turkmen is not historically old. Currently located in Golestan Province, the city was established in 1927after then ruler Shah Reza Pahlavi forcibly moved nomads. This city was set up for military purposes. Bandar Turkmen is the capital of caviar in the world. Cotton is also raised around it and is a main source of income for the area.

Residents of Bandar Turkmen are mainly Turkmen, but their culture is a combination of Iranian, Turkmen, Russian and Kazakh customs. Despite being connected to Caspian Sea, Bandar Turkmen has semi-arid weather conditions. It is because of its proximity to Turkmen Sahra and southern deserts of Turkmenistan.

Tallest Brick Tower

Undoubtedly the most outstanding historical monument in Golestan Province is Gonbad Kavous brick tower. It is known to be the tallest brick tower in the world. It was built in 1006 at the order of Kavous bin Voshmgir. The materials used in this tower are mainly brick and gypsum. It is 62.88 meters tall and 4.8 meters thick.

Gonbad Kavous

Gonbad Kavous is located in the eastern part of Golestan Province. It neighbors Turkmenistan to the north, the cities of Aliabad, Aq Qala and Gorgan to the west and Kalaleh to the west. The city's name is derived from Kavous bin Voshmgir, who was a ruler during Al Ziar dynasty. His capital was where we know today as Gonbad Kavous.

Carpet Museum

Gonbad Kavous Carpet Museum is the third top carpet museum in Iran, just behind Tehran Carpet Museum and Astan Qods Razavi carpet museum in Mashhad. It is located near the tallest brick tower in Gonbad Kavous. The museum puts on display different stages of production of Turkmen carpet, introduces techniques and motifs for this carpet and also displays distribution of Turkmen carpet across the globe.             

  

 

Investment Potential in Bandar Turkmen, Gonbad Kavous

Golestan Province is the second most important food safety hub in Iran. It enjoys great potential for investment in farming and animal breeding. Moreover, equestrian clubs, a free trade zone and tourism are among investee sectors.

A strategically important city in this province is Bandar Turkmen.

Abdol-Hakim Firouzi, governor of Bandar Turkmen, highlights the great potential for farming in this city.

"Currently, thousands of hectares of land remain idle in this city. They could go under cultivation with proper investment," he said.

Firouzi added that German and Dutch companies planned to grow an exotic plant, noting that if lab tests give approval more than 18,000 ha of land would go under cultivation.

He also said that handicraft was a specialty in Bandar Turkmen. "Therefore, manufacturing handicraft and their export to other countries would provide potential for investment."

"On the other hand, sturgeons in the Caspian Sea and particularly in Bandar Turkman could be instrumental in attracting foreign investment," he said.

Firouzi said that cold stores in the city had 500,000 tons of empty space, which would be good for investment.

Bandar Turkmen has long been the hub of caviar production in Iran.

He underlined the significance of environmental issues in Ashouradeh Island, saying investment was needed in tourism sector there.

"For this purpose, the government has allotted 130 ha of land. Once this zone is launched a tourism hub will be established in northeast Iran off the Caspian Sea," said Firouzi.

He said that the presence of different minorities, nature and fishing were also among potentialities for attracting investment.

Incheh Boroun FTZ

Gonbad Kavous in Golestan Province is an attractive place for investment. The governor of Gonbad Kavous, Abdol-Qadir Kairmi, said that like other cities in Golestan Province, people of different ethnic groups live together in Gonbad Kavous.

"This city shares 145 kilometers of border with Turkmenistan and we have transactions with this country and Central Asia. The government is seriously trying to establish infrastructure in border areas of this city in order to give a boost to economic transactions with Turkmenistan," he said.

Karimi said: "We are currently looking for economic prosperity and job creation in the border villages of this county. Recently, more than 160 people have been employed following an IRR 300 billion investment in an organic products project."

Noting that Gonbad was the first hub for horse breeding, he said: "In this county, there are centers for breeding Turkmen purebred worth millions and billions. This issue could provide good potential for domestic and foreign investment. More than 15,000 spectators come to see horse races every week in the Middle East's largest horse track."

"Golestan Province and particularly Gonbad County are among main agriculture hubs in Iran. This county which has 165 ha of farmlands supplies wheat of the highest quality in Iran. This issue could attract many investors," Karimi said.

"The border city of Incheh Boroun, the second largest city in Gonbad County, has got permit from the Parliament to establish a free trade zone. This means providing good venue endowed with customs exemptions for more business activities," he said. "This free zone will be connected to Central Asia  through air, ground, railroad and maritime."