Sanctions, a Dud Policy

Over the past three decades, Iran's petroleum industry has been subject to the toughest ever sanctions. Ever since the D'Amato sanctions were imposed on Iran's oil sector in 1996 until now that President Donald Trump is envisaging sanctions, the idea has been to block the development of Iran's petroleum industry and subsequently the economic growth of Islamic Republic of Iran.

Experience has shown that these sanctions have yielded no results due to their lack of reasonable ground for world public opinion and the refusal of foreign governments to accompany the US policy of sanctions. However, US politicians are accustomed to resort to erroneous and failed experiences.

Without taking into consideration the realities, these policymakers have been seeking pretexts on a daily basis to bang the drum of tensions and cause instability in the oil and energy market. By doing so, they sacrifice global energy security for their illegitimate political ambitions.

Iran's landmark nuclear deal with six world powers and the legitimacy of Iran's position versus US pretexts on one hand, and the UN nuclear monitoring body's verification of Iran's compliance with the terms of the deal on the other, proved that the Americans were insincere and did not conform to their international commitments.

President Trump's dud policy of imposing new sanctions on Iran has not even been supported by the US government's European allies. Any such decision would further isolate American companies and deny them a big chance of benefitting from Iran's lucrative oil, gas and petrochemical industries.

The Iranian Ministry of Petroleum's signature of deals with international companies in recent weeks, holding Iran Petroleum and Energy Club (IPEC) Congress and the Asia Pacific Natural Gas Vehicles Association (ANGVA) are clearly indications of Iran's important position as the largest holder of hydrocarbon reserves and the most stable country in the tense Middle East region. It also shows that foreign countries and international organizations place trust in Iran.

Iran's oil diplomacy is based on interaction and cooperation with all companies and countries endowed with technology and capital based on mutual interests; a path which will lead to a brighter future through boosting the security of supply and demand and stabilizing the market of energy carriers  in producing and consuming countries.

US policymakers had better bow to realities and refrain from further isolation of nations instead of stonewalling the path of consensus and empathy of nations and blocking cooperation among countries.

Iran has already proved its sincerity and trustworthiness and the moment of truth has come for them now.

Austrian Firms Introduce EOR Technology 

Three Austrian companies introduced their cutting-edge enhanced oil recovery methods in a conference in Tehran.

Pars Marine Industries Company organized the First Austrian Technology Transfer Conference for EOR by using treated water at the Austrian Embassy's commercial section in Tehran.

The event was attended by the representatives of three Austrian companies operating in EOR technologies in oil industry, namely HOT Engineering, SONNEK Engineering and ILF Consulting Engineers.

The conference discussed strategies to boost the oilfields' lifespan, the key for cheap oil production on mature oilfields, as well as optimization of the water cycle to improve the reservoir pressure.

According to PMIC, EOR operations primarily aim at maintaining the optimum reservoir pressure and to this end, a well-designed process has to be carried out during the life time of oilfields.

Pointing to water scarcity as one of the biggest environmental woes afflicting Iran, Mohammad Zahedzadeh, a water management specialist from the National Iranian Oil Company and one of the keynote speakers, said, "Most of Iran's oilfields are in the middle or the end of their life cycle and water resource management should be incorporated in all master development plans. Appropriate solutions should be adopted to address water challenges during the fields' life cycle."

Austrian participants demonstrated their latest state-of-the-art EOR techniques using treated seawater or water extracted from oilfields. Reservoir analyses and modeling, designing and engineering the best process, technology and equipment manufacturing and installation systems were among other presented issues.

According to Diethard Kratzer, HOT Engineering CEO, proper reservoir understanding and characterization are prerequisites for a successful EOR operation.

The official also remarked on oilfield characterization and modeling as well as EOR process visualization using microfluidics "Rock-on-a-Chip" technology, a rapid and cost-effective tool for enhancing the understanding of the EOR processes to reduce the amount of conventional core floods required for EOR screening and planning.

Highlighting consulting, engineering, procurement and tendering of EOR projects, Helge Hoeft, the head of projects business unit upstream at ILF consulting engineering, talked about project management for the implementation, engineering, planning and tendering EOR ventures.

Werner Wieseneder, managing partner of SONNEK Engineering, focused on the design, production, startup and service of turnkey EOR modular systems for treatment and high pressure injection of produced water and seawater. He also offered a technical presentation about modular equipment for EOR projects, water treatment, water injection, dosing system and services.

New Appointments at Petroleum Ministry

Iran's petroleum minister Bijan Zangeneh has made three major appointments. He named a vice minister as well as CEOs for the National Petrochemical Company (NPC) and the National Iranian Oil Refining and Distribution Company (NIORDC).

Marzieh Shahdaei was named vice minister of petroleum, the first for a woman at this post at the petroleum industry. Zangeneh said this appointment was in line with the policy of the new administration in boosting the standing of women.

Reza Norouz-Zadeh, a former CEO of Social Security Investment Company, was named to managing director of the NPC.

Furthermore, in line with the policy of appointment of youth, Zangeneh named Ali-Reza Sadeq-Abadi as CEO of the NIORDC which was headed by Abbas Kazemi during the first term in office of Zangeneh.

Sadeq-Abadi was serving as CEO and Chairman of Siraf Refineries Infrastructure Company.

South Korea, Uzbek Ministers in Oil Talks with Iran

In mid-October, Iran's Minister of Petroleum Bijan Zangeneh received separately South Korean Minister of Land, Infrastructure and Transport Kim Hyun-mi and Uzbek Foreign Minister Abdulaziz Kamilov. The South Korean official said her country was ready to invest in Iran's petroleum industry while the Uzbek minister expressed his country's desire to purchase oil from Iran.

After his meeting with Kim, Zangeneh said the main topic in their discussions was the purchase of oil and gas condensate.

"There have been some problems with regard to payment of Iran's oil money by South Korea, which we discussed and we agreed that the outcome of these negotiations be communicated to the South Korean minister of finance," he said, adding that an Iranian delegation is to travel to South Korea soon.

He referred to the presence of South Korean companies in the South Pars gas field and their past involvement in the construction of oil refineries in Iran.

"South Korean companies are still interested in Iran's oil projects and the South Korean government has allocated a $20 billion credit line for South Korean companies to work in Iran, which is a good support," said the minister. "In the meeting we reiterated that the share of Iranian companies in the projects must be considerable."

Zangeneh said South Korea's long-term import of liquefied natural gas (LNG) from Iran was also discussed in the meeting.

He added that basic agreement was reached between the two sides for the South Korean companies to invest in Iran's oil, gas and petrochemical sectors.

Zangeneh said Iran is currently exporting 120,000 b/d of crude oil and gas condensate to South Korea, noting that Iran would change its oil sales policy, should payment problems are not resolved.

For his part, the Korean minister said South Korean companies, particularly state-run KOGAS, would be willing to operate projects in Iran.

"The managers of this company are in talks with Iranian companies and the CEO of KOGAS met with Iran's deputy minister of petroleum in May," he said.

Iran Seals 1^st LNG Deal

Iran signed first ever contract to export liquefied natural gas (LNG), following months of negotiations, the National Iranian Oil Company (NIOC) announced.

The contract was signed between the NIOC and IFLNG (jointly owned by Iran’s Kharg Gas Refining Company and Norway's Helma).

Under the contract Iran’s natural gas will be converted to LNG in a floating LNG vessel (FLNG), belonging to Belgium's Exmar.

The vessel called Caribbean FLNG, which is chartered by IFLNG Company, ‎has the capacity to produce 500,000 tons of LNG per year.

The 20-year contract will to come into force within three months.

The Caribbean FLNG is expected to dock at Pars Service port in the Persian Gulf in mid 2018, in order to receive 2.3 mcm of natural gas per day from 7th South Pars Gas Refinery.

Launching FLNG and mini-LNG facilities will help Iran diversify and expand its natural gas market, and take advantage of being the world’s largest natural gas holder.

These projects will also grant the country chance to use its flaring gas (mostly from burning associated gas in the oil sector) which currently amounted at about 11 billion cubic meters per year (bcm/y) by converting it into LNG.

Norway's ORG to Study Iran Caspian Blocks

Norway's Offshore Resource Group (ORG) has signed a memorandum of understanding (MOU) with National Iranian Oil Company (NIOC) to study exploration blocks in the Iranian sector of the Caspian Sea.

The MOU requires the Norwegian firm to study Sardar-e-Jangal field plus Blocks 24, 26 and 29 off Caspian Sea.

The memorandum was signed between CEO of ORG Jostein Kare Kjerstad and CEO of Khazar Exploration and Production Company (KEPCO) Mohsen Delaviz.

Iran's Deputy Minister of Petroleum for International Affairs and Commerce Amir-Hossein Zamani-Nia, who was present at the signing ceremony, expressed hope that the cooperation between NIOC, KEPCO and ORG would help extend the domain of exploration and development in the Iranian sector of the Caspian Sea.

Deputy CEO of NIOC, Gholam-Reza Manouchehri, said: "I hope that this MOU would lead to longer-term and more effective cooperation between the two sides and the results of studies to be conducted by Norway's ORG would help NIOC revise and complete existing information."

Norway's Ambassador to Tehran Lars Nordrum referred to the history of Norwegian companies' work in Iran's oil and gas industry, saying further interaction with Iran is an achievement of Iran's nuclear deal with six world powers.

He said that the Caspian Sea region would allow Norway to enhance its cooperation with other littoral states.

Iran, Russia Sign 6 Oil/Gas MOUs

Iran and Russia signed six memorandums of understanding for oil and gas cooperation during Russian President Vladimir Putin's visit to Tehran, an Iranian deputy minister of petroleum said.

Amir-hossein Zamani-nia, who is deputy minister for international affairs and commerce, said the first MOU, signed by Iran's Minister of Petroleum Bijan Zangeneh and Russian Minister of Energy Alexander Novak, on strategic cooperation in energy sector.

President Putin made a one-day visit to Tehran to attend a tripartite summit with Azerbaijan.

The MOUs signed between Iran and Russia are on cooperation in research and development of oil and gas fields.

"Cooperation between the three countries in different sectors has so far yielded positive and useful results for all the parties," Putin said at a news conference. "North-South transit corridor connecting the three countries was tested last year after the dispatch of a number of containers from India and Russia and from Russia to other countries. That is a profitable project," he added.

Zamani-nia said National Iranian Oil Company (NIOC) signed two MOUs with gas giant Gazprom and two with oil company Rosneft.

CEO of NIOC Ali Kardor and CEO of Rosneft Igor Sechin signed the MOU between the two companies.

Zamani-Nia said the NIOC-Rosneft MOU was beyond a memorandum, adding: "One of MOUs signed between Kardor and Sechin is for non-disclosure."

The Russian government holds 69.5% of Rosneft with the rest belonging to Britain's BP.

Zamani-Nia also said that he had signed an MOU with Vitaly Markelov, deputy CEO of Gazprom.

Gazprom which has the most extended network for gas transmission in the world is also the largest producer of natural gas in the world.

As the largest exporter of gas to the European countries, Gazprom supplies 25% of Europe's natural gas needs.

Forouzan Output Set to Rise

The output of Forouzan oil field is expected to increase after 18F platform becomes operational, CEO of Iranian Offshore Oil Company (IOOC) said.

Hamid Bovard said the jacket of the platform had been already installed in the jointly owned field.

"With the installation of this jacket, arrangements have been made for the installation of the 18F platform topside at Forouzan oil field to be followed by drilling new wells and increased output," he said.

Bovard said the Forouzan output was expected to increase by around 7,000 b/d after new wells have been spudded.

"After jackets, piles and other equipment, weighing 1,950 tonnes, are loaded out on the Iran International General Contractor Company (IGC) yard in Qeshm Island, marine transport operations were handled by Sadaf company and the jacket was successfully installed," he said.

Bovard said the design, commodity procurement and installation of subsea pipelines and cables had been carried out by IGC contractors.

IOOC ordered the platform to IGC in 2012 and the project was complete in early 2016.

Located 100 kilometers southwest of Kharg Island, Forouzan is shared by Iran and Saudi Arabia.

Iran, Ansaldo Sign Flare Gas Deal

Four major Iranian energy companies signed a memorandum of understanding (MOU) on October 18 with Italian turbine manufacturer Ansaldo Energia to modernize their equipment, as well as collect and convert flaring gas for power generation.

The MoU was signed between the Italian company, Pars Oil and Gas Company (POGC), the Iranian Central Oil Fields Company (ICOFC), National Iranian South Oil Company (NISOC) and the Iran Fuel Conservation Organization (IFCO).

One of objectives of signature of this MOU is to gather flare gas from Phase 12 of South Pars gas field to be used for generating electricity and modernizing oil and gas equipment.

By applying its technology of converting flare gas to electricity, Ansaldo will in the first step generate 600 MW of electricity and in the second step nearly 1,000 MW.  

Iran Oil Destinations

Iran's oil export, on average, stands at 2.6 mb/d, 60% of which is destined for Asian markets and the rest ending in in European markets.

During January-August period, on average, Iran exported 2.15 mb/d crude oil plus 500,000 b/d of condensate. Iran's crude oil exports hit a record in February with 2.3 mb/d.

Since two years ago, European companies have been vying for Iran's crude oil cargoes. The same companies that had brought to zero their oil purchase from Iran during years of sanctions are now receiving 40% of Iran's oil exports.

The Europeans are consuming 15 million barrels of oil, including 11 million barrels imported. Europe receives half of its oil imports via pipeline and the rest through maritime tankers.

Iran is making efforts to win a 4-million-barrel share in Europe's markets, delivered via high seas.

Royal Dutch Shell, France's Total, Italy's Eni and SARAS, Greece's Hellenic Petroleum, Spain's Repsol, and Hungary's MOL are among European buyers of Iran's oil. From January to August this year, they purchased on average 720,000 b/d of crude oil from Iran.

The demand for oil in Europe has been on a downward trend over the past decade.

China Breaks Record

China is Iran's biggest oil buyer. It did not halt its oil imports from Iran and increased its oil purchase after international sanctions were lifted on Tehran. The growing demand for oil in China has made this country a leading importer of black gold. China is currently consuming 13 mb/d of oil on average, 9 mb/d of which is imported.

The difference between China and European countries lies in their level of demand. Unlike Europe, China is witnessing an upward trend in oil demand. China's oil imports are forecast to increase by 2 mb/d soon, implying that Beijing is a profitable market for producers like Iran.

China was buying 600,000 b/d of crude oil from Iran from January to August this year. In August alone, China received more than 700,000 b/d of Iranian oil.

India, Growing Market

India is the second largest buyer of Iran's crude oil, just behind China. Like China, India continued to import Iran's oil even during years of sanctions. The US pressured New Delhi to halt oil purchase from Iran; however, this Asian giant regularly demanded sanctions waiver in order to meet its growing demand for Iran's crude oil.

India is one of the growing oil markets in Asia. Indian refiners purchased on average 450,000 b/d of crude oil from Iran during January-August period. The Indian refineries' highest rate of oil purchase from Iran came in July with a 500,000 b/d rate.

East Asia and Iran Condensate

In June 2012, South Korea announced it would stop buying crude oil from Iran due to the toughening of sanctions by Europe against Tehran. But that did not come true and Seoul continued to buy Iran's crude oil, albeit at a lower level. As soon as the sanctions were lifted, it did not hesitate to raise its oil imports from Iran.

South Korea is the largest buyer of Iran's gas condensate, buying 300,000 b/d of this product.

During January-August period, South Korea imported on average 100,000 b/d of crude oil from Iran.

Japan, another country in East Asia, has been buying 100,000 b/d of crude oil from Iran since the beginning of the year.

530,000 b/d of Condensate Exports

Natural gas extracted from gas reservoirs contains significant condensate contents. Condensate is a low-density, high-API gravity liquid hydrocarbon phase that generally occurs in association with natural gas. Its presence as a liquid phase depends on temperature and pressure conditions in the reservoir allowing condensation of liquid from vapor. The production of condensate reservoirs can be complicated because of the pressure sensitivity of some condensates. There is a risk of the condensate changing from gas to liquid if the reservoir pressure drops below the dew point during production process. Reservoir pressure can be maintained by fluid injection if gas production is preferable to liquid production. Gas produced in association with condensate is called wet gas. The API gravity of condensate is typically 50 degrees to 120 degrees.

Iran's condensate cargoes were parked on water when the country was under sanctions. After the lifting of sanctions, Iran started selling condensate. The country had around 75 million barrels of condensate parked on water when the sanctions were removed. Iran has since sold out the condensate which is highly demanded both in the country and abroad. Bandar Abbas Gas Condensate Refinery in southern Iran is fed by condensate to produce gasoline.

For the first time the National Iranian Oil Company (NIOC) can claim that it has no more stocked gas condensate to export. Exactly a year ago, 50 million barrels of condensate were parked on water.

Iran sends more than half of its condensate production to South Korea. Last August, Seoul bought 530,000 b/d of Iranian condensate.

New Pressure Booster Raises Gas Transmission

Along with gas production hike, gas transmission and extension of gas supply network have been among major policies of the Iranian Ministry of Petroleum under Minister Bijan Zangeneh.

On October 17, Hamid-Reza Araqi, CEO of National Iranian Gas Company (NIGC), inaugurated a gas pressure booster station in Farashband in southern Iran. This new facility will bring the capacity of gas transmission from southern to northern Iran to 90 mcm/d, up 40 mcm/d from the current capacity.

Iran, whose total gas reserves stand at more than 34 tcm (18% of total world reserves), delivers more than 700 mcm/d via 35,272 kilometers of pipeline to consumers (power plants, industrial centers, businesses and households).

In addition to high-pressure pipeline, 70 gas pressure booster facilities, 40 pipeline operating centers and 277 turbocompressors are tasked with providing necessary pressure for gas consumption in Iran.

The Farashband gas pressure booster facility, located in the southwest of Fars Province, is among highly important and strategic stations in that area because of its important role in taking gas produced in southern Iran to consumer centers in northern Iran.

At the inauguration ceremony, Araqi said that the Iran Gas Transmission Company (IGTC) had operated the project.

"This is the first time that this company assumed such a responsibility and it managed to accomplish it successfully," he added.

Araqi referred to guaranteed and sustainable gas supply while respecting environmental protection regulations as a mission of the NIGC, saying this project was in line with this mission.

He also referred to efforts for finding new gas reservoirs, operation of new phases of South Pars gas field, operation of gas pipelines and gas pressure booster facilities as policies lying within the framework of sustainable gas supply.

Araqi said: "So far, 300,000 kilometers of urban network, more than 35,000 kilometers of transmission pipeline and 280 turbocompressors have been built and operated in Iran."

Gas Supply to Power Plants

Araqi referred to gas supply to power plants under the first administration of President Hassan Rouhani, saying: "Before the 11^th administration took office, gas had a 50% share in fuel supply to power plants, but this share has now reached 90%."

In the last calendar year to March 2017, 62 bcm of gas was delivered to power plants across Iran.

He said that replacement of liquid fuel with gas had provided the ground for exporting petroleum products.

Talks with Turkmenistan for Lower Price

Araqi said that the inauguration of new phases of South Pars under the 11^th administration and the ensuing increased gas production capacity spared Iran any harm after Turkmenistan cut its gas supply to Iran earlier this year.

"In the past, Turkmenistan halted its gas supply to Iran to charge more, but when it did so last winter, through managing consumption we prevented any problem in gas supply to Iranian consumers," he said.

"We are currently in talks with Turkmenistan in order to lower the price of gas and resume gas imports from this country. These talks indicate Iran's position of strength," said Araqi. "The talks with Turkmenistan are going on smoothly and we hope to reach a conclusion before a court hearing is held."

Iran and Turkmenistan signed a 25-year agreement in 1997 for gas delivery via a 200-kilometer pipeline. Under the agreement, Turkmenistan is committed to export more than 23 mcm/d of gas to Iran. Last winter, Turkmenistan halted its gas supply to Iran, demanding higher prices.

"In line with the development of South Pars, the Iran Gas Trunkline 10 (IGAT 10) and the pressure booster stations of the Iran Gas Trunkline 8 (IGAT 8) have become operational in order to increase gas transmission," said Araqi.

"Currently, the IGAT 6, gas pipeline to Basra and Iranshahr-Chabahar gas pipeline are under way," he added.

Saeed Tavakoli, CEO of IGCT, said his company was tasked with operating 35,000 kilometers of pipeline, 80 gas pressure booster facilities and 280 turbocompressors.

He said the Farashband project had been operated in an EPC and PC framework. "This station is located at the corridor of connection 2, 3 and 10 of national gas transmission trunkline, which are all among Iran's strategic areas," he added.

Gas Exports to Basra

Araqi also said that gas exports to Basra, Iraq's second city, are to start soon. "Gas exports to Baghdad are under way and the gas flare at Shalamcheh border will be turned on soon and we get ready to export gas to Basra."

"Currently, Iran is exporting 10 mcm/d of gas to Baghdad and our gas exports to Basra will start with a rate of 7 mcm/d," he said, adding that Iran would be finally supplying 50 mcm/d of gas to the cities of Basra and Baghdad together.

Araqi said providing sustainable and reliable sources are among requirements for business excellence that would be instrumental in the value chain of NIGC.

After five centuries of activity, the NIGC is now pursuing long-term objectives to step into world markets and become a brand, he said.

To that end, he added, huge efforts including precise planning, organization, mobilization of resources, and supervision on operations are needed.

Araqi said mobilization of resources included gas, finance and human resources. "With these three resources, refineries need to have sustainable production in order to guarantee sustainable gas supply in the country," he said.

Araqi said gas storage was the first source, adding: "In addition to these stocks, consumption needs to be managed and new approaches should be developed for promoting the culture of proper use of these resources."

Regarding financial resources, he said temporary resources included collection of debt, development of new methods of financing and buyback.

"The permanent sector includes signature of agreements for gas exports, selling condensate, LPG, sulfur and ethane, and particularly improving the quality of products for sale. That would provide reliable sources for the company," said Araqi.  

   

Tehran Hosts ANGVA 2017

South Pars Output to Help Iran Boost CNG Use

From October 31 to November 2, the Iranian capital hosted the first biennial conference and exhibition of the Asia Pacific Natural Gas Vehicles Association (ANGVA).

Like the previous ones, ANGVA 2017 was also aimed at promoting the use of gas-powered engines instead of those fueled by gasoil and gasoline in order to contribute to cleaner air.

Iran’s minister of petroleum said in his speech to the opening of the conference that development of more phases of the giant offshore South Pars gas field would help the country further develop its compressed natural gas (CNG) industry.

Bijan Zangeneh said since 2013, despite international sanctions, Iran has managed to complete its South Pars gas field phases and bring its gas production capacity of 850 mcm/d.

“This increase will continue and we will soon cross 1,000 mcm/d,” said the Iranian minister.

He said that the conference would also help Iranian CNG industrialists develop cooperation with international companies.

Zangeneh added the ANGVA 2017 conference and the exhibition provide a good opportunity for Iran to showcase its achievements in the compressed natural gas industry.

Zangeneh said the necessity of energy management in recent years has forced many countries in the world to consider using alternative fuels, particularly in their transportation sector.

He said Iran’s Ministry of Petroleum in 2000 adopted policies to include CNG in its fuel mix.

The Iranian minister said nearly 24.5 million gas vehicles are operating in the world, the bulk of which belongs to Asia.

Zangeneh said from 1994 to 2016, the CNG industry has seen a significant growth in the Asia Pacific region

With its 34 tcm gas reserves, he said, Iran ranked the first in terms of gas reserves.

Zangeneh said the growth of natural gas use has exceeded the use of liquid fuels in recent years.

Natural gas has become the main source of energy for all sectors of Iran’s economy.

The Iranian minister said plans were under way for the country’s gas exports to increase to 40 bcm a year.

The minister said Iran’s abundant gas reserves had facilitated plans for replacing fuels with CNG.

Zangeneh said the use of CNG and other low-carbon fuels were among missions assigned to the Iranian Ministry of Petroleum under the country’s Energy Vision,

MOP Supports ANGVA

Iran’s deputy minister of petroleum for international affairs and commerce Amir-Hossein Zamani-Nia said at a brief speech at the opening that he Ministry of Petroleum supports conferences like ANGVA.

“The Ministry of Petroleum supports such conferences. The long-term strategy is to promote natural gas vehicles,” Zamani-Nia said.

He, however, said there were some challenges which needed to be removed.

Zamani-Nia said the ANGVA policymaking council in cooperation with Ministry of Petroleum, Ministry of Industry, Mine and Trade, Ministry of Foreign Affairs, National Iranian Oil Products Distribution Company (NIODPC), National Iranian Gas Company (NIGC), CNG associations and the private sector would prepare the ground for a better future.

“We have great potential for CNG industry and we are making efforts for progress,” he said.

CNG Saves Iran $25bn

The head of National Iranian Oil Products Distribution Company (NIOPDC) said the government has so far invested $3 billion in developing compressed natural gas industry in the country.

Mansour Riahi said more than $25 billion had been saved due to the use of CNG in the country.

He said that 58 bcm CNG had been used since the CNG use project was launched in 2000.

Riahi said 2,400 CNG filling stations had been built in the country, adding that transfer of technology and indigenization of CNG knowhow and boosting manpower for CNG use in the country were among measures taken with regard to the CNG use in Iran.

He said the achievements of CNG use in Iran included diversification of the fuel mix through defining alternative fuels and changing paradigm of fuel use in the society, boosting energy security, standardization, and periodical inspection of CNG stations, 36,000 direct and indirect jobs, and establishment of domestic manufacturing committee.

Riahi said financial support for designing and producing gas-powered engines, dual-fuel car production, and supporting private sector are among other objectives realized so far.

He also pointed to restrictions and missing links in the CNG industry, saying the absence of after-sales services and the lack of inspection of cars, absence of R&D in the supply and distribution chain, paying attention to development of heavy gas vehicles, imbalanced growth of CNG share in the fuel mix.

Riahi referred to decisions which needed to be taken for the development of CNG industry, saying due to the attractiveness and potential of the country and the CNG industry’s strategic position, the CNG business development should be pursued.

The CNG industry is now mature, he said, adding that it should not hit the point of no return.

He said that due to an increase in the share of CNG in the fuel mix from 23% to 35%, establishing an Asia-Pacific CNG hub was to be pursued seriously.

Iran Enjoys Good CNG Standing

The chairman of ANGVA 2017 said valuable measures have been undertaken and proper infrastructure has been provided for using CNG as fuel in Iran.

“In order to achieve gas-fueled vehicles, in cooperation with universities and foreign consultants, we have managed to design such vehicles and mass produce them in line with commercialization,” Mostafa Mir-Salim said.

He added that the plans have been delayed; however, saying the delay was ignorable.

Mir-Salim, member of the Expediency Council, said Iranian automakers were initially reluctant to manufacture such vehicles because of its weak market.

“A problem was that we were worried for distribution of natural gas. But today when we have reached 2,400 CNG filing stations it becomes clear that many activities have been done by the public and the private sector” he said.

On the issue of manufacturing equipment, over recent years, “we have used domestic capabilities to reach a good status on the global scale”, he added.

However, he added there is some equipment whose manufacturing is not possible in the country.

“We have to make efforts so that we would be able to indigenize them. The infrastructure for this purpose is ready in the country and we need the support of government, particularly, Ministry of Petroleum and Ministry of Industry, Mine and Trade,” said Mir-Salim.

“Over these years, we have had cooperation with many foreign companies within the framework of agreements, most of which have turned into reality,” he said.

“Now, we have reached the stage to be on equal footing with foreign parties in terms of CNG,” he added.

Mir-Salim said “God-given reserves like natural gas are important”, adding that using these resources would need knowhow and technology.

“We have to make efforts for this purpose and such conferences would be instrumental,” he added.

Mir-Salim said a country like Iran where natural resources are abundant, using green fuel is a must.

“Since 1982, CNG industry work has started and has taken big strides. Until 2010, there were 450,000 gas vehicles in the country and we made good success.”

He said due to the slow and downward trend, annual gas vehicle production has reached 150,000.

“We have to find the reason behind this slowdown because one of options for fighting air pollution is using CNG provided that the vehicles be gas-fuelled,” he said.

“Given the current 20 mcm/d of CNG consumption, we can build bigger capacities and we need to revise our fuel mix,” he said.

“As far as safety and environment are concerned, we have to be more advanced and reach international car production standards,” said Mir-Salim.

CNG Transport Share to Reach 35%

The vice-chairman of ANGVA said 90% of CNG equipment in Iran is domestically manufactured and the natural gas share in the transportation sector needs to increase.

ANGVA vice-chairman Amir Khaki said the increase in the share of natural gas and transportation sector and motivating gas vehicles market were the main objectives of the conference in Tehran.

Transforming vehicles manufactured at plants, using gas engines and increasing their mileage are among goals of the Tehran gathering.

Khaki referred to hybrid CNG cars, saying one of the important objectives is to focus on producing these cars instead of hybrid-gasoline cars.

Renovation of public transportation sector, development of gas distribution to villages, establishing export network in ANGVA countries and creating a decision-making center between gas stations and cars are among the goals of the conference.

Khaki said Iran makes up 17% of the world’s gas vehicles fleet, adding that 8% of CNG stations are located in Iran.

Since the start of CNG project in Iran, 58 bcm compressed natural gas (CNG) has been consumed in the country.

CNG is the most expensive form of gas, he added.

Khaki said CNG is four times more costly than the gas consumed at households and factories, adding that it shows the significance of this gas.

Khaki said the government had so far provided the required infrastructure for CNG industry, adding the private sector is currently obligated to take action to bring about an increase in demand for CNG.

Khaki said familiarity with cutting edge technologies was an ANGVA approach, adding that it would be appropriate for foreign companies to get familiar with the potential of Iran and ANGVA members.

 

 

 

Iran CNG Achievements

More than two decades have passed since distribution stations were launched for CNG in Iran. That has given rise to a variety of achievements in Iran, including a new business market, energy security, private sector contribution, and cutting environmental pollution.

· Creating a fully new business market, backed by the Ministry of Petroleum on behalf of the government, in one decade

• Drawing up national standards
• Indigenizing CNG storage tanks manufacturing by seamless pipe spinning
• Indigenizing industrial-scale gas-fuelled kits
• Indigenizing equipment for CNG stations
• Indigenizing gas engine
• Encouraging private sector to have effective contribution
• Job creation (36,000 direct and indirect job opportunities)

· Energy Security / Economic Advantages

• Diversifying light transport fleet fuel mix
• Average supply of 20.7 mcm/d of CNG (20.3% of light transport vehicle fuel mix)
•   Supply of more than 58 bcm of CNG since start of project (saving hard currency for non-import of 58 billion liters of gasoline)

· Establishing dual-fuel vehicles fleet (4 million), supported by Ministry of Petroleum on behalf of the government

• Converting one million gasoline-fuelled vehicles to dual-fuel cars
• Manufacturing of 3 million dual-fuel vehicles by domestic carmakers   

· CNG Supply Section

• Launching 2,400 equipped CNG stations

· Preparing the Ground for Private Sector Effective Presence

• Providing free CNG station equipment to private sector applicants in accordance with government regulations
• Adopting regulation for special service fee in March 2014 about applicants for CNG station building while accounting for all construction, connections and equipment costs
• Launching 60 CNG stations while accounting for all construction, connections and equipment costs
• Sixty-four stations are under construction while accounting for all construction, connections and equipment costs

How NIOC Will Prevent Output Cut

Deputy CEO of National Iranian Oil Company (NIOC) Mohsen Paknejad says plans are under way to prevent a decline in the production from ageing oil fields. He explained the NIOC's plans in an interview with Iran Petroleum:

Q: Where do the NIOC subsidiaries currently stand in terms of production?

A: After the intensification of sanctions and concomitant reduction in crude oil exports, we had to make arrangements for reducing production from some oil fields. Of course, this was carried out so as to leave minimum impact on downstream units particularly oil refineries and petrochemical plants. After [Iran's] nuclear deal [with six world powers] was achieved and oil exports restrictions were eased, National Iranian Oil Company (NIOC) brought production from oil fields back to the presanctions levels. For instance, in the National Iranian South Oil Company (NISOC), crude oil production rose from around 2.1 mmb/d in the 2013 to 2.9 mmb/d in the first quarter of the current year. Meanwhile, in the Iranian Central Oil Fields Company (ICOFC), production soared from around 90,000 b/d to around 200,000 b/d.

Of course, along with planning for a return to the presanctions production level, special focus was put on the completion and operation of oil and gas projects in cross border fields. To this effect, planned production from South Pars gas field and its oil layer, West Karoun area, Azar oil field and the gas layer of Salman field has materialized.

Q: What are NIOC plans for fields which are faced with production decline?

A: At present, the most important measures taken to prevent production decline in some fields are water/gas injection, infill drilling and artificial lift. However, since preventing production decline in the fields requires precise and comprehensive studies to get to know the performance of the reservoir and reasons of decline before taking action to prevent or make up for the decline in production, numerous MOUs have been signed with international companies to study methods of enhanced oil recovery (EOR) and improved oil recovery (IOR) from oil fields. For that purpose, benefiting from the experience of companies which possess technology and reservoir engineering knowhow would be a top priority of NIOC in its studies on reservoirs in the country. In the current year, the framework for EPCF and EPDF contracts have been drawn up by the NIOC and notified to subsidiaries in order to facilitate execution of activities and projects related to enhanced recovery, which I hope that implementation of these contracts as well as upstream petroleum contracts would accelerate the enhanced production process.

In addition to these measures, planning is envisaged to make new exploration as part of the process to make up for the production decline in other fields. The NIOC has designed exploration, development and production contracts within the framework of upstream oil contracts to pave the ground for moving in that direction. In this regard, conducting reservoir studies and defining master development plan (MDP) using the state-of-the-art technologies and attracting foreign investment are of high importance to NIOC.

Q: What are the NIOC plans to enhance oil recovery from fields run by the NISOC and Iranian Offshore Oil Company (IOOC)?

A: Most NISOC-run oil fields are in their declining period; therefore, a new model of development contracts has been designed for them. Development of Shadgan, Parsi, Rag Sefid and Karanj fields within such a framework and with focus on EOR/IOR methods is on the agenda. NISOC has presented the first operation-based package of its proposed model of contract with the objective of increasing or stabilizing production from the fields. Production decline from these fields is expected to be stopped once hydraulic fracturing, under-balanced drilling (UBD), desalting plant construction, etc. are forfeited.

In the offshore sector, such projects as laying out pipelines, drilling, well workover and completion, as well as installation of wellhead platforms in Salman, Forouzan, Doroud and Abuzar fields are highly considered. Continued water injection into Doroud, Salman, Balal, Sivand, Dena and Esfand fields is another attempt for enhancing output from these fields.

Q: Technology transfer is a very important issue in Iran's petroleum industry, which has been highlighted in the Iran Petroleum Contract (IPC) model. What technology do you think Iran's petroleum industry currently needs to enhance production?  

A: Since most ageing oil fields in the country are in their production decline period and this level of production has been generally made by natural depletion, it is necessary to apply the latest scientific methods of enhanced recovery. Thermal recovery, chemical drives, etc. for enhanced recovery requires cutting edge technologies and investment. As mentioned earlier, the NIOC plans to benefit from the services of leading international companies. Transfer of technology and technical knowhow are expected to be realized under the aegis of contribution of exploration and production (E&P) companies in projects.

Q: The NIOC's pro-environment plans include flare gas recovery. What has been done in this regard?

A: Establishment of natural gas liquefaction plant (NGL) is one of the top priorities of the NIOC for gathering associated gas. For this purpose, numerous measures have been undertaken to relegate the construction of these plants to the private sector including petrochemical companies receiving feedstock. Meantime, auctioning off flare gas is on the agenda as a short-term solution until gas liquefaction plants have been constructed. Iran's petroleum minister has signed off new instructions for the NIOC to embark on transactions. Selling flare gas is set to be auctioned off soon. The preliminary agreement for investment by petrochemical companies has been done to optimize and renovate existing facilities of associated gas gathering. In case these projects are implemented we will witness a sharp decline in the volume of flare gas.

Q: How do you assess oil production management in the 11th administration?

A: I can answer this question in three parts: First, I highlight the increase in the level of production and exports after the removal of sanctions; the country's average oil production which had slashed by restrictions and sanctions from 3.9 mmb/d in 2011 to 2.8 mmb/d in 2013 soared past 3.8 mmb/d within months into the implementation of the JCPOA (Iran's nuclear agreement with world powers) and ensuing improvement in international conditions. As far as crude oil exports is concerned, the NIOC managed to regain its lost share in global market in six months, increase crude oil exports and bring it from 1 mmb/d to more than 2 mmb/d. We also witnessed a significant increase in the gas condensate exports; that is to say the average gas condensate export in the current year is 430,000 b/d.

Second, crude oil production from cross border fields increased; Yadavaran, North Azadegan and North Yaran fields became operational and the processing unit of West Karoun came online. In the ICOFC-run fields, output of Azar field was added to Iran's production since the start of 2017.

Third, natural gas and gas condensate production from gas fields in the country increased; natural gas and gas condensate production from South Pars gas field increased significantly in the 11th administration. This field's production has nearly doubled following the development and launch of new phases of South Pars by the end of 2016 and planned launch of remaining phases by the end of 2018.

Smuggled Gasoil Uncovered in 4 Minutes

West Azarbaijan Province shares more than 800 kilometers of border with the three countries of Nakhchivan, Turkey and Iraq. The northwestern Iranian province has established four filling stations for refueling more than 550 vehicles crossing the Bazargan border. Around 65% of these cars are non-Iranian and given the sharp difference in gasoil price in Iran and neighboring countries, preventing fuel smuggling along the borders is an inevitable must.

In a bid to facilitate the uncovering of smuggled fuel cargoes, Iranian specialists have developed a system known as gasoil detector, which is able to explore gasoil at 3-300 meter distances without any physical contact.

Some features of gasoil detector, which has been designed to gauge gasoil levels in buses and trucks, are the possibility of identifying any sort of camouflage, non-interference in the impacts of numerous targets and estimation of gasoil volume.

Non-influence by waves and noise of high-pressure posts and telecom stations, startup within five seconds and detection of gasoil in less than four minutes constitute other features of this system.

System Installed at Iran Borders

Kasra Nouri, general director of public relations at Iran's Ministry of Petroleum, heaped praise on the developers of the gasoil detection system.

"We hope that this system will be installed as soon as possible at other border posts in Iran in order to significantly prevent fuel smuggling out of the country," he said.

500 Vehicles Cross Bazargan Every Day

Ahmad Mojarrad, director of Urmia zone of the National Iranian Oil Products Distribution Company (NIOPDC), said that 3.8% of Iran's fuel is consumed in West Azarbaijan Province which stands in the 11^th position in terms of fuel consumption.

He said that fuel smuggling prevention haul was 26% higher year-on-year during the first half of the current calendar year (ends on 20 March 2018).

"That was equivalent to IRR 550 billion in revenue, part of which was achieved through gasoil detection system," he said. "In light of planning and consultations, this system will have soon been installed in all border points in Iran so that we would no longer witness any fuel smuggling via Iran's borders," said Mojarrad. "In less than four minutes, this system can estimate the amount of gasoil in the vehicle and where the car's hidden tank is stashed."

The Urmia zone comprises central, Salmas, Bazargan, Khoy and Makou districts.

"Half of our revenue and activity comes from Bazargan," Mojarrad said.

The fuel storage capacity of the Urmia zone is around 72 million liters, he added, noting that Makou was half-closed due to the gas supply policy of Ministry of Petroleum.

However, he said, a new storage site is about to come online 30 kilometers from Urmia with a capacity of 120 million liters.

1.6 ml/d Consumption

The Urmia zone has 114 liquid oil products retailers plus 71 CNG filling stations. Add to this 415 rural distribution centers. It is noteworthy that 80% of filling stations in this zone are classified as premium.

The Urmia zone is the fourth largest consumer of CNG among Iranian provinces and that is why the waiting period for vehicles at gas stations is zero.

Composition and volume of fuel consumption at West Azarbaijan Province is: 1.6 ml/d of gasoline, 850,000 l/d of kerosene, 2 ml/d of gasoil and 800,000 cubic meters a day of CNG. During the first six months of the current year, gasoline, kerosene and gasoil consumption have increased 8, 8.2 and 16%, respectively. The reason was cold snap and concomitant fuel storage by households and power plants, as well as development of Makou and Bazargan districts.

Gasoil Export Potential

The per capita gasoline consumption in West Azarbaijan Province stands at 240 liters, while this figure is on average 328 liters in Iran. This province also accounts for 3% of Iran's total gasoline consumption and the province stands first in terms of kerosene consumption.

One of good potentialities of West Azarbaijan Province is gasoil exports to neighboring countries. The provincial zone of NIOPDC has found good customers in Iraq in recent years. Since 2016, more than 100 million liters of gasoline has been exported to Iraq's Kurdistan region.

Fruitful negotiations have also been held for exporting fuel oil to Nakhchivan.

Iran, Germany Energize Ties

Amid widening business ties between Iran and European governments in the wake of Iran's nuclear deal with six world powers, the Iran-Germany Energy Committee held its first meeting in the Iranian capital to explore opportunities for investment by potential German financiers.

Hosted by the Iranian Ministry of Petroleum, the October 23-26 meeting was attended by senior Iranian and German officials. 

At an opening statement, Iran's Deputy Minister of Petroleum for International Affairs and Commerce Amir-Hossein Zamani-Nia said the nuclear deal, dubbed the Joint Comprehensive Plan of Action (JCPOA), would "survive" despite US President Donald Trump's threat to terminate it.

He said there were "indications" from Washington that the US Congress would opt for "wisdom" to prevent the JCPOA from being terminated.

Zamani-Nia said the threat of termination of the JCPA had "passed".

"Iran-Germany relations go far back," he said, adding that Iranians held a positive view of "industrial cooperation" between the two countries.

"We think that the capacity of cooperation between the two countries" is much more than their current levels stands, said Zamani-Nia.

He put at $3 billion the volume of trade between the two countries, which he described as "insignificant".

"This level of trade is insignificant compared to Iran and Germany's potentials … One of the first messages of the Iran-Germany Energy Committee should be to facilitate banking relations," he added.

Zamani-Nia referred to reciprocal visits by Iranian and German officials' post-JCPOA, adding that more negotiations were needed to accelerate the pace of cooperation for which there is great potential.

Close Cooperation

  German Ambassador to Iran Michael Klor-Berchtold said he hoped that the Iranian nation and government would benefit from the "dividends" of the JCPOA.

"This meeting today is another example of the close cooperation between the two countries," he said, adding: "It is one of the outcomes of the Joint German-Iranian Economic Commission which was held about one year ago for the first time in 15 years here in Tehran."

He referred to Germany's investment in "two solar plants" in the western city of Hamedan, adding:  "These solar plants were the first substantial solar plants being installed in Iran. This German-Iranian project underlines our common goal of a secure, affordable and sustainable energy supply for our future economic development."

"In order to achieve our common goals we need to work together on the development of sustainable energy, modernization of conventional energy installations, energy efficiency, and the planning of energy transition," said Klor-Berchtold.

The top diplomat said Iran is among the countries with the largest hydrocarbon resources in the world.

"Anyhow, the Iranian government has clearly committed itself to promoting renewable energy," he added.

"In my view, this is the right path to follow. The international energy transition is in full swing. More is being invested worldwide in developing renewable energies than in conventional energy sources," he said.

Renewables on Agenda

Ursula Borak, the deputy director general for Germany's Ministry for Economic Affairs and Energy, also told the meeting that Iran-Germany's energy collaborations are centered on renewables and enhancing power efficiency.

In July, a delegation of seven German companies operating in the renewables sector signed a memorandum of understanding to develop solar farms in North Khorasan Province.

Iran's total renewable energy capacity, including solar and wind, amounts to less than 500 megawatts compared to some 62,000 MW of thermal and 12,000 MW of hydroelectric capacity, as well as 1,000 MW of nuclear power.

Officials say Iran needs to expand its power generating capacity by 5,000 MW annually, or 20,000 MW in four years, to meet the rising demand at home and expand its footprint in the regional energy market. In roughly the same period, installed power generating capacity of renewables, including wind and solar, is envisioned to increase by 5,000 MW.

She said that Germany was ready to share its experience with Iranian companies in the development of renewable energies.

Borak said Iran's policies were instrumental in attracting foreign investment, noting that German companies owned advanced technology in power generation and transmission.

Hamid-Reza Tashayoei, head of the Iranian Energy Ministry's Center for Promotion of Exports and Water and Power Industry Support, said plans were under way for raising the current capacity of renewable power plants to 5,000 MW by 2025.

He pointed to longtime good relations between Iran and Germany, saying the Energy Committee meeting would help deepen relations between the two countries and help them exchange experience.

Tashayoei said the Iranian Ministry of Energy has been benefiting from the German experience in renewable energies. 

He said that Iran enjoyed good conditions in terms of sunlight to generate electricity across the country.

Tashayoei expressed hope for the continuation of such meetings for the two countries to develop energy cooperation.

Iran is the most advanced in its development of renewable energy, mostly due to its past investments in hydropower schemes. Lately, however, it has been taking big strides in terms of wind and solar power, with a slew of new projects announced over the past few months.

To date, the largest was unveiled in October 17 when Norway’s Saga Energy signed a €2.5bn ($2.9bn) deal with the state-owned Amin Energy Developers to build a solar power plant with generating capacity of up to 2GW over the next five years.

There are a few reasons behind the rush of investment, including favorable investment terms on offer from the Iranian government. The Energy Ministry typically signs deals guaranteeing to purchase the output of renewable energy plants for 20 years, via the Renewable Energy Organization of Iran (SUNA). The plants are also tax exempt for between five and 13 years.

 

 

ICOFC Investment Opportunities

The Iranian Central Oil Fields Company (ICOFC) is one of five major subsidiaries of the National Iranian Oil Company (NIOC). ICOFC has introduced 23 upstream and mid-stream projects, valued at $5.5 billion, for potential Iranian and foreign investors.

The ICOFC accounts for nine memorandums of understanding (MOU) of total memorandums signed between the NIOC and Iranian and foreign companies under the Iran Petroleum Contract (IPC) model.

Furthermore, the ICOFC Investment Directorate is holding meetings with Iranian and foreign companies for EPCF (Engineering, Procurement, Construction and Finance) and EPDF (Engineering, Procurement, Development and Finance) projects, which are valued at $4 billion under supervision of the ICOFC investment director Fereidoun Salehi.

Ever since international sanctions were lifted on Iran in the wake of the implementation of Iran's nuclear deal with six world powers, dubbed the Joint Comprehensive Plan of Action (JCPOA), the NIOC has moved to identify Iranian and foreign E&P companies to develop oil and gas field with the focus being on jointly owned fields under IPC agreements and also to preserve the oil and gas fields output under EPCF and EPDF contracts.

Alongside the NIOC's negotiations to attract foreign investment and transfer in technology, its subsidiaries have drawn up their own investment packages and held talks in parallel with domestic and foreign companies.

The ICOFC's share of field development projects equals $5.5 billion, including $4 billion upstream and downstream gas projects to be operated under EPCF and EPDF agreements.

30% Share in Gas Output

The ICOFC is active in 11 provinces in Iran. Of a total 90 oil and gas fields administered by this company, 30 are already operating.

The ICOFC is supplying around 200 mcm/d of gas plus 180,000 b/d of oil. During winter when demand for gas sharply increases, the ICOFC raises its output to 280 mcm/d.

Before the development of South Pars gas field, the ICOFC used to meet 80% of Iran's gas needs. The startup of South Pars has cut this share to 30% for the ICOFC.

"The ICOFC needs to carry out upstream and midstream projects valued at $5.5 billion in a bid to preserve and enhance its annual output," Salehi said. "The NIOC has embarked on talks under the new model of oil contracts with domestic and foreign companies, which have yielded nine MOUs for the ICOFC-run fields."

"The company has prepared upstream and midstream projects for gas fields worth at around $4 billion within EPCF and EPDF frameworks," he said.

Salehi said that negotiations were under way with Iranian and foreign companies as well as with consortiums willing to invest in these projects.

He said that some companies would account for necessary investment while some others would receive loans from European, Japanese and Chinese banks.

"Some of these companies have told us that European banks would give them loans for up to 85% of the project implementation and commodity supply and the balance will be guaranteed by their partners," said Salehi.

No Capital Commitment

The ICOFC has no obligation with regard to capital needed for the projects. Investors and their contractors shall account for the financing of the projects.

The projects introduced in this package have been defined in two phases. Phase 1, which is about the evaluation of fields, poses no risk to investment companies and the client shall hedge risks. But Phase 2, which is somewhat risky, involves gathering of technical and financial data from candidate companies. So far, the ICOFC has signed MOUs with some of these companies.

Companies from Spain, France and China have expressed their willingness for EPCD-style cooperation. For instance, the China State Construction Engineering Corporation (CSCEC) has teamed up with an Iranian company and has submitted its documents to the ICOFC for assessment. China's WLE, Germany's Siemens and Spain's HOMT are also willing to invest in the ICOFC oil projects.

"For the implementation of Kangan gas pressure booster station, which is a mid-stream project, we are currently in talks with 29 consortiums. We have received the financial, banking and technical documents. Upon an NIOC confirmation, a tender bid will be held for this project," he said.

Salehi said three companies had expressed willingness to develop Sefid Zakhour, Halegan, Sefid Baghoon, Aghar (Phase II) and Farashband fields. These projects are valued at $2.5 billion. Salehi said small-sized companies would not be able to develop these projects, adding that competent companies or consortiums could bid for them.

Iran Companies to Lead Projects

Salehi said Iranian companies would be the leader of these projects, adding that a foreign bank or company would be the financer.

Since decline in production in the ICOFC-run fields is inevitable, installation of pressure booster stations would be a must. But that would need big money and the ICOFC has taken this issue into consideration in its packages. Pressure boosters are envisaged for Kangan, Homa and Varavi fields and renovation is envisaged at Nar pressure booster station so that the accumulated output from these fields would be enhanced.

France's Sofregaz, Siemens, HOMT, CSCEC, and some Iranian companies like Persia Oil and Gas Industries Development Company have expressed readiness for these projects.

Salehi said an Iranian-Chinese consortium is also willing to operate such projects, adding that the consortium included 17 Chinese companies that have joined a group of Iranian firms.

He said this consortium planned to operate gas pressure booster projects, as well as upstream projects like evaluation of fields, early production from fields and their development under EPDF and EPCF contracts.

1-3 Years for Projects

These projects would take one to three years to come online. Repayment would be done six months after the startup of projects, which is guaranteed by the NIOC. The period of repayment varies from 3 to 10 years, depending on the volume of the project. Investment fees and interest rates will be also paid.

Once the aforesaid projects have been implemented, the ICOFC will see its accumulated oil production increase 700,000 b/d and its gas output increase 80 mcm/d.                        

ICOFC Investment Opportunities

The Iranian Central Oil Fields Company (ICOFC) is one of five major subsidiaries of the National Iranian Oil Company (NIOC). ICOFC has introduced 23 upstream and mid-stream projects, valued at $5.5 billion, for potential Iranian and foreign investors.

The ICOFC accounts for nine memorandums of understanding (MOU) of total memorandums signed between the NIOC and Iranian and foreign companies under the Iran Petroleum Contract (IPC) model.

Furthermore, the ICOFC Investment Directorate is holding meetings with Iranian and foreign companies for EPCF (Engineering, Procurement, Construction and Finance) and EPDF (Engineering, Procurement, Development and Finance) projects, which are valued at $4 billion under supervision of the ICOFC investment director Fereidoun Salehi.

Ever since international sanctions were lifted on Iran in the wake of the implementation of Iran's nuclear deal with six world powers, dubbed the Joint Comprehensive Plan of Action (JCPOA), the NIOC has moved to identify Iranian and foreign E&P companies to develop oil and gas field with the focus being on jointly owned fields under IPC agreements and also to preserve the oil and gas fields output under EPCF and EPDF contracts.

Alongside the NIOC's negotiations to attract foreign investment and transfer in technology, its subsidiaries have drawn up their own investment packages and held talks in parallel with domestic and foreign companies.

The ICOFC's share of field development projects equals $5.5 billion, including $4 billion upstream and downstream gas projects to be operated under EPCF and EPDF agreements.

30% Share in Gas Output

The ICOFC is active in 11 provinces in Iran. Of a total 90 oil and gas fields administered by this company, 30 are already operating.

The ICOFC is supplying around 200 mcm/d of gas plus 180,000 b/d of oil. During winter when demand for gas sharply increases, the ICOFC raises its output to 280 mcm/d.

Before the development of South Pars gas field, the ICOFC used to meet 80% of Iran's gas needs. The startup of South Pars has cut this share to 30% for the ICOFC.

"The ICOFC needs to carry out upstream and midstream projects valued at $5.5 billion in a bid to preserve and enhance its annual output," Salehi said. "The NIOC has embarked on talks under the new model of oil contracts with domestic and foreign companies, which have yielded nine MOUs for the ICOFC-run fields."

"The company has prepared upstream and midstream projects for gas fields worth at around $4 billion within EPCF and EPDF frameworks," he said.

Salehi said that negotiations were under way with Iranian and foreign companies as well as with consortiums willing to invest in these projects.

He said that some companies would account for necessary investment while some others would receive loans from European, Japanese and Chinese banks.

"Some of these companies have told us that European banks would give them loans for up to 85% of the project implementation and commodity supply and the balance will be guaranteed by their partners," said Salehi.

No Capital Commitment

The ICOFC has no obligation with regard to capital needed for the projects. Investors and their contractors shall account for the financing of the projects.

The projects introduced in this package have been defined in two phases. Phase 1, which is about the evaluation of fields, poses no risk to investment companies and the client shall hedge risks. But Phase 2, which is somewhat risky, involves gathering of technical and financial data from candidate companies. So far, the ICOFC has signed MOUs with some of these companies.

Companies from Spain, France and China have expressed their willingness for EPCD-style cooperation. For instance, the China State Construction Engineering Corporation (CSCEC) has teamed up with an Iranian company and has submitted its documents to the ICOFC for assessment. China's WLE, Germany's Siemens and Spain's HOMT are also willing to invest in the ICOFC oil projects.

"For the implementation of Kangan gas pressure booster station, which is a mid-stream project, we are currently in talks with 29 consortiums. We have received the financial, banking and technical documents. Upon an NIOC confirmation, a tender bid will be held for this project," he said.

Salehi said three companies had expressed willingness to develop Sefid Zakhour, Halegan, Sefid Baghoon, Aghar (Phase II) and Farashband fields. These projects are valued at $2.5 billion. Salehi said small-sized companies would not be able to develop these projects, adding that competent companies or consortiums could bid for them.

Iran Companies to Lead Projects

Salehi said Iranian companies would be the leader of these projects, adding that a foreign bank or company would be the financer.

Since decline in production in the ICOFC-run fields is inevitable, installation of pressure booster stations would be a must. But that would need big money and the ICOFC has taken this issue into consideration in its packages. Pressure boosters are envisaged for Kangan, Homa and Varavi fields and renovation is envisaged at Nar pressure booster station so that the accumulated output from these fields would be enhanced.

France's Sofregaz, Siemens, HOMT, CSCEC, and some Iranian companies like Persia Oil and Gas Industries Development Company have expressed readiness for these projects.

Salehi said an Iranian-Chinese consortium is also willing to operate such projects, adding that the consortium included 17 Chinese companies that have joined a group of Iranian firms.

He said this consortium planned to operate gas pressure booster projects, as well as upstream projects like evaluation of fields, early production from fields and their development under EPDF and EPCF contracts.

1-3 Years for Projects

These projects would take one to three years to come online. Repayment would be done six months after the startup of projects, which is guaranteed by the NIOC. The period of repayment varies from 3 to 10 years, depending on the volume of the project. Investment fees and interest rates will be also paid.

Once the aforesaid projects have been implemented, the ICOFC will see its accumulated oil production increase 700,000 b/d and its gas output increase 80 mcm/d.                        

Manufacturers Urged to Register in the Commodity Supply System

Iran's deputy minister of petroleum for engineering, research and technology has called on domestic manufacturing companies to register in the commodity supply system.

Addressing an exhibition of oil commodities in the oil-rich city of Ahvaz, Habibollah Bitaraf said that in case the domestic manufacturers fail to register they will not be able to bid for future projects.

He said that the Ministry of Petroleum supports domestic manufacturers in oil contracts.

"The mechanism for issuing certificate for products and industrial services has been worked out in cooperation with the National Standards Organization and the Iran Petroleum Association," said Bitaraf.

Bijan Aalipoour, CEO of National Iranian South Oil Company (NISOC), said at the event that 70% of equipment which Iran's oil industry needs is supplied domestically.

"We promise not to purchase foreign products as long as high-quality and standardized commodities are manufactured domestically," he said.

Since the Iran Petroleum Contract (IPC) was signed off on, the Ministry of Petroleum has been recommending Iranian manufacturers to enhance the quality of their products, because in the new round of oil contracts a big share has been envisaged for Iranian manufacturers and they are required to supply high-quality products in order to have a high share in this market.

Iran's Ministry of Petroleum has made significant efforts over this time to arrange the activities of Iranian manufacturers. One of them is the commodity supply system. Any company that registers on this system will provide its information to clients, while the Ministry of Petroleum could exercise more supervision on their performance. Foreign companies can also order their commodities to Iranian manufacturers with peace of mind.

Aalipour referred to the establishment and activity of sectors of research and manufacturing in the petroleum industry over the past four decades, saying: "It's a great pleasure that more than 70% of commodities and equipment required in the upstream sector are designed and built by Iranian specialists and the private sector," he said.

"As the harbinger of movement of indigenization of commodity in oil, the NISOC is currently using domestically manufactured products like drills, wellhead and downhole equipment, pumps, main components of gas turbines and even turbines and pumps fully manufactured in Iran in its facilities," said Aalipour.

6mb/d Potential Oil Output

According to the latest report from the Directorate of Corporate Planning at the National Iranian Oil Company (NIOC), Iran owns 18% of world's gas and 10% of world's oil reserves – equal 15.7 billion barrels.

Iran has potential to recover 6 mb/d of crude oil and 400 bcm/y of gas.

Bitaraf said Iran is forecast to be producing 4.5 mb/d of oil, 1 mb/d of condensate and 1,100 mcm/d of natural gas under the country's 6^th Five-Year Economic Development Plan. He added that such targets would require $134 billion of investment in upstream and $67 billion in downstream sector.

$5bn Package in 3 Years

Bitaraf also said that the Ministry of Petroleum envisages a $5 billion EPCF package for the coming three years to preserve and enhance output from oil fields currently operating in the country.

"With measures taken so far, several projects have been prepared. We hope that agreements would be signed in the next year for these projects to become operation in two to three years. Furthermore, we can see the return of investment over this period," he added.

Bitaraf said reconstruction and renovation of upstream oil industry installations, studying all oil fields and development of domestic manufacturing of equipment and commodities widely demanded in the oil and gas industry were among other plans envisaged by the Ministry of Petroleum.

"Therefore, significant work is available for the Iranian manufacturers of equipment. The policy of the Ministry of Petroleum is to make maximum use of domestic potentialities in implementing oil and gas projects," Bitaraf said.

4 Homegrown Items Unveiled

At the Ahvaz exhibition, four domestically manufactured items were unveiled. These items are manufactured for the first time in Iran with the support of NISOC.

Other commodities on exhibit in Ahvaz were a gas compressor rotor, suction pump, SRP, rotor for water injection and a pump with a capacity of 96 cubic meters per hour.

The four-day event was held on a piece of land of 15,000 square meters with the participation of 250 companies.

Russia-Saudi Alliance

Hopes and Fears at Energy Market

Russia-Saudi Arabia relations has its own complicated aspects. At the first glimpse, due to geographical distance, the Moscow-Riyadh ties do not seem to be complicated; however, the fact that they are sensitive to one another could not be disregarded.

Either side wields tools to influence the other side. Moreover, they are considered to be rivals in a variety of sectors. Saudi King Salman's visit to Moscow on 4 October 2017 – which was the first by a Saudi monarch in the history of ties between the two countries – brought a variety of issues to the fore. One of important issues discussed during this visit was oil price and the future of energy markets.

Energy; Key Issue

Since Russia and Saudi Arabia are both key producers and exporters of oil in the world, the issue of energy was put on the agenda of meetings during the Saudi ruler's state visit.

The discussions between Tehran and Moscow concentrated on two main issues:

First was the issue of cooperation between the two countries in energy sector; Russia is willing to invest in Saudi's oil and gas industry while Saudis enjoy great potential to invest in Russia's energy sector. To that effect, the Saudis announced that they would invest in more than 25 projects in Russia, including oil and gas projects.

Second was the issue of extension of a deal between OPEC and non-OPEC producers to cut oil output in a bid to curb the global supply glut which has slashed prices.

Kirill Dmitriev, CEO of the Russian Direct Investment Fund, said Russia and Saudi Arabia had each earned $40 billion from the 2016 OPEC and non-OPEC deal.

International efforts to stabilize oil prices "have been fruitful, bringing oil prices to above $55 per barrel," Dmitriev told Rossiya 24 news channel.

"We believe that without this deal, prices would be below $35 per barrel now," he added.

Dmitriev praised the 2016 agreement, saying it "generated trust between nations and showed that by working together we can achieve meaningful, serious results."

Meantime, Saudi Arabian Energy Minister Khalid Al-Falih, who was in Moscow together with other officials accompanying King Salman on his landmark Russian visit, also said that the deal between OPEC and non-OPEC countries had helped to stabilize oil prices.

The minister also said that cooperation between Riyadh and Moscow had "breathed back life into OPEC which found itself, quite frankly, unable to swing its production as supply was persistently high in 2014 and global inventories were steadily rising ahead of demand."

Such remarks were indicative of inclination by Russia and Saudi Arabia for the extension of the OPEC and non-OPEC deal. On this basis, expansion of Russia-Saudi relations could influence energy markets in the future. Undoubtedly if Moscow and Riyadh, both rich in energy, cooperate closely they would be instrumental in determining prices.

This issue could be of great value for Russia which has been under sanctions and economic pressure in recent years.

Change and Stability

For Russia, Saudi Arabia's oil policy, particularly with regard to prices has seen significant changes in recent years. In the past, the Russians imagined that Saudi policy was a major cause of decline in oil prices. More frankly, the Russians maintained that lowered oil prices were a Saudi plot. Some in Russia believed that Saudi Arabia and the US were driving prices down in a bid to pressure Russia into refraining from meddling with the Middle East affairs, particularly in Syria.

Linking oil price decline to Saudi-US anti-Russia alliance has a long history. In 1985, Saudi and the US had undertaken similar measures to accelerate the collapse of the former Union of Soviet Socialist Republics. In early 1985, unilateral production enhancement by Saudi Arabia led to sharp price decline. That is to say, Saudi Arabia increased its production in 1985 from 3.6 mb/d to around 5.2 mb/d in 1986. Later on, it came out that market share policy, US –Saudi collusion, as well as CIA plot were just tricks aimed at putting Iran under pressure to end imposed war, accelerating FSU collapse as well as exerting further pressure on Libya.

Over recent years, the Saudis imagined that Russia would stop supporting Syria's President Bashar Assad in order to have funds for dealing with the crisis in Ukraine in case it faces financial restrictions. A potential halt in Russia's support for the Damascus government would have changed the game in favor of pro-Saudi forces fighting in Syria. Furthermore, oil prices would have been a bargaining chip for Saudi Arabia.

Therefore, continued low oil prices would have prevented Russia from raising output, let alone affecting Moscow's policy vis-à-vis Iran and Syria. That was indicative of some sort of energy war between Russia and Saudi Arabia, which did not let the two countries come closer together. That is why the Russians viewed oil price decline as a Saudi conspiracy.

In any case, Russia and Saudi Arabia were considered as energy rivals, particularly in oil sales. While Moscow favored higher oil prices, the Saudis were a major factor in pushing the prices down.

However, in recent years, two factors have brought about a U-turn in the Saudi oil policy:

The first factor was losses incurred by Saudi Arabia due to low oil prices. During the first days and months of oil price crash, Saudi Arabia did not express any worry and even said it was ready to face much lower prices. However, after it invaded Yemen it faced a decline in financial resources. Saudi Arabia's 2017 budget bill was adopted with a big deficit running at around 198 billion Saudi riyals. The pressure exerted on Saudi Arabia due to low oil prices convinced this country to reconsider its oil policy.

The second factor was the US oil policy which saw a big change after President Donald Trump took office last January. In the past, oil prices were rarely under the impact of events in the developed markets of North America and West Europe. But under the present circumstances where the OPEC and non-OPEC deal is in effect, any production hike by a country would pose a challenge to this scheme. Trump's oil policy on production hike is not welcomed by the Saudis who seek rapprochement with Russia in a bid to compensate for the US breach of promise.

Russia and Saudi Arabia are currently willing to cooperate in the energy sector; however, such willingness is out of coercion, but for interests. Under normal conditions, they are rivals in terms of oil production and exports.

Any increase in oil production and export by Russia could largely destabilize the Saudi standing in global energy markets. Moreover, the two countries have severe contradictory views about political, regional and international issues like the Syria crisis.

Therefore, Russia-Saudi energy cooperation is unlikely to be sustained and long-term and it will be vulnerable to any return of prices on their normal track. Although Saudi Arabia's energy policy on oil prices and cooperation with Russia has changed such a shift in policy would not live long and will most probably remain limited to the OPEC and non-OPEC oil output cut deal.

Russia-Saudi Arabia relations has its own complicated aspects. At the first glimpse, due to geographical distance, the Moscow-Riyadh ties do not seem to be complicated; however, the fact that they are sensitive to one another could not be disregarded.

Either side wields tools to influence the other side. Moreover, they are considered to be rivals in a variety of sectors. Saudi King Salman's visit to Moscow on 4 October 2017 – which was the first by a Saudi monarch in the history of ties between the two countries – brought a variety of issues to the fore. One of important issues discussed during this visit was oil price and the future of energy markets.

Energy; Key Issue

Since Russia and Saudi Arabia are both key producers and exporters of oil in the world, the issue of energy was put on the agenda of meetings during the Saudi ruler's state visit.

The discussions between Tehran and Moscow concentrated on two main issues:

First was the issue of cooperation between the two countries in energy sector; Russia is willing to invest in Saudi's oil and gas industry while Saudis enjoy great potential to invest in Russia's energy sector. To that effect, the Saudis announced that they would invest in more than 25 projects in Russia, including oil and gas projects.

Second was the issue of extension of a deal between OPEC and non-OPEC producers to cut oil output in a bid to curb the global supply glut which has slashed prices.

Kirill Dmitriev, CEO of the Russian Direct Investment Fund, said Russia and Saudi Arabia had each earned $40 billion from the 2016 OPEC and non-OPEC deal.

International efforts to stabilize oil prices "have been fruitful, bringing oil prices to above $55 per barrel," Dmitriev told Rossiya 24 news channel.

"We believe that without this deal, prices would be below $35 per barrel now," he added.

Dmitriev praised the 2016 agreement, saying it "generated trust between nations and showed that by working together we can achieve meaningful, serious results."

Meantime, Saudi Arabian Energy Minister Khalid Al-Falih, who was in Moscow together with other officials accompanying King Salman on his landmark Russian visit, also said that the deal between OPEC and non-OPEC countries had helped to stabilize oil prices.

The minister also said that cooperation between Riyadh and Moscow had "breathed back life into OPEC which found itself, quite frankly, unable to swing its production as supply was persistently high in 2014 and global inventories were steadily rising ahead of demand."

Such remarks were indicative of inclination by Russia and Saudi Arabia for the extension of the OPEC and non-OPEC deal. On this basis, expansion of Russia-Saudi relations could influence energy markets in the future. Undoubtedly if Moscow and Riyadh, both rich in energy, cooperate closely they would be instrumental in determining prices.

This issue could be of great value for Russia which has been under sanctions and economic pressure in recent years.

Change and Stability

For Russia, Saudi Arabia's oil policy, particularly with regard to prices has seen significant changes in recent years. In the past, the Russians imagined that Saudi policy was a major cause of decline in oil prices. More frankly, the Russians maintained that lowered oil prices were a Saudi plot. Some in Russia believed that Saudi Arabia and the US were driving prices down in a bid to pressure Russia into refraining from meddling with the Middle East affairs, particularly in Syria.

Linking oil price decline to Saudi-US anti-Russia alliance has a long history. In 1985, Saudi and the US had undertaken similar measures to accelerate the collapse of the former Union of Soviet Socialist Republics. In early 1985, unilateral production enhancement by Saudi Arabia led to sharp price decline. That is to say, Saudi Arabia increased its production in 1985 from 3.6 mb/d to around 5.2 mb/d in 1986. Later on, it came out that market share policy, US –Saudi collusion, as well as CIA plot were just tricks aimed at putting Iran under pressure to end imposed war, accelerating FSU collapse as well as exerting further pressure on Libya.

Over recent years, the Saudis imagined that Russia would stop supporting Syria's President Bashar Assad in order to have funds for dealing with the crisis in Ukraine in case it faces financial restrictions. A potential halt in Russia's support for the Damascus government would have changed the game in favor of pro-Saudi forces fighting in Syria. Furthermore, oil prices would have been a bargaining chip for Saudi Arabia.

Therefore, continued low oil prices would have prevented Russia from raising output, let alone affecting Moscow's policy vis-à-vis Iran and Syria. That was indicative of some sort of energy war between Russia and Saudi Arabia, which did not let the two countries come closer together. That is why the Russians viewed oil price decline as a Saudi conspiracy.

In any case, Russia and Saudi Arabia were considered as energy rivals, particularly in oil sales. While Moscow favored higher oil prices, the Saudis were a major factor in pushing the prices down.

However, in recent years, two factors have brought about a U-turn in the Saudi oil policy:

The first factor was losses incurred by Saudi Arabia due to low oil prices. During the first days and months of oil price crash, Saudi Arabia did not express any worry and even said it was ready to face much lower prices. However, after it invaded Yemen it faced a decline in financial resources. Saudi Arabia's 2017 budget bill was adopted with a big deficit running at around 198 billion Saudi riyals. The pressure exerted on Saudi Arabia due to low oil prices convinced this country to reconsider its oil policy.

The second factor was the US oil policy which saw a big change after President Donald Trump took office last January. In the past, oil prices were rarely under the impact of events in the developed markets of North America and West Europe. But under the present circumstances where the OPEC and non-OPEC deal is in effect, any production hike by a country would pose a challenge to this scheme. Trump's oil policy on production hike is not welcomed by the Saudis who seek rapprochement with Russia in a bid to compensate for the US breach of promise.

Russia and Saudi Arabia are currently willing to cooperate in the energy sector; however, such willingness is out of coercion, but for interests. Under normal conditions, they are rivals in terms of oil production and exports.

Any increase in oil production and export by Russia could largely destabilize the Saudi standing in global energy markets. Moreover, the two countries have severe contradictory views about political, regional and international issues like the Syria crisis.

Therefore, Russia-Saudi energy cooperation is unlikely to be sustained and long-term and it will be vulnerable to any return of prices on their normal track. Although Saudi Arabia's energy policy on oil prices and cooperation with Russia has changed such a shift in policy would not live long and will most probably remain limited to the OPEC and non-OPEC oil output cut deal.

Mexico to Hold Oil/Gas Auction in 2018

Mexico’s oil regulator will likely add another auction in 2018 featuring conventional onshore oil and gas blocks, the head of the National Hydrocarbons Commission (CNH) said, potentially teeing up a third tender in an election year.

The bid terms will be announced later this year or in early 2018, while contracts will likely be awarded by the summer, said Juan Carlos Zepeda on the sidelines of a forum in Houston.

The onshore tender is, in addition to a deepwater Gulf auction, expected to attract in January some of the world’s biggest producers, as well as a March shallow water auction.

A landmark 2013 constitutional energy reform championed by President Enrique Pena Nieto paved the way for the auctions, in which private firms can bid to operate oil and gas fields on their own. Before the reform, state-owned company Pemex had a monopoly on hydrocarbons production.

Depending on the winner, Mexico’s July 2018 presidential election could alter the pace and scope of future auctions, which are organized and supervised by the CNH, while the energy ministry designs the contracts and sets the schedule.

Zepeda added that so-called non-conventional blocks to produce shale oil and gas are also being analyzed for inclusion in an additional separate auction.

To date, the CNH has run eight oil auctions, awarding 72 exploration and production contracts to more than 60 companies. The contracts are seen generating almost $61 billion in investment over their lifetime.

The 64 blocks to be offered in the two upcoming offshore auctions account for more than 65 percent of Mexico’s estimated resources. Along with the January bidding round, Pemex could also find a partner for the promising Nobilis-Maximino deepwater project close to the U.S. maritime border.

A development plan for another large deepwater project, Trion between Pemex and Australia’s BHP Billiton, has not yet been submitted to the regulator, Zepeda said, but it is expected before year end.

New regulation to establish how operators of two different blocks should produce oil from a single shared reservoir was recently finished by authorities and is now under public consultation, said Aldo Flores, Mexico’s deputy energy minister.

The well Zama-1 containing over 1 billion barrels of oil in place discovered in July by U.S. firm Talos Energy and its partners in Mexico’s shallow water could extend into a Pemex area, Zepeda said.

“The first unitization case could be Zama, but it has not yet been officially presented (to authorities),” Zepeda said.

The reservoir unitization regulation will establish the need to nominate a single operator to produce oil in shared reservoirs even keeping two separate companies or consortia for each one of the blocks. The energy ministry will have the final word if the parties do not agree on how to develop the field.

Eni to Foster Ties With Rosneft

Italian oil and gas group Eni is keen to strengthen ties with Russia’s Rosneft and could forge a partnership in the liquefied natural gas (LNG) sector, its chairwoman said.

In May this year, Eni extended a cooperation agreement with Rosneft to explore the Russian Barents Sea and the Black Sea, and consider further opportunities together.

“We are discussing a series of projects ... and are talking for a possible partnership in LNG,” Emma Marcegaglia said at an energy conference.

Eni, which in recent years has uncovered around 115 trillion cubic feet of gas in Mozambique and Egypt, said earlier this year it was looking to develop its LNG business worldwide.

The state-controlled major recently sold a 30 percent stake in its giant Zohr gas field in Egypt to Rosneft and the Russian energy giant has an option to buy a further 5 percent.

Speaking at the same conference, Rosneft CEO Igor Sechin said the Russian company was happy with its investment in Zohr.

“We are looking positively at the matter to realize this option,” he said.

Sechin said Rosneft would start drilling activity with Eni, and Italian oil service group Saipem, in the Black Sea at the end of December.

Eni has three licenses with Rosneft in the Black Sea and Barents Sea.

 

South Africa Commits to Shale Gas

South Africa’s mineral resources minister said the government remains committed to shale gas exploration despite a court order revoking fracking regulations that pushes back plans to award the first exploration licenses by 2019.

Farmers lobby AgriSA had said earlier that the High Court had issued an order quashing regulations governing proposed shale gas fracking in the Eastern Cape, one of the main areas where proposed shale gas exploration could take place.

The ruling to quash the regulations marked the latest setback to South Africa’s shale gas ambitions after a scientific study published last month suggested its Karoo Basin probably has a fraction of estimated deposits, deflating expectations of an energy bonanza.

However, Mineral Resources Minister Mosebenzi Zwane told Reuters the government could appeal the ruling and it was also considering a period of two years before any drilling started, taking into account various environmental and safety concerns.

“We remain committed (to shale gas exploration). We will study the outcome of the court and decide where we go,” he said.

“We are talking about first fracking licenses being granted in 2019 if everything goes well.”

Africa’s most industrialized economy has been hoping to find sufficient shale gas resources to exploit on a commercial basis.

South Africa’s government said in May it might award its first shale gas exploration licenses by the end of September, after environmental objections delayed the process.

“The judgment in our favor shows what can be accomplished when a community rallies around something as potentially devastating as fracking,” Janse Rabie, AgriSA’s natural resources chief, told Reuters.

Royal Dutch Shell, Falcon Oil and Gas and Bundu Gas & Oil are among five companies whose applications were being reviewed by the regulator.

Criticized by environmentalists worried about its ecological impact, fracking involves using water and chemicals at high pressure to crack rock and release the gas.

Campaigners say fracking could threaten the environment of the semi-arid Karoo, famed for its rugged scenery and rare wildlife.

The application to review and quash South Africa’s shale gas regulations, which has been in place since June 2015, was brought by the president of Agri Eastern Cape, together with 15 other applicants, including the agricultural unions of rural towns Graaff-Reinet and Cradock.

The court found the minister does not have the authority in terms of the law to make regulations concerning environmental issues, said oil and gas lawyer Lizel Oberholzer.

“So if the appeal does not succeed the regulations will have to be redrafted and this could cause additional delays,” she said

China Refineries Run at Record Sept Pace

China’s oil refineries increased their run rates by 12.7 percent to a record for September, data showed, after a major new state-run refinery launched operations and independent plants came back on stream after maintenance.

Processing volumes in September were up 12.7 percent in September compared with the same month a year ago at 49.34 million tonnes, or 12 million barrels per day (bpd). That was also an increase on August’s 11.1 million bpd, according to data from the National Bureau of Statistics.

For the first three quarters of the year, refinery output rose 4.7 percent from the same period last year to 418.4 million tonnes.

China National Offshore Oil Co’s 200,000-bpd Huizhou plant, in southern Guangdong province, started test runs in late September, becoming the second new major refinery brought on stream this year.

PetroChina started trial production at its 260,000 bpd Yunnan plant, near the southwestern city of Kunming, at end of June.

Meanwhile domestic crude oil production fell 2.9 percent on year to 15.53 million tonnes, or 3.78 million bpd.

Natural gas production rose 10.7 percent in September over the same month a year ago to 11.2 billion cubic meters.

Indonesia to Extend Inpex LNG Deal

Indonesia has agreed with Japan’s Inpex to extend the company’s contract to operate the Masela natural gas field in the country’s east by up to 27 years once it expires in 2028, the energy ministry said in a statement.

“This decision ... will give a 20-year extension to Inpex because their contract is almost over, with an additional seven years as compensation for changing the refinery development scheme from floating to land-based,” Energy and Mineral Resources Minister Ignasius Jonan said in the statement.

An Inpex spokesman in Jakarta confirmed Jonan met Inpex CEO Toshiaki Kitamura in Japan, and said the company was aware of media reports on the decision to extend the Masela contract.

“We continue to be engaged in discussions with the Indonesian government regarding the extension of the Masela PSC,” Inpex media relations specialist Moch N. Kurniawan told Reuters, declining to provide further details.

Indonesian President Joko Widodo in March 2016 rejected a $15 billion plan by Inpex and its partner Royal Dutch Shell to develop what would have been the world’s largest floating LNG facility to process gas from Masela, saying an onshore plant would benefit the local economy more.

The move was a blow to both companies and pushed the anticipated start of production from the field to the late 2020s, as development plans had to be revised.

Inpex subsequently asked to increase output from the LNG plant to 9.5 million tonnes per year, but the government has pushed the company to set aside a larger portion of the gas via a pipeline to domestic buyers.

The Masela block, located in the Timor Sea near Indonesia’s border with northern Australia, is 65 percent owned by Inpex and 35 percent by Shell.

Inpex is also working with BP, Mitsubishi, China National Offshore Oil Co, Sumitomo and Sojitz on an $8 billion expansion of the Tangguh project in West Papua province that will boost annual LNG production capacity there by 50 percent.

Indonesia’s gas demand has been in decline in recent years, and questions remain around how quickly Southeast Asia’s largest economy can develop infrastructure to absorb gas from these projects.

OPEC Seeking Consensus on Deal Extension

Oil producers are working to build consensus on extending their deal to reduce supplies, OPEC’s secretary general said, with the potential for continuation throughout 2018 forming a basis for talks.

The Organization of the Petroleum Exporting Countries, plus Russia and nine other producers are cutting oil output by about 1.8 mb/d until March 2018 in an attempt to eradicate a supply glut that has weighed on prices.

The deal has supported prices, which are trading within sight of a two-year high, but an overhang of stored oil has yet to be fully eradicated and producers are considering extending the deal at their next meeting on Nov. 30.

OPEC Secretary General Mohammad Barkindo, in a briefing with reporters, said that Russian President Vladimir Putin’s suggestion this month that the deal could be extended to the end of 2018 is being taken “seriously”.

Saudi Energy Minister Khalid al-Falih, the OPEC president, and Russian Energy Minister Alexander Novak “are taking cue from the open statement of President Putin and engaging the rest of the participating countries to build consensus before Nov. 30”, Barkindo said.

Barkindo said it wasn’t yet clear if the decision would be made on Nov.30 and, asked whether another meeting could be held in early 2018, said that Falih and Novak would consult and decide. “It is difficult to say at the moment what will be decided in November,” Barkindo said.

“It will depend on a number of factors, chief among which is how far we are from achieving our objective of a convergence of supply and demand.”

Falih and Novak are also talking to producers not currently participating in the supply cut, Barkindo added.

 

 

Global oil and Asian product market, October

Global crude oil price edged higher, underpinned by a fall in the US oil rig count slowing growth in US output which is aiding OPEC's efforts to rebalance the market. Meanwhile, geopolitical uncertainty in the Middle East as the threat of supply rose. Investors monitored ongoing unrest in Iraq following an independence referendum in Iraq’s Kurdistan region last month that threatens to disrupt the operation of a pipeline that carries 500,000-600,000 barrels of crude per day. However, Iraq plans to boost export from the South to make up for the loss of revenues after a retaking of federal fields from the semi-autonomous Kurdistan region led to a temporary shutdown. Oil production from central and southern Iraq will be directed to the Basra Oil Company, which will boost export by 200,000 b/d.

In addition to the above, signs of bullish Chinese demand, as well as falling stockpiles in the US supported the upbeat mood of the market.

Despite the bullish signals, analysts warned that the Organization of the Petroleum Exporting Countries needed to extend its agreement to reduce oil output beyond its current expiry date -March 2018- in order to rebalance the market. The original deal, struck nearly a year ago between OPEC and 10 other non-OPEC countries led by Russia, was to cut production by 1.8 million barrels a day for six months. The agreement was extended in May 2017 for a period of nine months until March 2018 in a bid to reduce global oil inventories and support oil prices. The upcoming OPEC Conference is due to be held at the OPEC Secretariat in Vienna on 30 November 2017.

Due to the widening range of WTI and Dubai differential, arbitrage from US to Asia was opened and export from US to Asia increased.

Asian Product Markets

During October, all Asian products market except naphtha was on the downward trend, confirming their weak fundamentals. 

Light Distillates (gasoline, naphtha)

The Asian gasoline market went down due to the seasonal decline in demand over the winter season. Gasoline market was correcting its upward trend following an overselling. Therefore, the market was quiet ahead of end of year months.

Asian naphtha crack spread- differential between naphtha prices and Dubai crude prices- was strong. Demand in the Asian naphtha market remained strong as steam crackers were running at full capacity amid strong margins. Moreover, LPG prices were still higher than naphtha. Therefore, there is no chance for the units to substitute naphtha with LPG. On the supply side, higher arbitrage volume went into Asia from Europe. However, the market is still tight due to the considerable demand.

Middle Distillates (gasoil, jet fuel)

Lackluster buying interest continued to weigh on sentiment in the Asian gasoil market. Furthermore, fresh export from China after additional export quotas could exert more downward pressure on the market. On the supply front, market sources said that lower requirements amid steady to higher run rates had led several refineries to send more barrels into the spot market.

The Asian jet fuel market weakened during October amid underwhelming buying interest and unattractive economics to move cargoes to the US West Coast or Northwest Europe. Activity in the North Asian market in particular was muted, though some participants were optimistic the upcoming winter heating demand season would provide a boost in the upcoming period.

Fuel Oil

Asian fuel oil market was at its lowest in the past five consecutive months due to weak demand from both bunker and power plant sectors. The market sentiment has stemmed largely from higher cargoes moving into Asia from Europe. On the stocks front, Singapore's commercial stockpiles of heavy distillates rose exerting more pressure on the market.

 

$5bn Package for Iranian Companies

The third annual Congress of the Iran Petroleum and Energy Club (IPEC) was held October 10-12 in Tehran.

Addressing the opening ceremony, Iran's Minister of Petroleum Bijan Zangeneh said a $5 billion package had been drawn up to enhance production from operating oil fields in Iran.

"In order to preserve and enhance production from operating fields in Iran, we are preparing a $5bn package over two years," he said.

"This package is exclusively for Iranian companies; however, they can choose foreign partners for financing," the minister said.

He added that the billion-dollar package was complementary to Iran's new model of oil contracts – Iran Petroleum Contract (IPC) – which require foreign companies to have an Iranian partner for operating oil projects in Iran.

"Preparation of this package and implementation of these projects would be apart from projects that would be implemented" under IPC framework, Zangeneh said.

The package, he added, would mainly be spent on workover of oil wells, drilling new wells, surface debottlenecking, and operation. A variety of fields run by the National Iranian South Oil Company (NISOC), the Iranian Central Oil Fields Company (ICOFC) and the Iranian Offshore Oil Company (IOOC) would be covered by this package.

"This $5bn package will be divided into smaller packages which would worth $300 million at most," said the minister.

Zangeneh added that these projects would be implemented in two years' time with reimbursements to be made from project revenues in less than three years.

He referred to financing, usance, bonds, domestic financing and getting loans from the National Development Fund of Iran (NDFI) as some methods of financing.

IPC Talks in Good Stage

Zangeneh gave a positive and acceptable assessment of negotiations under way for the development of oil fields within the framework of IPC contracts.

"The policy pursued by the government and the Ministry of Petroleum is to finalize the case of all jointly owned fields within four years and determine contractors for their development. That's a big stride," he said.

Zangeneh expressed hope for the signature of contracts with leading foreign companies to develop jointly owned fields. He noted that foreign companies would have to work with Iranian partners.

The minister said development of oil fields in the West Karoun area in western Iran and enhanced recovery from operating fields were among priorities of Iran's petroleum industry.

Petchem Needs Attention

Iran's petrochemical sector was also highlighted by Minister Zangeneh. He said the Ministry of Petroleum called for enhanced production capacity at petrochemical plants and paying further attention to mid-stream and downstream sectors of petrochemical industry.

"We need to activate these industries in cooperation with the Ministry of Industry, Mine and Trade," he said.

Regarding construction of oil refineries, he said: "We don’t need oil refineries for domestic consumption. Any new refinery must be used for exporting petroleum products. Of course, the existing refineries need optimization in order to see convergence between the quality of products and new standards,"

No Flaring

Zangeneh also highlighted the significance of no flaring, expressing hope that flaring associated petroleum gas would have been minimized by 2021, when his ministerial term ends.

He referred to NGL 3100

, NGL 3200, NGL Kharg and Bidboland 2 as plans under way by the Ministry of Petroleum for no flaring.

"These projects are not sufficient. We have to adopt successful methods in order to prevent flaring of associated gas," he said.

Zangeneh also said the first FLNG (floating liquefied natural gas) contract would be signed in the near future.

"The capacity of this FLNG is 500,000 tonnes a year, whose required gas we will be supplied by us," he added.

IPEC, Influential NGO

Zangeneh also described IPEC as an influential non-governmental body, saying it was finding its right direction.

"This club is continuing its life and will reach growth and blossoming," he said.

Zangeneh said the idea of IPEC establishment was raised in 2011 for the purpose of setting up a think tank for oil and energy without any dependence on government.

"We always seek to develop thoughts. I hope that more youth would join this club which has less than 200 members now," he said.

Trump Rhetoric Not Worrying

The second speaker was Ali Kardor, CEO of National Iranian Oil Company (NIOC).

He said that US President Donald Trump's anti-Iran rhetoric was not worrying.

"There is nothing worrying about Trump's remarks. A good path has been traced in Iran which I hope would continue in full strength," he said.

Kardor said 10 contracts were to be finalized in the current calendar year to March 2018.

He also referred to the conclusion of studies conducted by foreign companies, saying: "Hopefully these companies have understood our message of the significance of enhanced recovery and they have taken into consideration EOR and IOR methods in all their studies."

"At this stage, only technical proposals would be examined. In case technical aspects are reviewed and endorsed at the three layers of technical committee, reservoir consultants and reservoir supreme consultants, economic and contractual negotiations will be put on agenda," he said.

Kardor said Iranian exploration and production (E&P) companies had still time to establish bonds with foreign companies for future cooperation in the development of fields in Iran.

"Some foreign companies have yet to choose their domestic partners and we hope that Iranian E&P companies would boost their standards to become further influential in this regard," he said.

Kardor said that $300 million packages were being drawn up for different projects. "Necessary tender bids will be held and we hope that would provide potential for domestic companies and subsequently domestic manufacturers to boost their activities," he added.

Iran H/C Standing

Kardor said Iran was standing in a top position in terms of hydrocarbon reserves. He said Iran had brought its oil output to 6 mb/d before the 1979 Islamic Revolution.

"Over the past two years, by reliance on enhanced recovery we have concluded that reaching that level of production capacity is possible through practicing optimal management, enjoyment of foreign investment and state-of-the-art technologies," said Kardor.

He said the 6mb/d target would be achieved under Iran's 7th Five-Year Economic Development Plan.

Kardor said plans were under way for raising Iran's oil output to 4.5 to 5 mb/d by the end of the 6th Five-Year Economic Development Plan.

He said the cost price of oil production in Iran was acceptable, saying: "The cost price of oil production in Iran in foreign currency puts Iran among countries with lowest production costs. As we regularly monitor the economic model of international companies, Iran is among the best countries in the world in terms of profitability in this sector."

Kardor referred to field-oriented project implementation and said: "The resultant of outputs and specifically regulation of portfolio are among features of field-oriented performance. New oil contracts and other contractual frameworks for field development lie within such a framework."

He said that NIOC was planning to hire Iranian production companies to work in the West Karoun fields. "We had better establish companies for this purpose to work specifically in this sector. So far, some companies have become active in this sector."

Kardor said that international oil companies (IOC) had focused on reservoir and project management, as well as financing. "That is while Iranian E&P companies are still stuck in engineering

, procurement and construction (EPC). They need to change their conditions."

He voiced support for assigning NGL projects to petrochemical companies, saying: "We are ready to cooperate with these companies in the development of fields and we have so far assigned studies on two gas fields."

Kardor said Iran needed no more gas for domestic consumption. "Therefore, the gas produced in the fields must be converted to petrochemical products in the value chain."

1st FLNG Contract

Kardor said Iran was set to sign its first FLNG contract, with a capacity of 500,000 tonnes, with a Norwegian company soon. The contract will be for 20 years and the pricing formula will be set and communicated by the Ministry of Petroleum.

He said that NIOC was in favor of private companies in building water desalination plants and power plants.

"Companies are required to give realistic prices in the tender bids, because NIOC studies the commerciality of projects and will shun projects with insufficient commerciality," he added.

Kardor said NIOC had to cancel a project due to unrealistic price. "We hope that companies would offer realistic prices in order to help the NIOC in its policy of further cooperation with the private sector. If not, we will have to implement these projects through our own direct investment."

He welcomed build-operate-transfer (BOT), build-operate -own (BOO) and public-private partnership (PPP) models for projects.

"Australia and India are among countries that pursued PPP model and they achieved positive results," said Kardor.

Issue of Bonds

Kardor also spoke about methods of financing of projects, saying bonds in Iranian currency were to be issued for the first time on a foreign currency basis. He noted that NIOC would hedge risks of these bonds.

He said that necessary arrangements had been made with the Iran Energy Exchange.

Gas, Best Option to Cut Pollution

Mohammad Hossein Adeli, Secretary General of the Gas Exporting Countries Forum, (GECF), said natural gas market was being influenced by political and technological elements.

"Weather conditions, economic expansion mainly in Asia (China, India), competitive prices and environmental concerns are expected to boost natural gas consumption towards 2018," Adeli said, estimating a 2.1% to 2.3% increase in gas consumption.

He said that world energy demand is projected to grow by 1.1% a year between 2017 and 2040 mainly for a population growth, global economic prosperity due to the emergence of new economies and higher living standards.

"Natural gas will grow by 1.8% per annum and will be the fastest growing fossil fuel in 2040," he said.

"Fossil fuels are expected to meet 75% of the world's energy demand," Adeli said, adding that coal would be replaced increasingly by natural gas, renewables and nuclear power in power generation.

"The share of gas in the overall energy mix will increase from 22% in 2016 to 26% in 2040," he said.

"Cheaper prices of gas compared to renewables, ample global natural gas reserves and gas oversupply" were among factors enumerated by Adeli to support his idea.

He said that power generation will remain the largest natural gas consumer among all sectors, hitting 2,317 bcm in 2040.

"The share of gas in power generation increased from 18% to 23% between 2000 and 2016, and will continue to rise" to reach 28% by 2040, he said, adding: "That represents the largest market share of any fuel."

The share of renewables in the global energy mix was only 8% in 2016 and would reach 20% in 2040.

"Gas has a good competitive position against renewables, and also coal, especially if environmental externalities are integrated," Adeli said.

"Gas market is now very competitive and is passing through a changing and challenging transition," he said.

"There is a momentum for CO2 mitigation, and in spite of the US withdrawal China and EU are leading the world for this cause," added Adeli.

Gas and renewables are two fuels that can effectively address the global concerns on the climate change," he noted.

"Gas provides a global solution for all, while renewables will remain an EU centric solution for long period of time to come. Electrification of vehicles will not be overwhelming; on the contrary, it is again an opportunity for gas to grow as there is a need for more electricity generation," he said in conclusion.

 

Opportunities for Investment in Iran Oil Sector

On the second day of the 3rd annual Congress of the Iran Petroleum and Energy Club (IPEC), senior managers from National Iranian Oil Company (NIOC), National Petrochemical Company (NPC), as well as representatives of foreign companies exchanged views about opportunities for investment in Iran's petroleum industry in light of challenges and advantages.

The unique standing of Iran in terms of enjoyment of hydrocarbon reserves was emphasized. So far, half of Iran's hydrocarbon reserves has been depleted and fresh investment has been planned.

Three panel discussions were held on the second day of the event; two on upstream sector and the other on petrochemical sector. The first panel on upstream oil sector was presided over by Gholam-Reza Manouchehri, deputy CEO of NIOC for development and engineering.

Manouchehri referred to Iran's hydrocarbon reserves, saying: "Iran is among countries with huge volume of hydrocarbon reserves. It has potential reserves which could be developed."

He said Minister of Petroleum Bijan Zangeneh had instructed studying all reservoirs in the country.

"These studies could lead to increasing the volume of in-place hydrocarbon reserves in Iran. Domestic consultants will be hired while foreign consultants will also contribute so that the ground would be paved for a jump in the petroleum industry," said Manouchehri.

He enumerated the advantages of investment in Iran as rich hydrocarbon reserves, security, transportation infrastructure, formation of exploration and production (E&P) companies, activity of different oil service companies as well as Iranian oil experts.

Manouchehri said Iran could still produce oil and gas for 100 and 166 years respectively, adding: "It seems that in light of production from major unconventional reserves in the world, growth in renewable energies and oil production-consumption curve, we should count on oil at $40 to $60 a barrel for four to five years. Therefore, we have to adapt our oil economy and production economy with this figure."

He advised NIOC subsidiaries and development companies to manage their costs in a bid to have more profitability.

Manouchehri went on to highlight the establishment of working committees to negotiate Iran Petroleum Contract (IPC) deals and follow up on the development of fields.

Oil Output Could Rise 3mb/d

Manouchehri also said the petroleum industry has firm will to develop gas sector.

"This policy yielded good results, placing Iran in very favorable conditions in terms of gas production. Currently, gas has a 70% share in Iran's energy mix," he said.

"At present we have decided to make major investments in the oil sector. To that end, we focus upon giant and heavy crude oil reserves in southern Iran," said Manouchehri. "Recent studies conducted by foreign companies show that Iran's oil production capacity could rise by 3 m/d."

He underlined financing and application of cutting edge technologies as Iran's major expectations from the presence of foreign companies in the development of Iranian oil and gas field.

"We expect these companies to make necessary investment shortly, so that we can reach the designed plateaus in the shortest possible time," said Manouchehri.

Referring to the complicated nature of Iranian reservoirs and the necessity of applying sophisticated technology, he expressed hope that foreign companies would be able to apply the latest technological achievements for developing reservoirs in Iran.

Cost Control

Manouchehri said accumulated production and reaching maximum recovery are important factors contributing to the expiry of contracts, noting that reduction of costs would be a key parameter in field development.

He said that NIOC's priorities for development included jointly owned fields, particularly those with the possibility of migration, and high-pressure gas fields.

"The secondary priority goes to reservoirs which are geologically more sophisticated and have a lower recovery rate," added Manouchehri.

Iran Reservoirs at Half

Karim Zobeidi, director of consolidated planning at NIOC, provided detailed figures about Iran's hydrocarbon reserves and production capacity. Like others, he highlighted the necessity of enhanced recovery from oil reservoirs.

He said Iran was home to 184 fields, comprising 390 reservoirs, adding that 171 reservoirs had already been developed or were under development.

Zobeidi said Iran holds more than 712 billion barrels of oil in place, 101 billion barrels of which is recoverable with an average recovery rate of 24.6%. He said that application of enhanced oil recovery (EOR) methods had contributed to 4.4% recovery.

He also said the recovery rate for gas condensate and liquids was 51% and for gas was 70%.

In total, he said, Iran's hydrocarbon recovery rate stands at around 40%.

Zobeidi said a 35% recovery rate was an acceptable level for oil fields. "Therefore, the oil recovery rate in Iran is currently 10% below the desired rate and this 10% would mean a 70-billion-barrel extra recovery."

He said that EOR as well as improved oil recovery (IOR) methods would help increase oil recovery by 5 to 15%.

Iran Ranked 3rd in Oil/Gas Exploration Capacity

Saleh Hendi, NIOC exploration directorate chief, cited data from the United States Geological Survey (USGC), saying Iran was ranked the third in terms of exploration capacity. Iraq and Russia occupy the top positions.

He referred to the downward trend in oil consumption in the world, while gas has been on an upward trend, saying that demand for oil and gas would outstrip supply in the future.

"Therefore, oil and gas producers are required to take steps to ally such a concern and guarantee energy security. To that effect, a win-win relationship between producers and consumers would be instrumental," he said.

Hendi reiterated the need for more exploration in coming years in order to bridge the gap between energy supply and demand in the world.

He said that Iran has not only huge conventional hydrocarbon reserves, but also enjoys good potential in shale oil and gas."

"At present, extraction from unconventional reservoirs is not the NIOC priority; however, if conditions are ready for recovery from these deposits Iran will be enjoying high potential," he added.

Hendi also said that the cases of 10 exploration blocks, out of a total of 14, had been finalized. "By attracting 1.2 billion in investment, we have managed to add 1.6 billion barrels of oil and 16.6 tcf of gas to the country's in-place oil and gas reserves."

He expressed hope that tender bids would be soon held for exploration blocks in Iran.

"Furthermore, we plan to conduct joint studies with foreign companies in exploration sector," said Hendi.

Why Iran Oil Is Attractive

The second panel on the second day of the third annual Congress of the Iran Petroleum and Energy Club (IPEC) was again focused on Iran's upstream oil sector.

Behzad Mohammadi, CEO of Oil Industries Engineering and Construction Company (OIEC), highlighted two upstream projects which have recently become operational; phases 20&21 of South Pars gas field and Azar oil field. South Pars is shared by Iran and Qatar, while Azar is jointly owned by Iran and Iraq.

Mohammadi said production from Azar field totaled 4.6 million barrels, adding that its output had reached 35,000 b/d.

Azar started producing 15,000 b/d of oil in March before reaching 30,000 b/d in May and its production rate is 35,000 b/d now.

Azar is estimated to hold 2.5 billion barrels of oil in place, said Mohammadi, adding that new studies put the oil content at 4 billion barrels.

He said that Azar's output was planned to reach 65,000 b/d in the primary recovery.

"Talks are under way with international companies within the framework of new model of oil contracts for the second phase development of this field," said Mohammadi.

"After development of 2nd phase of this field under IPC, we expect oil recovery from Azar field to reach 100,000 b/d," he added.

Mohammadi said oil recovery risks in Azar field included its tough geological structure which had increased the average time needed for drilling. He added that international sanctions had prevented the supply of necessary commodities.

EOR a Must

Representatives of foreign oil companies also expressed their views about Iran's upstream oil sector.

China's CNPC International president Lyu Gongxun referred to the high attractiveness of Iran's petroleum industry for foreign firms, saying this attraction ows to IPC.

He expressed China's readiness for broader cooperation with Iran in the petroleum industry, saying cooperation between Iran and China should be based on securing mutual interests of the two parties.

Alessandro Tiani, Vice President for EOR and Advanced Reservoir Modelling at Italy's Eni SpA, briefed the audience about different methods of enhanced oil recovery, saying it was pretty necessary for Iran to raise its output due to the high level of reserves.

"In case a good method is not applied for enhanced recovery the result will not be acceptable and the reservoir may even be damaged," he said.

Then, the Royal Dutch Shell delegate at the congress said any increase in oil production, as predicted by the International Energy Agency (IEA) to meet growing demand, must take into consideration environmental concerns.

He also spoke about a variety of EOR methods, mainly water, gas and steam injection.

He said that choosing a method for enhanced recovery would depend on the certain

 conditions of the field in question.

Ildar Shaykhutdinov, project director at Russia's Rosneft, said 49% of the activities of this company is done by software.

"We plan to increase this percentage over the coming five years," he said.

Marquis Ennio H.A.R. Senese, vice president of ILF Consultants and Engineers, said international sanctions posed challenges to the development of oil fields in Iran.

"Iran is the largest owner of oil and gas reserves in the world and it has big potential for development," he said.

Senese said the high level of knowledge of Iranian university graduates, economic diversity and Persian rich civilization were among outstanding features of the country.

He referred to financial shortages as the biggest challenge to oil and gas industry development, saying Iran could become one of the largest producers of gas in the world in case of facilitation of financing for gas fields.

Senese criticized administrative red tape in Iran as a challenge to foreign investment. He expressed hope that streamlining bureaucracy would help clear the way for investment in Iran's oil and gas sector.

Why Iran Oil Is Attractive

The second panel on the second day of the third annual Congress of the Iran Petroleum and Energy Club (IPEC) was again focused on Iran's upstream oil sector.

Behzad Mohammadi, CEO of Oil Industries Engineering and Construction Company (OIEC), highlighted two upstream projects which have recently become operational; phases 20&21 of South Pars gas field and Azar oil field. South Pars is shared by Iran and Qatar, while Azar is jointly owned by Iran and Iraq.

Mohammadi said production from Azar field totaled 4.6 million barrels, adding that its output had reached 35,000 b/d.

Azar started producing 15,000 b/d of oil in March before reaching 30,000 b/d in May and its production rate is 35,000 b/d now.

Azar is estimated to hold 2.5 billion barrels of oil in place, said Mohammadi, adding that new studies put the oil content at 4 billion barrels.

He said that Azar's output was planned to reach 65,000 b/d in the primary recovery.

"Talks are under way with international companies within the framework of new model of oil contracts for the second phase development of this field," said Mohammadi.

"After development of 2nd phase of this field under IPC, we expect oil recovery from Azar field to reach 100,000 b/d," he added.

Mohammadi said oil recovery risks in Azar field included its tough geological structure which had increased the average time needed for drilling. He added that international sanctions had prevented the supply of necessary commodities.

EOR a Must

Representatives of foreign oil companies also expressed their views about Iran's upstream oil sector.

China's CNPC International president Lyu Gongxun referred to the high attractiveness of Iran's petroleum industry for foreign firms, saying this attraction ows to IPC.

He expressed China's readiness for broader cooperation with Iran in the petroleum industry, saying cooperation between Iran and China should be based on securing mutual interests of the two parties.

Alessandro Tiani, Vice President for EOR and Advanced Reservoir Modelling at Italy's Eni SpA, briefed the audience about different methods of enhanced oil recovery, saying it was pretty necessary for Iran to raise its output due to the high level of reserves.

"In case a good method is not applied for enhanced recovery the result will not be acceptable and the reservoir may even be damaged," he said.

Then, the Royal Dutch Shell delegate at the congress said any increase in oil production, as predicted by the International Energy Agency (IEA) to meet growing demand, must take into consideration environmental concerns.

He also spoke about a variety of EOR methods, mainly water, gas and steam injection.

He said that choosing a method for enhanced recovery would depend on the certain

 conditions of the field in question.

Ildar Shaykhutdinov, project director at Russia's Rosneft, said 49% of the activities of this company is done by software.

"We plan to increase this percentage over the coming five years," he said.

Marquis Ennio H.A.R. Senese, vice president of ILF Consultants and Engineers, said international sanctions posed challenges to the development of oil fields in Iran.

"Iran is the largest owner of oil and gas reserves in the world and it has big potential for development," he said.

Senese said the high level of knowledge of Iranian university graduates, economic diversity and Persian rich civilization were among outstanding features of the country.

He referred to financial shortages as the biggest challenge to oil and gas industry development, saying Iran could become one of the largest producers of gas in the world in case of facilitation of financing for gas fields.

Senese criticized administrative red tape in Iran as a challenge to foreign investment. He expressed hope that streamlining bureaucracy would help clear the way for investment in Iran's oil and gas sector.

Iran, Air Liquide Cooperate in Licensing

Knowhow and technology are considered winning cards and advantages in any developed country. Access to modern technical knowhow would be impossible without benefiting from newly developed knowledge. The necessity of such interaction for developing countries is much higher, as they can shorten their distance from developed countries in addition to preventing the waste of force. Add to all these advantages the fast growth of science and technology.

In order to further know about the latest scientific achievements in Iran's petrochemical industry, "Iran Petroleum" has conducted an interview with Ismaeil Qanbari, CEO and Chairman of Petrochemical Research and Technology Company (PRTC).

Q: In the first half of the current Iranian calendar year to March 2018, PRTC met with a number of foreign business delegations. What has  been the outcome of these meetings?

A: Petrochemical research projects often last three to four years. In the first half of the current [calendar] year, one of the main international activities of PRTC was its cooperation with Air Liquide in the commercialization of technology for converting methanol to propylene. The signature of this contract is a product of more than 1.5 years of talks with this company. Given the fact that for most experts the basis of development of downstream petrochemical industry would be to enhance propylene production and to plan significant methanol production in coming years, it seems that completion of units to convert methanol to propylene would be of high significance for the petrochemical industry. Methanol projects are about to become operational in the country. To that effect, our talks with Air Liquide that had started more than a year ago have been pursued more seriously. Fortunately, our talks came to fruition on August 8 and led to the signature of agreement for joint cooperation in granting license for methanol-to-propylene (MTP).Undoubtedly, the National Petrochemical Company (NPC)'s serious support was instrumental in achieving this success. This agreement was also the first scientific cooperation between Iran and Europe in the petrochemical sector post-JCPOA. Air Liquide is today among top 10 petrochemical companies in the world, whose research and technology section is well structured. Therefore, this cooperation is very valuable for Iran. In the event of signing agreement with this company for granting methanol-to-propylene license, we will be witnessing the development of the first joint technical knowhow in the petrochemical sector at a capacity of 500,000 tonnes a year. In coordination with Air Liquide, this technology is now known as Pars MTP and this joint cooperation is expected to reach the stage of agreement

with Iranian customers. Based on agreements made so far, Pars MTP technology will be presented to both Iranian and foreign customers. Intensive talks had been held with the German side to reach this breakthrough.

Q: How is that Air Liquide, which is a petrochemical giant in the world, agrees to cooperate with Iran in licensing?

A: PRTC has had more than 18 patents registered in the field of MTP (process and catalyst). It was interesting for Air Liquide to see that some of these patents were related to the domains which they had not worked on. In 2004, we started building a demo plant in Mahshahr in cooperation with the German firm Lurgi, which has been acquired by Air Liquide. However, this cooperation halted several years later due to the imposition of sanctions. Upon their return to this unit, representatives of this company realized how much we had progressed without their help. We had launched this unit by ourselves. It was hard for the German side to believe that 18 patents had been registered by Iranian specialists. They could only believe 4 of the patents. It was incredible for them to see that Iranian scientists had managed to operate an MPT demo plant in Mahshahr without any foreign help. We have managed to resolve such problems as the flaws in the flow system, temperature control system of reactors, heaters, heating system and optimization of the separation unit of the demo plant. In their talks, Air Liquide negotiators said they had come to Iran to sell license, but they were faced with new developments. That along with efforts by my colleagues at the NPC Investment Directorate convinced this company to agree to joint cooperation with Iran.

Q: Given the active role of the private sector in methanol projects in Iran, have you ever received any offers for the purchase of this technology by the private sector?

A: Yes, so far more than five domestic private companies have offered to purchase this technology. We are in serious talks with the private sector. The private sector has concluded that PRTC could be a reliable side for receiving this technology from European companies like Air Liquide. Our suggestion for the private sector has been chain technological cooperation. For instance, we can present the package of MTP cooperation to the private sector. One of achievements of PRTC in the first half of this year was the launch of propylene-to-polypropylene demo plant in Mahshahr. In Iran, the catalyst of this process has been indigenized. Lab results show that the catalyst developed in Iran could compete with foreign-made ones and they have even been better than foreign products.

Q: In light of negotiations with the private sector for launching MTP units, how much investment do you think is needed?

A: We believe that production must be on a chain basis because according to our calculations, the rate of return on investment is for this project throughout the gas-to-methanol-to-propylene-to-polypropylene chain. According to initial estimates, the necessary capital for the complete chain of this unit with a capacity of 165,000 tonnes a year of methanol, 500,000 tonnes a year of propylene, and 450,000 tonnes a year of polypropylene is said to be

around 1.5 billion euros.

Iran's annual propylene production totals one million tonnes of refinery-grade product. But under Vision 2025, Iran will bring its output to more than seven million tonnes. Iran's petrochemical industry has to change its approach and move towards propylene. We are in serious talks with leading producers of methanol like Kaveh Petrochemical Plant to sell MTP technology.

Q: It seems that PRTC spent its time mainly on concluding an MOU with Air Liquide in the first half of the year. What does this company plan to do in the second half of the year?

A: First and foremost, I should note that PRTC has had other activities in current calendar year. For instance, it has made valuable achievements like in developing spherical alumina catalyst base. This technology is significant because it can help us develop spherical alumina with a diameter of 1.5 to 3 millimeters that is used in oil, gas and petrochemical industries like in aromatization, reforming, LAB and HDS among other applications.

In response to your question, I should say that we have a variety of research plans on the agenda. Some of these research projects must be done fundamentally. Our research center in Tehran is active in this field. Conducting research on catalyst as a strategic product of petrochemical industry, establishing pilot and semi-industrial plants in the research centers of the Arak and Mahshahr branches of PRTC are among other activities in the second half of the year. Alongside these activities, new plans like presenting engineering documents for MTP basic design are on the agenda. That is a priority for the second half of the year and it will be done in collaboration with Air Liquide. We have managed this year to develop technical knowhow for producing pure polyvinyl alcohol at the Arak center; it is a biodegradable synthetic polymer used in hygiene, food, pharmaceutical, and agriculture sectors. We are also steering institutes and academic centers because this mission has been assigned to us by the NPC. Furthermore, commercialization of research achievements like offering MPT license to the private sector, license for propylene, producing catalysts for petrochemical industry in cooperation with companies like Petrochemical Commercial Company (PCC), producing catalyst PE100 for Arak Petrochemical Plant in cooperation with PCC and producing methanol in cooperation with BASF are among our other plans for the second half of the year.

Following up talks with foreign companies – Norway's Norner and France's Axens – are among other plans in the second half of the year. Foreign companies must note that Iran enjoys big potential in petrochemical sector. Other companies can step in for cooperation with Iran within the same framework set with Air Liquide. Therefore, there are good opportunities for foreign companies in the investment and technology sectors. In addition to Air Liquide, we have signed MOUs with Germany's BASF for producing methanol and ethylene oxide. Negotiations are under way for finalization of an agreement. PRTC has also signed MOUs with Axens and IBF of France for catalytic processes. I hereby invite all top petrochemical companies in the world to cooperate with Iran.

Q: In recent years, how much has PRTC cooperated with universities and research institutes?

A: At Iranian universities, research is viewed as a part-time job and we are trying to turn this positive phenomenon to a fulltime job. PRTC has been a leading company in cooperation with universities. This cooperation lies within the framework of four institutes in the value chain for methanol, propylene, olefin, polyolefin and catalyst. Not only is research a must for developing knowhow and technology, but also it would help boost companies, industries and even countries in applying knowhow. In fact, research organizations are better placed to use foreign available knowhow and the transfer of technology will be done more properly. Transfer of technology is common in the process of transactions between developing and developed countries as a unilateral process. This process often flows from developed countries into developing countries and what is displaced here is technical knowhow. One should not forget that such a process will not necessarily result in the technical and economic development of receiving countries. For this process to become efficient, planning and management are needed so that evolutionary developments would happen until the desired objective is achieved. We need a correct analysis of the past and the future in order to respond to future needs; otherwise, all efforts will be doomed to fail.

The PRTC experiences show that the transfer of technology within the framework of necessary communications and interactions could be carried out properly. The process of technology transfer has turned into a mutual process. It means that we are not solely buyer of technology and the other side is not merely a vendor of technology. Experience has shown that models of technology transfer could not be explained simply by focusing on what owners of technology have provided to others. Rather, we should concentrate more on host countries (receivers of technology) as well as policies and strategies of forming the pattern of technology transfer. Cooperation with international companies would accelerate indigenization of technical savvy and development of existing technical knowhow for the purpose of acquiring new knowhow.

Petrochimi Bandar Imam BC among Asia Top 4

The Iranian petroleum industry has invested heavily in basketball and achieved satisfactory results. The presence of two powerful teams – Sanat Naft Abadan Basketball Club and Petrochimi Bandar Imam Basketball Club – in Iran's basketball pro league bears proof to such progress. These two teams are undoubtedly the strongest basketball teams in Iran and are making great contribution to national team. However, Petrochimi Bandar Imam BC is more famous due to its history and experience, and has managed to win international awards. Petrochimi Bandar Imam BC was the only representative of Iran in the recent Asian matches and finished in the fourth position. This title is significant for Iran's basketball. Now it is showing a stronger presence in the new season of pro league and alongside Sanat Naft Abadan it claims the championship title. This point is laid bare by widespread activities conducted by the Ministry of Petroleum in basketball.

Petrochimi Bandar Imam BC Targets Title

Petrochimi Bandar Imam BC enjoys a long history in Iran and it has been the number one in Iran for years. Over the past two years it has preserved its pro league championship title, and has represented Iran in the Asian clubs championship for years. After winning in the pro league, Petrochimi Bandar Imam BC made its way as representative of Iran to China to compete with Asian teams. Had it not faced bad luck, Petrochimi Bandar Imam BC would have won Iran a medal. The team finished in the fourth position. It was a decline compared with previous years; however, it was satisfactory in light of current circumstances in Iran.

Fourth Ranking Plus Bad Luck

Despite all problems and challenges, Petrochimi Bandar Imam BC found its way into Asian matches thanks to its lineup of young and experienced players. The presence of basketballers like Arsalan Kazemi, Oushin Sahakian, Behnam Yakhchali and two famous foreign players had placed the team in appropriate conditions.

The strong progress of Petrochimi Bandar Imam BC into semi-finals had cleared the way for success. Alas, bad luck did prevent the famous team from reaching the finale. That did not let them perform their capabilities and finished fourth, down from last year's third position. However, this year's result may not be as bad as one thinks.

Renewed Presence in Pro League

Petrochimi Bandar Imam BC found its way into the pro league while maintaining its good conditions following the Asian clubs' cup.

For its part, Naft Abadan has become stronger than previous years. However, Petrochimi Bandar Imam is determined to reclaim its high position in the country. Any team supported by the Iranian Ministry of Petroleum would turn out to be successful anew. But this time the rival team also belongs to the petroleum industry family. A good game ahead!

Mehran Shahin-Tabe', Petrochimi Bandar Imam BC coach:

I'm Happy with Team Performance

Needless to say, Petrochimi Bandar Imam BC owes its success to its head coach. Mehran Shahin-Tabe' is a well-educated and experienced basketball trainer. Having brought together veteran and young basketballers, he has managed to promote the Petrochimi Bandar Imam BC team to a good position. He hopes to win numerous honors in the future.

Below is an interview with Shahin-Tabe':

Q: The fourth title in Asia is not a better one than the last year. Why did that happen?

A: I don't want to find pretexts to justify the failure, but I have to acknowledge that we ran into many problems. I've always said that the timing of Asian club matches is very bad. It coincides with training of Iranian teams and our players have to go to Asian games while they are returning from training and they are very exhausted. We could not have enough training and even during matches problems were created for us.

Q: Do you mean lack of cooperation on the part of FIBA and Asian basketball federation?

A: Yes, unfortunately at the start of matches cards had not been issued for our players and we had to pay for the federation's debts. Furthermore, the referees were very biased against Iran and they did not like to see the representative of Iran win. Despite all this, I am happy with the performance of Iranian players and I believe that they did their best. We cannot find any fault with foreign players because we have had them for a short period of time and I blame myself for their non-satisfactory performance. I failed to manage the team as I wished and take competent players to have satisfactory performance.

Q: Many had counted on Petrochimi Bandar Imam BC as the champion. Did you share their view?

A: Naturally expectation from a great team is always high. Had we not been unlucky we would have reached the finale. But as I mentioned many problems befell us. I do express my apologies to people, media and the club managers for technical problems that did not let us finish champion. I hope to make up for this failure in the future.

Q: What are your plans for the basketball pro league?

A: We have a good team. Before anything else, I hope that this year's league would be better than ever and we would be able to go ahead smoothly until the end of matches.

Q: Will you put efforts into winning championship this year, too?

A: It's so premature to discuss it and we cannot speak about the latest title of Petrochimi Bandar Imam BC. We don't know other teams clearly and time is still needed. However, we will try our best to win and I hope that we would reach our objectives.

Q: Anything else that you would like to add?

A: I offer my gratitude to Petrochimi Bandar Imam BC managers and particularly Mr. Yavari who has been following up on the issues very seriously and has created favorable conditions for us. As the head coach, I will try my best to meet the expectations of the club managers and display my best performance.

Tabriz, Symbol of Perseverance  

Tabriz, which is the capital city of East Azarbaijan Province, is one of Iran's big cities located in northwest. Known as the city of the first, Tabriz is among migrant-friendly cities. It has a rich past marked with ups and downs. The city was flattened time and again by devastating earthquakes; however, residents have not hesitated to rebuild the city.

Tabriz, in its current form, dates back to the Arsacid and Sassanid empires. It was designated as capital during the reign of the Ildegizids, Khawrazmshahids, Ilkhanides, Jalairides, Chupanides, AqQoyunlu and QaraQoyunlu and Safavids.

During the Qajar dynasty, Tabriz was the residence of crown prince.

For these reasons, Tabriz houses unique historical monuments which have made the city one of the most visited for foreign tourists. According to official data, Tabriz is the most secure big city in Iran.

Bazaar of Tabriz

The Bazaar of Tabriz is a historical market situated in the city center of Tabriz. It is one of the oldest bazaars in the Middle East and the largest roofed bazaar in the world. It is one of Iran's UNESCO World Heritage Sites.

Dating from the 4th century AH, the architecture of this bazaar bears proof to the ancient history of trade and architecture in Orient. Covering an area of around one square kilometers, this bazaar houses small markets, corridors and caravanserais. After a cataclysmic quake hit the city three centuries ago, the bazaar was rebuilt at the order of Najaf-Qoli Khan, the then governor of the city. Throughout history, the bazaar of Tabriz has always attracted Iranian, Arab and European tourists. Historians and geographers like Yaqut al-Hamawi, Zakaria Mahmoud Qazvini, Ibn Batutah, Hamdollah Mostowfi, Marco Polo, and Fredrick Richards are among those who have written a lot about Tabriz.

 

Blue Mosque

The Blue Mosque is a post-Islam masterpiece built at the order of Abu Muzaffar Jahanshah Qara Qoyounlu.

This mosque has attracted the attention of artists thanks to its turquoise and azure tilework, traditional calligraphy as well as geometrical and Arabesque designs. This monument dates from the 9th century AH on the lunar calendar. The diversity and delicacy of tilework, as well as calligraphy and motifs have given the name of Blue Mosque to this monument. This mosque is also known with other names like Shah-e Jahan (world king) Mosque and Mozaffarieh Mosque. After an earthquake in 1193 AH on the lunar calendar, the mosque was destroyed and its domes collapsed. Today, only the façade and several columns are remaining from the mosque. Even these remnants indicate the glory and beauty of the mosque. Restoration of the mosque started in 1939 and ended in 1976. Reconstruction of the main dome has been done by the late Reza Memarian, while interior and exterior tileworks are still being restored.

Qajar Museum

The Amir Nezām House, or The Qajar Museum of Tabriz, is a historical building in the Sheshghelan district, one of the oldest quarters of Tabriz. The base of the edifice covers an area of 1200 square meters. This monument which since 2006 houses a museum dedicated to the Qajar dynasty was built in the period of the Crown Prince Abbas Mirza. It was renovated by Hasan-Ali Khan, Hasan Ali Khan Garroosy, in his position as the Major-domo of Azarbaijan, and used as his residence. In the subsequent periods, the house was employed as the official residence of the provincial governors of Azarbaijan. Because of persistent neglect over a long period of time, this building had come to be in such a bad state of disrepair that for a time it was seriously considered to demolish it and build a school in its place. Between 1993 and 2006 it has been subject of an extensive renovation process and since the completion of this undertaking it has been granted the National Heritage status.

 

NIOPDC Tabriz Zone, Distributor and Exporter

Abolfazl Rouhollahi, director of Tabriz zone of the National Iranian Oil Products Distribution Company (NIOPDC), has said that gas supply expansion along with reduced consumption of fuel oil, kerosene and gasoil during the first half of the current calendar year, as well as distribution of Euro-grade gasoline had prevented the emission of 16.5 tonnes of sulfur.

"Meantime, during the calendar year 1395 (to March 2017), due to increased gas supply to power plants we witnessed a 70% decline in the consumption of gasoil and fuel oil," he said, adding that more than 338 million tonnes of fuel oil had been delivered to Bandar Abbas and Bandar Imam to be exported to the United Arab Emirates in the last calendar year.

During the same period, more than 29 million tonnes of gasoil was exported to Iraq and Nakhichevan.

According to Rouhollahi, 93 million liters of fuel oil and 5.5 million liters of gasoil were exported in the first half of the current calendar year.

He referred to the geographical extension of East Azarbaijan Province and the existence of fuel supply centers all across the province where there are treacherous rural roads, saying the Tabriz zone of NIOPDC is distributing fuel to a population of 3.9 million on 45,000 square kilometers of land, which accounts for 2.8% of Iran's whole area.

He cited geographical features of the province as the cause of complication and toughness of fuel supply there.

Rouhollahi said Tabriz zone of NIOPDC provides services to a vast region consisting of some cities and provinces: Urmia, Miandoab, Qazvin, Ardebil, Zanjan, Hamedan, Kurdestan and Guilan – spreading over 154,000 square kilometers – which receive their required fuel from Tabriz zone. Fuel supply in this area is handled by 2,482 tankers operated by 9 transportation companies and 84 transportation contractors.

"It has been decided that 1,200 cubic meters of Euro-4 gasoline be distributed in Tabriz. In total, 159 fuel distribution stations, 520 refueling stations as well as 161 CNG stations are operating in East Azarbaijan Province," he said.

Rouhollahi said gas supply development had cut by half the number of local distribution centers.

During the first half of the current calendar year, liquefied petroleum gas (LPG) distribution was 55.6 million kilograms, up from 51.7 million kilograms in the same period last year.

Gasoline consumption in the first half of the current calendar year was 560 million liters, up 7.5% year-on-year. But kerosene distribution reached 20 million liters this year, down 16% from the year before due to natural gas consumption.

Regarding gasoil, Rouhollahi said that 563.143 million liters had been distributed in the first half of the year, up 6.9% year-on-year.

"In the fuel oil sector we have seen an increase year-on-year due to increased consumption in some power plants," he said.

Rouhollahi said Tabriz, Sarab, Miyaneh and Maragheh oil storage facilities had a capacity of 545, 23, 14.8 and 50.4 million liters, respectively.

He said that IRR 120 billion is being paid in subsidies by the Tabriz zone of the NIOPDC to fuel distribution, noting that the price of fuel distribution in East Azarbaijan and neighboring provinces was different from the Persian Gulf FOB price.

"Today, 3.7% of the country's gasoline and 3.9% of the country's gasoil is distributed in East Azarbaijan Province," he said, adding that a total of 15.6 million liters of products was distributed in this province and neighboring provinces.

"Tabriz zone of NIOPDC has two border stations in Nourduz and Jolfa," said Rouhollahi, adding that the vehicles carrying gasoline and gasoil to Nakhichevan and Armenia are monitored by the company.

"Every day 110 vehicles cross Jolfa border post and 60 vehicles cross the Nourduz border post. Gasoil sales at these points reach 38,000 and 32,000 liters a day, respectively" he said.