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.