Message of Hope, Peace and Security

President Hassan Rouhani's re-election calling for the persistence of his first four-year successful mandate in foreign policy and his administration's plan to attract foreign partners and investors in the sector of industry and economy constitute a unique opportunity for Iran's oil, gas, petrochemical and refining industries.

In the tense Middle East region, which is home to major oil and gas reserves, Iran remains the most secure and most stable country and a good option for economic cooperation, industrial investment and interactions based on common interests.

The international majors' willingness to invest in Iran's oil, gas and petrochemical projects was an indication of mutual understanding between Iranian industrial policymakers and the owners of technology and capital in the world.

What is currently of high significance and could help both sides realize their wishes, is commitment to agreements and abiding by their obligations.

By devising intelligent energy diplomacy and following up on plans, providing legal grounds for the effective presence of potential partners and investors in parallel with introducing projects worth tens of billions of dollars, the Iranian Ministry of Petroleum has fulfilled its task in the best possible manner and played its part as the largest holder of hydrocarbon reserves in the world.

International bodies have confirmed Iran's compliance with its nuclear deal with six world powers and proved that it is a sincere and reliable partner.

Now, foreign companies are required to show their good will and carry out their tasks with regard to secure energy supply in the world.

Numerous companies have taken steps towards more extensive cooperation with Iran's petroleum industry. Some of them have been from France, South Korea, Germany, Russia and Italy.

Tehran will continue to host managers of international companies involved in oil, gas and petrochemical sector. That would sketch a new atmosphere in international cooperation in the region.

Such cooperation will be based on mutual economic interests, mutual trust and respect, and future energy needs. Its message will be that of hope, peace and security.

First IPC Contract

Total Back to Iran with $5bn South Pars Deal

Iran signed a $5 billion agreement with France's Total SA and a CNPC to develop its massive offshore natural gas field, the first such deal with foreign companies since the landmark 2015 nuclear deal with world powers.

The agreement, which will see the firms develop a portion of the massive South Pars offshore field that Iran shares with Qatar. It was signed in Tehran on July 3.

Total has a 50.1-percent share in the deal. The state-owned China National Petroleum Corp (CNPC) has 30-percent stake and Iran's Petropars has 19.9 percent.

It is the first contract under the newly developed framework – Iran Petroleum Contract (IPC) – for the development of Phase 11 of the giant offshore South Pars gas field.

Implementation of this agreement by the Total-led consortium is expected to bring Iran's energy revenue to over $84 billion.

Development of South Pars gas field, which is jointly owned by Iran and Qatar, has been a top priority for Iran's Ministry of Petroleum under the administration of President Hassan Rouhani.

Ever since IPC was developed by a restructuring committee established by Minister of Petroleum Bijan Zangeneh, development of jointly owned fields was prioritized in international contracts.

In parallel with the definition of a new framework for oil contracts, Iran was in talks with international companies with a view to cooperating in the future.

Zangeneh had promised that a first IPC-based contract would be signed before Rouhani's first administration bows out in August.

After Iran sought investment for the development of Phase 11 of South Pars within the IPC framework, some international companies volunteered to develop this phase. Last year, NIOC and Total started drafting a heads of agreement for the project. An HOA was signed between the two sides in November between Total with a 50.1% stake, CNPC with a 30% share and Petropars with 19.9%.

After the text of the agreement and its 14 appendices were finalized, the $4.879 billion development deal was signed in Tehran in the presence of Minister Zangeneh. NIOC managing director Ali Kardor, Total's CEO Patrick Pouyanné, Petropars CEO Hamid Akbari and Yaohua Lu, who serves as an Outside Director of CNPC, signed the agreement. Total is the leader of Iranian-French-Chinese consortium, and NIOC is the client in the deal.

Int'l Firms Asked to Be More Active

Zangeneh gave an upbeat assessment of the SP11 agreement, expressing hope that a new phase would open in Iran's petroleum industry development.

He said that the SP11 agreement was an immediate outcome of Iran's nuclear deal with six world powers, dubbed the Joint Comprehensive Plan of Action (JCPOA) and the recent re-election of President Hassan Rouhani.

"By participating in the election and re-electing Hassan Rouhani for a second term in office, people firmly decided that the Rouhani administration's oil policy must continue. The Iranian president called on the Ministry of Petroleum to continue the same path," said Zangeneh.

He said that the deal with Total had the approval of Supreme Leader Ayatollah Ali Khamenei.

Zangeneh said a new structure was developed for oil contracts to be attractive enough to foreign firms, while helping transferring in financial resources and technological savvy.

"The approval of this new model of contracts was based on national consensus," said the minister.

Zangeneh said transfer of technology at different levels was one of the most important issues of the day.

"Boosting domestic manufacturing is very important. As of today, we expect Petropars and other Iranian companies to take advantage of the opportunity this contract will create for them," he added.

$5bn Investment in Iran

Zangeneh said the SP11 agreement was valued at $5 billion and described it as foreign investment.

"We never forget Total for its precursor role in this project," he added.

He recalled Total's deceased chief Christophe de Margerie, saying: "He was an intimate friend of Iran and petroleum industry."

Zangeneh also appreciated CNPCI for its cooperation with Iran when the country was under tough sanctions.

"The company was our friend in hard days and will be among our strategic partners post-sanctions," he said.

$200bn Investment Needed

Zangeneh said Iran's Ministry of Petroleum and NIOC had received all necessary permits for the signature of the first IPC deal.

He said that Iran would need to attract $200 billion of investment for its petroleum industry under the 6^th Five-Year Economic Development Plan.

"That would include $130 billion for upstream sector and the rest would go to downstream sector," he added.

Zangeneh said 70% of this amount of investment could be provided through foreign financing.

"Given the perspective sketched out for Iran's petroleum industry, which is reaching 6 mb/d of crude oil and gas condensate output under the 6^th Development Plan, we need foreign investment," he added.

Zangeneh said development of jointly owned fields was the priority in oil and gas projects, citing the giant Azadegan oil field which Iran shares with Iraq.

U.S. Companies Welcomed

Zangeneh expressed hope that European and Asian companies would become more active in Iran and expedite their efforts to sign contracts with Iran.

He said that cooperation with Chinese and Russian companies would be among Iran's strategic plans, adding: "Of course, Iran does not pose any obstacle to the presence of U.S. companies. This is their own government – U.S. – that has set restrictions to them."

Zangeneh also highlighted the issue of security of energy supply and said: "During its 110 years of presence in global oil markets, Iran has always significantly and effectively contributed to security of energy supply in the world."

‘Historic Day’

"Today, for Total, is a historic day, the day we come back to Iran," Pouyanné said at the signing ceremony. "It's an honor for me to attend this signing ceremony," he

The development project will see 20 wells drilled and two wellhead platforms built and connected to existing facilities by two underwater pipelines. A second phase will involve the construction of offshore compression facilities.

Pouyanné provided a brief history of Total's activity in Iran, saying it came to Iran in 1995 and signed a deal with NIOC for a development project in Siri Island.

"Today again, we are the first international company to come back to Iran and it is a great source of pleasure and pride to come to you…to sign the South Pars 11 development contract," he said.

Pouyanné expressed pleasure that Total signed the first IPC deal in Iran.

He said "Total has a long history in Iran," pointing to its development of phases two and three of South Pars in the 1990s.

Total had signed up to develop phase 11 back in 2009 but was forced to abandon its Iranian projects in 2012 when France joined European Union partners and imposed sanctions, including an oil embargo.

He said that the agreement was signed just 18 months after Iran and France signed a memorandum of understanding (MOU) during a visit to Paris by President Rouhani.

He noted that the agreement would be "mutually beneficial" for all parties involved.

Pouyanné said Total would remain in Iran for at least 20 years, saying it presence in Iran would help the country develop its gas market.

He noted that Total's operation in Iran would "contribute to the development of Iran's manufacturing capabilities…and development of Iran's oil and gas industry."

"This is a major agreement for Total, which officially marks our return to Iran to open a new page in the history of our partnership with the country," Pouyanné was separately quoted as saying in a statement. "Total will develop the project in strict compliance with applicable national and international laws."

$80bn Revenue from SP11

The heads of agreement signed for the SP11 project facilitated negotiations between the companies to conclude the deal.

In a bid to save time, while the text of the agreement was being drafted, NIOC had provided necessary documents for bidders and was in talks with companies that were willing to operate the project.

The duration for the contract with Total would be 20 years starting from the day of signature of the agreement. NIOC would be supervising construction activities throughout the contract.

According to the timeframe set in the contract, primary production from the field will start 40 months after the signature of the deal.

Due to the complexity of construction of pressure booster facilities, 36 months would be needed for studying and preparation, and 60 months for building platforms.

Addressing the signing ceremony, Kardor said implementation of the SP11 agreement would let Iran produce 2 bcf/d or 56 mcm/d of gas.

"Therefore, over a 20-year period, 335 bcm of rich gas will be recovered. Moreover, we will have 290 mcm gas condensate, 14 million tonnes of liquefied gas, 12 million tonnes of ethane, 2 million tonnes of sulfur along with 315 bcm of sweet gas," he said.

"With oil price at $50 a barrel, the value of products of this phase will reach $23 billion. Given the value created by the products, we can expect $80 billion in revenue," said Kardor.

Two-State Project

Kardor said that the SP11 project would be a two-phase one. "In the first stage, after installing platforms in Phase 11 and investing $2.4 billion, we would reach 2 bcf/d output."

He said that total production had fallen in South Pars, noting that the second stage of SP11 would be to make up for losses.

"In the second stage, we will design pressure booster platforms with an investment of $2.4 billion," he added.

Kardor said the advantages of the second phase of SP11 project included transfer of technological knowhow to Iran.

"Since Total had earlier cooperated with Iran in Phases 2 and 3 of South Pars, as well as in the Siri project with Iranian contractors and manufacturers, we expect that this trend would go ahead smoothly. Total is eager to cooperate with these companies," he said.

Fast SP11 Development

CNPC's Lu said the SP11 agreement was a new chapter in Iran's petroleum industry, describing it as a good example for cooperation between NIOC and international oil companies.

He said that many investors would come to Iran in the near future to take advantage of opportunities created in Iran.

Lu extended his gratitude to Iran's Ministry of Petroleum, NIOC as well as Pars Oil and Gas Company (POGC) for their cooperation with CNPC to bid for the project.
"Without your cooperation we could not come together here to celebrate our victory," he said.

Lu said that NIOC displayed a high level of expertise and knowhow to finalize this agreement and appreciated Total for having facilitated the negotiations by showing flexibility.

He said that Petropars would have a significant role in the project to develop the offshore South Pars.

Lu said since entering Iran's oil market in the 1990s, CNPC had been involved in numerous oil and gas projects in Iran, including North Azadegan oil field.

"Thanks to support provided by the Iranian government, NIOC and local companies, we have overcome numerous challenges," he said.

Lu said: "We are assured that through close cooperation and by applying advanced technologies, Total, CNPCI and Petropars will be able to have the highest production from Phase 11 of South Pars in the shortest possible time."

"In the long-term, parties to the contract and the Iranian government will both benefit from this big project. CNPCI will use up its capabilities to facilitate the implementation of this contract and help materialize the development of Phase 11 of South Pars," said Lu.

Technology Transfer to Petropars

Akbari said Total had a separate plan to transfer technology to Petropars. "This issue will be separate from this company's responsibility for domestic manufacturing and transfer of technology to Iranian companies."

"So far, Petropars has successfully concluded the development of 11 phases of South Pars with a total daily output of 11 bcm/d of natural gas and 500,000 b/d of gas condensate."

"Petropars will be a non-operator in its cooperation with France's Total and will fulfil its obligations," said Akbari.

SP11 Deal Heralds Foreign Firms Return

Iran's Minister of Petroleum Bijan Zangeneh said Iranian companies faced no restrictions for involvement in the deal signed with France's Total for the development of Phase 11 of South Pars gas field.

"There are no restrictions to the participation of Iranian companies in this contract," Zangeneh said after the deal was signed in Tehran.

He said that Iranian companies would take care of such services as drilling, construction of platform and pipe laying.

"It is estimated that this figure would be around 70%. Furthermore, dozens of Iranian companies and manufacturers would make gains and tens of thousands of jobs will be created in Iran," said the minister.

Concerns Allayed

Zangeneh said the signature of thedeal with Total would remove doubts about investment in Iran.

"With the signature of this agreement, foreign companies will see their doubts removed for investment and work in Iran," he said. "The signature of this contract will be a start for the return of companies that are willing to invest in Iran; not only oil companies but also non-oil firms, because this contract sends a very important signal to European and Asian businesspeople for return to Iran for investment," he said.

Tender Bid under Way for Azadegan

Zangeneh said the tender bid for Azadegan oil field was under way, but he refused to say which bidder would have the highest chance to win the contract.

He said a number of companies had been officially invited to bid for the project, adding: "The companies have been invited at two levels – leader and co-operator – to bid for the project."

The minister said companies have first to submit their technical and then financial proposals.

He added that a large number of companies had shown interest for presence in the Azadegan tender bid.

Zangeneh said the conclusion of deal with Total for the South Pars development would facilitate negotiations for more contracts, adding that the texts of new agreements would be different, but they would follow the same lines.

Russians Welcomed

Asked if the new round of US Senate sanctions against Russia would cause any problem in oil cooperation between Iran and Russia, the minister said: "If Iran is to respect the US Senate sanctions it will be itself the first country to have slapped with the sanctions."

Zangeneh said the fresh Senate sanctions were "illegal", adding: "They are not entitled to make decisions for others. I believe that Russian companies can come to Iran for the development of oil fields under competitive conditions."

Oil Market Unforeseeable

The Iranian minister also said that oil market remained unpredictable as a variety of factors are involved.

"The problem that currently exists is that US oil production rate has surpassed OPEC's forecasts and at present there is consensus on waiting to see the impacts of [OPEC] production cut," said Zangeneh.

"The percentage of compliance with agreed upon rates is very good. OPEC members have been 100% complaint and some have even been compliant more than 100%. That would affect the market," he added.

"You must have seen in the market that the trend of oil price fall has been reversed and the prices go up; however, the oil market remains unforeseeable," said the minister.

Maersk a Qualified Company

Zangeneh also said that Denmark's Maersk was the most qualified company to develop the oil layer of South Pars gas field.

"But we never restrict ourselves to a single company," he added.

"However, Maersk which was active in the Qatar-owned sector of this layer for years is willing to develop the oil layer of South Pars," said Zangeneh.

Eni Agrees to Study Two Iran H/C Fields

Italy's Eni has signed a provisional agreement with Iran's state-run energy group to carry out feasibility studies on the development of oil and gas fields in Iran.

Italy’s largest oil and gas group signed a memorandum of understanding on Tuesday with the National Iranian Oil Company (NIOC) to explore a potential investment in Kish gas field in the Persian Gulf and the third phase of development of the Darquain oilfield in southwest Iran within the next six months.

Iran had signed provisional agreements at the end of last year on the two fields with Royal Dutch Shell, Russia’s Gazprom, The Philippines’ PNOC and an Iran’s Ghadir Investment Company.

The agreement on June 20 was signed by Gholam-Reza Manouchehri, NIOC deputy managing director of for engineering and development and Seger Willem Arie Hoijtink, Eni's vice-president for international upstream projects. Other officials present at the ceremony were Ali Kardor, CEO of NIOC, and Nouroddin Shahnazi, CEO of Petroleum Engineering and Development Company (PEDEC).

Eni is no stranger to Iran's petroleum industry. The Italian energy company first came to Iran in 2000 and completed phase one and two of Darquain oilfield but quitted development of the third phase in 2011 due to international sanctions imposed on Iran over its nuclear program.

Eni has already led oil projects in Egypt and the Mediterranean with Manouchehri saying that the company has registered significant records in rapidity and quality in these countries.

Now Iran hopes to enhance oil production from Darquain from 160,000 b/d to 220,000 b/d, which would require an estimated $1.5 billion in investment. In the third phase of development of the oil field, Ilam, Sarvak and Fahlyan layers will be developed.

6 Months for Feasibility Studies

Manouchehri said Eni would have six months to complete its technical surveys on Kish and Darquain fields and submit its conclusion to NIOC.

"We hope to be able to achieve an acceptable basic development plan based on the findings of studies we receive from companies," he said.

"Based on these MOUs, domestic and foreign companies will conduct their studies on the development of oil and gas fields free of any charge," he added.

Manouchehri said an advantage of signing MOUs with a variety of domestic and foreign companies to study oil and gas fields was the compilation of various plans. "That would help us compare the results of studies with each other. Furthermore, valuable projects have so far been submitted to NIOC," he added.

Manouchehri said NIOC had conducted its own independent studies separately in order to have a more realistic view of oil and gas fields, rate of recovery from them and their lifecycle.

Cutting Edge Technologies a Must

Under Iran's new model of oil contracts, IPC, NIOC insists on improved oil recovery and enhanced oil recovery (IOR/EOR) and expects IPC to bring about oil and gas recovery enhancement.

Manouchehri said NIOC wants the use of modern technologies in studying the field in order to "have maximum efficiency in recovery from the fields."

"We expect the use of conventional technologies which are available in the world in order to stabilize Iran's oil and gas reserves because these deposits are Iran's accumulated wealth and should we fail to recover them through IOR/EOR we will lose these resources in coming years," he added.

Manouchehri said under IPC deals, Iranian E&P companies would join foreign companies in developing oil and gas fields.

"In case we reach a final conclusion in IOR/EOR, Iranian companies that are now serving as partners to foreign companies in oil and gas projects will themselves become developer of projects," he added.

Eni Seeks Comeback to Iran

Arie Hoijtink referred to Eni's cooperation with Iran in the past in developing Siri and Darquain fields, saying the Italian company had accomplished all its projects

accomplished all its projects in Iran.

"We expect to submit our study findings to NIOC in six months," he said. "On this basis we are trying to acquire developed technologies in order to make maximum profit from the fields."

Manouchehri said Kish field was selected due to Eni's return to Iran's gas market, adding that the Italian group was attentive to gas and gas production.

NIOC to Regulate Oil Export Mix

Kardor said plans were under way to regulate Iran's crude oil exports mix.

"By regulating crude oil exports, the amount of oil delivered to various countries will be crystal clear," he said. "That would help create balance in the supply of oil to different countries and will avert sudden changes in the trend of exports and will prevent the country's dependence on oil demand by certain companies."

He said that Iran had cut oil exports to India, while in parallel boosting delivery to Western countries.

Kardor said Iran's oil production capacity stood at 4 mb/d, noting that Iran's oil production had not declined.

He said that European countries received 50% of Iran's crude oil exports in May.

SP11 Contract Text Finalized

Kardor said the text of agreement for the development of Phase 11 of South Pars with a consortium of France's Total, China's CNPC and Iran's Petropars had been finalized.

"We are waiting to receive some permits and arrange the presence of senior managers of companies to attend the ceremony of signing the contract," he said, adding that the agreement would be signed before the administration of President Hassan Rouhani mandate ends.

Kardor said Total had sent a team to Iran to finalize the text of the South Pars project. "Signature of this contract has nothing to do with political issues and Total is interested in signing the agreement."

Azadegan Tender Unlikely Under Current Administration

Kardor also referred to a long-awaited tender rounding for Azadegan oil field which Iran shares with Iraq.

"Instead of sending tender papers to all companies, a letter was sent to them so that companies willing to bid for Azadegan would express their readiness. After it has been finalized limited bidding round will be held," he said.

Kardor said this process would take several weeks, adding: "Furthermore, some bidders have not already signed MOUs with NIOC and naturally their technical studies will last months. It is unlikely that the contract for Azadegan field would be signed under this administration."

Maersk Wooed for SP Oil Layer

Kardor said NIOC was in talks with Denmark's Maersk to develop the oil layer of South Pars gas field.

"The technical model offered by Maersk is under review by NIOC experts," he added.

He said Iran was seeking to deplete the reservoir of the oil layer of South Pars as it is jointly owned by Iran and Qatar. "That must be done more rapidly and we have asked Maersk to take this issue into consideration," he added.

Kardor said no other foreign company than Maersk had shown willingness to develop the oil layer of South Pars.

"Signing a contract is something and technical issues of recovery from the field are something else. Since this field is jointly owned and Iran insists on its faster depletion we are willing to see recovery from this field happen more rapidly," he added.

He also referred to negotiations with India for the development of Farzad-B gas field, saying: "In case the financial model presented by the Indians turns out to be commercial we will review it. Meantime, we are drawing up EPC and EPCF packages to develop Farzad-B. Now if we reach agreement with the Indians sooner we will welcome it; otherwise, we will not stop developing the field we will go another away."

Asked if Shell and Eni were likely to team up to develop Kish gas field, he said: "since both companies enjoy market shares in LNG and gas export I don't think they would like to form a consortium to develop the field."

Joint Committees with Qatar, Iraq

Kardor also said Iran was cooperating with neighboring countries for maximum efficient recovery from jointly owned fields.

"Qatar demanded that a joint committee be set up and the first meeting of the committee has been held. Also a joint meeting has been held with Iraq," he said. "Iran welcomes cooperation in this regard because both sides will benefit from such cooperation."

Kardor said one reason for Qatar's request for the establishment of a joint committee was that Iran had reached the same level of extraction from South Pars.

"Maybe before Iran had raised its production capacity in South Pars gas field and Iran was behind Qatar they would not welcome holding such meetings, but now Iran is in a strong position and its production capacity has increased. Therefore, both sides will benefit from holding such meeting," he said.

Petronas, Shell to Submit Azadegan Report

Malaysia's Petronas and Royal Dutch Shell are to submit their final reports on Azadegan oil field to National Iranian Oil Company (NIOC), the CEO of Petroleum and Engineering Development Company (PEDCO) said.

Nouroddin Shahnazizadeh, CEO of PEDEC, said France's Total and Japan's Inpex had already presented the findings of their studies on Azadegan to NIOC.

Azadegan, which is Iran's largest oil field, is to be developed under new contractual frameworks known as IPC. The field, which Iran shares with Iraq, is to be put out to tender.

Total, Inpex, Petronas, Shell and Iran's Kish modern oil energy development company have already signed MOUs with NIOC with a view to studying this jointly owned field.

Azadegan has the capacity to produce more than 150,000 b/d of oil. After development, its recovery rate is expected to grow further.

Positive Step in Iran-France Ties

Iran's President Hassan Rouhani met with the CEO of France's Total, Patrick Pouyanné, in Tehran after a landmark gas deal was signed.

During the meeting on July 3, Rouhani said the contract for the development of Phase 11 of South Pars gas field between National Iranian Oil Company (NIOC) and a Total-led consortium which also includes China's CNPC and Iran's Petropars would be in line with the development of economic and technological cooperation between Iran and France.

"Iran and France have always maintained good relations and cooperation with each other," he said.

Rouhani highlighted France's position in energy economy and technology, saying: "The signature and implementation of this agreement will be a positive step on the path of further development of economic and technological cooperation between the two countries."

He said that his administration had sought to pave the way for further economic cooperation between Iran and major IOCs in the wake of the implementation of Iran's nuclear agreement with six world powers.

Rouhani said the deal with Total was concluded, thanks to the political will shown by Iran and the six powers.

He recalled his visit to Paris early last year, saying: "In Paris, the two officials showed political will for the development of relations, and important agreements were signed between the two countries to expand ties and cooperation."

Rouhani said Total was widely expected to be the first company to start cooperation with Iran.

"Our policy lies in cooperation with big companies like Total," said the president.

"Currently, some $200 billion of projects in oil and gas sector are ready to receive investment. Major foreign companies can contribute to these projects."

"We have to make efforts to reach peace, tranquility and stability in the region with a view to economic progress and development, because scientific cooperation for development could help fight on ignorance and poverty, which are the main roots of terrorism growth and expansion," said Rouhani.

He also expressed hope that Iran and France would further cooperate in the oil, gas and petrochemical sectors and take steps for further development of ties.

NIOC to Introduce Projects to WPC

National Iranian Oil Company (NIOC) plans to introduce opportunities for investment at the 22nd World Petroleum Congress (WPC), which is scheduled to be held in Istanbul from July 9 to 13, an NIOC official said.

Ebrahim Taleqani, head of NIOC research and technology, said the company would introduce opportunities for investment, exploration blocks and equipment manufacturing.

"As in the previous rounds of the Congress, NIOC will be active in the Congress itself, its exhibition and its petroleum industry youth committee," he said.

Taleqani, who will lead Iran's delegation to WPC 2017, said NIOC and National Iranian Gas Company (NIGC) would jointly have 280 square meters in the exhibition. He said that 23 articles from Iran had been accepted.

He said that Iranian experts would be informed of the future of energy, future policy and plans of big oil companies and the future of oil trading.

NPC Ready to Introduce Foreign Investors

The head of investment affairs at the National Petrochemical Company (NPC) has said that the company would be ready to introduce foreign investors willing to finance petrochemical projects in Iran.

Hossein Ali-Morad said the presence of investors in Iran's petrochemical industry would not be limited to the operation of projects in this sector.

"Manufacturing companies will be also able to take action with regard to attracting fresh investment and present portions of their shares to companies applying for domestic and foreign investment, and then will spend new financial resources achieved from foreign investment in operating their development projects," he added.

Ali-Morad said: companies from Turkey had expressed readiness for investment in collaboration with petrochemical companies in Iran.

"If need be, companies willing to invest will be introduced to them," he added.

"Using the potential of foreign investment for joint cooperation will lead to the signature of new agreements that could bring about consumption security for us," said Ali-Morad.

Noting that exports are one of existing challenges for petrochemical companies, he said: "All petrochemical companies will be able to get a share of current atmosphere for investment in the country."

"For future investments and removal of financial problems of production we have to benefit from hard currency resources that enter the country for development," he said.

Iran Starts Petchem Exports to Russia

Iran's petrochemical plants have started exporting polymer and chemical products to Russia's big market, the director of production control at National Petrochemical Company said.

Ali-Mohammad Bosaqzadeh referred to growing demand by different countries to purchase petrochemical products from Iran, saying: "Besides traditional customers, several countries have applied to sign contracts to buy petrochemical products from Iran."

"Some petrochemical plants have shifted their market from traditional customers to Russia and this is a good new trend for boosting exports," he said.

Assadollah Asgarowladi, head of Iran-Russia Joint Chamber, underscored the strategic importance of Tehran-Moscow relations, saying: "This country severely needs to import petrochemical products, and appropriate cooperation between our country's producers of petrochemicals needs to be planned for boosting exports to Russia."

He said petrochemical production was not lucrative in Russia, adding that the Russian market was suitable for Iran to export petrochemical products.

"Our petrochemical exporters should take part in exhibitions held in Russia and enter talks with potential Russian buyers of petrochemicals," he said. "Over recent years, the proper presence of our exporters in petrochemical exhibition in Russia has led to good contracts. We hope to see good contracts for petrochemical industry this year, too."

Iran, Russia Ink Energy Roadmap

Iran and Russia have signed a roadmap for cooperation in energy sector. The roadmap was signed by Iran's Deputy Minister of Petroleum for International Affairs and Commerce Amir-Hossein Zamani-Nia and Russia's Deputy Minister of Energy Kirill Molodtsov.

The roadmap for energy cooperation between Tehran and Moscow was signed in a meeting between Iran and Russia joint energy taskforce, led by Zamani-Nia and Molodtsov.

The taskforce held a meeting simultaneously with the 21st St. Petersburg International Conference, and attended the SPIEF 2017 panels and spoke about opportunities and advantages of investment in Iran now that sanctions have been lifted on the country.

Iran has so far signed memorandums of understanding (MOUs) with four Russian companies: With Lukoil for Ab Teimour and Mansouri oil fields, with Zarubezhneft for Aban and Paydar Gharb fields, with Tatneft for Dehloran and Shadegan and with Gazprom for Cheshmeh Khosh and Changouleh. No other country has so many MOUs with Iran.

Zamani-Nia said in Moscow that six to seven Russian companies had expressed willingness for involvement in the development of nine oil and gas fields in Iran.

"The companies have already made preliminary assessments and some of them have drawn up master development plan (MDP). Iran will examine these proposals," he added.

Zamani-Nia said Iranian and Russian companies were poised to start cooperation, expressing hope that such cooperation would begin in the near future. 

He also referred to the impact of energy sector on the environment and balance between energy and environment as an important issue discussed in the SPIEF 2017.

"Most probably, the share of oil and gas in the world energy mix will be different from the current level of around 80% in the future, but it will remain an influential sector. Therefore, serious investment must be made to develop oil and gas sector," he said.

South Pars Zero Flaring Due in 2020

The director of supervision on production at National Iranian Gas Company (NIGC) has said that associated petroleum gas flares at South Pars gas field would have been extinguished by March 2020.

"One of our main jobs in gas refining sector in the [calendar] year 1395 (ended on 20 March 2017) was to reduce gas flaring at refineries and extinguish one of flares at the first refinery of South Pars," Gholam-Reza Bahman-Nia said.

He said that the flares had been designed primarily for the instantaneous relief of gasses accumulated at the refinery or letting gas off during operation and overhaul.

"The philosophy has changed to some extent and as new technologies are developed in the world we have sought to move towards reducing gas flares at their start point," he added.

Bahman-Nia said gas flare reduction did not mean that relief and delivery of excess gas under emergency conditions had declined, adding: "Since this issue (relief and delivery of excess gas under emergency conditions) will exist in any case, this job is done via extinguished flare which is started with a spark and turned off after the end of work."

He said that the technology applied to the first refinery of South Pars was meant to reduce excess gases and it worked properly. "It means that we managed to disengage one of two operating compressors before switching off one of the flares."

He said another technology would be used in phases 2, 3 and 12 of South Pars to return excess gas to gas feedstock processing.

Bahman-Nia said the gas used in South Pars under normal conditions would be reused to feed the refinery.

"We expect all flares to be extinguished by March 2020 at the refineries of South Pars after state-of-the-art technologies are coupled with the creativity, initiatives and obligations of Iranian engineers and technicians," he added.

Exploration Starts in Arya Field

The Exploration Directorate of National Iranian Oil Company has begun drilling operations for exploration in Arya field, an official said.

Ali-Mohammad Hemmatian, official in charge of technical affairs at the Directorate, said a two-year agreement had been signed with North Drilling Company (NDCO) to spud four offshore exploration wells.

"Signing agreement with NDCO is not limited to exploration in Arya but it will also include other exploration projects over these two years," he added.

Hemmatian said Sahar-1 offshore drilling rig had been provided by NDCO to the NIOC Exploration Directorate for exploration in the Persian Gulf.

He said that the area under exploration is limited to al-Khalij oil field (shared with Qatar) to the south, Balal and South Pars fields to the west and to Reshadat, Resalat and Salman fields to the northeast.

Hemmatian said that the timeframe forecast for these drilling operations would be four months, adding that the operation would start from Arya and continue to Sourmeh Formation.

He said that the NIOC Exploration Directorate carried out around 114,000 meters of exploration drilling from 2012 to 2016, more than 23,000 meters of which was done in 2016.

Hemmatian said onshore exploration had been assigned to the Exploration Directorate, adding that 6 to 8 onshore rigs would carry out the task.

Tehran to Host IGRC 2020

Iran is to host the 16^th gathering of International Gas Union Research Conference (IGRC) in 2020. The decision was made during the last IGRC in Brazil's Rio de Janeiro.

Saeed Pakseresht, director of research and technology at National Iranian Gas Company (NIGC), who was addressing the IRGC gathering in Brazil, highlighted the Islamic Republic's potential in gas industry and the country's daily growing use of gas as a source of energy.

He said that natural gas had achieved the status it deserves in the world.

"The International Gas Union, as one of the most influential international organizations specializing in gas industry, is seeking to prove to everyone that gas and the sustainable production and development of this clean energy is the sole key to reach a life of better quality in the future," he added.

"Iran has the largest gas reserves in the world and is the third largest producer of natural gas. It is equipped with an extended supply network for this clean energy that includes extraction, production, refining, transmission and distribution," said Pakseresht.

He said that Iran had suggested techno market during IGRC 2020.

Austria Finance Minister, Zangeneh Meet in Tehran

The Austrian finance minister met Iran's minister of petroleum in Tehran to discuss cooperation avenues in oil and gas projects.

Heading a high-profile economic delegation, Hans Jorg Schelling met Bijan Zangeneh. The Austrian ambassador to Tehran was also present in the meeting.

Development of banking cooperation, cooperation between Austria's OMV and National Iranian Oil Company (NIOC) and more cooperation in oil projects were the main topics of discussion between the two sides.

Austria has already expressed its willingness for an Austrian bank to open a branch office in Tehran.

Austria's former president Heinz Fischer visited Iran in September 2016 at the invitation of President Hassan Rouhani. During his visit, Iran and Austria signed documents for cooperation.

Iran Seeks Bigger Share in World Gas Trading

In the second half-century of its work, National Iranian Gas Company (NIGC) has shifted its strategy from domestic development to international trading of gas. According to its Vision Plan 2025, it eyes a 10% share of global gas trading. To that end, the company has started intensive talks with neighboring countries for gas delivery to them. Iraq is set to receive Iran's gas and more countries would be getting Iran's gas in the future.

There are complaints that Iran's price of gas is high, but director for international affairs of NIGC, Behzad Babazadeh, insists that the price of Iran's gas is realistic. In an interview with "Iran Petroleum", he said that Iran would not export its gas below its real price.

The following is the full text of the interview with Mr. Babazadeh.

Q: Iran has signed two gas export agreements with Iraq to pump gas to Basra and Baghdad. At what stage are these two agreements now?

A: A 6-year agreement for exporting gas to Basra was signed in 2015 with the objective of supplying up to 35 mcm/d of gas to that area [of Iraq]. Under the agreement, Iran would be supplying 20 mcm/d of gas to Basra in cold seasons of the year and 35 mcm/d in hot seasons.

The final agreement for Iran's gas exports to Baghdad's power plant via Iran Gas Trunkline 1 (IGAT-1) was signed in 2013.

Both agreements are at a good stage of progress. We expect the agreement for gas export to Baghdad to become operational soon and exports to Basra would start in six months.

Q: Therefore, construction operation for gas export to Baghdad is over on the Iranian side, isn't it?

A: Yes, that’s so. As you know under the six-year agreement for gas export to Baghdad, Iran would be delivering gas to Iraqi power plants. At present, construction operations on the Iranian and Iraqi sides are over. The preliminary gas for the pre-commissioning of measurement systems and pipe test has been injected.

Q: How should the bills be footed for these agreements?

A: In the agreement, it has been mentioned that through opening an LC, the monthly sum would be paid in favor of NIGC. The LC issued by the Iraqi Ministry of Electricity in favor of NIGC must be renewable and certified.

Q: How much gas will Iran be exporting to Baghdad?

A: Gas delivery to Baghdad will start from 7 mcm/d, which will reach 14 mcm/d to 18 mcm/d in the second year, and will finally reach 25 mcm/d to 35 mcm/d.

Q: Has any price revision clause included in this agreement?

A: In all long-term agreements for natural gas selling and buying, a precise revision clause is included. But since the agreement with Iraq is initially valid for six years before being renewed conditionally such a clause is not included now, but it will be decided upon in a long-term agreement.

Q: In the wake of Turkmenistan's suspension of gas supply to Iran, NIGC demanded gas swap with Turkmenistan. Do you swap Turkmenistan's gas now?

A: As you know after Turkmenistan halted its gas exports to Iran, Iran has managed to supply gas to Northern provinces without any problem. But after that, since Iran and Turkmenistan are trading partners we suggested that Iran could swap Turkmenistan's gas. They agreed to send the same volume of gas they used to export to Iran before halting it for swap and we charge them for delivering their gas to other countries.

Q: You had also negotiations for gas delivery to Europe via Turkey. At what stage are those talks now?

A: Turkey had offered to transfer Iran's gas to Europe via its territory, but NIGC would sign a trilateral agreement provided that Iran's gas would directly go to Europe without being consumed in Turkey. We are currently in talks with influential Turkish companies, but we have yet to reach a conclusion.

Q: Has the volume of gas received from the Republic of Azerbaijan to be swapped to Nakhichevan changed?

A: No, it hasn't. The agreement for swapping the Republic of Azerbaijan's gas to the autonomous republic of Nakhichevan was signed on 5August 2004 for 22 years between National Iranian Gas Export Company (NIGEC) and the Azeri side. The agreement took effect in 2005. Iran receives Azerbaijan's gas via the border city of Astara and swaps it to Nakhichevan via Jolfa. In 2013 and 2014, some 400 mcm of natural gas was delivered each year from Azerbaijan to the autonomous Republic of Nakhichevan via Iran.

Nakhichevan via Iran.

Q: Regarding Iran's plan to barter gas with electricity from Armenia, the latter has demanded more gas. Have any talks been held in this regard?

A: The ceiling for Iran's gas exports to Armenia in exchange for electricity is below 1 mcm/d. The Armenian side had demanded that Iran's gas exports be increased to 2 or 2.5 mcm/d. NIGC is considering this request. Of course, NIGC prefers to sign a direct agreement with Armenia about increasing gas exports in order to be directly paid for gas exports.

Q: So you plan to sign a separate agreement with Armenia?

A: Yes, that's it. We have had talks in this regard. Of course, Armenia favors the price of Russia's gas sales, which is low and we do not accept it.

Q: Will Iran's gas-for-electricity agreement with Armenia be annulled if talks reach conclusion?

A: No, the gas-for-electricity agreement has been signed by the governments of Iran and Armenia and will be respected. But in case Armenia expresses interest in receiving more gas from Iran; NIGC, as a gas trading entity, would like to sign a separate agreement with Armenia and we would receive money in return for gas exports.

Q: Do you give an acceptable account of NIGC's gas trading record?

A: In the first half-century of its activity, NIGC was focusing on domestic development and it did not actively enter transaction with its neighbors. But over the past seven months, proper measures have been taken in this regard and there has been a good start. During this short period of time, we have signed profitable gas swap and exports agreements and we have respected our obligations. We are currently providing necessary infrastructure to get a 10% share of global gas trading by 2025.

Q: How many gas swap deals has Iran already signed?

A: We have two gas swap agreements; swapping Turkmenistan's gas to Azerbaijan at 16 mcm/d and swapping gas from Astara to Nakhichevan.

Q: Have you had any talks about gas exports via pipeline?

A: Yes, we have entered talks with Georgia. We have also held talks with Turkey to use the idle capacity of Botas pipeline. An agreement had been signed for exporting gas to Georgia, but it has not been finalized. The reason is that gas must pass by Armenia to reach Georgia and Georgia-Armenia negotiations have not been finalized to that effect.

Q: Why is Iran's gas exports deal to Georgia short-term?

A: The agreement was signed in August 2016 between Iran and a private Georgian company, Georgian International Energy Corporation (GIEC), for a four-month period at 40 mcm. The reason for signing a short-term agreement is that Iran is planning to deliver gas to a country farther than its neighbors for the first time and it has to assess all aspects of the project.

Q: Of course Georgia believes that the price of Iran's gas is high.

A: Georgia compares the price of Iran's gas with Russia's. Russia is selling gas at a lower price than Iran's proposed price. We believe that Iran's gas price is reasonable and we see no reason to reduce the price of our gas delivery to Georgia.

Q: So you have no plan to reduce the price of gas export to Georgia.

A: We have no reason to do so. We have customers for the gas share we plan to export. Iran is currently exporting gas to Turkey, Armenia and Azerbaijan and it will soon start exporting gas to Iraq. We do not intend to export gas to Georgia at any price. It should be also noted that any price we agree upon in the contract will be the base for our negotiations and we would not be able to modify it too much. Of course, what I am saying does not mean that we are tough. But I insist that Iran's gas price is not high but realistic. We favor negotiations but we will not export gas below its real price.

Q: As new development phases of South Pars gas field become operational, Iran's gas production capacity has increased and the country will have more surplus gas for exports. Under such circumstances, it would be more important for Iran to gain a foothold in the market than insisting on its desired price. Will Iran lower its gas price then to win more buyers?

A: Half a century has passed since NIGC was established. In the second half-century period of this company we are concentrating on international interaction and exports. But it does not mean that we plan to export all our gas before being processed. We can use gas to create more value-added and reach this objective by delivering processed gas to petrochemical companies. Of course, reaching this objective would require petrochemical companies to reach agreement with NIGC to receive gas feedstock. These companies will be NIGC's priority for gas delivery. Another priority for NIGC in gas exports is to deliver liquefied natural gas (LNG) to farther countries like Japan and South Korea. Therefore, we can say there are numerous horizons for selling our gas and we are planning to reach the objective.

Q: So you do not worry about Iran's gas market?

A: No, we are not worried that Iran's gas would not be sold. Of course, in case of excess gas supply we will have to show flexibility. But that does not mean selling gas at a low price.

Q: How much will be Iran's share of global trade if gas export agreements take effect?

A: At present, Iran's share of global gas trade is below one percent. But under objectives enshrined in Iran's 6th Economic Development Plan, we expect this share to increase to 10%. Of course, this share will depend on political and economic efforts in favor of international interaction.

Gas Export to Europe Difficult but Feasible

As far as energy is concerned, one cannot limit himself to a single viewpoint. Market developments, methods of cooperation with various countries, innovations and forecasts are among services provided by consulting agencies.

Established in 1961, Atlantic Council offers consulting services on international issues. It organizes annual conferences on different issues. It last held an energy conference in Istanbul this summer. Representatives of major oil and gas companies, senior analysts and energy officials from a variety of countries attended the event. The conference focused on energy market, particularly gas and renewable energies.

Iran was highlighted in this conference. In the post-sanctions era, gas-rich Iran is reentering world energy market.    

Over the past four years, Iran has put a great effort into reshaping its energy policy, tempting foreign investors back and revitalizing its oil and gas industry. Hence, it reconsidered its ambitious project to export gas to Europe. Iran's abundant gas deposits have largely attracted major companies which wish to forge cooperation with Iran. Nonetheless, a long road lies ahead of Iran to become an influential player in the petroleum industry. Iran's standing as a major player in the gas and oil market is undeniable; however, foreign companies keep watching closely ongoing developments in Iran.

The Atlantic Council 2017 in Istanbul was proof of the potential comeback of Iran as an influential producer and exporter of oil and gas, analysts and government officials who attended the event said.

For the time being, one of the most important issues for Iran is to attract severely-needed foreign investment. Since sanctions have been lifted, Iran has signed agreements with big companies on various gas projects. Once again giants like France's Total and Royal Dutch Shell are coming to invest in Iran. 

Everything was on track before unprecedented challenges arose. US President Donald Trump, who took office in January, has pursued a different political approach towards Iran. The managing director and global head of RBC capital market, Halima Craft, believes that although Iran is a major player in energy market, further investment in its gas sector depends on the US politics.

“When you look at how the US sanctions are structured, you can see how they are extraterritorial. The US has not invested in Iran after 1979. Hence, essentially the US says to foreign investors, you can invest in Iran or you can access the US capital market,” she told Iran Petroleum.

Her remarks come true when one takes into account Total's change of position in the wake of the election of Trump as US president.

However, Iran's Minister of Petroleum Bijan Zangeneh said recently that the agreement with Total for the development of Phase 11 of South Pars gas field would be finalized before the current administration of President Hassan Rouhani bows out.

   Potential for Gas Exports to EU    

While energy experts like Craft maintain that there is some ambiguity and uncertainty with regard to foreign investment in Iran's oil and gas projects, Europeans are more optimistic.

After removal of the sanctions, European companies were first given the green light for investing in Iran's projects, specifically gas sector.

Since 2015 when Iran and six world powers reached a historic nuclear deal, dozens of MOUs and agreements have been signed. Companies from Germany, France and the UK have been keen to invest in Iran. But the desire of exporting gas to Europe faded very soon due to tough competition in the market. Russia holds a monopoly on gas supply to East Europe. Some other European countries have long been purchasing liquefied natural gas (LNG) from Qatar.

Add to this shipment of gas which needs infrastructure. As a result, Iran preferred to consume its gas domestically.

The chairman of Board of Directors of Ukraine's NAFTOGAZ, Andriy Koboyev, believes that there is a possibility for Iran to have some relationships with the Eastern Europe countries in the gas market.

"The gas market is big, while there is not that much stock constrains from Ukraine, but there are players who make sure that Iranian gas doesn’t arrive to Europe market. So, if these impediments can be resolved, Iranian gas can be exported to Europe; but this is a difficult task," he said.

Meanwhile, Iran is looking for other destinations for its gas.

Ruben Eiras, an advisor in Portugal's Ministry of Sea, said that Iran and Portugal were more than hopeful about future cooperation.

Iran is investing at Sines Port to commercialize LPG shipments, he said, adding that the two countries were focusing on infrastructure to distribute LPG in the African market.

By accomplishing this project, Iran plans to use its flares efficiently.

Eiras speaks on a positive note about gas cooperation between Iran and Europe, saying, “For what I know, if there is a will and investment capacity in both parts, this will lead to other cooperation as well.”

Iran great Potential in Renewables

It is imperative to know that besides gas, Iran enjoys potential in renewable energies. The country intends to increase the share of renewables in its energy mix up to 5% over the coming three years. Iran also plans to build windfarms.

Mark Jones is the CEO of EWT, a leading company in building localized turbines.

EWT has already installed turbines in the UK, Alaska, and China.

He said an Iranian company has demanded that EWT build turbines in Iran.

This kind of projects is suitable for Iran, Turkey and the Black Sea countries. There are local industries in Iran and Turkey and their sources of energy are not used effectively.

"There are a lot of local industries, and also these countries are poor on cheap energy. Even though there are a lot of resources but they are used somewhere else. So Iran is up to use most of its resources," he said.

However, this sector is faced with challenges. In Iran, most projects are financed by the government while renewable energy pertains to projects which are handled by the private sector. Therefore, operating such projects in Iran would need more time.

Jones said however that "once people believe it works, then it will take off."

"So the hardest part is starting it and make up to 1.2 or 3% of the energy basket purely from renewable energy," he added.

"It will take time for Iran to build the infrastructure for the renewable energy. Iran needs investments, new policies, and people to start the development process," he added.

 

Tehran, Seoul in $20mn Deal

Iran and South Korea have signed a $20 million agreement for the development of technical knowhow for mini-LNG ISO containers over a period of four years. This agreement on technical and research cooperation will facilitate international marketing for the two countries.

The memorandum was signed in South Korea's Busan between a group of companies led by National Iranian Gas Company (NIGC) and a consortium led by South Korea's Oceanus.

The Korean side comprises KITECH, DongHwa Entec, Sung-IL Encare, Gs E&C, KoGas Tech and KGS. The NIGC-led consortium regroups LNG Institute of Tehran University (ILNG), Research Institute of Petroleum Industry (RIPI) and a number of engineering and manufacturing companies. The Iranian delegation was led by Saeed Pakseresht, director of research and technology at NIGC, Ali Vatani, head of ILNG, and Mansour Bazmi, deputy head of RIPI.

NIGC was looking for mini-LNG knowhow before signature of the memorandum. Establishment of ILNG was within this framework. For two years, NIGC has been in talks with RIPI and other companies to master technological savvy for LNG. To that end, Iran from the very beginning considering cooperation with South Korea which depends on LNG imports for its gas needs. Therefore, it has developed technical savvy for liquefied natural gas. The most important rivals of Iran and South Korea are GE and CryBox, both American, and European Siemens and Dresser-Randel.

Saeed Pakseresht, director of research and technology at NIGC, said at a press conference that mini-LNG plants with a capacity below 300 tonnes a day, gas could be converted to liquid throughout hot months of the year while in cold days it could be evaporated and injected to the gas distribution network.

He said one of the important usages of mini-LNG was gas supply to remote areas, adding: "The process of construction of mini-LNG plants and related storage ranks in areas with high consumption is aimed at curtailing peak consumption in winter."

Pakseresht said that when consumption declines relatively in winter, surplus gas could be gathered in these units and be liquefied. In this way, LNG storage tanks will be preserved.

Steering Committee Formed

Pakseresht said the timeframe set for this joint project is a technical and research one and is not limited to research.

"A one-year timeframe has been forecast for the conceptual and basic design of this project. It will become operational by sending staff," he said.

Pakseresht said the governments of Iran and South Korea would finance the project.

"Each party will invest some $10 million in this project, which will total $20 million," he added.

Pakseresht said: "Since each party is planned to provide for its own share of investment and costs of this project there would be no monetary transactions between the two countries and the project will start after an agreement has been signed."

He referred to cooperation between the two countries about technical knowhow, saying: "A steering committee, which is planned to be set up, will decide about the share of these countries in providing technological components."

Pakseresht said the agreement allows both countries to do marketing, adding: "We plan to carry out joint marketing to find markets all across the world to serve the interests of both parties," he added.

Pakseresht said: "It has also been stipulated in this agreement that if any of these countries (Iran and South Korea) finds an exclusive market it will have a preferential share."

Key Manufacturing Companies Listed

Pakseresht said the agreement would provide conditions for further cooperation between the two countries.

"On this basis, certain people will be exchanged between the two countries for the formation of technical, operating and designing task forces," he added.

The agreement has been divided into two chapters; the first one is development of liquefaction technology in South Korea and Iranian staff will be available for joint work. The other one pertains to natural gas pre-treatment for feeding into the liquefaction unit. This responsibility is assigned to Iran which will host South Korean staff.

Pakseresht said equipment manufacturing companies from the two countries would be involved.

Pakseresht said the Iranian side insists on the presence of manufacturing companies. "Our main objective is to empower domestic companies manufacturing equipment," he added.

"We expect Iranian companies to upgrade themselves and benefit from global experience. In this regard, Iran and South Korea have identified a list of companies whose countries are key manufacturers of equipment to cooperate with each other," he said.

International Marketing

Pakseresht said an advantage of this agreement was the feasibility of international marketing, adding: "Since South Korea does not own significant gas reserves the agreement is expected to bring back benefits to Iran so that we would be able to use this technology for producing LNG on small scale. We can also benefit from the potentialities of the South Korean team for international marketing."

He added that Iran would have at least 25% of profits from international marketing, which would increase to 75%. 

Pakseresht said a suitable location for the establishment of mini-LNG plants would be chosen in coming weeks.

"Of course the possibility of transfer of ISO Container equipment is an advantage of such facilities. It is technologically new and is in the process of research all across the world. That is why the South Korean company has managed to win sovereign and state capital for this project," he said.

Asked if this technology and equipment would be transferred to Iran after four years, he added: "Under this four-year technical cooperation, technical savvy for mini-LNG ISO containers would be developed and a prototype would be built, tested and assessed."

Pakseresht said this unit had a capacity of 15 tonnes a day, adding: "This structure could be transferred in three or four containers measuring 12 meters long and 3 to 4 meters high."

"Liquefaction package could be accommodated in a single container, the purification system in one or two containers (depending on the feedstock) and other equipment in one or two containers," Pakseresht said.

Infographics of National Petrochemical Company's Future Plans

NPC future plans are as follows:

Helping existing facilities realize their nominal capacity;
Helping complete half-finished projects;
Conducting economic and market surveys of products of projects with meager physical progress and their moderation;
Helping attract foreign direct investment with a view to transferring technology, completing value chain, diversifying export-oriented products, developing capital and management in collaboration with engineering companies and domestic manufacturing;
Steering project financers towards partnership with foreign direct investors; and
Not issuing new permits for the completion of methanol projects and encouraging methanol projects to merge and complete value chain.

Projects under Way

Number of Projects: 50

Total Capacity: 41.3 million tonnes per year

Investment (Foreign Currency): $ 23 billion

Investment (Local Currency): IRR 239,000 billion

Annual Sales: 32.3 million tonnes per year

Investment in Iran New Petchem Hubs

Iran's National Petrochemical Company (NPC) is an important wing of the country's oil diplomacy. It embarked on significant measures four years ago. Iran is currently producing at least 60 million tonnes a year of petrochemical products, while more than 60 petrochemical projects remain incomplete envisaged in the previous five-year economic development plans. Once these projects come online, Iran's petrochemical production capacity will double.

Under the next administration of President Hassan Rouhani, Iranian petrochemical officials intend to produce more feedstock at the giant South Pars gas field as more petrochemical plants are to be built. The new plants are projected to be constructed in new petrochemical hubs.

Mahshahr is home to 21 petrochemical plants with a total capacity of 25.6 million tonnes a year and Assaluyeh is home to 13 petrochemical plants with an annual capacity of 24.3 million tonnes. They are Iran's main petrochemical hubs.

Since development of industrial hubs is a key factor in the industrial development of countries, and favorable and sustainable development of petrochemical industry in these hubs hinges upon preparing general and specialized infrastructure, the NPC is studying potential petrochemical hubs within the framework of its development plan with a view to proximity to sources of feedstock, water and facilities for exporting petrochemicals.

Among the areas under study for petrochemical projects are Special Petrochemical Zone in Mahshahr, Parsian Energy Industry Site, Lavan Island, Qeshm Island, Jask and Chabahar.

Marzieh Shahdaei, CEO of NPC, said Iran's petrochemical roadmap would require 36 new projects in the new hubs. These new projects would add 60 million tonnes to the country's petrochemical output capacity. That would be the third jump in Iran's petrochemical sector.

Future development of petrochemical industry will not be limited to Bandar Imam and Assaluyeh as four other hubs off Persian Gulf and the Sea of Oman would also see new projects.

Parsian Special Economic Zone in eastern Assaluyeh, Jask Free Zone located next to the Strait of Hormuz, Chabahar Free Zone and nearby Iranshahr Free Zone are the four hubs.

In addition to these four hubs, four mega-tone methanol and urea/ammoniac projects with capacities above one million tonnes in Lavan and a number of GTP plants in the mainland are envisaged. Since natural gas will be available in abundance in the near future, the NPC intends to apply GTO and GTP technologies to produce olefin which is crucial to downstream industrial development.

Senior NPC managers say investments in the Persian Gulf and the Sea of Oman will continue. All Persian Gulf and Sea of Oman coasts have potential to become petrochemical hubs due to access to feedstock and high seas. The private sector is building new hubs in Chabahar, Jask and Parsian. Iran has already laid out a pipeline as far away as the Pakistani border for future transfer of gas. The pipeline has capacity to carry 105 mcm/d of gas. Pakistan would be receiving 25 mcm/d of gas; therefore, the pipeline would be able to supply more than 75 mcm/d of gas to petrochemical plants in southeastern Iran.

Furthermore, railroads in southeastern Iran and Chabahar Free Zone could be attractive for investors. Required infrastructure is also envisaged to be erected in Jask, Parsian and Lavan.

In the near future, natural gas will become the main feedstock for Iran's petrochemical plants because ethane would not be easily accessible. Given Iran's huge gas deposits, it will be one of the most reliable countries for investment in petrochemical projects.

Iran, Suitable for Investment

Iran enjoys unique opportunities for petrochemical development thanks to its access to liquid and gas feedstock required for this industry. Iran holds the largest hydrocarbon (oil and gas) reserves in the world. There are also other advantages in Iran like long sea borders in the Persian Gulf and the Sea of Oman that could save foreign investors big sums in shipping products to target markets.

Educated and experienced youth and the skills developed by designing, engineering, construction and installation companies are among other advantages in Iran. Above all, with a population of more than 80 million and easy access to important consumer markets like Central Asia, Iraq, India and China, Iran would be attractive enough for potential investors. Add to this Iran's free trade and special zones that would allow foreign investors to invest alone and be exempted from taxes and duties for 10 years.

"Iran envisages more than 105 mcm/d of methane, 2.8 million tonnes a year of ethane, 2.1 million tonnes a year of propane, butane and liquefied petroleum gas as well as four million tonnes a year of naphtha as feedstock for its new petrochemical projects in the future. Domestic and foreign companies that would operate these projects will have no problem with feedstock," Shahdaei said.

Petrochemical industry consumes huge amounts of water and energy and many petrochemical units are already facing water shortages and decline in exports. Therefore, development of infrastructure in new hubs

could be a top priority for petrochemical sector.

Top Regional Spot

Iran aims to become the top petrochemical producer in the region by 2025and is currently exporting petrochemicals to more than 40 countries. Iran's landmark nuclear deal with six world powers and the ensuing lifting of sanctions have provided suitable conditions for Iran to benefit from 400-million-strong markets in neighboring countries. Given Iran's geopolitical position, these markets are highly significant. Iran is instrumental in meeting basic needs in other countries. After new development projects become operational by 2020, Iran's share of petrochemical production in the Middle East region would reach 41%.

Under Iran's 6th Five-Year Economic Development Plan, 55 million tonnes will be added to production capacity, while 33 petrochemical plants plus eight supply chains for the production of 60 types of products are planned.

Over the past 10 years, the pace of provision of infrastructure for investment in the petrochemical industry has been slowed down by sanctions. The Iranian government has tried its best to make up for losses. Petrochemical industry is key to increasing profitability and boosting Iran's status in economic ties in the region. The industry must be paid attention to more seriously as there are powerful rivals. In addition to gaining revenues from petrochemical industries, jobs will be created and welfare will be provided to underprivileged areas.

The government's new approach in developing petrochemical infrastructure is a sign of paying special attention to the infrastructure in this sector and increasing advantages. Given Iran's special conditions and its standing in energy commodity exchanges, as well as its hydrocarbon reserves and paying more attention to petrochemical industry is an important and strategic decision. By supporting the private sector, the government is paving grounds for the presence of Iranian and foreign investors. Iran's petrochemical industry has always been coherent enough to attract investment. Such advantages would turn Iran into a big petrochemical hub in the future to bring investors in.

Mohammad-Hassan Peyvandi, who heads a top petrochemical holding in Iran, says Iran enjoys all tools, capacities and necessary resources for a profitable petrochemical industry.

"No other country enjoys such advantages altogether. Therefore, our country enjoys a new and rare chance which no other investor does enjoy in the world," he said.

"Undoubtedly, improvement in Iran's international relations and attraction of more investment will promise a brighter future for the petrochemical industry," said Peyvandi.

By completing some 60 petrochemical projects, which are 10 to 90% complete, Iran's current petrochemical production capacity could be brought to 120 million tonnes.

Furthermore, by implementing 36 new projects which need $41 billion, the annual output capacity will exceed 180 million tonnes.

In the current calendar year to March 2018, the completion of four projects which had remained incomplete will add two million tonnes to the country's petrochemical production capacity.

Petropars Making Bonds with Oil Giants

In coincidence with the development of Phase 1 of South Pars gas field, Petropars Ltd. (PPL) was established in January 1998 thanks to efforts undertaken by then Minister of Petroleum Bijan Zangeneh. PPL is 100 percent owned by Naftiran Intertrade Company (NICO) which is affiliated with the National Iranian Oil Company (NIOC). PPL was tasked with putting efforts into upgrading the potential of Iranian contractors and transferring in cutting edge technology and project management knowhow. Two decades have since passed and Petropars is currently an internationally recognized company thanks to its acceptable performance. It was among the first group of companies whose qualifications  was accepted by Iran’s Ministry of Petroleum for operating E&P projects under newly developed contracts. Last year, France’s Total teamed up with China’s CNPC and Petropars to develop Phase 11 of South Pars.

Abbas Taqipour-Nia, director of business development at PPL, has talked to Iran Petroleum exclusively about Petropars Group’s exploration and production projects.

Q: Would you please speak about the major projects that Petropars Group has operated over the past 20 years?

A: Petropars has mainly been active in the development of South Pars gas field. The projects operated by Petropars alongside domestic and foreign companies have led to the production of 11 bcf of gas. The projects operated by Petropars are valued at $17 billion, which is a big sum.

But regarding buy-back projects I can say that in the development of Phase 1 of South Pars, Petropars was working with a British company in the management of the project. Later on, it was present alongside Italy’s ENI in developing Phases 4 and 5. Then, it contributed to the development of onshore facilities in phases 6, 7 and 8 in cooperation with Norway’s Statoil for drilling wells and erecting offshore installations. Given its positive background, development of Phase 12 was fully assigned to Petropars in 2005. Petropars, on its own, fully handled the project including reservoir studies, offshore drilling, offshore installations and subsea pipeline. The project was financed by NIOC and Naftiran Intertrade Company (NICO). Development of Phase 19 was assigned to Petropars in 2010 under an EPC deal. The contractor was Petropars Iran, a subsidiary of Petropars.

Q: Have you ever been present in any international projects abroad?

A: We had good activities in Venezuela and Angola, but due to certain issues including international sanctions we could not continue our cooperation. For instance, during that time, we had good talks with Venezuela’s state-run oil company PDVSA and we contributed to the development of Venezuela’s Dobokubi heavy oil block. Petropars had a share of 26% in the project. At the same time, we conducted preliminary studies to identify oil deposits in place and even the Venezuelan parliament approved the assignment of project to Petropars. But we failed to finance it due to financial restrictions stemming from sanctions.

Also in 2009, we purchased 10% of shares for exploration and development in the onshore northern block of Cabinda in Angola. In the project, Petropars was working with ENI, Inpex Group, SOCO, ACERP, China Sonangol and Sonangol P&P. It was Petropars’ first international partnership as a non-operating partner in exploration and production activities within the framework of a production sharing agreement. The client was Angola’s oil company Sonangol. Due to the toughness of international sanctions against Iran, we had to stop cooperating.

Q: Iran’s Ministry of Petroleum has cleared a number of companies including Petropars for E&P projects. What do you think of that?

A: Before answering this question I would like to explain about the cooperation of companies under the new model of oil contracts. As you know, under new oil contracts, Iran’s petroleum ministry has decided to assist qualified oil companies to promote their E&P skills rather than working as general contractors and EPC companies. These companies will operate oil and gas projects alongside leading international firms within the framework of new oil contracts. Under buy-back deals, contractors were involved in the project until the stage of production. After reaching this stage, the company was given back to the operating company and the contractor was remunerated through the sales of products. This model was no longer attractive to investors. Therefore, a new generation of contracts was devised by the Ministry of Petroleum in the 11th administration. The timeframe for the activity of these companies became longer in these new contracts and contractors will be engaged for 15 to 25 years. The important thing for the Iranian Ministry of Petroleum was that domestic oil companies would be empowered alongside foreign companies. But to this end they had to change the nature of their activities and get involved in E&P sector. Therefore, Iran’s Ministry of Petroleum called on Iranian companies to submit their documents to the ministry. As far as I know many companies submitted their documents, but finally the qualification of a limited number of companies for activity in exploration and production was approved.

Q: Did you ever imagine seeing Petropars be qualified?

A: Among qualified companies, Petropars was a leading one. Moreover, we had a brilliant record of activity among Iranian companies. You can see our performance in the development of South Pars phases. Over the past 20 years, Petropars has focused on its own development

besides working in master development plan (MDP) sector and experiencing production in our subsidiaries. Based on evaluation mechanism devised by the Iranian Ministry of Petroleum, our company’s competence has been significantly different from that of other qualified companies. Furthermore, the new model of oil contracts requires Iranian companies to operate in exploration and production and increase their experience in this sector gradually. As Petropars Group, we also believe that the presence of Iranian companies in E&P framework is better for the country. The new model of oil contracts is more attractive for investors and naturally we intend to take steps in this direction.

Q: Have you decided to become an E&P company after Iran’s petroleum ministry cleared you?

A: No, that’s not so. Petropars had taken steps in this direction before this new model of oil contracts had been worked out. More precisely, when Gholam-Reza Manouchehri, the current deputy head of NIOC for development and engineering, was CEO of Petropars, he had reiterated that PPL had to move in this direction and become an oil and gas operator. It was such that a top foreign company had studied our strategy and offered proposals in this regard. We also took steps on this path since that time.

Q: The first international agreement within the framework of new oil contracts was signed by a consortium of Total, CNPC and Petropars for the development of Phase 11 of South Pars. The heads of agreement for this contract had been signed in November 2016. Why did it last so long?

A: In the agreement for the development of Phase 11 of South Pars, Total is the operator while Petropars and CNPC are non-operators. It was the first international contract under the new model of oil contracts and it was natural for negotiations to take time. These negotiations were of high significance for Iran because they served as the example for future talks. I forecast future negotiations for oil contracts to be shorter after this agreement has been signed.

Another reason for the long drawn-out talks was that international companies had been kept away from Iran’s petroleum industry for nearly eight years. The new model of oil contracts looked unfamiliar and foreign companies were not aware of their terms. Anyway, this contract is worth near $5 billion and for the first time we want to use pressure-booster platforms in South Pars. The mechanism of technology transfer and the activity of companies were other issues whose discussion lasted long.

Q: How will Petropars be involved in this partnership agreement?

A: As I said we are non-operator in this partnership. Our main job is to provide capital and support the operator. Petropars must provide $20 of the capital needed for this agreement. We are also making efforts to be present alongside Total in different phases of the project including management and particularly where technology transfer is needed. Of course Petropars already owns technologies needed for building jackets and topsides, but we lack the technology needed for building pressure booster platforms. We want Total to help us by providing this technical knowhow. Petropars has already worked alongside such companies as Agip, ENI and Statoil. This time it wants to experience cooperation with Total.

Q: Have you had any negotiations with other international companies to develop oil and gas fields?

A: We have held talks with numerous companies over this period of time. For instance, I can refer to Germany’s Wintershall for enhancing recovery from Dehloran oil field. I hope that our talks will bear fruits by the end of the current Iranian calendar year (21 March 2018) and end in the signature of a contract. In this project, Wintershall will be operator and Petropars will remain non-operator.

Q: Isn’t Petropars willing to work as the main contractor in implementing these projects?

A: Petropars has no interest to operate projects whose required capital would exceed $3 billion because we lack such a capacity now. Of course we recently wrote a letter to NIOC, targeting companies that need investment of less than $1 billion, and we have asked them to sign memorandums of understanding with Petropars for studying these fields.

Q: Why have you chosen projects worth below $1 billion?

A: Because major international companies rarely volunteer to develop such fields; therefore, we can claim to be operator in these fields, and financing is easier for us. Moreover, we can present more diverse models for investment.

Q: NIOC has recently selected Petropars as management consultant (MC) in the development of Farzad B gas field. How does Petropars plan to do this job?

A: In December 2011, an agreement was signed with Petropars for the development of Farzad-A field to conduct MDP studies and drill an appraisal well. The project was done two years later. Since the Iranian Ministry of Petroleum did not reach an agreement with India’s ONGC for the development of Farzad-B and given Petropars’ experience in the Farzad-A studies, upon an instruction by the Iranian minister of petroleum, Petropars was selected as the MC for Farzad-A and Farzad-B fields. We will be obligated to drill two appraisal wells in each of these fields. Petropars will also keep tabs on the management of the project. This agreement is for 15 months and we intend to hire two international consultants while preparing EPC and EPCF packages. We cannot be the contractor in this project because Petropars is the MC.

 

Zagros Company Sees Gas Output Hike

South Zagros Oil and Gas Production Company (SZOGPC) is one of three subsidiaries of Iranian Central Oil Fields Company (ICOFC). SZOGPC runs five operating areas known as Naar & Kangan, Aghar & Dalan, Parsian, Sarkhoun & Gashouy-e Jonoubi and Sarvestan & Saadatabad. Nine gas fields – Aghar, Dalan, Naar, Kangan, Sarkhoun, Tabnak, Homa, Varavi and Shanoul – plus two oil fields – Saadatabad and Sarvestan – are administered by this company. SZOGPC covers stretches in the southern provinces of Fars, Bushehr and Hormuzgan. Due to new discoveries, it will in the future reach the provinces of Kohguiluyeh Boeyer Ahmad and Chahar Mahal Bakhtiari.

Besides 11 operating fields, 37 newly discovered fields are under authority of SZOGPC. These new fields are planned to be developed and operated in coming years. The executive committee of SZOGPC is located in Fars Province.

Currently, Naar & Kangan near Jam in Bushehr Province has the capacity to produce 80 mcm/d of gas to be delivered to Fajr Jam refinery.

Parsian, which includes the four gas fields of Shanol, Homa, Varavi and Tabnak, is near Lamerd and Khonj in Fars Province. Its 80 mcm/d gas production could feed the Parsian refinery.

In Aghar & Dalan, near the cities of Qir and Farashband, 45 mcm/d of gas is obtained, the bulk of which is used for injection into oil wells for enhanced recovery. In winter, part of this gas is fed into national trunkline to meet increased demand.

Sarkhoun and Gashouy-e Jonoubi are in Hormuzgan Province. Its output reaches 8.5 mcm/d and is destined mainly for Sarkhoun gas refinery.

And finally Sarvestan & Saadatabad area near the city of Sarvestan can produce up to 6,000 b/d of oil which is mainly fed into Shiraz oil refinery.

In total, SZOGPC meets 30% of Iran's gas demand, which is equal to the output of nine phases of South Pars gas field. That is why SZOGPC is among top gas producing companies in Iran.

62 bcm Gas Output

Gholam-Hossein Montazeri, CEO of SZOGPC, told a group of reporters visiting areas run by the company that SZOGPC produced 62 bcm of gas, 20 million barrels of gas condensate and 2.2 million barrels of oil during the last Iranian calendar year which ended on March 20. He said the products were valued at nearly $9 billion.

Regarding SZOGPC's plan for the current calendar year, he said gas production would reach 175.3 mcm/d on average.

Montazeri said that during the first eight months of the current year, gas production would stand at 163 mcm/d and it would reach 200 mcm/d during the last four months of the year when the weather gets cold.

"We forecast to produce 62 to 63 bcm of gas, nearly 20 million barrels of gas condensate and 2.1 million barrels of oil," said Montazeri.

Currently, 214 gas wells and 12 oil wells are operating in the area covered by SZOGPC. Montazeri said the wells totaled 350, some of which remained undeveloped.

He said that three wells were to be drilled this year in the Dalan, Naar and Homa fields, while two wells in Dalan and Aghar would undergo workover.

Oil & Gas Production Safety

Overhaul has always topped the agenda of operating companies. In the last calendar year, overhaul on pipelines and oil and gas facilities of SZOGPC registered 228,000 persons-hours. That was aimed at providing safe conditions for oil and gas production.

Montazeri said 25.5 kilometers of pipelines were retrofitted, while intelligent pigging was carried out within the framework of overhaul last calendar year.

"Some 110 kilometers of intelligent pigging was done in the year 1395 (last calendar year). In the year 1396, 200 kilometers of pipeline owned by this company is to undergo intelligent pigging," he added.

Montazeri referred

to establishment of domestically manufacturing committees in electronic sector, saying: "The electronic cards of electronic systems in the Lar gas pressure booster stations whose turbines and compressors belong to Siemens have been designed and built by Iranian technicians at Shiraz electronic industry."

Pointing to planning for the development of Khesht oil field in the first half of the Iranian calendar year 1397, he said this field was expected to have an output of 20,000 b/d to be carried to Guenaveh for exports.

High-Quality Oil in Sarvestan/Saadatabad

Among five SZOGPC-run operating areas, Sarvestan and Saadatabad fields which are located near the city of Sarvestan in Fars Province produce oil. In this area, there are wellhead installations, stream pipelines, production unit, desalineation plant, pressure booster station for associated gas, facility for pumping oil to Shiraz refinery, sweetening plant and oil vapor pressure stabilization system.

Oil processing operation is done at Shahid Dast Bala plant in Sarvestan. This plant was launched in March 2013 and currently supplies 6,000 b/d of oil, which can be brought to 6,500 b/d.

Nour-Ali Mofateh, head of Sarvestan and Saadatabad operating area, said Sarvestan and Saadatabad held respectively 120 million and 180 million barrels of oil in place.

"The light crude oil from these fields has an API of 31 and is among high-quality oil, destined for export," he said.

In some areas in Iran, the oil H2S level stands at around 80 ppm while in Sarvestan and Saadatabad it is at 15 ppm. That is an advantage for oil which is meant for export.

There are three oil storage tanks in Sarvestan and Saadatabad operating area. Oil is fed into Shiraz refinery via pipeline measuring 10 inches in diameter.

Mofateh said a total of 12 wells had been drilled in Sarvestan and Saadatabad. He said Well No. 3 was between 2,000 and 3,000 meters deep with a surface pressure of 30 to 150 bar. This well supplies 1,000 b/d of oil.

Varavi Gas Output at 8mcm/d

Journalists were also given a tour of Parsian operating area. It is near the cities of Lamerd, Mohr, Khonj and Parsian. A total of 94 wells have been drilled in the four gas fields of Tabnak, Homa, Shanol and Varavi. There are six gas gathering centers and 700 kilometers of pipeline.

Tabnak produces 43 mcm/d of gas, Shanol 16 mcm/d, Homa 14 mcm/d and Varavi 8 mcm/d. Besides a total of 81 mcm/d of gas produced in this area, 30,000 b/d of gas condensate is supplied.

Therefore, Parsian is one of the largest operating areas producing sweet gas. Geographically speaking, it is located in Fars Province; however, it is in a very hot area. It was 45 degrees Celsius when journalists were touring. Bad weather conditions have made operations difficult there; nonetheless, production has never dropped as staff and service workers commit themselves to production.

Visiting gas wells to make sure that there is no disruption requires a 100-kilometer journey in a rugged and treacherous area. But service workers there carry out this task under searing sun and in stinging cold.

Mostafa Mostafaian, head of Varavi gathering center, said Varavi was producing nearly 1,000 b/d of gas condensate and 8 mcm/d of gas from 12 wells. Varavi's products go directly to Parsian gas refinery.

Since gas enters this gathering facility, a wellhead safety valve is watching out for leakage or other disruptions to automatically cut the gas flow. There is also a control valve gauging the amount of gas delivered to the Parsian refinery. There are also eight safety valves that would keep a tab on the gas pressure.

The gathering center has the lowest altitude, while other gas fields in this area are located at a higher location above sea level.

Tabnak, Largest Gas Field in Parsian

Tabnak gas field, whose production capacity is approximately five times that of Varavi, is located south of Lamerd. It is among the largest sweet gas fields in Parsian.

Hojjat Ilani, manager of Parsian operating area, said 50% of the Parsian refinery feedstock is provided by this field, adding: "Forty-four wells in Tabnak gas field produce 43 to 44 mcm/d of sweet gas and around 15,000 b/d of gas condensate."

He said there were three gas gathering centers at Tabnak gas field.

"The gas gathered by two pipelines is transferred to Parsian refinery. The gas produced in Parsian operating area accounts for one-eighth of Iran's total gas consumption," said Ilani.

"Given the fact that gas production in this area is one-decade old, South Zagros Oil and Gas Production Company plans to maintain production from the wells. For this purpose, pressure booster stations are planned to be used," he added.

Saudi-Qatar Row and Oil/Gas Market

The severance of diplomatic ties between Qatar and a Saudi-led alliance of Arab governments has given rise to the worst diplomatic crisis in the Arab world since the establishment of Gulf Cooperation Council (GCC) in 1981.

The tension between the Persian Gulf Arab states has engulfed the entire region. In addition to leading some other countries to cut ties with Qatar, the economic sector has been affected. Ever since Saudi Arabia, Bahrain and the United Arab Emirates (UAE) closed their sea and land borders and airspace to Qatar, stocks started tumbling in the Doha stock market. Furthermore, fear for an escalation of the crisis has resulted in the shortage of stocks in some stores. Of course, the impact of the political crisis in the Persian Gulf Arab world was not limited to the countries involved. World energy market also reacted. Qatar is not an influential country in crude oil market, but it is among the largest exporters of natural and liquefied gas. Therefore, future developments in Qatar's relations with Saudi Arabia and its allies could largely affect the global energy markets.

Aspects of Crisis

Over recent years, having relied on windfall oil and gas wealth, as well as media propaganda campaign, Qatar has sought to become an influential element in the Middle East developments.

Qatar has pushed its foreign policy through, via its big wealth, causing dissatisfaction among its Arab neighbors. Some of them are Doha's support for Egypt's Muslim Brotherhood, Palestinian resistance movement Hamas in the Gaza Strip as well as armed groups opposed to the policies of Saudi Arabia and UAE in Libya and Syria. Qatar-funded Al Jazeera television is financed by gas sales. This network has on many occasions triggered the wrath of Arab governments in the Middle East region.

Qatar's conflict of interests with Saudi Arabia has caused serious discrepancies between the two governments. This conflict is rooted in both attitude and energy.

As far as attitude and ideology are concerned, the Qataris favor the Muslim Brotherhood while the Saudis have been promoting and supporting Wahhabism and Takfirism all across the region. Riyadh and Doha have also been locked in a tough rivalry in the energy sector. The Saudis have never liked to recognize Qatar as one of the most important exporters of gas. The crisis between Qatar and a Saudi-alliance of Arab governments started after Qatar's Emir, Sheikh Tamim bin Hamad al-Thani, was quoted as uttering rhetoric criticizing Riyadh's regional policies. The remarks were immediately denied by Qatar officials, but the Saudis and their mouthpieces accepted them as true and fired a broadside

Qatari goods would not be allowed to be unloaded in Saudi ports.

“Vessels flying the flag of Qatar or vessels destined to or arriving from Qatar ports are not allowed to call on the Port of Fujairah or Fujairah Offshore Anchorage regardless of the nature of their call until further notice,” authorities in Fujairah, an emirate in the UAE and regional bunkering hub, said in a notice.

OPEC member Qatar, the world’s top seller of liquefied natural gas (LNG), produces around 600,000 barrels of crude oil per day and is not a big crude exporter.

But it is a major exporter of condensate, an ultra-light form of crude oil, as well as liquefied petroleum gas (LPG), with most supplies of the two fuels going to Japan and South Korea under long-term supply contracts.

The shipping ban will make the logistics of buying Qatari crude and condensate much harder.

Impact on Energy Market

Amidst worsening row among the Persian Gulf Arab countries, some experts forecast oil prices to go beyond $55 a barrel. But their predictions turned out to come untrue. In reaction to the Qatar crisis, world markets were shocked and oil prices rallied slightly; however, they fell again due to lack of confidence in the future and uncertainty over the face of an OPEC output cuts deal.

Nonetheless, this question still stands to know if oil prices would increase in case the row between Qatar and the Saudi-led coalition lingers on.

In order to respond to this question, several issues must be taken into consideration:  

With a per capita income of $130,000 a year, Qatar is the world's richest country and largest producer of LNG. But with an oil output of 620,000 b/d, it is among the smallest member states of the Organization of the Petroleum Exporting Countries. That shows that Qatar is not a key figure in oil production and even if it pulls out of the output cuts deal no important changes will transpire the world markets. Furthermore, besides Saudi Arabia are Iran and Russia involved in the deal and Qatar has no intention of damaging its relations with these two countries and its fellow OPEC member states. Qatar is well aware that oil prices will fall immediately after it quits the deal and it will not augur well for the Qatari economy which is currently besieged. Even Qatar's oil production halt could not significantly affect the market because Saudi Arabia will not hesitate to compensate for any void left by Qatar. In that case, Qatar will need months to regain its standing in the market. Therefore, Qatar would not be willing to leave the deal or stop supplying oil on the market and it continues to remain dependent on stability in the energy market.

This is not the first time that the Persian Gulf region, which is the resource-richest energy in the world, is engulfed in a crisis. Moreover, OPEC oil producers have experienced political infighting on many occasions. Therefore, regardless of until when the political crisis between Qatar and Arab governments will end, the issue of economy and energy revenues are important for producing countries. In the past, wars and conflicts have never left any serious impact on the flow of oil and OPEC agreements. Therefore, oil producers are trying their best to make a distinction between political tensions and oil policy. If not, they will be harmed.

Tensions among the Persian Gulf littoral states will not bring a halt to oil supply in the region. The possibility of an all-out war between Qatar and other Arab governments that would disrupt oil exports from the Persian Gulf and affect the market stands very low.

The most significant harm that is likely to be inflicted on the energy market due to the Qatar crisis would be a possible halt in its natural gas supply to Asian nations like India, South Korea and Japan – the three large buyers of Qatar's gas. For the time being, Qatar's gas activities are unlikely to affect gas prices because agreements for gas sales are signed for the long term; therefore, periodic and short-term crisis could not affect them.

Last but not least, a deep energy crisis could happen only if the flow of oil and gas from the Persian Gulf region is disrupted. In case the Qatar-Saudi row affects the OPEC output deal, oil prices would be likely to fall in the near future. For the moment, no significant event is in the offing.

Falklands Project Finance Under Review

Finance under review for Sea Lion project offshore the Falklands

Rockhopper Energy says front-end engineering and design is progressing for Phase 1 of the Sea Lion oil field development in the offshore North Falkland basin.

This year, the focus has been on the commercial, fiscal, and financing elements of the project.

Various contractors have expressed interest in providing funding for the project and the company hopes to reach agreement in principle on key terms soon with the operator Premier Oil, with a view to sanctioning the project during 2018.

Discussions also continue with potential providers of export credit finance.

Elsewhere, Rockhopper expects an arbitral tribunal to be established this summer to handle its proceedings against the Republic of Italy. This followed the Italian government’s decision not to renew Rockhopper’s license (and proposed development) for the Ombrina Mare oil field in the Adriatic Sea.

Rockhopper is claiming the decision breaches the Energy Charter Treaty, and plans to seek damages on the basis of lost profits.

Kenya Oil Blocks in Spotlight

Chariot Oil & Gas has issued a resource/exploration update concerning blocks 2312 and 2412A offshore Namibia.

In February 2016, the company and partners AziNam, NAMCOR, and Ignitus completed acquisition of a 2,600-sq km (1,004-sq mi) 3D seismic survey.

This targeted leads identified in the northwestern area of the two Central blocks following a 2D survey the previous year.

The 3D data was processed with 3,500 sq km (1,351 sq mi) of legacy 3D seismic, with both depth migration and inversion products calibrated using results from the nearby Wingat-1 and Murombe-1 wells.

Chariot has identified five new dip-closed structural prospects in Upper Cretaceous deepwaterturbidite reservoirs (as penetrated in Murombe-1). Hydrocarbon charge appears to come from the proven Aptian marine source rocks identified in both that well and Wingat-1.

Netherland Sewell and Associates (NSAI) estimates resources for each prospect in the range of 283-459 MMbbl. Each of the prospects has two or more targets, and NSAI assesses the Probability of Geologic Success at up to 29%.

On behalf of the partners, Chariot has begun preparations for drilling during the second half of 2018 by conducting an environmental impact assessment over these prospects.

In addition, it is looking for a suitable drilling rig, long-lead items such as wellheads and tubulars, auxiliary services and a logistic base for well services, supplies, helicopters, and medivac.

The company’s in-house team will manage the initial scope of work, supported by Robert Mwanachilenga, country manager and senior staff drilling engineer. He worked on Chariot’s deepwater Tapir South-1 well in 2012.

Namibia’s government has also granted a one-year license extension to Chariot and its partners in the PEL 71 license in the South of Walvis offshore basin

Statoil Outlines Technology Strategy

Statoil has updated its technology strategy, which focuses on safety, high value creation, and low carbon.

The new technology strategy increases the company’s research on CO2 reduction and digital solutions.

The strategy focuses on five technology directions:

Optimize production from existing and near-field resources

Low-carbon solutions for oil and gas

Discover and develop frontier and deepwater areas

Unlock low-recovery reservoirs

Develop renewable energy opportunities.

All directions build on digitalization, innovation, and multidisciplinary solutions.

MargarethØvrum, executive vice president for Technology, Projects and Drilling, said: “Statoil wants to be in the forefront of the development in the oil and gas industry. Technology and innovation are vital to finding more resources and developing projects, while at the same time reducing costs and CO2 emissions.”

In 2020, Statoil said that it will spend 25% of its research funds on CO2 reductions and new energy solutions. In order to reduce emissions from oil and gas activities, efforts are being made to develop electrification technologies, reduce emissions from turbines offshore, and reduce energy consumption for new fields.

.---Reliance, BP sanction India Gas Project

BP and Reliance Industries Ltd. (RIL) have sanctioned development of the R-Series deepwater gas fields in block KGD6 offshore eastern India.

The R-Series (D34) project is a dry gas development in water depths of more than 2,000 m (6,562 ft), about 70 km (43 mi) offshore. The fields will be developed as a subsea tieback to the existing control and riser platform off block KGD6. The project is expected to produce up to 12 MMcm/d (425 MMcf/d), coming onstream in 2020.

This is the first of three planned projects in block KGD6 that are expected to be developed in an integrated manner, producing from about 3 tcf of discovered gas resources.

RIL and BP plan to submit development plans for the next two projects for government approval before the end of the year.

Development of the three projects, with total investment of about INR 40,000 crore ($6 billion), is expected to bring a total about 30-35 MMcm/d (1 bcf/d) of new domestic gas production onstream, phased over 2020-2022.

India consumes more than 5 bcf/d of natural gas and aspires to double gas consumption by 2022. Gas production from the integrated development is expected to help reduce India’s import dependence and amount to more than 10% of the country’s projected gas demand in 2022.

New Zealand Platform to Undergo Repair

Average oil production from the Maari and Manaia fields offshore New Zealand stabilized at around 10,000 b/d at the end of 1Q, according to partner Cue Energy.

This followed a maintenance shutdown at the start of the year, with production resuming on Jan. 12.

Preparations continue for a permanent repair to the Maari wellhead platform’s horizontal strut crack, identified in late 2016. The program will likely be performed soon.

In the Santos-operated Sampang PSC in the Madura Strait offshore Indonesia (Cue 15%), production from the Oyong field should switch to gas only during 3Q.

This measure should extend the life of the Oyong and Wortel fields to 2020 or beyond, Cue says.

Mexico Auctions 2/3 of Shallow Water Blocks

Mexico has auctioned two-thirds of the shallow water oil and gas blocks up for grabs in the latest round of its energy market opening, surpassing the cautious estimates officials made earlier.

Italy's Eni, Colombia's Ecopetrol and Capricorn Energy, a unit of Edinburgh-based Cairn Energy, were among the companies at the forefront of the bidding for 15 blocks in the southern Gulf of Mexico.

Ten of the 15 blocks were taken up in the auction.

"This is a great result," Juan Carlos Zepeda, head of the oil industry regulator known as the CNH, told a news conference.

Eni took one of the blocks by itself and two in consortium with other companies. One comprised Capricorn and Mexican oil firm Citla Energy, the other was with Citla alone.

Citla also partnered with Capricorn to win another block, edging out Eni in a tie-breaker after a hotly contested bid for the ninth block in which both made the maximum possible offer.

Russia's Lukoil also took a block, as did a tie-up between France's Total SA and Royal Dutch Shell Plc .

The potential output from the blocks auctioned could total 170,000 barrels per day of crude equivalent, and investments could eventually reach $8.2 billion, Energy Minister Pedro Joaquin Coldwell said.

The auction was the latest step in Mexico's bid to attract more private investment to the industry after Congress changed the constitution in late 2013 to end the 75-year production and exploration monopoly of state oil company Pemex.

Pemex won two blocks in the bidding: one in consortium with Germany's Deutsche Erdoel AG, and another with Ecopetrol. The Colombian company also won a block with PC Carigali, a unit of Malaysian oil firm Petronas.

Spain's Repsol combined with the company Sierra Perote to win another block in the southern Gulf of Mexico.

Top government officials said before the auction they were hopeful Mexico would assign at least one-third to 40 percent of the blocks in the shallow water round.

The auction was the fifth since the energy reform, including one deep water and two previous shallow water tenders. The previous ones yielded 39 contracts with forecast investment over their lifespan of $48.8 billion, according to the government.

Mexico hopes opening the energy sector will help reverse years of declining crude output. Total crude production in Mexico has fallen to 2.01 million barrels per day from a peak of 3.38 million in 2004.

China's 2017 Crude Oil Quotas Exceed 2016's

China issued a second batch of crude oil import quotas under the so-called "non-state trade" that is higher than for all of the allowances in 2016, but allotments to independent refineries were lower than a year earlier.

The lower grants to the independents dealt the new group of crude oil buyers another blow because they were already barred from exporting refined fuel, squeezing margins in an oversupplied domestic fuel market.

The Ministry of Commerce approved 22.92 million tonnes to 32 companies, against 29 recipients in the first issue for 2017, according to a document dated June 14 and viewed by Reuters.

The 32 companies included mostly independent oil refineries, also known as teapots, and some state-run companies.

That latest quotas take the total issued this year to 91.73 million tonnes, compared with 87.6 million tonnes in 2016. The second batch will be valid until year-end.

Volumes for the 19 independent oil plants that make up two thirds of the total issues for 2017 dropped by 12.36 million tonnes, or nearly 17 percent, from last 2016.

"The message is pretty clear: the government is tightening the screws as the industry is heavily oversupplied," said a Beijing-based trading executive who deals with independents.

"Those who have not played by the rules, under-using quotas for instance, are taking a bigger cut."

Four independents -- Baota Petrochemical, Wonfull Petrochemical, Haiyou and Chambroad -- took the deepest cuts, between 43 percent and 90 percent, according to data Reuters compiled based on official documents.

Uncertainties over the time and the size of issues have led some independents to scramble for purchases, resulting in brimming fuel stocks and port congestion.

"We are rushing to buy as much crude as we can because we thought the government is going to issue second batch of quotas based on the volumes (used) in the first half of the year," said a trader with Shandong Wanda Group, owner of Tianhong Chemical.

"That led to higher running rate as we don't have enough storage ... and in turn a glut of refined products."

The Ministry of Commerce did not immediately respond to request for comment.

Company officials at five independent refiners told Reuters that they have received a second batch of crude import quotas.

Beijing approved the oil quotas under the "non-state trade" designation, so they do not include state-owned oil companies Sinopec, China National Petroleum Corp, Sinochem Group, China National Offshore Oil Corp and Zhuhai Zhenrong Corp.

The increased quotas buoyed the price of Oman crude on the Dubai Mercantile Exchange to its narrowest discount against Dubai swaps in four sessions. China buys most of Oman's crude output.

Energen Sticks to Plan amid Pressure from Corvex

Energen Corp said its board had unanimously decided to stick to its business plan, less than a month after activist investor Corvex Management LP disclosed a large stake in the oil and gas producer and demanded that it explore a sale.

The Birmingham, Alabama-based company, which has a large concentration of its assets in the Permian Basin, also raised its 2017 production forecast by 5.9 percent to 70,200 barrels of oil equivalent per day.

Corvex, run by Carl Icahn protege Keith Meister, disclosed a 5.5 percent stake in May and said the fund had discussed its views with the company.

Energen said it had engaged J.P. Morgan and Tudor Pickering Holt & Co. to review strategic alternatives but that, in the end, it decided to stick with its own business plan.

"This examination took into consideration input from numerous shareholders and analyzed Energen’s top-tier assets, its improving execution, and the broader macroeconomic and commodity price environment," the company said in its statement.

Whether Corvex accepts the $5 billion company's decision or ramps up pressure further is unclear.

Britain's SSE Eyes Offshore Wind Power

British energy supplier SSE is eyeing the offshore wind power industry for a possible first foreign investment, its chief executive said.

Unlike most major European utilities, Britain's second-biggest energy supplier SSE is focused mainly on its domestic market, though it is a highly diversified group involved in nearly every aspect of the UK power and gas business.

In recent years it has invested heavily in offshore wind power and other renewables, but until now it has been uninterested in emulating continental peers that have built on their specialisations at home to win market share abroad.

These include France's EDF operating Britain's nuclear plants, Norway's hydropower specialist Statkraft building dams in Asia and Latin America and Denmark's Dong Energy becoming a top player in offshore wind in Britain and Germany.

SSE operates several large offshore wind farms on British and Irish coasts, often in partnerships with EU utilities such as Dong and Germany's Innogy, but it has no operations on foreign shores.

"That is a global business where we have to think about whether we need to have more global ambitions. We have a very strong franchise around the UK and Ireland ... should we be looking further afield? That is a good question for us to ask ourselves," SSE chief executive Alistair Phillips-Davies told Reuters at the Eurelectric conference.

He said that SSE last year came reasonably close to an American onshore renewables investment. Though that did not come to fruition, Phillips-Davies said he is continuing to look at opportunities while seeking value for shareholders and remaining consistent with the company's skill base.

"I would not say we are the world leader (in offshore wind) but we have possibilities there. Dong would clearly be the number one company out there at the moment ... but I think there are lots of things that we can do," he said, adding that SSE is also strong in networks and thermal generation.

In terms of exporting those skills to other countries, Phillips-Davies said that SSE would look at partnerships or an acquisition rather than dropping its own staff on the ground.

Centrica and SSE are the only two UK-owned utilities among Britain's big six energy suppliers, with European utilities EDF, E.ON, RWE and Iberdrola all having built up significant shares in the market.

Qatargas to Supply Shell 1.1 mt/y LNG

State-owned Qatargas said it had signed an agreement with Shell for the delivery of up to 1.1 million tonnes of liquefied natural gas (LNG) per year for five years.

The agreement will start in January 2019 and will be for the supply of LNG from Qatar Liquefied Gas Company Limited (4) (Qatargas 4), a joint venture between Qatar Petroleum which holds 70 percent and Shell with the remaining 30 percent.

The LNG will be delivered to either the Dragon LNG Terminal in Britain or the Gate LNG Terminal in the Netherlands, Qatargas said in a statement, which gave no value for the deal.

Qatar, the world's biggest exporter of LNG, faces competition from Australian and U.S. producers. Supply deals into Europe offer a valuable option as Asia's gas-consuming economies rein in new deals in light of a growing supply overhang.

The Shell agreement also comes as the worst rift in years among some of the most powerful states in the Arab world continues to simmer.

Saudi Arabia, Egypt, the United Arab Emirates and Bahrain severed their ties with Qatar this month, accusing it of supporting terrorism, a charge which Doha denies.

Qatargas has said its LNG supply to the world's largest LNG importer Japan would not be affected by the economic, diplomatic and transport boycott.

Innovators to Revive Canada Oil Sands

In the boreal forests and on the remote prairies of Alberta, a handful of firms are running pilot projects they hope will end a two-decade drought in innovation and stem the exodus of top global energy firms from Canada's oil sands.

They are searching for a breakthrough that will cut the cost of pumping the tar-like oil from the country's vast underground bitumen reservoirs and better compete with the booming shale industry in the United States.

If they fail, a bigger chunk of the world's third-largest oil reserves will stay in the ground. Canada's oil sands sector has become one of the biggest victims of the global oil price crash that began in 2014 when top OPEC producer Saudi Arabia flooded the market with cheap crude to drive out high cost competitors.

This year alone, oil majors have sold over $22.5 billion of assets in Canada's energy industry, and been lured south to invest in the higher returns of U.S. shale.

Joseph Kuhach is among the entrepreneurs in Canada hoping they can turn the tide. He runs a small Calgary-based firm, Nsolv, that is testing the use of solvents to liquefy the bitumen buried in the sands and make it flow as oil.

Kuhach says using solvents can cut 20 to 40 percent from the cost of producing the oil. The technique currently used is to use steam to heat the sands underground to extract the oil.

It's a hard sell, he said, to Canadian producers struggling with low oil prices. They are reluctant to invest in a multi-million dollar technology that is unproven on a commercial scale, he said.

"The comment I hear so often when I am talking to companies is, 'We want to be the very first in line to be second'," said Kuhach. "It's easier to go after incremental improvements that they can back away from with no great cost and no great risk."

Nsolv is winding down a three-year pilot project with Canada's second-largest energy producer Suncor Energy at its Dover oil sands lease in northern Alberta. Suncor is evaluating the results, the firm's spokeswoman Erin Rees said.

Fourth-largest producer Imperial Oil, controlled by ExxonMobil Corp, is also developing solvent technology and has had an ongoing C$100-million pilot project since 2013, the company said.

The caution of oil sands producers stems in part from the unique challenges of operating here, where projects take years to build and require billions of dollars in upfront capital.

The development of the technique using steam two decades ago made Canada's sands the new frontier for the oil industry, and majors were among the firms that flocked to buy in.

Since then, innovation has stalled. That failure, energy-industry entrepreneurs and venture capitalists told Reuters, is rooted in a risk-averse culture that has left oil sands years behind U.S. shale.

The exodus of international oil firms such as Royal Dutch Shell and Statoil ASA from oil sands has made innovation tougher because there are fewer potential customers who might adopt new technology, said Joe Gasca, chairman of Fractal Systems Inc. His firm processes bitumen into higher-quality crude at the wellhead.

Fractal is running a 1,000 barrel-per-day (bpd) test plant in eastern Alberta for third-largest producer Cenovus Energy, which has yet to make a decision on whether to proceed commercially.

Libyan Oil Output Nears Target

Libya's oil output has risen by more than 50,000 b/d to 885,000 b/d after the state oil firm agreed to restart production which had been stopped by a dispute with Germany's Wintershall, a Libyan oil source told Reuters.

The National Oil Corp (NOC) and Wintershall reached an interim deal on an upstream contract dispute that had stopped production of some 160,000 b/d.

OPEC member Libya's production is expected to recover to 900,000 b/d in the short term; the NOC said Libya is targeting output of 1 million b/d by the end of July.

Wintershall shut down production at its NC 96 and NC 97 concessions in the Sirte basin, around 1,000 km (625 miles) southeast of the Libyan capital Tripoli, during the dispute which began earlier this year.

It also led to a shutdown at oilfields including Eni's Abu Attifel, which shares processing facilities with Wintershall.

"Through Wintershall facilities we can pump the production of other producers like Eni and other operators," the source, who declined to be name, said.

Abu Attifel, which resumed production on June 14, can pump 50,000-60,000 bpd, NOC says.

In a further boost to Libya's production prospects, an official from Harouge Oil Operations, which operates the port of Ras Lanuf, said three storage tanks damaged by fighting had been repaired and were ready for use, bringing the total number of functioning tanks to seven.

He did not say by how much the extra capacity could increase exports.

Libya is excluded from a renewed output reduction pact struck by OPEC and non-OPEC producers which runs until the end of March 2018. But rising Libyan supplies threaten to overwhelm OPEC's efforts to rebalance the oil market.

OPEC's May oil production was up by 336,000 bpd at 32.14 million bpd, led by a rebound in output from the two countries.

Libya was producing more than 1.6 million bpd before the 2011 uprising. Its partial revival in output remains vulnerable to political turmoil, protests and financial constraints.

This month, factions in eastern Libya threatened to cut off exports handled by Glencore from Hariga because of the trading firm's links with Qatar, although an official at the port said it was working normally.

Chevron Wins Ecuador Pollution Case

The U.S. Supreme Court has handed a victory to Chevron Corp by preventing Ecuadorean villagers and their American lawyer from trying to collect on an $8.65 billion pollution judgment issued against the oil company by a court in Ecuador.

The justices turned away an appeal by New York-based lawyer Steven Donziger, who has spent more than two decades trying to hold Chevron responsible for pollution in the Ecuadorean rain forest, of lower court rulings blocking enforcement in the United States of the 2011 judgment.

While not disputing that pollution occurred, San Ramon, California-based Chevron has said it is not liable and that Donziger and his associates orchestrated the writing of a key environmental report and bribed the presiding judge in Ecuador.

"Today's decision is an important step toward bringing this illegal scheme to a final conclusion," said R. Hewitt Pate, Chevron's vice president and general counsel.

U.S. District Judge Lewis Kaplan in Manhattan barred enforcement of the judgment in 2014, citing the corruption used to obtain it. The New York-based 2nd U.S. Circuit Court of Appeals last year upheld Kaplan's decision, citing "a parade of corrupt actions" by Donziger and his associates, including coercion and fraud, culminating in the bribe offer.

The 2nd Circuit found that Chevron's $8.646 billion judgment debt was "clearly traceable" to corrupt conduct by the legal team representing villagers from the area affected by the pollution.

The lengthy legal battle with Chevron has been waged in several countries and was documented in "Crude," a 2009 documentary film. The plaintiffs have said they plan to continue efforts to enforce the judgment in other countries, including Canada, regardless of the outcome in the United States.

"The Supreme Court's decision closes a chapter and will allow the global public to properly focus on the true substance of the case, which is an international judgment enforcement process - in which U.S. courts have no role - and the devastating environmental and human tragedy that both Chevron and the global community need to address," Donziger said in a statement.

The saga has drawn extensive media attention over the years, with a succession of reporters given tours by both sides of the affected sites on the edge of the Amazonian jungle near the town of Lago Agrio. The plaintiffs also touted the backing of several celebrities including actors Mia Farrow and Danny Glover.

Donziger and representatives of residents of the Lago Agrio region have sought to force Chevron to pay for water and soil contamination caused from 1964 to 1992 by Texaco, which Chevron acquired in 2001. Chevron has said a 1998 agreement between Texaco and Ecuador absolved it of further liability.

Donziger's crusade began to unravel when Chevron noticed a scene in the "Crude" documentary, released in 2009, showing Donziger working with supposedly neutral experts in preparing a report for the Ecuadorean court.

Chevron was then able to get access to outtakes and other material related to the documentary via court order. Chevron cited this evidence when it filed its lawsuit in 2011 seeking to block enforcement of the judgment, saying Donziger's actions violated U.S. anti-racketeering law.

Nigeria Forte Oil Targets $66bn Share Sale

Nigeria's Forte Oil plans a 20 billion naira ($66 mln) share sale to institutional and high net worth investors and has applied for regulatory approval, it said.

The energy firm said the capital raising will be done as a public offer for shares through a book building process to help price discovery. It has applied to the Securities and Exchange Commission (SEC) and Nigerian Stock Exchange for approval.

Forte said its core investor, Zenon Petroleum and Gas Limited, owned by billionaire Femi Otedola, with a total stake of 62.97 percent in the company, will not participate in the offer, it said in an email to Reuters.

Nigerian companies are going through a tough time brought on by low oil prices which tipped the economy into a recession, depleted the country's foreign reserves, weakened the currency and caused chronic dollar shortages, frustrating businesses.

Several firms including Guinness Nigeria, reported losses last year due to the weak economy, and are set to raise funds from existing shareholders.

In 2016, Forte posted a 24 percent fall in pretax profit, which knocked it shares down 74.4 percent.

This year, the shares have fallen 34.2 percent, giving it a market value of 68.8 billion naira ($226 mln). It ended 4.98 percent down to 52.81 naira on, underperforming the main index which gained 0.96 percent.

Forte said it was on track to achieve its target for 2017 and that based on its performance so far it could payout half of its earnings as dividend.

It said its fuel distribution and power business accounted for 95 percent of its operating profit and that it hoped to announce its half-year audited account before July 31.

"The outlook remains positive on the back of the renewed peace in the Niger Delta ... while the passing of the (oil industry governance bill) by the Senate is another positive," it said.

Last year the energy firm planned to raise 100 billion naira in debt or equity for expansion. It later sold 9 billion naira in five-year bonds.

Nigeria's IPO market has dried up for almost a decade following a stock market crisis with regulators struggling to revive it. In March, the SEC proposed to cut listing fees to attract issuers.

Last year, stocks shed 40 percent in dollar terms after the naira fell by a third due to central bank's currency curbs. This year, stocks have recovered after the bank in April allowed investors to trade the naira at market rates.

Global Oil and Asian Product Market, June

Crude prices average in June declined compared to May. For the second consecutive month prices are declining. Major bullish and bearish factors contributed to the price decline are referred to below.

OPEC production rose to its highest level this year in May, as Iraq and a few members exempted from the Organization’s output deal boosted supplies. Crude prices felt some pressure as countries not subject to OPEC production boosted their output. Due to high volume of global oil stocks, crude prices were under more pressure.

On the other hand, there were some bullish signals in the market. Qatar crisis affected loadings. The circumstances surrounding Qatari crude has led to uncertainty growth. Four Arab countries including Saudi Arabia, Bahrain, Egypt and UAE announced that they would cut off diplomatic relations with Qatar, accusing it of supporting terrorism. The four countries would cut transports including sea contacts with Qatar. Saudi Arabia in the past did not allow its term buyers to co-load Saudi grades with Iranian grades due to deepening confrontation between the two countries. The same story is now happening in case of Qatar. Qatar crisis also affected condensate spot market. Iran and Qatar are the only two major suppliers of condensate in the region. Therefore, the consuming market can not miss Qatari volume and also Qatari guys appeared to consider various options to avoid the worst scenario. However, some market players believe that Qatari condensate is rarely co-loaded with crude and is often paired with Iranian condensate from South Pars. That is to say, loadings are unlikely to face any operational challenges.

Asian Product Markets

All products performed strong except middle distillates ones. Gasoil and jet fuel cracks – the differential between products price and Dubai crude prices- fell during July. While middle distillates were weak, fuel oil was strong among the products.

Light Distillates (gasoline, naphtha)

Gasoline and naphtha markets slightly moved up, and supported gasoline market on the back of healthy demand. Going forward, several FCC units are expected to be shut down for maintenance in India over July and August (according to Reuters), which will likely limit further exports out of the country. Therefore, as a result of lower supply and expected higher demand in summer time, the outlook for gasoline market is bullish.

Naphtha market is weak but slightly moving up. Fundamentals in Asia remained weak amid ample supply and the regional naphtha balance has yet to tighten compared with the past. The slight supports in naphtha market emanated from the shipping ban imposed on Qatar by Saudi Arabia and three other countries in the region.

Middle Distillates (gasoil, jet fuel)

Gasoil market weakened on the back of ample supplies and seasonal weakness. However, regional demand remains relatively firm, limiting downside trend in gasoil market.

Jet fuel market reached its weakest in one year. Ample supplies from India and Middle East region were the main bearish factors.

Fuel Oil

Asian fuel oil market sharply improved. Tightening global supplies of fuel oil and rising power generation demand in Asia pacific sent the fuel oil market to its strongest since the beginning of 2017. Singapore onshore fuel oil inventories fell to a more than two- and – a – half – year low. Moreover, lower arbitrage volume from Europe and reduced exports from the region supported the market more. Looking forward, the market will likely remain strong due to the lower arbitrage volume.

 

Iran Regains Europe Market

Iran's oil exports to European buyers reached their post-sanctions highs in May, official figures show. According to these figures, Iran's Europe oil exports have also neared oil exports to Asian countries.

Iran sold some 1.1 million barrels of oil to European countries last May, close to the amount it supplied before international sanctions were imposed on Iran over its nuclear program. The sanctions were lifted in January 2016 under a nuclear deal Iran signed with six world powers in 2015.

After sanctions were enforced, many European buyers of Iran's oil were forced to get their oil from other sources than Iran. Due to the sanctions, Iran's oil exports fell below 2 mb/d in March 2012. Greece totally cut its oil imports from Iran in April 2012. Spain slashed its purchase from Iran by 31% through December 2011 to January 2012 and instead raised its oil imports from Iraq and Nigeria.

Turkey, which used to buy one-third of its oil needs from Iran, cut its imports by 20%. Iran's oil supply to France and Italy was also halted completely.

2015, Efforts Begin to Regain Share

After these sanctions were imposed, Asian buyers were still continuing their cooperation with Iran, but Japan and South Korea cut their purchase and had to get their oil from other producers. Iran's share of oil market declined and Saudi Arabia grabbed Iran's share.

But the signature of Iran's nuclear agreement with world powers, dubbed the Joint Comprehensive Plan of Action (JCPOA), reversed this trend. Iran decided to get its share of oil market back and it focused on oil production hike. The International Energy Agency (IEA) announced in 2016 that Iran's oil production had reached the pre-sanctions levels of 3.56 mb/d, the figure Iran had last recorded in November 2011.

Long time Asian buyers once more decided to increase their oil purchase from Iran. China was still a big buyer of Iran's oil. European buyers once more turned back quietly to their traditional supplier. These European countries used to purchase 600,000 b/d of oil from Iran pre-sanctions.

According to a report released by UK-based global shipping consultancy VesselsValue, seaborne demand for Iranian crude has more than doubled after the lifting of the sanctions.

In the past five years, the greatest demand for Iranian crude came from China, Japan and South Korea, respectively, it said.

"New players in the mix following the removal of sanctions include France with 21 shipments in 2016, while Italy took 15 shipments, Greece fourteen and Spain thirteen shipments," added VesselsValue.

Exports to Europe at 290,000 b/d

Iran exported on average 290,000 b/d of oil to European countries in 2016, figures released by Middle East Economic Survey (MEES) show.

Iran's oil exports to Europe was valued at $4.57 billion in 2016, $812 million of which was achieved due to exports and oil price hike in December.

In that year, Iran was the 9th largest supplier of oil to Europe. In 2011 when the sanctions had not been toughened, Iran sold $23.5 billion of oil to Europe. At that time, oil prices were above $100 a barrel, while Iran faced no restrictions for the delivery of oil to these countries. In 2011, Iran was selling on average 598,000 b/d of oil to Europe.

In December 2016, Iran's oil sales to Europe topped 550,900 b/d, 50,000 b/d below the pre-sanctions level. In that month, Iran supplied 5.3% of Europe's oil needs and was the 6th biggest supplier to this continent.

Meanwhile, preliminary figures for 2017 are also indicative of the upward trend in oil exports to Europe. In 2016, Spain had purchased on average 49,900 b/d of oil from Iran, but it raised its imports from Iran to 91,000 b/d in January this year. Italian customers, whose average oil purchase from Iran was at 47,300 b/d in 2016, more than trebled their purchase in January to 151,000 b/d. Furthermore, Italy, Spain, France and Greece are among top European buyers of Iran's oil. In 2016, France purchased 88,900 b/d of oil and Greece 59,200 b/d of oil from Iran. Except for these four major buyers, other European countries have also been targeted by Iran's oil as Tehran seeks new markets in Europe. For instance, Belgium has been buying 15,000 b/d of oil from Iran; however, its import from Iran has experienced heavy fluctuations.

300% Growth in 2 Years

Iran's oil exports to Europe reached post-sanctions highs last May. It reached a level nearly equal to imports by Asian customers.

In that month, Iran was exporting around 1.1 mb/d of oil to European countries, very close to 1.2 mb/d it exported in the pre-sanctions era.

These figures also show that Iran's oil exports to European countries have grown 300% over the past two years.

Petrochimi Bandar Imam, Symbol of Iran Basketball

Well thought-out investment and timely planning by Iranian oil officials in basketball have paid off. Naft Abadan and Petrochimi Bandar Imam managed to find their way into the finale as they had done last year. The pair reached the finale of basketball pro league, while powerful teams were also in that stage. However, they managed to overpower the rivals to give rise to an attractive competition coupled with friendship.

In the end, Petrochimi Bandar Imam was crowned the champion of basketball in the league matches and held the trophy.

The unsuccessful experience of the basketball federation in holding two leagues in parallel (national and professional) ended in the holding of a single league professionally. After group matches and playoff were held, Naft Abadan and Petrochimi Bandar Imam went into the finale. This year, it was decided that any team that would win three out of five matches would be crowned champion. A simple comparison between Petrochimi Bandar Imam and Naft Abadan brought everyone to the conclusion that Petrochimi Bandar Imam (with a more brilliant background) would hold up the trophy for the fourth time. This possibility was strengthened after Hamed Haddadi joined the trainees of Mehran Shahin Tab'e. It was exactly what happened. In these matches which were being watched very closely, Petrochimi Bandar Imam managed to make three gains to head off a fourth and fifth match.

It was the second championship celebrated by Petrochimi Bandar Imam that also finished champion last year. Once more, a team from southern Iran managed to win the pro league and join top Asian basketball teams.

Main Challenge

The pro league held in the previous season had a very tight schedule. The reason stemmed from unusual planning by the basketball federation for the matches so that the pro league teams would be stuck in the matches for seven months. After matches were held within each group, the teams were divided into two five-team groups to have another round of matches together. From each group four teams were chosen and then the teams fought each other in the quarter-finale, semi-final and final matches. Exactly when the pro league matches were under way, West Asian matches at national and club levels as well as the Asian club champion and national team training were held. It was such that some teams started complaining due to tight schedule. Such conditions were particularly harmful to Petrochimi Bandar Imam. It was the only basketball team representing Iran in the West Asian matches and Asian clubs cup. The number of national basketballers in Petrochimi Bandar Imam was higher than in any other team.

Naft Abadan and Petrochimi Bandar Imam managed to overpower their rivals and reach the finale. Despite all problems, Petrochimi Bandar Imam lifted the trophy.

Aiding National Basketball Team

Naft Abadan and Petrochimi Bandar Imam have been of great help to national basket team in recent years. Petrochimi Bandar Imam has been of greater help even. Since backup is a major cause of concern for the management of teams financed by Iran's Ministry of Petroleum, basketball has been no exception. Mehran Shahin Tab'e, the veteran coach of Iran's basketball, is heading Petrochimi Bandar Imam. He is also coach for Iran's national basketball. By precise planning, Shahin Tab'e has managed to identify talented youth and recruit them at the Petrochimi Bandar Imam team.

For its part, Naft Abadan has helped train teams administered by Iran's Ministry of Petroleum and has made great contribution to national basketball teams.

Third Presence in Asia Matches

Petrochimi Bandar Imam marked its third presence in the Asian championships in a row as it won the pro league. The trainees of Mehran Shahin Tab'e failed to reach championship due to bad luck in the past two years, but they are now hopeful of future. As the representative of Iran, Petrochimi Bandar Imam should compete in the West Asia matches from the beginning of autumn in order to win permit for presence in the Asian clubs matches.

Undoubtedly, championship in West Asia is not the objective sought by a team that has already been champion. It is eying championship all across Asia. Given its conditions, Petrochimi Bandar Imam seems to have a good chance to win the championship title in Asia.

Interview with Mehran Shahin Tab'e:

I Like to Become Asia Champion

Without any doubt, one of the main reasons for the success of Petrochimi Bandar Imam has been the presence of Mehran Shahin Tab'e, the veteran basketball coach of Iran.

Enjoying a brilliant background, Shahin Tab'e has recorded big honors for Petrochimi Bandar Imam and is currently steering it ahead with great hope. He is making efforts to prepare his team for the Asian matches and send them to the Asian battle with full preparation.

The following is an interview with Mehran Shahin Tab'e:

Q: Another championship title in the basketball league! Would you please tell us about it?

A: First of all, I should congratulate my players. Given the match schedule and our concurrent presence in the pro league, West Asia games and Asian clubs matches we had tough schedule. However, we registered good results. After finishing third in the Asian matches we became champion in the pro league and fortunately we made good gains.

Q: You last faced Naft Abadan. Both of you are from the same family and you finished winner in the end.

A: I sincerely offer congratulations to Naft Abadan because of its good team. We and Naft Abadan are affiliated with Ministry of Petroleum. Members of both teams were friendly and all three final matches were held peacefully. Naft Abadan has competent players. They had several qualified foreign players in their team, but with changes we made in our lineup we managed to show good performance and lift the trophy despite our weaknesses.

Q: You hired Hamed Haddadi mid-way and he was present in the final matches. How helpful was his presence?

A: In the post we placed Hamed Haddadi we had weakness from the very beginning, but since we knew his capabilities we even set aside a foreign player in our team. Haddadi is great. He is 31 years old, but he remains a key player. He made great contribution to the championship of Petrochimi Bandar Imam.

Q: An outstanding feature of your teams is that they start not satisfactorily, but they always finish in the best way. What's the reason in your own opinion?

A: The fact is that at the beginning the teams are not prepared enough to take part in matches. This year too, we had many technical problems, but gradually conditions improved and in the final stages we had good cohesion.

Q: Will you continue your cooperation with Petrochimi Bandar Imam?

A: Petrochimi Bandar Imam is a big club with cohesive planning. It hires everyone who is willing to work there. To be honest, the club managers have not talked to me about next season, but I factor the continuation of our cooperation and God wiling we will register new success.

Q: When you talk about success, do you specifically mean Asian championship?

A: It is difficult but possible. Last year we finished third in Asia for the first time in history and we can have a better face in the future if we make necessary preparations. You must know that other teams in Asia hire powerful players and they do their best for the continental matches. Undoubtedly, if your team is supported we will be able to register good results. Generally speaking, I think that Iran's basketball has reached a stage to become champion in Asia although it is difficult.

Q: Anything else you would like to say?

A: I would like to heap praise on Petrochimi Bandar Imam Club. The managers of the club did their utmost and I appreciate that. They provided us with facilities in the best possible way and fortunately we responded to their trust with this championship. I hope to be able to continue to serve Iran's basketball team.

Hamedan, Capital of Iran Civilization

Hamedan which is the provincial capital of Hamedan is one of Iran's big cities located in the mountainous west. It is located near Mount Alvand and is among cities with cold weather.

Hamedan is said to be the most ancient city in Iran. The Medes had chosen Ecbatana as their capital when they ruled ancient Persia. Additional excavations have shown that the Kassites were living in Ecbatana before it was chosen as the capital of the Medes.

Given the ancient history of this city, there are numerous monuments there. Some of them are as follows:

Baba Taher Tomb

Baba Taher is a famous Iranian soufi and poet who lived in Hamedan. His tomb is located at the center of a rectangular-shaped, beautiful and green square with a turquoise-colored dome, seen like a hexagon from above.

The ceiling of the tomb, which is decorated with tilework, is 25 meters tall. The construction of this tomb ended in 1965 based on a combination of ancient and modern architecture.

One person is content with pain, another with the cure; one is content with Union, another with separation. I am content with whatever the Beloved desires.

Be it cure, pain, Union or separation.

Ganj Nameh

Ganj Nameh (literally: Treasure epistle) is an ancient inscription, 5 km southwest of Hamedan, on the side of Alvand Mountain in Iran. The inscriptions were carved in granite in two sections. The one on the left was ordered by Darius the Great (521-485 BC) and the one on the right by Xerxes the Great (485-65 BC). Both sections were carved in three ancient languages: Old Persian, Neo-Babylonian and Neo-Elamite. The inscriptions start with praise of the Zoroastrian God (Ahura Mazda) and describe the lineage and deeds of the mentioned kings.

Later generations who could not read the Cuneiform alphabets of the ancient Persian assumed that they contained the guide to an uncovered treasure; hence they called it Ganj Nameh.

The translation of the text on the right plate, attributed to Xerxes, is:

"The Great God Ahuramazda, greatest of all the gods, who created the earth and the sky and the people; who made Xerxes king, and outstanding king as outstanding ruler among innumerable rulers; I the great king Xerxes, king of kings, king of lands with numerous inhabitants, king of this vast kingdom with far-away territories, son of the Achaemenid monarch Darius."

Two modern contemporary carved tablets have been placed in the site's parking lot with Persian explanation and its English translation.

Avicenna's Tomb

The first tomb of renowned Iranian philosopher, scientist and physician Avicenna was built in Hamedan under the Qajar Dynasty. Later on, Shah Mohammad Reza Pahlavi ordered a new tomb for him to be built in 1954. The idea for the design was put to a competition nine years before by the Association of National Monuments. Finally, the design proposed by Iranian architect HoushangSeyhoun was accepted after winning approval by a group of top architects including French Andre Godard. The construction of the new tomb started in 1949. The tomb has been designed based on Islamic architecture and is similar to GonbadKavous, which is a masterpiece in Iran.

Twelve columns have been erected in the Avicenna tomb, implying the number of branches of science he was specializing in.

Stephen Gregory Church

Stephen Gregory Church is located in the eastern part of Hegmataneh Hill in the Old Quarter of Armenians. The church was built in 1676 by a group of Isfahan's Armenians as well as immigrants and Russian Armenian merchants who had settled in Hamedan. There are four circular columns inside the Gregory church connected to each other with Merrythought shape Arches. This church was restored in 1932.

The church has three ports. Also around the altar of the church was covered by plaster. The interior view of the church is made from brick. The bellow tower of this church is round-shaped.

There are two churches in the eastern part of Hegmataneh Hill in the Armenian neighborhood. Stephen Gregory is the oldest and promotes Protestantism. The newer church, Saint Mary, belongs to the Orthodox.

 

Hamedan Supplies Fuel to 5 Provinces

Hamedan Province is one of the oldest places of living in Iran. The province is among Iran's major arteries. Due to its location on a corridor linking northern and southern provinces, it records more than 1,000 travels a day.

Thanks to its suitable geographical and climate conditions, Hamedan is a hub of agriculture in Iran. The commutation by thousands of cars and the operation of thousands of businesses, as well as cold weather in this province add to the significance of fuel supply which is a major cause of concern for the provincial officials of the National Iranian Oil Products Distribution Company (NIOPDC).

Amin Roustaei, manager of the Hamedan zone of NIOPDC, told Iran Petroleum that fuel supply in this province was highly significant due to the location of the province in a cold area.

He said that in certain months of the year, fuel is delivered by Arak refinery to the provinces of West Azarbaijan, Zanjan, Kurdistan, Kermanshah and Qazvin via the Hamedan branch of NIDC.

"Fuel supply in the provincial cities of Hamedan and Malayer dates from 1300 years. Therefore, one of significant projects in the previous years was to relocate oil depots surrounded by residential areas," said Roustaei.

At present, the stocking capacity of gasoline, gasoil and kerosene in this province is 350 million liters. According to plans, Hamedan and Malayer depots are to be developed in the near future.

Roustaei said more than 97% of cities and villages in Hamedan Province have access to natural gas.

However, under  some certain circumstances like Turkmenistan's recent suspension of gas supply to Iran, the manpower of the provincial zone of NIOPDC redoubled their efforts in order to provide fuel to power plants and households and make up for gas shortages.

"For example, 4 ml/d of fuel for Mofateh Power Plant in Hamedan was delivered by 300 oil tankers under -25 degrees Centigrade," he said.

Roustaei said there has been inclination for developing fuel supply infrastructure due to a variety of reasons including cold weather "in order to supply people's fuel needs during peak consumption."

He noted that consumption may double during certain periods of time when people travel to Hamedan from across Iran.

There are currently 82 gas stations in the Hamedan area, which would reach 100 in coming two years.

Fuel distribution is carried out in Hamedan, Malayer, Toyserkan, Nahavand, Assadabad, Bahar, Razan and Kaboudar Ahang without facing any disruption.

Roustaei said: "Currently, 2.5 ml/d of liquid fuel is consumed in the province. As required by law, each gas station is controlled in terms of quantity and quality four times a month."

He added that 80% of gas stations in Hamedan Province have been proven to be compliant with standards.

Roustaei said 25,000 tractors are working in Hamedan Province, adding that they need fuel all the time.