Petroleum Developme Inntd ustry Domestic

ver recent years, Iran’s petroleum
industry has focused on basic
development strategies as the driver
of national economy and industry. The
Iranian Ministry of Petroleum has gradually
grown from a “major producer of crude
oil” to a “major developer of oil industry
upstream and downstream sectors”.
Currently, the activities of petroleum
industry are extended beyond the Ministry
of Petroleum to cover hundreds of small
and large-sized companies producing
hydrocarbon products, manufacturers of
commodity and equipment, providers of
engineering services, contractors and large
holdings. This initiative started during the
seventh post-revolutionary administration
and under the financial and spiritual aegis
of the Ministry of Petroleum with a view
to introducing specialized disciplines
pertaining to petroleum industry at
prestigious universities for the purpose
of development of specialized human
resources and launching specialized
petroleum institutes to expand scientific
and research capacities in the oil sector.
In parallel with this fundamental measure,
development of production capacity
and potentialities continued within the
framework of development of large oil and
gas fields, construction of petrochemical
plants and refining facilities by leading
international companies benefiting from
the maximum capacity of small and big
Iranian engineering firms and contractors.
After the departure of foreign companies,
national petroleum industry development
did not stop, rather it continued at a
high pace with more reliance on Iranian
companies, while still benefiting from some
foreign potentialities. National capabilities
culminated in March 2018, when six phases
of the South Pars gas field came on-stream
simultaneously at a cost of $20 billion.
An immediate outcome of fundamental
strategies, which worked out for the
development of Iran’s petroleum industry,
has been encouraging private entities
involved in the oil industry. Today, about
65% of commodities needed in petroleum
industry projects are designed and
manufactured by local private companies.
When it comes to detailed engineering
services for projects, 100% is handled
by Iranian consulting and engineering
companies, contractors and manufacturers.
Petroleum

Iran Petchem Output on the Rise
Rouhani Inaugurates 3
Petchem Projects in Assaluyeh Iranian President Hassan Rouhani officially inaugurated three major petrochemical
projects in Assaluyeh; Phase III of the Pardis Petrochemical Plant, the Marjan
Petrochemical Plant and Phase I of the power plant of the Damavand Petrochemical Plant. The startup of the Pardis and Marjan plants would increase Iran’s polymer product output from the current 62.15 million tonnes a year (mt/y) to 65.55 mt/y. In parallel with the aforesaid projects, two separate agreements were signed between National Iranian South Oil Company (NISOC) on one side, and Persian Gulf Petrochemical Industries Co. (PGPIC) and Marun Petrochemical Co. (MPC) on the other side for the renovation of flare gas gathering
installations in the southwestern Khuzestan Province. Addressing the inauguration ceremony, Rouhani said: “Some of projects which became operational today had started during years of sanctions. They came on-stream today when the enemy is mulling over enforcing new sanctions.
In the meantime, [agreements were] signed for new projects to start.” “With the implementation of these projects, in addition to creating jobs in Iran, we have invested billions of dollars in production in order to supply domestic needs and export [products]. Multi-billion-dollar margins are projected to earn Iran in coming years,” he added.

Rouhani said the petroleum industry was instrumental in Iran, noting that
“14 major petrochemical projects” had been launched in the country since 2013,
when he took office for his first tenure. “The inauguration of petrochemical projects will continue this year and in the following years,” he said.
Rouhani said staying clear of selling crude oil and natural gas and rather than that converting them to valuable products to be sold on domestic and foreign
markets was of high significance.
“This objective may be realized by attracting domestic and foreign investment,” said the president. Rouhani boasted that his administration had managed
to regain Iran’s share in the Organization of the Petroleum Exporting Countries (OPEC), had made breakthroughs in the petrochemical sector and had become self-sufficient in the gas industry. The Iranian president went on to highlight an
economic and psychological war initiated against Iran, adding: “When the enemy intends to impose sanctions on us it targets oil industry, oil exports and
petrochemicals, but we will try our best to produce and export oil and petrochemical products.” “It would be very significant and strategic for us to be able to move the bulk of Iran’s oil sales from Kharg (Persian Gulf) to Jask
(Oman Sea),” he said, expressing hope that the project would begin this year.
Petchem Output at 54mt Iran’s Minister of Petroleum Bijan Zangeneh said in the
inaugural that since the first Rouhani administration, the Ilam Petrochemical Plant, Lorestan Petrochemical Plant, Urmia Sulfuric Acid Plant, Mahabad
Petrochemical Plant, Shiraz Urea and Ammonia Plant, Kurdestan
Petrochemical Plant, Karoun Petrochemical Plant, PBR and SBR units ahd come on-stream.
“The products by these units, excluding the three [newlylaunched] projects, are valued at $3.5 billion,” he said. Zangeneh said $1.85 billion had been invested in the three projects inaugurated by President Rouhani. He said the products of Pardis urea and ammonia and Marjan methanol plants were valued at $834
million. The Pardis plant has capacity to produce 1.755 mt/y of urea and ammonia, while the Marjan plant has capacity to produce 1.65 mt/y of methanol. Zangeneh said the Morvarid, Kavian and Entekhab petrochemical plants
plus Takht-e Jamshid Pars Polystyrene Plant, which had become operational during his tenure of office, had capacity to produce 2 mt/y, which would be
worth $4.359 million. He said Iran’s petrochemical industry had seen major
developments in recent years. “Owing to increased delivery of feedstock to petrochemical plants, the output of these units increased $5.4 billion in value,”
he added. Zangeneh said Iran’s petrochemical output had increased from 42.5 mt/y in 2013 to 54 mt/y now.
Gas delivery to power plants had increased from 38 mcm/d in
2013 to 51 mcm/d in 2017. Ethane Output Capacity Doubles
Zangeneh referred to the production of ethane as the most important base for
petrochemical products in recent years. He said Iran’s ethane output had jumped from 3.8 mt/y in 2013 to 6.11 mt/y in 2017, which is forecast to hit 8 mt/y this year. Each tonne of ethane rivals at least $1,000 in
exports, he said, adding that Iran’s ethane production would reach 12.75 mt/y in 2019 and 17.6 mt/y in 2020. Zangeneh said the Bidboland gas refinery
project in the Persian Gulf was expected to produce ethane.
“This project, which is receiving 2 bcf of gas from Khuzestan Province as feedstock, is to come online next year,” he added. Zangeneh said the Parsian
ethane recovery plant, NGL 3200 in West Karoun, NGL 3100 in
Ilam and Kharg NGL were other ethane production units. He added that an ethane production plant would come online in the southern city of Bushehr.
According to the minister, the Kaveh methanol plant, Phase I of Bushehr Petrochemical Plant, Ilam Petrochemical Olefin Plant, Sabalan Methanol Plant,
Lordegan Chemical Fertilizer Plant, Miandoab Petrochemical Plant and Bushehr SPR were among other important projects whose output is valued at

more than $2.5 billion. “Thetotal investment made in theseprojects stands at $4 billion inthe first phase,” said Zangeneh.480,000b/d CondensateProcessing
Zangeneh referred to theSiraf refineries as a projectcompleting Iran’s petrochemicalchain, saying the facilities hadcapacity to treat 480,000 b/d of
gas condensate. He expressedhope that the Siraf projectwould come online before theRouhani administration wouldend its current term in office. Hesaid the National DevelopmentFund of Iran would be tappedfor the completion of the Sirafproject, adding that the entirecondensate produced in thecountry would be consumeddomestically.No Flaring in KhuzestanZangeneh said the twoagreements signed for flare gasgathering plan would result inzero flaring in the provinces
of Khuzestan and KohguiluyehBoyer Ahmad. He said that thetwo buyback agreements wereset to prevent the flaring of 22mcm/d of gas in order to convert
it to feedstock for petrochemicalplants. He put the value of theseagreements at $1,216 million,adding that PGPIC and MPCwere required to implement
the projects over the coming 2½ years. Zangeneh said PGPICand MPC would recoup theirinvestment via extra feedstocksupply to the plants.Pardis, Largest UreaProducerWith the inaugurationof its Phase III, the PardisPetrochemical Plant wouldbecome the largest producerof urea and ammonia in theMiddle East with an annualoutput of 5.265 mt. The urea andammonia project has cost €502
million, provided by revenuefrom Phase I and Phase II of thePardis Petrochemical Plant. Thesum was spent on utility sectionsincluding two boilers, each with
capacity of 150 tonnes per hour,water reservoir developmentand DM water production unitwith capacity of 300 cubicmeters per hour. The ammoniasection of Phase III of the Pardisplant has produced 327,000tonnes of ammonia since last
November. Over this period,the urea section of the planthas produced 401,000 tonneswhich would soon reach 522,000tonnes. Hossein Shahryari, CEO
of Pardis Petrochemical Plant,said: “The annual productionof the three phases of thispetrochemical plant totals 2.04mt of ammonia plus 3.225 mtof urea.” He added that 700,000tonnes of urea would be suppliedon domestic market and be usedin the agriculture sector, while2.5 mt would be exported oEurope, Argentina, Brazil andSouth America. Shahryari saidPhase III of the Pardis plant had
capacity to produce 1.755 mt/yof urea and ammonia, of which1.15 mt would be exported for$257 million.Marjan Methanol StartsCommercial Output
The Marjan Petrochemical Planthas capacity to produce 1.65mt/y of methanol. Since PhasesII and III of the DamavandPetrochemical Plant were notready, the oxygen generationsection of the Marjan plantcame online this year in order to
provide logistics services.The Damavand petrochemicalplant is operator of utility
facilities and off-site servicesin Phases III of petrochemicalprojects in the Pars SpecialEconomic Energy Zone (PSEEZ).The utilities of petrochemical
plants in Phase II of Assaluyeh,just like Phase I, weresupposed to be provided in anintegrated manner, but due tothe protracted rivatizationof the Damavand project, theMarjan petrochemical plantchanged strategy and moved to
produce the ASU unit for oxygenproduction in a bid to save time.1,900MW Power GenerationPhase I of the power plant ofthe Damavand Petrochemical
Plant has capacity to generate1,900MW of electricity. Itcomprises 12 turbines and asteam unit. In the meantime,GIS installations and electricity
transmission posts becameoperational to allow for thesupply of power to PSEEZ
projects and those expected tocome online in the future.Mohammad-Reza Samiei, CEOof the Damavand plant, said theplant was responsible for utilities
in 14 petrochemical projects inPhase II of Assaluyeh. “Once thethree phases of this project havebecome operational, 2,000MW ofelectricity, 400,000 cubic metersof industrial water plus 650,000cubic meters of oxygen for the
methanol unit, 1,890 tonnes ofsteam and the waste collectionunit would be put at the disposalof petrochemical units,” he said.Phase I of this project, he
said, would involve generating648MW of electricity and 780tonnes of steam, adding thatPhase I had cost €305 million.Regarding exchange of power,
he said there were three optionsfor that purpose. “One of theseoptions is the 100MW with theMobin Petrochemical Plant, asecond one is being linked to the
132-kilovolt network and thethird option is getting connectedto national power grid which isnow 60% complete,” he added.Regarding exchange of gas and
steam between the two utilityproviders for the Assaluyehpetrochemical plants, he said:“We will exchange about300,000ubic meters of gas with the
Mobin petrochemical plantvia pipeline. We are alreadysupplying 60 tonnes of steam toPhase I of the Mobin plant. Theoxygen and nitrogen line willbe between the Damavand andMobin petrochemical plants.”NISOC Flare Gas Gathering
NISOC’s flare gas gatheringprojects were signed betweenCEO of NISOC Bijan Alipour onone side and PGPIC CEO JafarRabiei and MPC CEO Abdol-
Majid Mohammadi on the other.The agreements are aimed atrevitalization and renovationof flare gas gathering facilitiesin Khuzestan Province. Theagreements involve a total of 32projects worth $1.2 billion forthe purpose of preventing the
flaring of 22 mcm/d (760 mcf/d)of flare gas in the eastern part ofKaroun River. The projects areexpected to come online in 2 ½years. Once all these 32 projects
have been implemented, 510mcf/d of extra feedstock wouldbe supplied to the Bidboland-2petrochemical plant, currently
under construction, and an
extra 250 mcf/d of feedstock to
the MPC. The planned flare gas
gathering will increase NISOC
gas condensate production
by 38,000 b/d, which would
increase feedstock supply to the
Bandar Imam Petrochemical
Plant. Therefore, a total of 1.6
mt/y of ethane and heavier
gas compounds, as well as 14
mb/y of gas condensate would
be added to feedstock supply
to petrochemical plants. That
would constitute a big step
in making up for feedstock
shortage in petrochemical
plants across the country. This
volume of feedstock is valued
at $1,300 million a year for
National Iranian Oil Company
(NIOC). The petrochemical
production from extra feedstock
supply at these projects is
estimated at $2,600 million per
annum. These projects will also
provide NIOC with 16 mcm/d
of light natural gas. Flare gas
gathering will help improve
environmental conditions in
oil and gas production areas
and gauge the petroleum
industry’s commitment to
sustainable development and
implementation of resilient
economy policies. This issue
has been insisted upon by
President Rouhani. To that end,
NIOC has signed agreements
with domestic petrochemical
companies demanding
feedstock. Implementation
of these agreements will
accelerate flare gas gathering
and improve feedstock supplyto
petrochemical plants.

Big Transport Fuel Use Reduction Possible

The manager of “transportation
sector Dept.” at Iran Fuel
Conservation Organization
(IFCO) has said that 2.3 out of
16 million light vehicles in Iran
had to be phased out, and in
this way 35 million barrels of
oil equivalent per annum may
be saved in the transportation
sector.
“Energy intensity is very high
in the country, and in general
consumption of energy carriers
including gasoline is very
higher” said Sasan Kazeminejad.
He added that 258 million
barrels of oil equivalent was
being consumed annually in
the transportation sector. “In
the transportation sector, the

highest consumption level
goes to gasoline, petroleum
and gas, respectively” he
added.
He said that 65,000 trailer
trucks, 17,000 buses
and 140,000 taxis had
to be phased out while
transportation networks
in Tehran and eight mega
cities had to be developed.
Furthermore, he added, lowconsumption
automotive
systems need to be designed
and manufactured.
“If such projects as the
replacement of 140,000
worn-out taxis are
implemented, necessary
motivation will be created
for investment. At the same
time, gasoline consumption
will decline significantly,” said
Kazeminejad. “But as long as
clapped-out cars are active
and no measure is taken to
renovate the transportation
fleet, our gasoline, petroleum
and gas consumption will keep
rising.”

NISOC Conducts 164
Research Projects
National Iranian South Oil Company (NISOC)
has so far conducted 164 research projects,
the head of NISOC R&D Department said.
“Since the establishment of R&D Department
of NISOC, 164 research projects have been
signed and implemented,” Baqer Pour-Qasem
said. He added that some of them were aimed
at the manufacturing of commodities and
equipment for commercialization. Pour-Qasem
cited the most important projects, referring
to the manufacturing of T-4502 gas turbine,
manufacturing of toothed drilling bit by
applying modern technology, production of
drilling cement additives and production of
light and ultralight cement slurry for cementing
in 10 wells in Maroun. “Nine projects are ready
for commercialization. Domestic companies
affiliated with the petroleum industry may refer
to NISOC for the development of products of
these projects,” he said

Energy Technology Center
Poised to Be Launched

The secretary of the Energy Technology
Development Council of the Office of Vice-
President for Science and Technology has
announced the imminent launch of Iran’s first
Energy Technology Center. “Financed by the
Council and the private sector, this Center will
be launched soon so that all startups, seed
accelerators and knowledge-based companies
in the energy sector would work in an integral
manner,” Kambiz Mehdizadeh said. He added
that the inauguration of the technology center
would be a step for arranging activities in
the energy sector. “This Center provides a
venue for the development of energy-related
innovations so that companies involved there
could offer their ideas and capabilities in
this sector,” he said. Mehdizadeh said that
private startups and accelerators have voiced
readiness for financing the technology center
and that necessary infrastructure is ready.

NIDC Eyes Iraq
Projects

National Iranian Drilling Company (NIDC) is
scrutinizing proposals presented by the Italian
giant oil company Eni, as well as Russia’s Lukoil
to undertake drilling projects in Iraq. Karam
Ali Naderi, NIDC’s marketing manager, made
the statement on the sidelines of a ceremony
to sign a memorandum of understanding with
a domestic Iraqi drilling company in Ahvaz,
aimed at conducting drilling and overhaul
operations in Basra and Zubair oilfields, Shana
reported. “Eni and Lukoil have won tenders
to implement drilling operations in Iraq,” he
said, noting that NIDC has received proposals
to join after selecting an Iraqi business partner.
Over the past one year, NIDC has drilled and
completed 156 offshore and onshore wells with
a total depth of 221,065 meters. Drilling has
been conducted by reliance on local technical
knowhow and maximum use of domestically
manufactured equipment.

Total Quits South Pars
Gas Project

Iran’s Minister of Petroleum Bijan Zangeneh
announced French energy major Total
had officially left Iran due to the threat of
secondary sanctions from the United States.
“Total officially quit the South Pars Phase 11
development contract,” Zangeneh said.
He added that arrangements were under
way for replacing Total with another
company.
Total also said it had notified the Iranian
authorities of its withdrawal from the multibillion-
dollar South Pars gas project after it
failed to obtain a waiver from US sanctions.
“The contractual process is ongoing,” Total
said in an emailed statement. “As for the
future of Total’s share, we have not been
informed of an official CNPC position, but as
we have always said, CNPC, a Chinese stateowned
company, has the right to resume our
participation if it decides so,” Total added.

Iran Gasoline Unsanctionable
Iran’s First Vice President
Es’haq Jahangiri has said that
imposing gasoline restrictions
on Iran will be ineffective due
to national production.
“After the startup of the
Persian Gulf Star refinery, the
bulk of Iran’s gasoline needs
is supplied by reliance on
domestic capabilities, stripping
enemies of a chance to pile
up pressure on Iran through
restricting gasoline [delivery to
Iran],” he said.
Jahangiri said domestically
produced gasoline is of
high quality, adding: “The
quality of gasoline produced
in Iran complies with
global standards and it no
longer causes pollution
and environmental impacts
which were caused by
petrochemicals-based
gasoline produced” under
the administration of
former president Mahmoud
Ahmadinejad.
Jahangiri said “key sections”
in Iran need to be safeguarded
effectively as the country is
coming under sanctions.
He said that the oil price
slump in 2015 motivated Iran
to make its economy “resilient”.
“Now that we are faced with
US unilateral sanctions, we
have to act under the aegis
of economic resilience in a
bid to tackle sanctions,” said
Jahangiri.
He said that implementation
of such projects as the Persian
Gulf Star refinery had boosted
Iran’s economic resilience.
Euro-5 Gasoil Up
Ali-Reza Sadeq-Abadi, CEO of
National Iranian Oil Refining
and Distribution Company
(NIORDC), said that Iran

had increased its Euro-5
gasoil production thanks
to insistence by Minister of
Petroleum Bijan Zangeneh
on honoring civil rights and
environmental principles.
He said that upgrading the
quality of gasoil produced at
Tabriz, Isfahan and Bandar
Abbas refineries was a major
achievement of the current
administration.
“Soon, we will see startup of
projects to enhance the quality
and quantity of Euro-5 gasoil
at the Tabriz and Bandar
Abbas refineries,” said Sadeq-
Abadi.
He said the Tabriz refinery
was producing 6 ml/d of Euro-
5 gasoil, the Isfahan refinery
16 ml/d and the Bandar Abbas
refinery 12 ml/d.

Spanish Company
to Continue Business
with Iran
Esproenko International, which specializes in
oil and gas services, has in an interview with
Russia’s Sputnik commented on the situation
around the first phase of Washington’s anti-
Iranian sanctions which entered into force on
August 7. Esproenko International’s PR manager
Carlos Toledo explained that the company
had started working with Iran in 2013, “when
sanctions on the Islamic Republic were imposed
by all sides, namely, the European Union and the
United States.” “We had no competition on the
Iranian territory [at the time], which prompted us
to enter this market,” he pointed out.
However, he added, the company had to face
“huge competition” in 2015 and minimize its
activities when the anti-Iranian sanctions were
lifted. Now that Washington has tried to stifle
the Iranian economy and has warned European
and US companies against conducting trade with
Tehran, Esproenko International perceives all this
as a new opportunity, according to Toldeo.
“Now we are considering the resumption of
activities at a higher level. So far, the EU has not
adopted any sanctions against Iran. And what
the US is saying is its own problem, not ours,”
Toledo said. He added that the company had not
received any threats, and even if it did, it would
have ignored them

Iran Petchem Reliant
on Domestic Potential
A senior official at National
Petrochemical Company (NPC) has said
that petrochemical industry development
has always relied on domestic capabilities.
“In cooperation with petrochemical
companies we always try to identify
potential challenges,” said Farnaz
Alavi, who is director of planning and
development at NPC.
She added that future petrochemical
industry plans needed to be formulated
in coordination with other organs and
bodies for companies to follow their
logical approach.
“We intend to adopt approaches in
the run-up to the [second wave of]
US sanctions in November and if the
European Union acts more transparently
and the level of petrochemical
cooperation with European companies in
banking and insurance is determined, we
could make plans for actions to follow,”
said Alavi.
She said that NPC was seeking
sustainable production and completion of
development projects in cooperation with
holdings and petrochemical companies.
“We will benefit from the experience we
achieved during past sanctions,” she said.
Hossein Mir-Afzali, CEO of Jam
Petrochemical Company, said every
month one project would come online
in the plant by March.

OPEC Resolution
‘Arbitrary’ Interpretation
Unfavorable
Iran’s Minister of Petroleum Bijan
Zangeneh has warned against “arbitrary
interpretation” of the last resolution
adopted by OPEC to satisfy the United
States. “Some OPEC members have their
arbitrary interpretation of the recent
OPEC resolution, which is an incorrect
move,” Zangeneh said. OPEC and its allies
will review the monitoring mechanisms
of its output agreement at the Joint
Ministerial Monitoring Committee
(JMMC) meeting in Algiers on September
23 but said it sees the current oil market
as largely balanced. The JMMC, which is
responsible for closely monitoring the
market and recommending appropriate
response measures, said in a statement
that in Algiers “it will review the plan for
monitoring overall market fundamentals
and conformity levels for the remainder
of 2018, as well as the framework of
cooperation to be established in 2019 and
beyond.
The JMMC said it was satisfied that recent
market fundamentals showed a “good
balance between supply and demand
considering seasonal factors. “Conformity
levels of the participating countries was
109% in July compared to 121% in June,
but still higher than what the alliance had
agreed to at its meeting in late June,
the statement said.

Japan Firm on Seeking US
Iran Oil Waiver
TheJapan remains firmly committed to seeking
U.S. exemption for Iranian oil imports as it sees
the supplies as important for the country’s energy
security and businesses, a top government official
told S&P Global Platts.
“Japan’s position remains firm even after the
second round of talks [with the U.S. government],”
Ryo Minami, the director-general of oil, gas and
mineral resources at the Ministry of Economy,
Trade and Industry said in an interview.
“Our basic principle is to seek an exemption
[from the U.S.],” Minami said. Asked whether Japan
was also looking to reduce its Iranian oil imports
in order to secure U.S. sanction waivers, Minami
declined to comment.
Japan and the U.S. held a second round of talks
on the U.S.’ Iran sanctions in Washington over
August 1-2, when the two sides agreed to continue
bilateral discussions.
“During the second round of talks Japan clearly
explained its position to continue [Iranian
oil] imports to the U.S. in an effort to gain
their understanding,” Minami said. “Looking
forward, we will inevitably have to hold talks
with the U.S. government solidly to obtain their
understanding,” he said. “From the Japanese
perspective, we see the import of Iranian crude
oil as necessary to continue Japan’s energy
security, as well as considering the impact on
Japanese companies.”

SP14 2nd Platform Ready for Operation
The manager of South Pars
Phase 14 development project
has said that Platform 14C
would be ready to come online
in October.
“After the installation of
satellite Platform 14C on
its Persian Gulf location,
pre-commissioning and
commissioning operations
started. In case of favorable
weather conditions this
platform will be ready” to
come online in October,
Hamid-Reza Masoudi said.
He added that Platform 14C
weighs 2,200 tonnes and is
fitted with 53 fixed, rotary
and packed equipment. The
platform required 35,000
inches of welding and 60,000
meters of electric cable
extension.
Masoudi said that sour gas
recovery started from the
first platform of SP14 in May,
adding that Platform 14A is
in full operation by delivering
sour gas to Phase 12.
SP14 came on-stream after
the development of Phase 19
and Phases 20-21.
He said that seven wells
Platform 14C were ready and
that 500 mcf/d of sour gas
had been recovered after the
satellite platform installation.
The gas production capacity of
SP14 has increased to 1bcf/d.
Platform 14B 88% Complete
Masoudi said Platform 14B
was 88% complete. It is under
construction at ISOICO yard.
He said 14B was expected to
be loaded out and installed in
October.
Noting that drilling of 11
offshore wells in this platform
was in the final stage, Masoudi
said completion of seven wells

and installation of Platform
14B would allow the recovery
of 1.5 bcf/d of gas from SP14.
Order Placed for SP14
Equipment
Masoudireferred to the
refining section of SP14 and
said that development work
for the project had been put on
the right track both onshore
and offshore after the client
and the contractor were
restructured.
“The stagnation caused in
the previous years has been
compensated for to a large
extent. Hopefully all necessary
commodities have been
supplied to the refinery,” he
said.
Masoudi said that efforts
were under way for benefiting
from the existing processing
capacity of the refinery of SP14
in parallel with the completion
of the offshore section of
this phase.

Sustainable Oil & Gas Recovery from Joint Fields

Iran’s oil production has experienced ups and downs over the past one decade. During certain periods, the country has seen its oil output fall, but it has been short-lived as Iran has raised its crude oil production.

For instance, in 2006, Iran’s oil output had exceeded 4 mb/d, which was cut by 1 mb/d in 2014 under tough international sanctions. Following the implementation of Iran’s nuclear deal with six world powers, Iran’s oil production started rising anew. Iran was producing 3.72 mb/d in 2016 and 3.85 mb/d the following year. Iran’s 2017 oil production level reached that of 2011.

Despite pressure by US President Donald Trump on buyers of Iran’s oil, the country’s oil and gas production is racing ahead and Iran’s petroleum industry is undertaking plans to raise production.

West Karoun Oil Output Up 275,000 b/d

Increasing oil recovery from jointly owned fields has been a top priority of National Iranian Oil Company (NIOC) under President Hassan Rouhani’s administration.

After Bijan Zangeneh took office as minister of petroleum, development of shared oil fields picked up speed. By March 2018, crude oil production capacity in the West Karoun area (North Azadegan, South Azadegan, Yadavaran, North Yaran and South Yaran oil fields) reached 350,000 b/d, up from 275,000 b/d in September 2016.

In addition to West Karoun fields, Azar oil field (shared by Iran and Iraq) has been producing at 30,000 b/d. Azar is among tight fields in terms of oil recovery, but Iranian contractors managed to make this field operational without any assistance from foreign companies.

NISOC Output at 3 mb/d

Among NIOC subsidiaries, National Iranian South Oil Company (NISOC) is very important as it accounts for 83% of Iran’s oil production and 16% of Iran’s gas production. Over the past one year, NISOC has been sustainably supplying 3 mb/d of oil.

Since NISOC-run oil fields are ageing, the company is pushing ahead with development plans in order to sustain the oil flow. Contracts have also been signed with domestic contractors over the past one year, including with MAPNA for the development of Parsi and Paranj fields. Parsi and Paranj are under gas injection. Once developed, their losses would be offset while they would see their output increase 30,000 to 40,000 b/d.

Furthermore, the first non-disclosure EPC/D agreement was signed between NISOC and Petro Gohar Fara Sahel Kish Co. on the supply and installation of wellhead and downhole pumps, drilling and workover of six wells, necessary reparation in production and desalting units, installation and repair of turbines.

South Pars Gas Output at 570 mcm/d

The significance of development of the giant offshore South Pars gas field is no secret to anyone. Over the past five years, Iran's Petroleum Ministry has brought South Pars output from 282 mcm/d to the current 570 mcm/d.

NIOC divided South Pars into 24 phases for development. Except for Phase 11, other phases would have been developed by 2019. In the current calendar year, SP13, SP14 and SP 22-24 would reach their final stage with their refineries to come online in 2019.

SP13 Gas Processing at 9mcm

The contract for Phase 13 development was signed in 2010. The project has been accelerated in the past 1 ½ years. Two sweetening trains of the refinery are now operational. After reaching full capacity, the treatment facility would sweeten 28.2 mcm/d of gas for injection into national network.

The first train came online last March and is now processing 9 mcm/d of gas. The second train which became operational in late May is now processing more than 7 mcm/d of gas.

SP13 development is set to produce 56.6 mcm/d of rich gas, 75,000 b/d of gas condensate, 400 tonnes  per day of sulfur and 1.05 million tonnes a year of liquefied petroleum gas (LPG) plus 1 million tonnes a year of ethane.

SP14 Offshore Section

SP14 has been developed to produce 56.6 mcm/d of sour gas, 75,000 b/d of gas condensate, 1 million tonnes a year of LPG, 1 million tonnes a year of ethane for petrochemical plants, and 400 tonnes a day of sulfur. The refinery of this phase is expected to come online by March 2020.

The first sweetening train of SP14 refinery is coming online in 2019 and the offshore section is set to come on-stream by next March.

Platform 14A with a capacity of 14.1 mcm has been built by ISOCIO at Bandar Abbas industrial yard. It was installed and launched last May. Platform 14C is set to be installed soon.

Construction of platforms 14B and 14D at ISOICO yard is under way. They are expected to be installed in their Persian Gulf location by next March.

SP22-24 Development

SP22 and SP23 & 24 are expected to see important events in September. The offshore platform of SP22 was installed in June. As offshore drilling is nearly over and CRA pipes are to be installed, SP22 is expected to become operational in November.

The offshore topside of 24A is to come online in September before being loaded out from SADRA industrial yard in Bushehr at the destination of its Persian Gulf location.

The first sweetening train of SP 22-24 refinery was launched last March to receive sour gas from South Pars gas field. Sweet gas production from this processing unit began last June. It is currently receiving sour gas from SP6, SP7 and SP8 to feed more than 7 mcm/d of sweet gas to Iran Gas Trunkline 6 (IGAT6).

NIDC Completes 154 Wells

National Iranian Drilling Company (NIDC) has spudded and completed 154 wells since 2017. They include 66 development wells, 4 appraisal wells, one exploration well and 83 workover wells.

Over the same period, NIDC has accomplished 7,885 missions with regard to drilling services, including cementing management, well stimulation and technical services.

For the first time, NIDC has carried out oil production maintenance and enhancement projects through offering integrated technical and engineering services without drilling rigs. The first such project was carried out in the South Azadegan oil field through partnership between NIDC and Petroleum Engineering and Development Company (PEDEC). This project is aimed at the reclamation of 50 wells in this field.

Through turnkey projects, NIDC has drilled 40 wells in the South Azadegan field. It is now drilling 20 more wells in this field which is shared by Iran and Iraq.

Power Plants Fed 70bcm Gas in 1 Year

Gas has grown into a vital product in the energy mix of world nations. Experts believe that the share of gas, a clean source of fuel, in the energy mix is set to rise significantly in coming years. Iran holds more than 18% of global reserves thanks to its natural gas deposits currently estimated 34 tcm. Therefore, it is among nations with the chance to become an influential supplier of this source of energy.

In addition to following up on plans for exporting gas to neighboring countries, the Iranian Ministry of Petroleum has expanded national gas distribution network and gas trunklines in a bid to save on middle distillate products and liquid fuel. Over the past one year, 70 bcm of gas has been delivered to power plants across Iran, largely contributing to air pollution control.

90% of Iran Population Connected to Gas

Ever since National Iranian Gas Company (NIGC) was established until 2013, a total of 12,000 villages had been connected to national gas grid. But during the four-year in office of the 11th administration (2013-2017) alone, more than 9,000 villages were connected to the gas distribution network.

The first administration of President Hassan Rouhani benefited from modern financing and investment methods to remove obstacles. That continued with the private sector involvement under the 12th administration.

As the 12th administration took office, villages with more than 20 households were identified and in the last calendar year to March 2918, 29 towns and 2,643 villages were connected to the national gas grid.

In the current calendar year, 5,250 villages and 50 towns are in the line to be connected to the gas distribution network. By next March, which marks the turn of Iranian calendar year, 3,600 villages would have been connected to gas network. By then, 97% of Iranian cities and 83% of Iranian villages will have been connected to national gas grid.

Sustainable Gas Supply

In the last calendar year, more than 190 bcm of gas was distributed on a sustainable basis between 22.3 million consumers in the household, commercial and industrial sectors. As part of plans to safeguard the environment and to prevent the consumption of liquid fuels, 70 bcm was supplied to power plants.

Among other major activities carried out by NIGC in the last calendar year were installing upgraded gas meters to apply hourly, daily and seasonally adjusted tariffs at power plants, CNG stations and industries, and monitoring gas consumption in order to prevent gas waste.

1,000km Gas Pipeline

In coincidence with the development of South Pars gas field under the 11th and 12th administrations for enhanced gas recovery from the giant reservoir, which Iran shares with Qatar, necessary infrastructure for processing, transmission and distribution of gas was provided. The most important development plans in the last and current calendar years have been the startup of Iran Gas Trunkline 6 (IGAT6) and acceleration of activity for the operation of IGAT9. In the last calendar year, a total of 1,000 kilometers of gas pipeline were installed. This year too, 1,000 kilometers are to be laid out.

Gas Compressors

Compressors are the beating heart of gas industry. In this regard, NIGC operated Khour Moj and Ab Pakhsh gas compression facilities with a capacity of 100MW at IGAT6, and Khorramdareh, Qazvin, Neyzar, Semnan and Parchin facilities with a capacity of 125MW in the last calendar year. In the current calendar year, the remaining facilities at IGAT6 are to become operational.

In addition to gas trunklines and gas compressors, refinery projects including South Pars metering at the 1st, 2nd, 3rd and 5th refineries, and mercaptan production unit with 800 tonnes of capacity have become operational over the past one year.

Installation of 2,375 kilometers of telecommunications lines and fiber optics and startup of operation centers in Kerman and Khorramabad are among other NIGC projects for the current calendar year.

Gasoline Production Up in Iran

Gasoline remains a strategic product in Iran. Not long ago, gasoline consumption outweighed its production in Iran, playing well into US hands to pressure the country.

After President Hassan Rouhani took office in 2013, the Ministry of Petroleum formulated plans to upgrade gasoline production at refineries. In the meantime, the startup of the Bandar Abbas Condensate Refinery (operated by the Persian Gulf Star Oil Refinery) increased gasoline production Iran and rendered gasoline sanctions ineffective.

Over the past one year, implementation of projects to boost gasoline production both quantitatively and qualitatively at Iranian refineries, inauguration of gasoline production project at the Bandar Abbas oil refinery, inauguration of gasoline production facilities at the Lavan and Isfahan oil refineries, and green gasoline production unit at the Abadan oil refinery are among other projects which have contributed to gasoline production hike in Iran. These projects helped Iran increase its gasoline production more than 50% year-on-year. However, that is not the end of the story. As the Persian Gulf Star refinery becomes more complete, Iran’s gasoline keeps improving in terms of both quantity and quality.

Largest Gas Condensate Refiner

The Bandar Abbas Gas Condensate Refinery, known as Persian Gulf Star, is the largest gas condensate processing facility and also the largest Euro-5 gasoline producer in the world. It is spread on 230 ha of land west of the city of Bandar Abbas in southern Iran. Phase 1 of this refinery came online in May 2017 with an output of 12 ml/d of Euro-5 gasoline, 4.5 ml/d of gasoil, 1 m/d of kerosene and 1.3 ml/d of liquefied petroleum gas (LPG). Gasoline production from Phase 2 of the refinery started last March; Euro-5 gasoline production currently stands at 24 ml/d and gasoil output has reached 8 ml/d.

Ali-Reza Sadeq-Abadi, CEO of National Iranian Oil Refining and Distribution Company (NIORDC), said Phase 3 of the refinery will supply 30 ml/d of gasoline, which would bring Iran’s gasoline output to 107 ml/d.

Abadan Gasoline Output Hits Target

The ground was broken for the Abadan oil refinery in 1910. Two years later, the facility started treating 2,500 b/d of oil. The refinery has since witnessed ups and downs. The refinery has been developed in three phases. In Phase 1, the capacity of distillation unit 85 increased from 130,000 to 180,000 b/d, while the vacuum distillation unit with a capacity of 70,000 b/d and the viscosity reduction unit with a capacity of 25,000 b/d for reducing fuel oil output and feeding the catalytic cracking unit came on-stream in 2005.

In Phase 2, the idea was to stabilize the current production capacity and to upgrade the quality of refined petroleum products. In this phase, distillation units, gasoline, kerosene and gasoline treatment units, sulfur production units, and a second catalytic cracking plant will be established.

Phase 3 involves construction of catalytic cracking and alkylation plant, butane isomerization and acid unit renovation. That is aimed at increasing gasoline production and reducing fuel oil output. This project will help increase gasoline production 6 ml/d.

In future development projects for this refinery, addressing environmental concerns is of high significance. A variety of filters and scrubbers will be used to prevent air pollution, treat industrial waste and operate the closed circuit system of coolers. Owing to the use of new technology in such units, energy wastes will be reduced to minimum. After establishment of industrial waste treatment unit, water pollution at Arvandroud River will be eliminated.

The Abadan refinery output has increased from less than 10 ml/d to 12 ml/d. To that end, two sections of the refinery that had remained non-operational for four years were restarted. The refinery is expected to upgrade the quality of its total output to Euro-4 grade. The Abadan refinery is delivering more than 12 ml/d of gasoline to the National Iranian Oil Products Distribution Company (NIOPDC).

Arak Refinery Output Up

Imam Khomeini Oil Refining Company (Arak oil refinery) produces Euro-4 gasoline. It is the largest single-unit refining facility in Iran. It began work in 1993 with a rated capacity of 150,000 b/d. The Arak refinery is also the first treatment facility whose feasibility studies began after the 1979 Islamic Revolution. The refinery capacity was raised to 170,000 b/d shortly.

Switch from middle distillate petroleum products to gasoline and an upgrade in the quality of products to comply with environmental obligations and international standards prompted authorities to adopt a plan for increasing the output and upgrading the quality of refined petroleum products at the refinery.

Annual Petchem Output at 54mt

Annually adjusted data released for petrochemical production and exports in Iran indicates growth in this profitable sectors. Iran produced 54 million tonnes of petrochemical products in the Iranian calendar year to March 2018, which proves growth in the sales and export of these strategic products on an annual basis.

The rated petrochemical industry production capacity was estimated at 63 million tonnes for a one-year period ending in August 2017. The figure is registered at 64 million tonnes for the one-year period ending in August 2018. Petrochemical production for the two mentioned periods was 51.6 million tonnes and 53.8 million tonnes, respectively.

123 Petchem Items

A review of diversity in petrochemical production shows that 115 items of petrochemical products were manufactured in Iran during a one-year period up to August 2017. The number of items grew to 123 over the one-year period.

Petrochemical Export Growth

ran exported 21.05 million tonnes of petrochemical products over one-year starting in August 2016. The export levels hit 22.21 million tonnes for the one-year to follow. Furthermore, the value of exported petrochemical products was recorded at $10.43 billion and $12.67 billion for the two periods under review.

Petchem Sales at $18bn

Net sales of petrochemical products reached 28.82 million tonnes, yielding $15.26 billion in revenue during the one-year period ending in August 2017. Petrochemical sales were registered at 30.26 million tonnes, earning the country $18.48 billion in revenue during the following one-year period.

In the meantime, domestic sales of petrochemicals were recorded at 7.77 million tonnes and 8.05 million tonnes respectively for the foregoing one-year periods. That yielded respectively $4.83 million and $5.81 billion.

Value Chain Completion

Development of downstream petrochemical industry is of high significance in Iran due to its role in eradication of poverty, creation of jobs, generation of value-added as well as completion of value chain. That is why much focus has been on the petrochemical industry development in recent years. Compared with upstream and midstream industries, downstream sector needs a lower amount of investment with a shorter return on investment.

The downstream petrochemical chapter in Iran’s 6th Five-Year Economic Development Plan is based on the continuation of schemes incorporated in the 5th Development Plan for the petrochemical industry, the strategy of National Petrochemical Company (NPC), completion of value chain and generation of more value-added.

2 Petchem Plants Ready for Operation

Two petrochemical plants in Iran are now ready for inauguration. One of them is Pardis 3 Petrochemical Plant, which reached production stage last year. It is one of the largest producers of ammoniac and urea in the Middle East and the world. Its construction is within the framework of national development plans in the oil, gas and petrochemical sectors and also within the framework of measures undertaken by NPC for the development of the Pars Special Economic Energy Zone (PSEEZ). The other one is Marjan Petrochemical Plant with a production capacity of 5,000 tonnes a day in Phase 2 of PSEEZ in Assaluyeh in the southern Bushehr Province. Marjan plant, whose annual production capacity stands at 1.6 million tonnes, is owned by Novin Social Security Investment Company (67%), Tamin Oil, Gas and Petrochemical Investment Company (17%) and Fanavaran Petrochemical Company (16%).

1- Ghana OCTP Makes 1st Gas Delivery

Eni has started producing gas from the Sankofa field in the Offshore Cape Three Points (OCTP) integrated oil and gas project offshore Ghana.

Production comes currently from two of the four deepwater subsea wells connected to the FPSO John Agyekum Kufuor.

After final commissioning of the offshore facilities, production will gradually flow through a 60-km (37-mi) subsea pipeline to the onshore receiving facility in Sanzule, where the gas will be compressed and distributed to Ghana’s national grid.

The field should provide 180 MMcf/d for at least 15 years, sufficient feedstock for of Ghana’s power generation capacity.

According to Eni, OCTP is the sole deep offshore non-associated gas development in Sub-Saharan Africa dedicated entirely for domestic consumption. The project has the support of the World Bank, and it will also help Ghana shift from oil-fuelled power generation to a cleaner power source.

Dr. KK Sarpong, CEO of state-owned GNPC, a partner in the development, said his company would support Eni on the further steps to ensure gas delivery to the Ghanaian market reaches its expected volumes in the shortest period of time.

OCTP, which already produces oil, should ramp up eventually to 85,000 boe/d, Eni added.

2-PEMEX Picks Contractor for Mexico Pipeline Project

PEMEX has awarded McDermott International an EPCI/design contract for two subsea flowlines for the heavy-oil Ayatsil field development, 50 mi (80 km) northwest of Ciudad del Carmen in the Bay of Campeche.

The first line (L1) will be a 24-in., 1.9-mi (3.2-km) long gas line connecting the PP-Ayatsil-C and PP-Ayatsil-A platforms. The second (L10) will be an 8-in., 0.9-mi (1.5-km) long oil pipeline connected to the PP-Ayatsil-C platform.

Previously McDermott fabricated and installed the Ayatsil-C platform and it is also working for PEMEX on fabrication and future installation of the Abkatun field facilities.

The company’s operating center in Mexico City will manage engineering for the new project, with offshore installation scheduled to be completed early next year.

Ayatsil, PEMEX’s largest discovery to date, is in water depths of around 375-400 ft (114-121 m).

In addition, McDermott issued an update on its progress in other offshore projects. During 2Q the company performed mechanical completion and onshore commissioning for the Angelin development off Trinidad and Tobago.

Fabrication is close to starting in Indonesia of the platform structures for Total’s Tyra redevelopment in the Danish North Sea.

3-CNOOC Details Exploration, Production Highlights

CNOOC made eight new discoveries during the first half of the year, including six offshore China and two elsewhere.

The company successfully appraised two finds in the hundred-million-tons of oil equivalent-range in the Bohai Bay area of the South China Sea.

It also participated in ExxonMobil’s exploration campaign in the Stabroek block project offshore Guyana.

To date, two of the five new projects CNNOC planned to bring on-stream this year, have started production.

The company’s first half net oil and gas production was 238.1 MMboe, in-line with expectations.

4- Australia Ichthys LNG Starts Up

INPEX has started production from the Ichthys LNG project offshore/onshore northwest Australia.

Gas has started flowing from the first offshore production well following the completion of final safety verifications including additional measures concerning electrical equipment.

Produced gas/condensate from the Ichthys field’s subsea wells, in 260 m (853 ft) water depth, heads to the central processing facility (Ichthys Explorer) for separation into gases and liquids.

At peak, the offshore facilities will produce 1.6 MMcf/d of gas and 85,000 b/d of condensate.

The separated liquids will travel through a short pipeline to the nearby FPSO Ichthys Venturer for storage and subsequent offloading to tankers.

Gas will be transported via the 890-km (553-mi) long gas export pipeline to the onshore gas liquefaction plant at Darwin, Northern Territory.

On arrival, the gas will undergo further separation and liquefaction to produce liquefied petroleum gas (LPG) and liquefied natural gas (LNG).

5-Funding Secured for UK North Sea Project

Independent Oil and Gas (IOG) has secured funding for its Harvey gas field appraisal well in the UK southern North Sea and plans to spud the well in December.

A facility signed with London Oil and Gas of £15 million ($19.3 million) will be used both for this campaign, to fund other costs in the run-up to IOG’s gas development project sanction, and full repayment of final remaining liabilities for the Skipper oil field exploration program in the UK northern North Sea.

IOG hopes the well will prove gas across the entire Harvey structure – a competent person's report last November assessed potential resources as up to 286 bcf, with a 50% geological chance of success.

Schlumberger Western Geco has reprocessed 3D seismic over the Harvey area, and IOG expects to complete seismic re-interpretation and re-mapping this month. The aim is to optimize the appraisal well location, and thereby de-risk the project.

Even if the well delivers a mid-case 114 bcf, this would still represent the company’s largest gas asset, IOG said, and a fast track Harvey development could follow in direct continuation from Phase 1 of the development of the Blythe and Vulcan Satellites hubs, which are approaching a final investment decision.

August 2018 Issue No. 74
Interviewmonthly23InterviewCould you update us about the contract
for Phase 11 of South Pars gas field?
This year subcontracts will be struck withsubcontractors. Tenders for SP11 have been heldand activity in this project is being followed upon at a faster pace.
In light of US pressure on France’sTotal to quit cooperation with NIOC in SP11,
has any decision been made with regard toreplacing the Total stake in the project?
Members of the consortium developing thisproject are accountable within the frameworkof the terms and conditions of the contract. Sofar, no changes have been officially made in theprovisions of the contract. Total holds a 50.1%
share, China National Petroleum Corporation(CNPC) a 30% share and Iran’s Petropars theremaining 19.9% share in the project. Anypossible changes will be announced.Regardless of the possibility of CNPCbeing cosen as the operator of the Azadeganoil field, in general what do you think ofthe Chinese firm’s involvement in Iran’s oildevelopment projects?To be realistic, CNPC is a good company. It isamong the world’s top five oil companies. Itis growing rapidly and is in competition withleading oil companies. I believe that not onlyunder sanctions, but under any circumstances,we have to work with the Chinese. China is theworld’s largest consumer of energy. As oil priceschange with the turn of time, so do economicconditions and business opportunities. Thatrequires economic organs to make suitabledecisions. What’s more is that China is also
experiencing the fastest growth and it couldtherefore be a strategic partner to any energysupplier including Iran. Cooperation with majorChinese firms is of strategic significance forNIOC.Agreements for development of Yaran
and Azar oil fields have long been expectedto be finalized and signed. Many believe thatthese agreements had to be finalized priorto Donald Trump’s position on JCPOA andpulling out of it. What do you think of that?It was not just question of Yaran and Azar. Wehad several agreements ready to be signed, but
they have not been signed. Trump’s positionin May was not the only criterion for thefinalization of agreements as possible changesat the international level had thrown Iran intosuch ambiguity that signing long-term contractswas impossible. Even before the US presidentmade up his mind, the conditions were much
more complicated than they are now becauseforeign parties id not know what action to take.Now everything is clear and I can tell you thatbusy days lie ahead of us. Last year we signedthree IPC agreements which have got under
way. Development of such big fields as Azadeganis being pursued quickly, whose developmentcontract will be signed this year. An addendumto the Yadaravan contract is to be signed soonto allow for the second phase development of
this field. At worst, we can keep our productionlevels unchanged and implement enhancementprojects to boost our output. With theimplementation of such packages, oil contractorswill be flooded with more work. Therefore,despite all hardship and to the dismay of theUS, upstream petroleum industry activities
are set to be numerous this year. We can bracefor a reasonable and not necessarily dramaticprosperity in oil. Furthermore, the present
circumstances will not go forever, i.e. better days
will arrive.Implementing production preservationand enhancement projects is expected to addseveral hundred thousand barrels to nationaloil output. Are such projects being pursuedseriously under the present circumstances?Definitely, they are being followed up onseriously because preserving contractor work
potential in the country is a must. Even ifstagnation is set to be intensified in the country,such projects would take up added significance.The contractor work potential in the petroleumindustry has taken shape throughout yearsand we have to appreciate such potential andsafeguard it. Maintaining oil production capacity
is as significant as the petroleum industrycontractor potential.The same objective isbeing sought in the implementation of the 34packages. However, we have to take into accountthe flipside of the coin, too. Contractors arelikely to come under pressure due to foreignexchange rates, increased labor costs and other
problems gripping the Iranian economy. Thatthrows a challenge to the implementation ofprojects. But NIOC is standing by these projects
and remains determined to bring prosperityback to petroleum industry by executing them.Maintaining oil production capacity and even
increasing it to about 4.5 million barrels issignificant for NIOC and that is why we arepushing ahead with the 34 packages.It was recently announced that NIOC
planned to sign two agreements worth $1.2billion with the Persian Gulf PetrochemicalIndustries Company and MarounPetrochemical Company to prevent theflaring of 22 mcm of gas in the East Karounarea. Would you please tell us about plansfor the renovation of flare gas gatheringinstallations in southern Iran? When will thetwo agreements be signed?Both agreements have been recently approvedby the Board of Directors of NIOC and they willbe signed. Under these agreements, which willbe signed between NIOC and the Persian GulfHolding and Maroun Petrochemical Company,30 projects (mainly small-scale) will be signed
over a two-year period. Supplying feedstock toBidboland-2 petrochemical plant, now underconstruction, as well as Maroun PetrochemicalPlant, increasing gas liquid production by theNational Iranian South Oil Company (NISOC)
Besides implementing development plans aimed at preserving
and enhancing recovery rate from Iranian oil fields, theNational Iranian Oil Company (NIOC) is pushing ahead withits talks to finalize oil agreements.
Maintainingoil productioncapacityand evenincreasing itto about 4.5
million barrelsis significantfor NIOC andthat is why weare pushing
ahead with the34 packagesMostafaviThe contractorwork potentialin the petroleum
industry hastaken shapethroughoutyears andwe have toappreciate suchpotential andsafeguard it.Maintainingoil productioncapacity is assignificant as
the petroleumindustrycontractorpotentialThe US is set to re-imposesanctions on Iran’s petroleumindustry in a bid to stymie investmentin this vital sector; however, MohammadMostafavi, director of NIOC investment andbusiness directorate, tells Iran Petroleum thatIran would not face any production slump asupstream activities are under way.The full text of Mostafavi’s interview is as follows:
Upstream Oil ActivitiesSet toGrow

Agreements for development of Yaran and Azar oil fields have long been expected to be finalized and signed. Many believe that these agreements had to be finalized prior to Donald Trump's position on JCPOA and pulling out of it. What do you think of that?

It was not just question of Yaran and Azar. We had several agreements ready to be signed, but they have not been signed. Trump’s position in May was not the only criterion for the finalization of agreements as possible changes at the international level had thrown Iran into such ambiguity that signing long-term contracts was impossible. Even before the US president made up his mind, the conditions were much more complicated than they are now because foreign parties did not know what action to take. Now everything is clear and I can tell you that busy days lie ahead of us. Last year we signed three IPC agreements which have got under way. Development of such big fields as Azadegan is being pursued quickly, whose development contract will be signed this year.  An addendum to the Yadaravan contract is to be signed soon to allow for the second phase development of this field. At worst, we can keep our production levels unchanged and implement enhancement projects to boost our output. With the implementation of such packages, oil contractors will be flooded with more work. Therefore, despite all hardship and to the dismay of the US, upstream petroleum industry activities are set to be numerous this year. We can brace for a reasonable and not necessarily dramatic prosperity in oil. Furthermore, the present circumstances will not go forever, i.e. better days will arrive.

Implementing production preservation and enhancement projects is expected to add several hundred thousand barrels to national oil output. Are such projects being pursued seriously under the present circumstances?

Definitely, they are being followed up on seriously because preserving contractor work potential in the country is a must. Even if stagnation is set to be intensified in the country, such projects would take up added significance. The contractor work potential in the petroleum industry has taken shape throughout years and we have to appreciate such potential and safeguard it. Maintaining oil production capacity is as significant as the petroleum industry contractor potential. The same objective is being sought in the implementation of the 34 packages. However, we have to take into account the flipside of the coin, too. Contractors are likely to come under pressure due to foreign exchange rates, increased labor costs and other problems gripping the Iranian economy. That throws a challenge to the implementation of projects. But NIOC is standing by these projects and remains determined to bring prosperity back to petroleum industry by executing them. Maintaining oil production capacity and even increasing it to about 4.5 million barrels is significant for NIOC and that is why we are pushing ahead with the 34 packages.

It was recently announced that NIOC planned to sign two agreements worth $1.2 billion with the Persian Gulf Petrochemical Industries Company and Maroun Petrochemical Company to prevent the flaring of 22 mcm of gas in the East Karoun area. Would you please tell us about plans for the renovation of flare gas gathering installations in southern Iran? When will the two agreements be signed?

Both agreements have been recently approved by the Board of Directors of NIOC and they will be signed. Under these agreements, which will be signed between NIOC and the Persian Gulf Holding and Maroun Petrochemical Company, 30 projects (mainly small-scale) will be signed over a two-year period. Supplying feedstock to Bidboland-2 petrochemical plant, now under construction, as well as Maroun Petrochemical Plant, increasing gas liquid production by the National Iranian South Oil Company (NISOC) and increasing petrochemical feedstock supply by Bandar Imam, production of light gas and hard currency earning for NIOC, and above all improving the environmental standards in the eastern part of Karoun River are among major advantages of implementation of these contracts.

Was it based on the policy of petrochemical plants’ stake in the startup of LNG units for feedstock supply to choose the Persian Gulf Holding and Maroun Petrochemical Plant for this purpose?

Exactly! Since they consume feedstock achieved from flare gases they have required economic motivations to implement such projects. Furthermore, they enjoy sufficient financial and technical potential.

Has this approach received good feedback so far?

Yes, of course! For instance, the Bidboland-2 petrochemical project which is under construction by the Persian Gulf Holding has had good progress and is expected to come online next year. The Parsian refinery project, under way by the Imam Khomeini’s Command Executive Committee, and the ethane recovery unit of SP12, which is under way by Kangan Petrorefinery, has also had good progress.

But the NGL 3200 project is slow, isn’t it?

The Holding has no problem with financing this project, but challenges between this company and its former contractor have yet to be removed. That is why the project has been slowed down.  However, pushing ahead with a project which has had several percent progress with hundreds of millions of dollars in spending is not easy. Certain procedures must be gone through before the project is back to normal. That explains the slow pace of work at NGL 3200. I have also to recall that after an addendum is signed to the NGL 3200 agreement between NIOC and the Persian Gulf Holding, the latter would take ownership of the project and NIOC would no longer be its owner.

Isn’t the project likely to be restituted to NIOC?

Based on the policy of the Ministry of Petroleum, ethane recovery units like Bidboland-2, as well as Pars Petrochemical and Maroun Petrochemical lie under the category of petrochemical projects and ceding these units to NIOC would be meaningless. We have to accept that ethane recovery units are vital for the petrochemical industry as they feed petrochemical units, but they are considered as secondary priority for NIOC. Therefore, petrochemical plants would be more serious than NIOC in following up on ethane recovery units and our petrochemical industry is in good financial conditions now. Furthermore, NGL 3022 or NGL Kharg were not born yesterday so that we could claim that their incompleteness emanate from current policies or think that if NIOC becomes administrator of the project everything will be all right. Furthermore, we plan to use mobile processing systems in West Karoun. To that end, we plan to install the first system in the Azadegan field. Undoubtedly, removing pollution in Khuzestan Province would be of high significance for the petroleum industry. Pollution is affecting urban and rural areas of Khuzestan Province both in the East and West Karoun areas. We hope that the projects we have got under way, would help reduce to zero gas flaring in East Karoun over two years and NGL 3022 would put an end to gas flaring in West Karoun.

What about contracts which have been signed with Tamkar Gas Equipment Company and Hirbod Niroo for Parsi, Maroun and Mansouri no flaring projects? Have any of them, except for Parsi, become operational?

Four agreements were signed in Parsi, Maroun 3, Maroun 6 and Manouri units in order to prevent the flaring of about 44 mcf/d of gas in southern oil-rich areas. As you mentioned, the gas gathering facility of Parsi came online earlier this year. The three other projects are also to come online this year. I think that Maroun 3 would start up within two to three months. We have also signed an agreement with Masjed Soleyman Petrochemical Plant for the gathering of 100 mcf/d of gas around Masjed Soleyman, and Bidboland-2 Petrochemical Plant is expected to come online in 2019. These projects along with two more contracts which are to be implemented soon would reduce to zero gas flaring in East Karoun.

How has NGL Kharg been doing after the agreement was signed for completing the project?

We hope that this project would be delivered to investor in one month so that after some modifications everything would go ahead well. This is of course a big project and it may be affected by sanctions from certain aspects. NGL Kharg or NGL Siri which are facing feedstock shortage was among projects that started with erroneous design and unrealistically high capacity. That is why they were faced with problems. NGL Kharg was initially designed to attract $4.7 billion investment for gathering 600 mcf of gas. We reduced the figures to €800 million for gathering a maximum 300 mcf of associated gas in the Kharg and Bahregan areas, which are related mainly to Forouzan.

Where does NGL 3100 stand now?

This project is under way by OIEC (Oil Industries Engineering and Construction Company) for gathering associated petroleum gas in the Dehloran, Azar, Cheshmekhosh and West Paydar fields, and supplying feedstock to Dehloran Petrochemical Plant. The project is going ahead appropriately and I hope it would come online next year. In total, 1.5 bcf of gas is being flared in the country, mainly in East Karoun (more than 700 mcf), Masjed Soleyman (100 mcf), Kharg (300 mcf), West Karoun (250 mcf), Ilam (150 mcf) and some for Salman. The 2300, 1700, 2400 and 1800 units were off the agenda as we are facing surplus ethane recovery.

You are a Board member at Iran LNG project. Have any changes taken place in this project?

Based on a previous MOU with Gazprom, the Russian company is conducting a feasibility study on the project.

Several gatherings held by the Petroleum Association reviewed necessities of stepping into LNG market. How do you assess such gatherings?

They have been very positive. In my view, the expert issues discussed in these gatherings managed to transform this issue from media hype to an expert subject. I hope that practical steps would be taken after policymaking by the Supreme Regulatory Board.

Do you suppose any other agreements will be signed?

We are likely to sign an agreement with Kangan Oil and Gas Company. We are also following up on an agreement in the FLNG sector.   

Win-Win Deal in Caspian Summit

The presidents of the five Caspian Sea littoral states – Iran, Republic of Azerbaijan, Turkmenistan, Kazakhstan and Russia – held their fifth summit, ending in a landmark and hard-won agreement on the landlocked lake’s legal regime. Hosted by Kazakhstan, the summit also resulted in the signature of six documents for strategic and economic cooperation in the Caspian Sea.

Iran’s President Hassan Rouhani said the deal on the Caspian Sea’s legal regime was a very significant step in line with further convergence among the countries bordering the vast body of water.

“Today the Caspian Sea, as a very important and strategic zone, is the center of friendship, cooperation and convergence among its governments and nations,” he said, adding that the Convention on the Legal Regime of the Caspian Sea was a sovereign instrument governing obligations and rights of the five littoral states.

Before this convention was signed, the only agreements ever signed on the Caspian Sea dated back to 1921 and 1940 – both between Iran and the then Union of Soviet Socialist Republics (USSR).

Rouhani said that the new convention did not divvy up Caspian Sea bed resources, adding that separate agreements would be needed for dividing the rich hydrocarbon reserves.

The Iranian president said the only option for the Caspian Sea states to prevent any dispute in recovery from the subsea energy resources in un-demarcated zones was “joint production” from the resources. He called on the littoral states to steer clear of any unilateral exploration and production activities.

Rouhani’s remarks make clear that the convention signed between the littoral states had not divided the Caspian resources, for which further talks are needed.

In response to speculation raised by the public opinion regarding the division of the Caspian Sea, it must be noted that due to the Islamic Republic’s full knowledge of legal issues as well as Republic of Azerbaijan-Turkmenistan dispute, the other four countries have been convinced to resolve the issue in the future.

However, what is of significance is that the five nations have reached understanding on the Caspian Sea, which may be billed as a win-win deal. The convention on the Caspian Sea would allow for better agreements.

Environmental concerns and obligations in the Caspian Sea ecosystem, safety issues in the face of critical conditions and natural disasters, military security in the Caspian Sea and the ban on foreign military presence there, exchange of equipment and manpower between the littoral states and sharing experience in recovery from energy resources are all positive aspects of the convention that would help the Islamic Republic push ahead with its development objectives there.

Legally speaking, a country’s borderline lies up to 15 miles from land, while its fishing zone is up to 10 nautical miles. This law shall apply as long as no agreement has been reached on dividing the Caspian Sea.

So far, no demarcation of the Caspian Sea has been legalized and littoral states are not authorized to carry out exploration or production activities outside their territorial waters.

However, thanks to peace and friendship, and based on agreements between the littoral states, the Khazar Exploration and Production Company (KEPCO) – on behalf of National Iranian Oil Company (NIOC) – started exploration surveys in the southern Caspian Sea two decades ago. These surveys have yielded positive results, whose updating has led to the signature of memorandums of cooperation with leading companies for joint oil cooperation with Republic of Azerbaijan.

ICOFC on Development Track

Iranian Central Oil Fields Company (ICOFC) – one of the five oil and gas companies affiliated with National Iranian Oil Company (NIOC) – is the second largest gas producing company in Iran.

Since most oil and gas fields administered by ICOFC are in the second half of their lifecycle the need for investment in preserving their production capacity and reaching maximum efficient recovery by applying improved oil recovery (IOR) and enhanced oil recovery (EOR) on one hand and limited national financial resources on the other, have forced the company to attract investment for upstream and downstream development projects.

“We expect ICOFC’s oil and gas recovery from operating fields to increase significantly after implementation of memorandums of understanding on the development of fields under the newly developed framework of oil contract for horizontal drilling, IOR/EOR, applying state-of-the-art technology, and installing gas compressors,” Ramin Hatami, CEO of ICOFC, told "Iran Petroleum".

No Halt

ICOFC has three offshoots; namely, South Zagros Oil and Gas Production Company, West Oil and Gas Production Company, and East Oil and Gas Production Company. ICOFC is mainly responsible for the development of onshore fields located in 14 Iranian provinces. ICOFC comes second in gas production, just behind the giant South Pars gas field. ICOFC runs 51 gas fields, 28 oil fields and one oil/gas field, which constitute 80% of Iran’s total oil and gas fields.

Ever since its establishment in 1998, ICOFC has operated 13 major projects, leading to enhanced oil and gas production capacity. These projects include development of nine oil fields like Cheshmeh Khosh, Saadatabad and Sarvestan, Paydar and West Paydar, development of gas fields like Homa-Shanol-Varavi and Tang-e Bijar, construction of Phase 2 of Parsian refinery and installation of Nar gas compressor.

“Over recent years, we have been witnessing an improvement in drilling and HSE indices, increased oil and gas production and enhanced recovery from jointly owned fields [run by ICOFC],” Hatami said.

Ever since the new contractual framework for oil contracts was introduced in Iran under the title of Iran Petroleum Contract (IPC), ICOFC has been in talks with domestic and foreign companies for the development of oil and gas fields.

Of MOUs signed between NIOC on one side and Iranian and foreign companies on the other, for the development of oil and gas fields and conducing feasibility studies on gas compressor projects, 20 belong to ICOFC-run areas. Ten of these MOUs are now in the stage of financial and technical proposal, which would be submitted to NIOC in the near future.

Hatami said: “We expect two MOUs to end in agreements.”

Last March, NIOC and Russia’s Zarubezhneft signed an agreement to develop Aban and West Paydar fields. “This agreement is in the process of implementation,” said Hatami.

Development of Aban and West Paydar in the Bangestan and Asmari layers had already been completed. What remains to be done is gas gathering and gas injection.

Enhanced Recovery Planned

In addition to operating development plans, NIOC intends to boost Iran’s oil production capacity through cooperation with national and international firms. These projects are expected to be operated by Iranian companies, but foreign partners would be hired if need be.

Implementation of this project takes up added significance in light of the fact that most oil and gas fields in Iran are in the second half of their lifecycle. Furthermore, these projects would boost activity in contracting because the lead contractor of these projects are Iranian firms and foreign companies may work alongside Iranians as their partners.

ICOFC is in talks with competent Iranian companies. Planning for drilling new wells, workover and completion of old wells are among cases which Iranian contractors need to take into consideration in production maintenance and enhancement projects.

Of course, production from undeveloped fields by using cutting edge technology and enhanced recovery are among future plans of this company, which would be discussed in negotiations with Iranian and foreign firms.

ICOFC needs $7.5 billion in investment to enhance recovery from its oil and gas fields and install gas compressors.

Oil and Gas Output Maintenance

The last Iranian calendar year to March 2018 was a good year for ICOFC, Hatami said.

Referring to production of oil, rich gas and condensate by ICOFC, he added: “Combined rich gas production at Zagros Oil and Gas Production Company reached 58,108 mcm, condensate output reached 18.43 million barrels, while oil production reached 2.09 million barrels.”

“At West Oil and Gas Production Company, combined rich gas production from Tang-e Bijar gas field was 1,677 mcm, gas condensate was 2 million barrels, while oil production from independent and shared oil fields stood at 71.5 million barrels,” said Hatami. “At East Oil and Gas Production Company, rich gas production from independent and joint fields reached 15,281 mcm, while gas condensate output stood at 594,000 barrels.”

Hatami said rich gas production by ICOFC equaled 101.66% of target envisaged by the Board of Directors, while oil production equaled 99% of the Board’s target.

He said the main plans envisaged by ICOFC in the current calendar year included overhaul, development projects, following up on contract negotiations and sustainable oil and gas production.

Euro-5 Gasoil Output
Up in Iran
National Iranian
Oil Refining and
Distribution Company
(NIORDC) has in recent years
taken effective steps with a
view to reducing air pollution
in favor of the environment. It
has implemented well thoughtout
plans at nine refineries
in Iran in a bid to improve
the quality of products. One
of these projects is oil and
gas desulfurization at the
Tabriz Oil Refining Company.
The desulfurization unit has
come online tentatively. The
completion of this process
would soon add 6 ml/d to
Iran’s Euro-5 gasoil. The Tabriz
oil refinery is one of nine old
treatment facilities in Iran. It
was privatized in 2010.
It has now 15 refining
units to process crude
oil for conversion to
refined petroleum
products as well as 8
utility services to support
the process of production.
According to NIORDC
instructions, the Tabriz
refinery along with nine other
refining companies is required
to cut its fuel oil output to
below 10% and concomitantly
improved the quality of
products to Euro-5 grade. The
sulfur content of fuel oil
has been cut to below
5% in weight. In
this capacity,
refinery development projects
started in 2007 and in the first
step a new gasoline production
unit was envisaged, which came
on-stream in 2013.
€42mn Investment Under
Axens License
Gholam-Reza Baqeri Dizaj, CEO
of Tabriz Oil Refining Company,
said newer desulfurization
units were planned to be built
at a higher capacity while being
equipped with new technology.
That would allow for gasoil
production in line with global
standards. The new unit was
built with a €42 million plus
IRR 787 billion investment
under France’s
Axens license.
Detailed
engineering
and installation
have been
conducted under
the supervision of
Iranian experts
and contractors.
Baqeri said that
no low-quality
gasoil should
be supplied by
any refinery as
of March 2019.
“We have
considered
incentives
for the
suppliers
of quality
products,” he said. Referring
to the trial-run production of
base oil, he said the project
was tested in partnership with
a knowledge-based company
and the Research Institute of
Petroleum Industry (RIPI).
Then, he said, a foreignmade
catalyst and oi and gas
desulfurization unit helped
the project come on-stream on
industrial scale. “This project
is coming online with a rated
capacity of 270,000 tonnes
a year, whose production
capacity currently stands at
90,000 tonnes a year,” said
Baqeri.
Euro-4 Gasoline
The Tabriz refinery is
producing 5.5 mt/year of
products, 90% of which is
being converted to fuel.
Liquefied petroleum gas (LPG)
production constitutes 3% of
the refinery output. LPG output
stands at 300,000 l/d. Baqeri
said the Tabriz refinery is
currently producing 3.5 ml/d
of gasoline, adding that half the
output is Euro-4 and remaining
half is clean gasoline. Euro-4
gasoline production is expected
to grow this year. Other
products supplied by the Tabriz
refinery include
1 ml of kerosene
and 4 ml of fuel
oil.
Tabriz Refinery
Brand
The Tabriz refinery
is among Iran’s first
refining companies
in Iran to have
received NIORDC
permission in the
oil and gas sector.
“We have started our
activity in branding,” he said.
Neighborhood with Azerbaijan,
Turkey, Iraq, Armenia and
the Republic of Nakhichevan
has boosted chances for the
Tabriz refinery to strengthen
its presence in global markets.
Multinational companies are
now able to purchase the Tabriz
refinery-branded products to
be supplied to filling stations
located nearby. The Tabriz
refinery products enjoy
strong technical support. In
recent years, it has boosted its
experience and technical savvy.
In terms of hardware, it has the
most advanced laboratories
in refining and oil production
in Iran, which is unique in the
country. The refinery managers
are not worried about the
market as multinational
companies are ready to sell the
Tabriz refinery’s products to
motorists plying border areas.
€500mn Investment in
Environment Projects
More than
38% of
the Tabriz
Petrochemical
Company’s
stocks are held
by the Tabriz
oil refining
company. The
petrochemical
firm has so
far invested
more
than €500
million in
environmental projects like
sulfur granulation, high-quality
gasoline production as well
as bitumen production. It has
separately invested €5 million
in flare gas gathering.
Sanctions Teach New
Methods
Iran’s petroleum industry is
not unfamiliar with sanctions.
Iranian contractors have
already learnt how to deal
with restrictions to avoid
production halt. Although
sanctions have imposed
costs on this industry, the
petroleum sector has always
looked at the sanctions as a
tool for improving its activities.
Baqeri acknowledged that
imposition of sanctions would
slow down the work; however,
he noted: “But we will learn
under such circumstances to
test new methods.” “We have
already considered all possible
methods in order to supply
equipment even after sanctions
have been imposed and we will
have no problem in this regard,”
he said. Baqeri referred to
a €1.5 billion project for
improving the quality of
Tabriz refined petroleum
products to Euro-5 grade in
cooperation with Chinese
and Russian companies and
European financers. “About
60% of equipment used in the
gasoline production unit has
been provided domestically.
All necessary catalysts
for the refinery will
be supplied by
domestic
companies,”
he said

Oil Market Can’t Ignore Iran

Oil market has been experiencing certain conditions in recent months. On one hand, oil prices have followed an upward trend while on the other, US President Donald Trump is imposing oil sanction on Iran and calling on OPEC countries to help his anti-Iran campaign. However, Iran’s former national representative to OPEC Javad Yarjani says Iran could not be completely driven out of global oil market, as it sits atop the world’s largest hydrocarbon reserves and has oil export level of about 2.5 million barrels per day. He told "Iran Petroleum" in an interview that fellow OPEC members could not collectively fill shortage emanated from Iran’s oil absence in the market.

The following is the full text of the interview Mr. Yarjani gave to "Iran Petroleum".

Oil prices have seen ups and downs over the past one year and particularly after Donald Trump took office as US president in January 2017. Over recent months, oil prices have gained ground. What do you think of the future of oil prices? Will this upward trend continue in the coming months?

What is commonly believed in the oil market is that no exact oil price level could be forecast for the future, and only its unpredictability is predictable. Rarely may you find an expert to say with full certainty, in which direction the oil prices are headed. A variety of factors are at play in the oil market, some of which are fundamental and directly affect prices; like supply and demand and level of commercial stocks. In the meantime, there are some other factors like geopolitical issues, wars and political disputes between producers and consumers, which are not among fundamental factors but indirectly, affect prices. Therefore, one cannot say with certainty where the prices are headed from now on.

However, what has happened over the past one year has driven up oil prices, which was predictable.

We have to note that based on events that preceded the US administration's pullout from the JCPOA (Iran’s nuclear deal with six world powers), it was possible to argue that the prices were in increasing trend. The reason is clear. Major oil exporting countries at that time had concluded that prices needed to go up. Some of the producers were faced with budget deficit or for example Saudi Arabia was planning to list Aramco shares on major stock markets. Therefore, a variety of factors were unified so that high oil prices would be in the best interests of producers. It may be concluded that the upward trend of oil prices was the outcome of OPEC-non-OPEC agreement in late 2016.

But in this decision, OPEC was not the only factor, as non-OPEC producers led by Russia, were also involved in the upward trend of oil prices.

Yes, of course! At that time Russia was at height of restructuring its own economy and army. Therefore, revenue from oil and gas exports were essential for Russia to reach its economic and security objectives. The unfavorable conditions prevailing in the oil market in 2016 and the price slumping to below $30 in that year in January pushed Russia as the largest non-OPEC producer and exporter of oil to close ranks with OPEC for driving prices up.

But after the US’s unilateral pullout from the JCPOA and President Trump’s announcement of planned re-imposition of sanctions on Iran in November, the prices were up again. It was predictable, wasn’t it?

We cannot yet say where the prices would go for sure. On one hand, the possible exit of part of Iran’s oil from the market would drive prices up, but on the other hand, there are suggestions that certain countries can fill Iran’s absence from the oil market. That remains shrouded in ambiguity and may not be solid-based. Now, we have to see whether such claims would be translated into action or they would be limited to words. Therefore, I reiterate once more that we cannot say with certainty which direction the prices would take.

Speculation continues about oil price hikes after Iran’s elimination from the market. Conflicting figures have been bandied about, from $100 to $400.

We should keep in mind that never have such figures as $400 been experienced in the price of oil in the history. That may happen when a group of major oil producers are forced to supply to the market altogether, which is unlikely to happen. Furthermore, the global economy cannot sustain oil prices above $100 a barrel for a long period. Several years ago, we experienced $140 prices. I remember well the world economy was fraught with concerns. It was not limited to consumers. OPEC was also worried about high oil prices because sustained high prices could seriously harm the global economy and could impact the oil demand negatively. Therefore, everyone helped keep prices within a certain limit. For its part, OPEC adopted decisions which would help reduce prices. Of course, the global economic crisis finally sharply drove down prices to below $40 a barrel in December that year. OPEC cut 1.2 million barrels from its output in a bid to keep the oil price sharp decline.

As far as Iran’s exit from oil market is concerned, I don’t think they could completely drive Iran out. First and foremost, no country will accept to be deprived of its main source of export, and Iran would use every tool at its disposal to sell its oil and will not bow to US bullying. Second, we have to see what position Europe, China and India would take after Iran’s oil export is sanctioned. All these issues may affect the prices. But it is evident that political intervention in the oil market would lead to more negative results for global economy.

How can issues like President Trump’s offer of unconditional talks with Iran affect oil prices?

I reiterate that the complicated structure of oil market would not allow any definite forecast on this issue. All of us know that oil is traded in the paper markets in much larger volumes than physical markets.

The way oil news is reflected and oil market analyses impact the decisions  of multi- billion dollar   hedge funds which are investing in the paper oil market because they buy and sell oil based on reports of price reporting agencies and of course in the hope of gaining from oil price movements.

The US is unlikely to be able to fully ban Iran’s oil sales in light of current global economic conditions. Anyway, the US is imposing unlawful and unilateral sanctions on Iran’s petroleum sector. Iran is not subject to international embargo and the European Union has thus far shown support for Iran. That is why oil market conditions have got complicated.

Yes, that’s it. Many analysts are of the opinion that Iran by no means could be eliminated

Oil Market Can’t Ignore Iran

Oil market has been experiencing certain conditions in recent months. On one hand, oil prices have followed an upward trend while on the other, US President Donald Trump is imposing oil sanction on Iran and calling on OPEC countries to help his anti-Iran campaign. However, Iran’s former national representative to OPEC Javad Yarjani says Iran could not be completely driven out of global oil market, as it sits atop the world’s largest hydrocarbon reserves and has oil export level of about 2.5 million barrels per day. He told "Iran Petroleum" in an interview that fellow OPEC members could not collectively fill shortage emanated from Iran’s oil absence in the market.

The following is the full text of the interview Mr. Yarjani gave to "Iran Petroleum".

Oil prices have seen ups and downs over the past one year and particularly after Donald Trump took office as US president in January 2017. Over recent months, oil prices have gained ground. What do you think of the future of oil prices? Will this upward trend continue in the coming months?

What is commonly believed in the oil market is that no exact oil price level could be forecast for the future, and only its unpredictability is predictable. Rarely may you find an expert to say with full certainty, in which direction the oil prices are headed. A variety of factors are at play in the oil market, some of which are fundamental and directly affect prices; like supply and demand and level of commercial stocks. In the meantime, there are some other factors like geopolitical issues, wars and political disputes between producers and consumers, which are not among fundamental factors but indirectly, affect prices. Therefore, one cannot say with certainty where the prices are headed from now on.

However, what has happened over the past one year has driven up oil prices, which was predictable.

We have to note that based on events that preceded the US administration's pullout from the JCPOA (Iran’s nuclear deal with six world powers), it was possible to argue that the prices were in increasing trend. The reason is clear. Major oil exporting countries at that time had concluded that prices needed to go up. Some of the producers were faced with budget deficit or for example Saudi Arabia was planning to list Aramco shares on major stock markets. Therefore, a variety of factors were unified so that high oil prices would be in the best interests of producers. It may be concluded that the upward trend of oil prices was the outcome of OPEC-non-OPEC agreement in late 2016.

But in this decision, OPEC was not the only factor, as non-OPEC producers led by Russia, were also involved in the upward trend of oil prices.

Yes, of course! At that time Russia was at height of restructuring its own economy and army. Therefore, revenue from oil and gas exports were essential for Russia to reach its economic and security objectives. The unfavorable conditions prevailing in the oil market in 2016 and the price slumping to below $30 in that year in January pushed Russia as the largest non-OPEC producer and exporter of oil to close ranks with OPEC for driving prices up.

But after the US’s unilateral pullout from the JCPOA and President Trump’s announcement of planned re-imposition of sanctions on Iran in November, the prices were up again. It was predictable, wasn’t it?

We cannot yet say where the prices would go for sure. On one hand, the possible exit of part of Iran’s oil from the market would drive prices up, but on the other hand, there are suggestions that certain countries can fill Iran’s absence from the oil market. That remains shrouded in ambiguity and may not be solid-based. Now, we have to see whether such claims would be translated into action or they would be limited to words. Therefore, I reiterate once more that we cannot say with certainty which direction the prices would take.

Speculation continues about oil price hikes after Iran’s elimination from the market. Conflicting figures have been bandied about, from $100 to $400.

We should keep in mind that never have such figures as $400 been experienced in the price of oil in the history. That may happen when a group of major oil producers are forced to supply to the market altogether, which is unlikely to happen. Furthermore, the global economy cannot sustain oil prices above $100 a barrel for a long period. Several years ago, we experienced $140 prices. I remember well the world economy was fraught with concerns. It was not limited to consumers. OPEC was also worried about high oil prices because sustained high prices could seriously harm the global economy and could impact the oil demand negatively. Therefore, everyone helped keep prices within a certain limit. For its part, OPEC adopted decisions which would help reduce prices. Of course, the global economic crisis finally sharply drove down prices to below $40 a barrel in December that year. OPEC cut 1.2 million barrels from its output in a bid to keep the oil price sharp decline.

As far as Iran’s exit from oil market is concerned, I don’t think they could completely drive Iran out. First and foremost, no country will accept to be deprived of its main source of export, and Iran would use every tool at its disposal to sell its oil and will not bow to US bullying. Second, we have to see what position Europe, China and India would take after Iran’s oil export is sanctioned. All these issues may affect the prices. But it is evident that political intervention in the oil market would lead to more negative results for global economy.

How can issues like President Trump’s offer of unconditional talks with Iran affect oil prices?

I reiterate that the complicated structure of oil market would not allow any definite forecast on this issue. All of us know that oil is traded in the paper markets in much larger volumes than physical markets.

The way oil news is reflected and oil market analyses impact the decisions  of multi- billion dollar   hedge funds which are investing in the paper oil market because they buy and sell oil based on reports of price reporting agencies and of course in the hope of gaining from oil price movements.

The US is unlikely to be able to fully ban Iran’s oil sales in light of current global economic conditions. Anyway, the US is imposing unlawful and unilateral sanctions on Iran’s petroleum sector. Iran is not subject to international embargo and the European Union has thus far shown support for Iran. That is why oil market conditions have got complicated.

Yes, that’s it. Many analysts are of the opinion that Iran by no means could be eliminated

completely from the oil market. Even if the Trump administration intends to risk such a move, its impacts on regional geopolitics, global economy and the Middle East could follow. Iran’s oil enjoys a significant standing in global economy. Many countries are well aware that in case Iran’s oil exports are completely banned from the oil market, the global economy will be affected.

Some countries like Saudi Arabia have announced their readiness to provide any extra oil. Iran has not been mentioned directly, but it goes without saying that Saudi Arabia meant it would make up for any shortages resulting from the imposition of sanctions on Iran. Of course, other countries like Kuwait and Iraq have also raised their output. Do you think that Saudi Arabia will be able to supply extra oil in case Iran’s oil is dropped off the market?

Under the current circumstances, the oil market conditions have become extremely complicated. On one side, Trump intends to impose sanctions on Iran’s oil and in the meantime he calls on Saudi Arabia to raise its output by 2 mb/d. Saudi Arabia responded to the US without making clear whether or not it would be able to boost its output by 2 mb/d.

To be realistic, Saudi Arabia has largely invested in its petroleum industry in  in past decades and years, as it did not face restrictions created for Iran’s petroleum industry due to international sanctions, wars and nationalization. As a result, Saudi Arabia says it would be able to bring its production to more than 12.5 mb/d. In the meantime, many analysts believe that even if Saudi Arabia manages to supply 12.5 mb/d, such output level would not be sustainable.

In case Saudi Arabia decides to produce oil at its claimed full capacity, the global oil production spare capacity will decline to almost nil and it would plunge the oil market into complicated and dangerous conditions. Suppose that an unpredictable war breaks out or an oil producer experiences a sharp slump in production. Under such circumstances, spare production capacity would be necessary to help the world economy by giving assurances that sufficient oil would be available for consumption all across the globe.

According to secondary sources, Saudi Arabia’s production level has been close to 11 mb/d over the past 18 years, which is now below 10.5 mb/d. Of course Saudi Arabia has boosted its production capacity in recent years, but experts believe that it could not fully compensate for shortages emanated from embargo on Iran’s oil and that would adversely affect the market.

Secondary sources also confirm that Iraq, Kuwait and United Arab Emirates raised their production in July. To what extent do you think these countries would be able to make up for shortages in the market?

Before answering your question, I deem it necessary to say that over recent years we have witnessed investment in some OPEC members with a view to increasing their oil production. However, due to financial issues or certain political conditions we have seen that their production has not increased as planned. Now, in response to your question, we have to take into consideration a variety of parameters. First and foremost, everyone knows that eliminating Iran from the global oil market would in the long term leave adverse impacts on the global economy. Although some countries have said they would be able to make up for supply shortages the main question is to know if they would be able to raise their output sustainably in the long term. Second, OPEC member states increase their production within the framework of the organization’s policy. Now, if they supply more than their allocated quota, it could bring down oil prices, in this case will their budget face any problem? Naturally, there should be a balance in decisions. I don’t think that these countries would be able even collectively to make up for Iran’s oil shortage in the global markets.

The US is banking in on OPEC’s cooperation. In the 174th OPEC Conference, as you may recall, OPEC members rejected the US request. Iran also called on OPEC Member Countries not to bow to US demands, noting that OPEC policies should not be imposed from outside the group. Now that the US has decided to impose sanctions on Iran’s oil exports, to what extent do you think OPEC member states would stand by each other?

OPEC was established in 1960 and it has been standing tall for most of its 58 years existence. Such longevity indicates that OPEC has had benefits for its member states and world in general. That is why despite all ups and downs, OPEC has grown into an influential body of the Third World nations.

Of course some countries including the US did their best in previous years to allegedly show that OPEC is uninfluential in oil market and close to collapse. But every time the market faces any problem and prices fluctuate, the same countries urge OPEC to take action to bring the oil market into balance. Therefore, OPEC continues to remain beneficial even to countries opposed to it.

OPEC is currently faced with tough situation. This is not the first time that the US president is directly lobbying other OPEC member states in a bid to sway their minds. Despite all outside pressure, OPEC has so far maintained its partial independent nature, not for a specific nation but for the reason that each and every nation has seen that OPEC’s existence would benefit them.

What do you think of the current level of interaction among OPEC member states?

Not many observers predicted any type of cooperation among OPEC member states in the 174^th meeting of the OPEC Conference. Despite all pressure exerted by the US government on some member states to increase their respective oil production, OPEC decided to stick with the 2016 production ceiling. That was a breakthrough for OPEC. If we base everything on the past, it seems that OPEC would be able to overcome the current crisis, too. Should OPEC Members fail to overcome this crisis, the countries that sought to undermine OPEC would realize their long-held objective of OPEC demise. However, one thing is clear; elimination of OPEC would in long term harm countries favoring its collapse.

If OPEC members intend to show their commitment to the producer body, are they likely to hold an extraordinary meeting?

Decisions within OPEC are taken unanimously. If a nation intends to boost its production against the will of rest of the member states, OPEC does not have any tool to punish it. But we should pay heed to the fact that OPEC is not a cartel, its decisions are clear and well defined, and everyone knows which decisions are taken in its meetings. There are neither any tools for punishing member states nor honoring their commitments. The most important tool wielded by OPEC for implementation of its decisions is to secure the interests of its member states. In the last OPEC meeting, Iran sought to remind member states of the fact that we have an agreement which we had better honor, because it would benefit all nations. The agreement reached among member states was born out of a decision which finally benefited all member states. But an OPEC extraordinary meeting depends on the conditions of oil prices. In case prices fall or grow sharply to reach for instance below $50 or above $150 a barrel, OPEC President may call for an extraordinary meeting of the Conference.

The Russians have also claimed that they could boost their production by more than 200,000 b/d. Is that true?

It is appropriate to know that in the aftermath of the collapse of the Union of Soviet Socialist Republics (USSR), Russian oil firms after collapsing the oil production to almost half, after some years have made great success in boosting their oil production, raising their collective output from 6.25 mb/d in 2000 to nearly 12 mb/d in collaboration with international companies. But now their combined output stands at around 11 mb/d. We also know that Russian companies are under sanctions and it is not clear if they would be able to add 200,000 b/d to their output. The figures given by Russian firms for output hike could be for marketing purposes.

However, I believe that none of oil exporting countries should assist sanctions against other producing nations because oil embargo would definitely affect the global economy, which they are also part of that. If assurances are given of sufficient oil supply, sustained oil embargo would gradually harm every other country and the same nations are likely to face sanctions one day themselves. Therefore, the minimum action to be taken by OPEC member states is to close ranks, which would benefit both producers and consumers in the long run.

In your view, does Mr. Trump favor high or low oil prices? When we juxtapose oil embargo on Iran and Venezuela we conclude that the current US administration is not interested in oil price decline.

This issue can’t be dealt with so simply. It is no secret to anyone that due to the importance of driving private cars in the American citizens’ everyday life, high gasoline price is a key factor in that country. Therefore, high oil prices, which would push up gasoline prices, could cause public discontent among the Americans. In light of the key November elections in the US, Mr. Trump does not seem to be favoring oil price hikes at least until the elections is over.

US shale oil companies, on the other hand, favor high oil prices in order to pocket more profits and pay back high level of loans they have borrowed from the banks. It is noteworthy that following the OPEC infamous decision in November 2014 and the subsequent flow of high level of oil to the market, we witnessed a sharp fall in oil prices. That pushed shale oil producers to reduce their production and also their costs in order to make their production economical. Therefore, in case oil prices fall again, the shale oil firms would not halt work. On the other hand, oil production has jumped significantly in the US and this country is likely to become an oil exporter. That is why this group of producers prefers higher oil prices. Major international oil companies in the US also favor high prices to the extent to increase future investment in this industry, so that the rate of return on investment in oil would be lucrative enough. Therefore, it is hard to say with certainty whether or not the US is after increasing or decreasing oil prices.

What price do you think the US economy favors now?

The price of each gallon of gasoline in the US for end-user is a key factor in the political and economic policies in that country. As an importer and consumer of oil, they do not agree with high oil prices 100 percent. On the other hand, since oil producing countries there, particularly shale producers, would be able to develop much faster under conditions of high oil prices, they oppose very low prices. Therefore, due to the conflict of interests in that country, the current level of prices must serve the interests of all these groups.

On one hand Mr. Trump claims to be seeking unconditional talks with Iran, while on the other, he is imposing stiff sanctions on Iran. He has also called on countries doing business with Iran to pull out of Iran or face penalties. In your view, is Mr. Trump reliable in his claims about Iran?

Apart from his track record in the first four-year term in office, every president in the US is willing to achieve a so-called “legacy” to have its mark in the history in the second round of his presidency if he is reelected. For instance, Mr. Nixon’s legacy is the resumption in the U.S. ties with China although he failed domestically and was forced to resign before end of his second term in the White House. Or Mr. [Bill] Clinton sought in vain to re-establish diplomatic ties with Iran, while Mr. [Barack] Obama was also willing to resume full diplomatic ties with Iran, but he also was not able to achieve this goal. Now, despite all his threats against Iran, Mr. Trump now mainly is seeking to undo all achievements of Mr. Obama, the former US president, which is in full harmony with Mr. Netanyahu's anti-Iran policy. Therefore, Mr. Trump’s claim of readiness for unconditional talks with Iran seems to be aimed at causing further division inside Iran. However, in his possible second term in office, Mr. Trump could try to register a positive track record for himself through resolution of hostility with Iran after more than 40 years, provided that it brings about huge economic reward for his favored companies.

1- Ghana OCTP Makes 1st Gas Delivery

Eni has started producing gas from the Sankofa field in the Offshore Cape Three Points (OCTP) integrated oil and gas project offshore Ghana.

Production comes currently from two of the four deepwater subsea wells connected to the FPSO John Agyekum Kufuor.

After final commissioning of the offshore facilities, production will gradually flow through a 60-km (37-mi) subsea pipeline to the onshore receiving facility in Sanzule, where the gas will be compressed and distributed to Ghana’s national grid.

The field should provide 180 MMcf/d for at least 15 years, sufficient feedstock for of Ghana’s power generation capacity.

According to Eni, OCTP is the sole deep offshore non-associated gas development in Sub-Saharan Africa dedicated entirely for domestic consumption. The project has the support of the World Bank, and it will also help Ghana shift from oil-fuelled power generation to a cleaner power source.

Dr. KK Sarpong, CEO of state-owned GNPC, a partner in the development, said his company would support Eni on the further steps to ensure gas delivery to the Ghanaian market reaches its expected volumes in the shortest period of time.

OCTP, which already produces oil, should ramp up eventually to 85,000 boe/d, Eni added.

2-PEMEX Picks Contractor for Mexico Pipeline Project

PEMEX has awarded McDermott International an EPCI/design contract for two subsea flowlines for the heavy-oil Ayatsil field development, 50 mi (80 km) northwest of Ciudad del Carmen in the Bay of Campeche.

The first line (L1) will be a 24-in., 1.9-mi (3.2-km) long gas line connecting the PP-Ayatsil-C and PP-Ayatsil-A platforms. The second (L10) will be an 8-in., 0.9-mi (1.5-km) long oil pipeline connected to the PP-Ayatsil-C platform.

Previously McDermott fabricated and installed the Ayatsil-C platform and it is also working for PEMEX on fabrication and future installation of the Abkatun field facilities.

The company’s operating center in Mexico City will manage engineering for the new project, with offshore installation scheduled to be completed early next year.

Ayatsil, PEMEX’s largest discovery to date, is in water depths of around 375-400 ft (114-121 m).

In addition, McDermott issued an update on its progress in other offshore projects. During 2Q the company performed mechanical completion and onshore commissioning for the Angelin development off Trinidad and Tobago.

Fabrication is close to starting in Indonesia of the platform structures for Total’s Tyra redevelopment in the Danish North Sea.

3-CNOOC Details Exploration, Production Highlights

CNOOC made eight new discoveries during the first half of the year, including six offshore China and two elsewhere.

The company successfully appraised two finds in the hundred-million-tons of oil equivalent-range in the Bohai Bay area of the South China Sea.

It also participated in ExxonMobil’s exploration campaign in the Stabroek block project offshore Guyana.

To date, two of the five new projects CNNOC planned to bring on-stream this year, have started production.

The company’s first half net oil and gas production was 238.1 MMboe, in-line with expectations.

4- Australia Ichthys LNG Starts Up

INPEX has started production from the Ichthys LNG project offshore/onshore northwest Australia.

Gas has started flowing from the first offshore production well following the completion of final safety verifications including additional measures concerning electrical equipment.

Produced gas/condensate from the Ichthys field’s subsea wells, in 260 m (853 ft) water depth, heads to the central processing facility (Ichthys Explorer) for separation into gases and liquids.

At peak, the offshore facilities will produce 1.6 MMcf/d of gas and 85,000 b/d of condensate.

The separated liquids will travel through a short pipeline to the nearby FPSO Ichthys Venturer for storage and subsequent offloading to tankers.

Gas will be transported via the 890-km (553-mi) long gas export pipeline to the onshore gas liquefaction plant at Darwin, Northern Territory.

On arrival, the gas will undergo further separation and liquefaction to produce liquefied petroleum gas (LPG) and liquefied natural gas (LNG).

5-Funding Secured for UK North Sea Project

Independent Oil and Gas (IOG) has secured funding for its Harvey gas field appraisal well in the UK southern North Sea and plans to spud the well in December.

A facility signed with London Oil and Gas of £15 million ($19.3 million) will be used both for this campaign, to fund other costs in the run-up to IOG’s gas development project sanction, and full repayment of final remaining liabilities for the Skipper oil field exploration program in the UK northern North Sea.

IOG hopes the well will prove gas across the entire Harvey structure – a competent person's report last November assessed potential resources as up to 286 bcf, with a 50% geological chance of success.

Schlumberger Western Geco has reprocessed 3D seismic over the Harvey area, and IOG expects to complete seismic re-interpretation and re-mapping this month. The aim is to optimize the appraisal well location, and thereby de-risk the project.

Even if the well delivers a mid-case 114 bcf, this would still represent the company’s largest gas asset, IOG said, and a fast track Harvey development could follow in direct continuation from Phase 1 of the development of the Blythe and Vulcan Satellites hubs, which are approaching a final investment decision.

PEMEX Picks Contractor for
Mexico Pipeline Project
PEMEX has awarded McDermott
International an EPCI/design contract
for two subsea flowlines for the
heavy-oil Ayatsil field development,
50 mi (80 km) northwest of Ciudad del
Carmen in the Bay of Campeche.
The first line (L1) will be a 24-in., 1.9-
mi (3.2-km) long gas line connecting
the PP-Ayatsil-C and PP-Ayatsil-A
platforms. The second (L10) will be an
8-in., 0.9-mi (1.5-km) long oil pipeline
connected to the PP-Ayatsil-C platform.
Previously McDermott fabricated
and installed the Ayatsil-C platform
and it is also working for PEMEX on
fabrication and future installation of
the bkatun field facilities.
Ghana OCTP
Makes 1st Gas Delivery
Eni has started producing gas from the
Sankofa field in the Offshore Cape Three
Points (OCTP) integrated oil and gas project
offshore Ghana. Production comes currently
from two of the four deepwater subsea wells
connected to the FPSO John Agyekum Kufuor. After
final commissioning of the offshore facilities,
production will gradually flow through a 60-
km (37-mi) subsea pipeline to the onshore
receiving facility in Sanzule, where
the gas will be compressed and
distributed to Ghana’s
Mexico national grid.
Ghana
UK
CNOOC Details
Exploration, Production
Highlights
CNOOC made eight new discoveries
during the first half of the year, including
six offshore China and two elsewhere. The
company successfully appraised two finds in the
hundred-million-tons of oil equivalent-range
in the Bohai Bay area of the South China Sea. It
also participated in ExxonMobil’s exploration
campaign in the Stabroek block project
offshore Guyana. To date, two of the five
new projects CNNOC planned to
bring on-stream this year, have
started production.
Funding Secured for UK North Sea Project
Independent Oil and Gas (IOG) has
secured funding for its Harvey gas
field appraisal well in the UK southern
North Sea and plans to spud the well
in December. A facility signed with
London Oil and Gas of £15 million
($19.3 million) will be used both for
this campaign, to fund other costs in the
run-up to IOG’s gas development project
sanction, and full repayment of final
remaining liabilities for the Skipper
oil field exploration program in the UK
northern North Sea. IOG hopes the well
will prove gas across the entire Harvey
structure – a competent person’s report
last November assessed potential
resources as up to 286 bcf, with a 50%
geological chance of success.
China
Australia Ichthys LNG
Starts Up
INPEX has started production from
the Ichthys LNG project offshore/
onshore northwest Australia.
Gas has started flowing from the
first offshore production well
following the completion of final
safety verifications including
additional measures concerning
electrical equipment. Produced
gas/condensate from the Ichthys
field’s subsea wells, in 260 m (853
ft) water depth, heads to the central
processing facility (Ichthys Explorer)
for separation into gases and liquids.
At peak, the offshore facilities will
produce 1.6 MMcf/d of gas and
85,000 b/d of condensate.
VIEW VIEW Australia
VIEW

Ecopetrol to Focus Spending on Drilling

Colombia’s state-run oil
company Ecopetrol SA will
focus spending for the rest
of the year on increased
drilling activity and securing
operational licenses, its chief
executive said. Spending delays
earlier this year will make it
harder for the company to
achieve its 2018 $3 billion
to $3.5 billion capital plan,
CEO Felipe Bayon said in
an interview at the New
York Stock Exchange, where
company officials observed the
10th anniversary of its NYSE
listing. “It’s a challenge” to hit
spending targets, Bayon said,
adding the company plans to
have 41 working rigs at year
end, up from 33 at the end of
June. Acquiring drilling rights
consumes “a lot of the CAPEX
we invest,” he said. Ecopetrol
said earlier it will invest $3
billion to $3.5 billion during
2018, below the initial target
of up to $4 billion because of
spending delays and protests
that closed three fields in
the first quarter. “It’s never
going to be smooth sailing in
this industry. There’s always
uncertainty, there are things
that are going to hit you that
you don’t know.” Ecopetrol
faced dozens of attacks on
its Cano Limon-Covenas oil
pipeline this year by the
National Liberation Army
guerrilla group, military
sources previously said.
The Cano Limon pipeline is
operating now,
Bayon said, adding
that production impacts this
year were marginal due to
rerouting the Bicentenario
pipeline which connects to the
Cano Limon line. Last year, the
attacks and pipeline closure
led to production losses of
more than a million barrels,
Bayon said.

Norway Wealth Fund Should Keep Oil Stocks

Norway’s trillion-dollar
sovereign wealth fund should
continue to invest in oil and
gas companies, a governmentappointed
commission
recommended, contradicting
earlier advice from the central
bank, and boosting the shares
of oil firms. A decision on
whether to drop energy shares
from the fund’s benchmark
index, and thus divest tens
of billions of dollars from oil
and gas stocks over time, is
expected this autumn.
Shares of European oil
and gas companies fell last
November when the fund’s
manager, the Norwegian
central bank, announced its
proposal to cut the exposure
of the fund - and thus the
Norwegian government - to
oil price fluctuations. “To get
that small insurance (against
the fluctuation of the oil price
by removing energy stocks),
it would cost the fund a lot, as
it would be less diversified,”
commission chair Oeystein
Thoegersen told Reuters.
“Second, you would change
an institution that has worked
very well. And third, as the
years go by, we have less and
less oil risk,” he said, referring
to Norway’s declining oil
reserves. The fund, the world’s
largest sovereign wealth fund,
invests Norway’s revenues
from oil and gas production for
future generations in stocks,
bonds and real estate abroad.
Energy stocks amounted
to about 4 percent of the
value of the fund, or about
315 billion crowns ($37
billion), at the end of 2017,
the commission said. Finance
Minister Siv Jensen, who will
present the government’s
decision this autumn, did not
signal which way a decision
would go.

Canadian Oil Pipeline
Faces Delay
Canada’s resource minister said construction
on the Trans Mountain project had faced a
delay, but he did not provide an update on when
the expansion of the oil pipeline from Alberta to
British Columbia’s coast would be complete.
The Canadian government agreed in May to
buy the pipeline from Kinder Morgan Canada
Ltd for C$4.5 billion ($3.5 billion), in an effort to
ensure its expansion went ahead. It is currently
scheduled to be in service by December 2020.
“Yes, there’s a delay because the construction
was stopped for a couple of months, but this
is a project that is moving forward and will
continue to move forward until it’s done,”
Natural Resources Minister Amarjeet
Sohi told reporters outside a Cabinet
meeting in Nanaimo, British Columbia

U.S. Drillers Cut Most Oil
Rigs in 2 Years
U.S. energy companies cut nine oil drilling rigs,
the biggest reduction since May 2016, following
a recent decline in crude prices. The oil rig
count fell to 860 in the week to Aug. 24, General
Electric Co’s Baker Hughes energy services
firm said in its closely followed report. U.S.
crude futures, trading around $69 per barrel,
were down about 7 percent so far this quarter,
heading for the first quarterly decline since the
second quarter last year. The U.S. rig count, an
early indicator of future output, is much higher
than a year ago when 759 rigs were active
as energy companies have been ramping up
production in tandem with OPEC’s efforts over
the past year-and-a-half to cut global
output. So far this year, U.S. oil futures
have averaged $66.33 per barrel.

UAE ADNOC in Talks to
Sell Refinery Stakes
State-owned Abu Dhabi National Oil Co
(ADNOC) is in advanced talks with more than
one potential buyer, including Italy’s ENI, as it
prepares to sell minority stakes in its refining
business, two sources familiar with the matter
said. ADNOC began a wide-ranging shake-up in
2016 to tackle competition from new producers
such as U.S. shale firms. It listed 10 percent of its
fuel distribution business last year and aims to
expand its downstream business abroad.
The company also started a sales process for
a stake in its $20 billion refining business,
which the sources said it was likely to split
between two or more parties. One said
that ADNOC would favor companies it
already has partnerships with, including
ENI and Austrian oil and gas group OMV

Sinopec Forecasts H2
Fuel Sales Drop
China Petroleum & Chemical Corp, the
country’s largest refiner, said it expects fuel
sales to drop and processing rates for crude
to stay flat in the second half of 2018, amid
an oversupply of refined fuels. The company,
known as Sinopec, will process 121 million
tonnes of crude oil in the second half of the
year, the same as in the first half, and its fuel
sales will be 90.5 million tonnes, compared
to 96.48 million in the first half, it said in a
statement to the Shanghai Stock Exchange. Net
income for the company for the first half was
41.6 billion yuan ($6.05 billion), rising 53.6
percent from a year ago, the statement said.
That beat a company forecast of 50 percent
profit growth as the upstream and refining
sectors delivered strong results.

Petroleum Industry Domestic Development

Habibollah Bitaraf

Deputy Minister of Petroleum for Engineering, Research and Technology

Over recent years, Iran’s petroleum industry has focused on basic development strategies as the driver of national economy and industry.

The Iranian Ministry of Petroleum has gradually grown from a “major producer of crude oil” to a “major developer of oil industry upstream and downstream sectors”.

Currently, the activities of petroleum industry are extended beyond the Ministry of Petroleum to cover hundreds of small and large-sized companies producing hydrocarbon products, manufacturers of commodity and equipment, providers of engineering services, contractors and large holdings.

This initiative started during the seventh post-revolutionary administration and under the financial and spiritual aegis of the Ministry of Petroleum with a view to introducing specialized disciplines pertaining to petroleum industry at prestigious universities for the purpose of development of specialized human resources and launching specialized petroleum institutes to expand scientific and research capacities in the oil sector.

In parallel with this fundamental measure, development of production capacity and potentialities continued within the framework of development of large oil and gas fields, construction of petrochemical plants and refining facilities by leading international companies benefiting from the maximum capacity of small and big Iranian engineering firms and contractors. After the departure of foreign companies, national petroleum industry development did not stop, rather it continued at a high pace with more reliance on Iranian companies, while still benefiting from some foreign potentialities. National capabilities culminated in March 2018, when six phases of the South Pars gas field came on-stream simultaneously at a cost of $20 billion.

An immediate outcome of fundamental strategies, which worked out for the development of Iran’s petroleum industry, has been encouraging private entities involved in the oil industry. Today, about 65% of commodities needed in petroleum industry projects are designed and manufactured by local private companies. When it comes to detailed engineering services for projects, 100% is handled by Iranian consulting and engineering companies, contractors and manufacturers.

The Ministry of Petroleum has been exercising its role as the highest regulatory body charged with the coordination and management of portfolios and value chains.

Since engineering, research and technology constitute the three basic pillars of Iranian petroleum industry development and these three sectors are run by a single department at the Ministry of Petroleum, all affairs related to either of the trio are handled by the Office of Deputy Minister of Petroleum for Engineering, Research and Technology.

In line with policies instructed by Minister of Petroleum, this Office formulates the required technical framework for engineering services, supply of commodity and equipment and executive affairs in addition to signing off on engineering and technical instructions in order to systemize the activities of consulting engineers and contractors. In parallel with drawing up and updating a price list of petroleum industry installations and adoption of regulations, it has paved the ground for professional and fair activities of actors.

It has also launched the integrated system of e-supply of products to steer the manufacturing 10 groups of commodities, support the establishment of a body to issue quality certificate for manufacturers, make arrangements for the identification of dual-purpose items, and provide guidance for the purchase of commodity. The objective is to enhance the capabilities of domestic manufacturers and promote business. 

In the research and technology sector, 9 upstream, 12 downstream and five oil and gas exploration research agreements have been signed with Iranian universities and implemented. The universities were required to work with leading foreign technology centers as part of efforts to shore up this strategic industry in Iran.

In parallel, the Ministry of Petroleum in the 11th administration developed the Iran Petroleum Contract (IPC) as a new type of oil contractual framework to transfer in technology and empower domestic companies in the exploration& production sector. Under IPC terms, four groups – E&P companies, EPC, GC, and manufacturers – are set to benefit from technology transfer. That came after 17 Iranian E&P companies were cleared to work in this sector.

Last but not least, national development, transfer of technology, expansion of research, empowerment of domestic manufacturers and placing trust in them along with other effective measures by the Ministry of Petroleum are instrumental in business prosperity in the country.

Global oil and Asianproduct market, August

August 2018 Issue No. 74
Brent prices saw a downward correction this
month as bears outpaced the bulls. Dated Brent
averaged US$71.5/bbl month-to-date vs. US$74.3/bbl in
July, posting a US$2.8/bbl fall. Key bullish news on Saudi
production and the introduction of the first set of US
sanctions against Iran offered support for prices
earlier this month. However, retaliatory tariffs
announced by China on US exports outweighed
these bullish factors.

The Dubai market backwardation
weakened over the course of July and
by the end of the month the Dubai M1
vs M3 premium had fallen to its lowest level
in more than four months. This went in line
with the seasonal pattern of a longer Asian
crude balance which will continue until
it peaks around October, when the crude
deficit in Asia is estimated to be around 22.7
million b/d, or 600,000 b/d less tight than in
August. From October onwards the balance
should tighten again, which in turn supports
the notion that the backwardation in the
Dubai market structure should gain further
support over the course of Q4.
Asian Product Markets
Light Distillates (gasoline, naphtha)
Asian naphtha prices have continued to
trend near parity with Dubai, but have
started to come under some pressure since
the beginning of the month. June data
indicated the startup of ethylene production
from CSPC’s 1.2 million tpy cracker in China,
providing additional upside to regional
demand. With arbitrage spreads vs Europe
narrowing
recently, we could see some limited upside
to naphtha cracks in the near term as arb
barrels get squeezed, but do not expect any
long-term breakouts as Asia is nonetheless
set to remain well supplied.
Middle Distillates (gasoil, jet fuel)
East of Suez gas oil/diesel cracks rallied
over the last few weeks and we see several
factors supporting strong cracks going
forward. The Asian balance will start
tightening seasonally as the monsoon
season wraps up and demand in Southeast
Asia rebounds. After a relatively mild m-o-m
tightening in September, the Asian balance
coming in significantly tighter m-o-m in
October. This should more than offset a
lengthening in the Middle East balances.
The call on East of Suez barrels from Europe
should increase in the near term due to the
start of autumn maintenance and seasonally
higher demand. Jet regards in the East of
Suez have been weakening over the last
few days, although this is as a reflection of
very strong diesel cracks and not jet/kero
weakness. The pull on Asian and Middle
East exports from the West of Suez has been
very supportive, and there is a support from
this side extending into the coming weeks.
Some weakness in terms of market structure
- Singapore jet/kero forwards flipped into
contango recently - should persist to support
kerosene stock builds ahead of the heating
season. Meanwhile, strong regional demand
growth (+120,000 b/d y-o-y in Q3) should
continue providing support.
Fuel Oil
The rally in Asian fuel oil cracks has
continued, hitting a 13-month high of
-US$1.40/bbl month-to-date in line with
shrinking global balances. Asia’s fuel
oil deficit is estimated to be relatively
flat y-o-y in August as both sides of the
supply-demand equation tighten.
Soaring temperatures in North Asia
have sent regional utilities scrambling
for fuel oil to run their peak load power
plants. Korean utilities returned to the
spot market to tender for fuel oil for August
delivery, with volumes amounting to 125
kt. This is unlikely to continue after August
as support from the heat wave dissipates
and several nuclear reactors return from
maintenance.
Over in the Middle East, Saudi Arabia
continues to pull HSFO from Europe to
meet strong power generation needs for air
conditioning (around 1.5 mmt per month
since June). This contributed to the lower
Western arb flows to Singapore in recent
months. Saudi Arabia’s fuel oil imports for
power generation will remain elevated until
end-3Q when temperatures start dropping
again. The country’s fuel oil deficit should
widen by 44 kb/d y-o-y over 2H 2018 on
the commissioning of new oil-fired power
plants.

Iran Economy to Survive, Even With Oil Embargo

US President Donald Trump pulled his
country out of Iran’s 2015 historic
nuclear accord with world powers in
May, saying he would snap back sanctions lifted
under the deal into place on Iran. What would
happen to Iran’s petroleum industry once
President Trump restores sanctions on Iran’s
oil sector? Will European and Asian buyers of
Iran’s oil align themselves with the US to drive
Iran out of market? Will Iran see its exports
fall back to pre-2016 levels when the nuclear
deal, known as the Joint Comprehensive Plan
of Action (JCPOA), had yet to be implemented?
Will the US pullout from the JCPOA bring Iran’s
petroleum industry to its knees?
To answer these questions, we need to review
Iran’s petroleum industry status quo in a bid to
have a more precise assessment of the impact of
US withdrawal.
Iran’s crude oil exports have reached all time
highs thanks to the JCPOA.
Iran’s oil production has reached stable
conditions, while international sanctions
had cut it by 1 mb/d between 2012 and
2015. Iran offset the loss following the JCPOA
implementation in early 2016.
US JCPOA Pullout Forecasts
1mb/d Decline in Production/Export
Forecasts vary about possible decline in
Iran’s oil production and export. Some
Western institutes tend to consider ambiguous
conditions for Iran’s petroleum industry.
Some of them resort to exaggeration, saying
Iran would lose 1 mb/d in its oil exports. If
the sanctions are restored, energy research
firm FGE estimates that Iran’s output could be
slashed by 250,000 to 500,000 barrels per day
by the end of 2018. That figure would rise to
500,000 to 1 million per day through 2019. But
energy analysts are not sure whether or not all
of Iran’s oil production growth is at risk.
Richard Nephew, who was the Principal

Deputy Coordinator for Sanctions Policy
at the Department of State for the Obama
administration from 2013-2015, said in a
February report that about 400,000-500,000
b/d of Iranian oil could be disrupted within 12
months.
“If we assume that the renewed U.S. sanctions
only target oil purchases, then the market
analysis is somewhat simplified and would
depend on how much Iranian oil is actually
removed from the market. If the above
characterization of government responses
were correct, then it would be reasonable to
estimate an initial year reduction of perhaps
400,000-500,000 bpd. In other words, Iranian
exports would fall from their present value of
approximately 2.4 million bpd to 1.9 million bpd
within a year of sanctions reimposition,” the
report said.
Iran’s Role in Energy Supply to Europe
The director general of chairman’s office at
the Tehran-based Strategic Council on Foreign
Relations (SCFR), Abdorreza Faraji-Rad, said
energy remained a key element in political and
international developments.
“Europe doesn’t want to be exclusively reliant
on Russia’s oil and gas, and it is seeking options
to diversify its energy sector,” he said.
Faraji-Rad said that the Organization of the
Petroleum Exporting Countries (OPEC) was
changing while the Russians were determined
to increase their clout with oil market.
Meanwhile, he said, Saudi Arabia’s future OPEC
clout will decline and Russia will become more
influential in international energy transactions.
“For its part, Europe does not want to remain
dependent on Russia in the energy sector and
it is seeking diversification,” said Faraji-Rad.
“They want Iran to remain an energy supplier to
Europe. Their desired pipeline for Iran’s energy
exports cuts through Iraq, Syria and finally the
Mediterranean.”
US Energy Security Challenge
According to “Foreign Policy”, since withdrawal
from the Iran nuclear deal in May, the Trump
administration has faced a serious dilemma.
“On one hand, with the prospective reimposition
of oil-related sanctions in November,
it hopes to exert maximum economic pressure
on the Iranian government by cutting its

Universities to Help Soroush Oil Recovery

Soroush, which started production in 2001 in partnership with Royal Dutch Shell in 2001, is known as Iran’s largest offshore oil field. Due to natural decline in production, this field needs to be upgraded with modern technology in order to be developed. The main reservoir of this field is Bourgen located in the west of the Persian Gulf.

Soroush is located in Bushehr Province, more precisely 83 kilometers southwest of Kharg Island. Discovered in 1962, the field became operational at a rate of 14,000 b/d after the drilling of the first well. The field was harmed severely during the 1980-1988 imposed war. The field halted production during the conflict. Arrangements for the renovation of this field started in 2000 and development of the field began two years later.

Iran’s Ministry of Petroleum introduced Soroush for foreign investment during a conference held a couple of years ago to roll out a new type of oil contract. Iran hopes to lift output from old fields by using big oil companies’ capital and cutting edge technology.

During 15 years of production, Soroush has produced only less than 3% of its reserves, or about 360 million barrels of oil.

Soroush last underwent development under a buyback deal with Shell in 2000. Under this deal, 10 horizontal wells were drilled in the field. In total, there are 32 wells in Soroush, producing oil with an API gravity of 14 to 21. The API gravity of the oil currently being produced is 18.

Soroush remains the largest field owned by the Iranian Offshore Oil Company (IOOC); however, it is among the oldest oil reservoirs in Iran. As a mature and brown field, it needs modern technologies to supply more oil.

The heavy crude oil extracted from Soroush is blended from that of nearby Norouz field to be shipped to the Persian Gulf floating terminal before being sold by the Directorate of International Affairs of National Iranian Oil Company.

A major advantage with the Soroush platform is its simultaneous supply and export of oil and gas. Furthermore, it is among rare platforms where no flaring projects have been implemented. Before Shell, American and Italian companies were developing the field.

The head of reservoir engineering at IOOC has said that Soroush needed the involvement of international oil companies.

Sahand University Assistance

Enhanced recovery from Soroush started recently in the wake of an agreement signed between IOOC and Sahand University of Technology. The agreement was signed by CEO of IOOC and chancellor of Sahand University of Technology.

NIOC officials say Soroush has recovery rate of 5% under normal conditions, which is much lower than that of similar fields. Enhanced oil recovery (EOR) methods would raise the recovery rate to 10 to 15%.

Under the 10-year agreement, universities will be required to carry out EOR studies in a bid to devise short-term and long-term plans for boosting production from Soroush.

NIOC is currently focusing on maximum efficient recovery from oil and gas fields across the country and enhancing oil recovery from Soroush.

The head of Research and Technology (R&D) at IOOC recently said that various scenarios for enhanced recovery from Soroush were under review in light of partnership between IOOC and universities.

Noting that Soroush enjoyed high potential for enhanced recovery, he said the heavy crude field had a meager 5% recovery rate.

He cited various enhanced recovery methods like miscible gas injection, immiscible gas injection and chemical injection.

"To that end, good cooperation has taken shape between IOOC and Sahand University of Technology. We are in the process of drawing up a comprehensive action plan for implementing enhanced recovery project in this field, the head of Research and Technology (R&D) at IOOC said.

Whereas Soroush recovery could rise to as high as 15%, we intend to use the experience of enhancing recovery in Soroush-style oil fields, whose heavy oil is highly viscose", said the head of Research and Technology (R&D) at IOOC. The experience is also to be used to boost the recovery of this offshore oil field."      

Gas Odorant Developed in Iran

Iran Operates Gas Refineries from A to Z

Along with the development of gas industry, production and supply of widely used products of this industry has been put on the agenda. Significant success has so far been achieved in this sector. The latest is the development of gas odorants, which are to be marketed in the future.

The full text of the interview of "Iran Petroleum" with Majid Reza Jansarian, manager of refinery development projects at the Iranian Gas Engineering and Development Company is as follows:

Development of gas odorant is the latest success recorded by Iranian petroleum industry specialists. Could you please explain about it?

Ever since the birth of gas industry in Iran, gas odorants have been supplied by two countries. Now Iran is becoming the third supplier of gas odorant in the world. The basic design of this project has been done by the Research Institute of Petroleum Industry (RIPI), which is a license-holder of this technology in Iran. The basic design work was handled by the project engineering section until the gas odorant was developed.

How much is the production capacity of this unit per year? At what stage is it now?

The project is physically over. It is ready to enter the startup phase. Its startup will help meet domestic needs for odorant in addition to letting the country export odorants. After France and Russia – which are known as the major suppliers of this strategic product in the world – Iran is the third nation to join the international club of mercaptan producers with an annual output of 800 tonnes of gas odorant. Acquiring the technology to produce odorants is breaking the global monopoly on this substance in addition to earning the country significant revenue through exports. Since Iran-made mercaptan is of high quality, there is good capacity for its supply on regional markets. It would be possible to export surplus production to neighboring countries.

Where is this substance being used?

Natural gas may inflict extensive damage in case of leakage. Therefore, we would need to odorize it in order to be smelled and to prevent explosion and fire. Mercaptan, which odorizes natural gas, is a major element in gas industry safety. Injection of mercaptan will alert gas leakage to avoid financial damage and life losses.

What other projects are under way?

The projects are: building a 70,000-cubic meter storage tank at Parsian refinery,  a logistics post in Phases 1-3 of Assaluyeh, and  installing gauges in the refineries of Phase 1-3 and Phase 5 of South Pars.

What are the projects that have been carried out with regard to sustainable power supply to South Pars refineries?

After the startup of SP1-SP3 logistics posts located in Phase 1 of Assaluyeh, secure power supply with sustainable frequency and voltage for gas production has been provided to the first and second refineries, which would be effective in the sustainability of gas production system. Until recently, local power plants were used to supply power to South Pars refineries, but numerous problems with these power plants prompted Pars Oil and Gas Company to establish a centralized power station in a bid to supply electricity to refineries more securely, more economically and more easily. The output of this power plant is 132-KV electricity, which would be reduced to 33 and 6 volts in the logistics posts of SP1-3 in order to be used in the first and second refineries. This project is now ready to come on-stream and be delivered to client. The startup of this logistics post would help phase out old turbines of SP1-3 which have been inflicting heavy maintenance costs in order to supply reliable electricity to the first and the second refineries for the purpose of sustainable natural gas production.

Development of Ilam refinery is one of the major projects currently under way. How much would it add to the refinery capacity?

After development of Ilam refinery (Phase 2 of Ilam refinery), the production capacity of the refinery will increase 50%. In order to implement this project, basic design for gas treatment, sulfur production, gas compressor and sulfur degasification is over and is ready to be put out to tender.

What stage is the construction of Parsian refinery gas condensate storage tank in?

Once a gas condensate storage tank has been built at the Parsian refinery with a capacity of 70,000 cubic meters, a big step would be taken in favor of sustainable production from this plant. In the absence of possibility of carrying refined products, they should be stored in a facility to be moved on time. Therefore, after this project has been launched the refined products would directly go to the storage tank so that production would not be halted.

The Parsian gas refinery storage tanks are under construction with prefabricated slabs. In order to avoid accumulation of inflammable gas, the ceiling of these storage tanks is mobile.

50 Years of Iran Petchem Industry

Farshid Khodadadian

Iran’s petroleum industry activities have not been limited to recovery from oil reserves. Rather, widespread activities have been carried out in other sectors including petrochemical and gas industry to the extent that Iran is now recognized as a leading state in both sectors.

On the global level, the petrochemical industry started its growth period after the end of World War II that was when it was spread all across the globe. Since petrochemical industry needed to be fed by oil and gas, it owed its progress to petroleum industry developments. In Iran, petrochemical industry was born after petroleum industry reached stability.

 The establishment of a chemical fertilizer plant in Iran’s southern city of Shiraz in 1958 was the first step for petrochemical production in Iran. Three years later, a small factory was set up in Shiraz to supply petrochemical products under the authority of Ministry of Economy. In the meantime, the Planning Organization focused on petrochemical industry and in 1962 it entered into talks with the Institut français du Pétrole (IFP). One year after, a memorandum was signed between them for feasibility studies pertaining to petrochemical projects. That is how petrochemical sector became the top talking point in the country with different sectors and organizations making contribution to this new industry.

In 1963, the Iranian government decided to centralize all petrochemical industry activities in a bid to avoid parallel organs. In December that year, the Cabinet held a meeting and agreed on the establishment of Supreme Council of Petrochemical Industry. The Council was comprised of minister of economy, chief executive of National Iranian Oil Company (NIOC) and chief executive of Planning Organization. That helped emancipate the nascent petrochemical industry. The formation of this council ended the need for the IFP activity in Iran’s petrochemical sector. In the meantime, the Planning Organization had undertaken certain measures in partnership with a foreign company and a group of Iranian private sector investors for the establishment of the Iran Chemical Fertilizer Public Stock Company. All these affairs were delegated to the Supreme Council. Although various entities were involved in the Supreme Council, the only organ competent to develop the petrochemical industry was NIOC. To that effect, the National Consultative Assembly and the Senate approved a law in August 1964 delegating the authority of all petrochemical activities to NIOC. Later on, NIOC was authorized to establish a subsidiary known as National Petrochemical Company (NPC). That was the start of administration of petrochemical affairs in Iran. NPC was launched in January 1965 with an initial capital of IRR 8,300 million, which totally belonged to NIOC and was unnegotiable. NPC immediately embarked on feasibility studies for operating petrochemical projects.

In July 1965, the National Assembly and the Senate approved the petrochemical industry development law which had been introduced by NPC. The law authorized NPC to enter into direct talks with Iranian companies and institutes with a view to supplying petrochemical products.

The Articles of Association of NPC was adopted by the Cabinet in August 1965. The Articles called for activities in all branches of petrochemical industry and affiliated industries, development and production and manufacturing of various petrochemical and chemical materials and products which are derived from oil and petroleum products, natural gas, hydrocarbons as well as other organic materials and minerals. Immediately after startup, NPC reviewed all measures which had earlier been taken with regard to the petrochemical industry, and concluded that IFP involvement and its partnership with NPC would not guarantee national interests.

The budget law, amended in 1964, delegated authority of all petrochemical industry activities to NIOC while the Shiraz chemical fertilizer plant was placed under administration of NPC. NPC changed the status of the fertilizer plant and registered it under Iran Chemical Fertilizer Company in 1965. This company had plants in Marvdasht, near Shiraz. They produced urea nitrate ammonium, sodium carbonate and bicarbonate, citric acid and blended fertilizers. In 1965, NPC entered into talks with the US-based Allied Chemical Corporation and reached agreement on a 50-50 joint venture deal in December the same year. The joint venture pertained to the establishment of a petrochemical plant at Shahpour Port (today known as Imam Khomeini). Shahpour Chemical Company (today renamed Razi) was established with an initial capital of $100 million. The products supplied by this company were: sulfur, ammoniac, urea, ammonium phosphate, phosphoric acid, etc.

Another project which NPC mulled over from the very beginning was the establishment of a petrochemical plant in the vicinity of the Abadan oil refinery to produce plastics and detergents. To that end, an agreement was signed with American tire company BFGoodrich, which led to the formation of the Abadan Petrochemical Company. In December 1965, NPC had signed an agreement with Amoco International, a subsidiary of Standard Indiana, for the establishment of a petrochemical plant in Kharg Island. In 1966, the Kharg Chemical Company was set up in coincidence with the Abadan Petrochemical Company.

From that time onward until 1986, a variety of petrochemical projects including Iran-Japan petrochemical corporation (Imam Khomeini), Iran Neptune Petrochemical Company (Farabi), Carbon Ahvaz, Pazargad and Shiraz Petrochemical Industries Development Corporation became operational. That was the first period of expansion of petrochemical industry in Iran. The 1979 Islamic Revolution and the subsequent suspension of petrochemical development projects in various areas, which coincided with the imposed war, largely drove Iran’s petrochemical industry into stagnation. After the end of the war in 1988, petrochemical plants which had been damaged were reconstructed and important petrochemical projects came on-stream in Isfahan, Arak, Tabriz, Urmia and Khorasan. Bandar Imam Petrochemical Plant was completed and Iran’s petrochemical production jumped to 20 million tonnes a year, from the previous one million tonnes.

Development of exports, privatization and profitability were the main results of petrochemical development. In the meantime, modern planning had given Iran the title of the second producer and exporter of petrochemical products in the Middle East. If petroleum industry has turned 100 in Iran, petrochemical industry is its 50-year-old child which is spreading its network across the Iranian territory.

The subsidiaries of NPC are as follows: Arak Petrochemical Company, Isfahan Petrochemical Company, Amir Kabir Petrochemical Company, Bandar Imam Khomeini Petrochemical Company, Tabriz Petrochemical Company, Kharg Petrochemical Company, Khorasan Petrochemical Company, Kharazmi Petrochemical Company, Razi Petrochemical Company, Shiraz Petrochemical Company, Abadan Petrochemical Company, Carbon Iran Petrochemical Company, Bandar Imam Polymer Company, Bandar Imam Processing Company, Bandar Imam Hydropower Company, Bandar Imam Kimia Company, Urmia Petrochemical Company, Farabi Petrochemical Company and Rejal Petrochemical Company.

NPC has also, under way; various projects to further expand the petrochemical industry: Borzouyeh, Tondguyan, Jam, Khuzestan, Fajr, Fanavaran, Qayed Basir, Karoun, Kermanshah, Maroun, Mobin, Hegmataneh, Pars, Mahabad, Ghadir and Shahid Rasouli.

Owing to relentless efforts by petrochemical service workers over the past five decades, Iran is today ready to export petrochemical technology to neighboring countries and become a major petrochemical hub.

Naft Omidiyeh Archery

Iran’s petroleum industry is supporting large numbers of sports teams within the framework of its investment in sports. Most of these teams have managed to win national and international titles, bringing joy to Iranian people. Archery is one of them. In the city of Omidiyeh in the oil-rich southwestern Khuzestan province, the archery team has been hiring talented local youths. The Naft Omidiyeh Archery may not have gained fame in the country as it has not had any extra spending like other archery teams in the Premier League; however, it has managed to maintain its status high. The main advantage with the Naft Omidiyeh Archery team is that it has introduced many archers to national team.

Naft Omidiyeh Archery History

The Naft Omidiyeh Archery team officially started work in February 2011. From the very beginning, it was seeking to identify local youths interested in archery in Khuzestan Province. In the following years, the team has managed to register brilliant results thanks to efforts by local archers. In 2014, the Naft Omidiyeh Archery team finished runner-up in the archery pro league. Three years later, it finished third. Since its establishment, the Naft Omidiyeh Archery team has been a serious rival to fellow teams and it has always combatted strong teams. 

Archery Hall

Generally speaking, archery is facing restrictions in Iran. To deal with this problem, the Naft Omidiyeh Club moved to establish Iran’s first exclusive archery hall as the club’s objective was to train future archers. This hall has largely been used by Iran’s Archery Federation to host archery matches in the country.

Iran’s second archery hall was opened in the central city of Arak one month ago; however, the Naft Omidiyeh archery hall is totally different owing to services it has rendered in recent years.

National Archers 

The Naft Omidiyeh Archery team has hired talented youths and family members of staff of National Iranian Oil Company (NIOC) in its squad. It has turned out to be successful in different age groups.

Led by Behzad Fouladvand, the team has attracted a large number of archers ranging from juniors to adults. By training them effectively, Fouladvand has promoted the archers to a high status.

Attention to archers has been a major point in the Naft Omidiyeh Archery team. That is why many archers from this team have joined national teams and managed to win medals in international matches. A prime example is Gholam-Reza Rahimi who was awarded in the 2016 Paralympic matches, bringing joy to Iranians. Likes of Rahimi have been numerous at the Naft Omidiyeh Archery team. This trend is set to bring about happy events in the country in coming years in archery.

International Matches Absence

A challenge that archery clubs all across the globe are faced with is that there are no international archery matches. On the club scale, archery has no continental or global matches and everything is limited to the national level. If there were international archery matches, the Naft Omidiyeh Archery team might have shot to prominence. That is why motivated Iranian archers try their best to join the national archery team and represent Iran beyond borders.

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Behzad Fouladvand, Naft Omidiyeh Archery Coach:

We Owe Our Success to Local Archers

Behzad Fouladvand had devoted huge efforts to archery in Iran. Thanks to his devotion and sense of duty, he has trained many archers for national team.

The following is an interview with the head coach of the Naft Omidiyeh Archery team.

Would you please tell us about the Naft Omidiyeh Archery team’s current situation?

Over recent years our team has effectively been racing ahead. Having employed NIOC staff’s family and local youths in Khuzestan Province, we have managed to leave behind good days. Our current agenda remains identical and we hope to be able to record a brilliant future.

How come you haven’t thought of attracting national archers in recent years?

In any case, our constant objective and plan has been to identify and engage local youths. Of course our budget has been limited, but I personally enjoy working with the youth and I feel delighted to have been able to act successfully by relying on young archers.

Anything else you would like to add?

Petroleum Ministry officials and Naft Omidiyeh Club managers have done their utmost for the archery team and I offer my most sincere gratitude to them for what they have done in recent years. What I ask them is that permission should be given for the participation of the ministry staff’s children in the archery games. Even if my request is turned down, we will do our best and I hope we would properly react to the confidence placed in us.

Bishapur, Symbol
of Sassanid Triumph
Bishapur Structure
Royal Citadel: Anahita Temple, Shapur Ceremonies Hall, Mosaic Veranda,
Valerian Palace
Commons’ Area: houses, hammam (bathroom), caravanserai and bazaar
Tourism
monthly
58 59
Tourism
August 2018 Issue No. 74
Bishapur was built in 266 AD at the order of Shapur I (240-270). There were
people living there up to the 14th century. According to inscriptions, Shapur
I of the Sassanid dynasty had ordered the establishment of a city on the road
connecting Persepolis to Ctesiphon. That came after Shapur I defeated Valerian,
the Roman Empire. The road used to connect Ctesiphon to Susa during the reign of
the Achaemenid dynasty. Bishapur is now located northwest of the city of Kazeroun
in Fars Province in southern Iran.

Anahita Temple
The building that is known as
the Temple of Anahita, is in fact
an unidentified structure, deeper
than the other rooms of the palace.
The structure, with its pleasant,
harmonious dimensions, can only
be reached by descending a long
stairway. It is a building without
parallel. Once you’ve descended the
stairs, you will find yourself on a small
square, surrounded by high walls. The
square itself must have been a shallow
pool, surrounded by sidewalks. The
doors in the walls give access to a
corridor that surrounded the square,
and which in turn gave access to the
place where the aqueduct reached
this square building.

Shapur Cave
Shapur Cave is located in the Zagros Mountains, in
southern Iran, about 6 km from the ancient city of Bishapur.
This cave is near Kazeroun in Chogan valley, which was the site
of polo (Persian for Chogan) during the Sasanian period. In the
cave, on the fourth of five terraces, stands the colossal statue of
Shapur I, the second ruler of the Sassanid Empire. The statue was
carved from one stalagmite. The height of statue is 7 m. and its
shoulders are 2 m. wide, and its hands are 3 m. long.

Bishapur Columns
These columns are located in the city center
at the intersection of two main roads. Famous French
archeologist Roman Ghirshman has said people
used to distribute donations there. These columns
are significant because the historical document of
urbanization in Bishapur is engraved on one of them
in Ashkanid and Sassanid scripts

Qualification Assessment Notice
Subject: International Tender No. 97107 for APSTM and APSDM Processing of
Onshore 3D Seismic Data on 4,000 sq km, Balaroud, Pardis and Tandis
Exploration Directorate
National Iranian Oil Company (NIOC) intends to put out to two-phase international tender the foregoing
project whose details are outlined below. Qualified companies are invited to bid.
(The tender bid is estimated at €4,150,000)
Applicants are required to submit their latest audited financial statements and officially introduce their
duly authorized representatives to receive tender assessment documents from the Legal Affairs and
Contracts Division of Exploration Directorate of NIOC, located at Close 1, Seoul St, Vanak Square, Tehran, Iran,
no later than September 22, 2018.
Telephone: +98 21 82703227
Fax: +98 21 88604584
Furthermore, the required information should be submitted to the abovementioned address in the form
of a folder of qualification assessment documents attached with a CD during the official working hours on
October 13, 2018. It is obvious that documents submitted after the expiry of the determined deadline shall
not be taken into consideration.
Tender documents shall be distributed among companies deemed to be qualified.
(Venue, date and deadline for the receipt of documents, submission and opening of proposals shall
be announced later on. The tentative date for opening financial proposals is January 8, 2019.
For any further information, the applicants may visit the following sites:
www.SHANA.ir
www.niocexp.ir
wwW.iets.mporg.ir
Public Relations Department
Exploration Directorate
Required Services: Processing 4,000 square kilometers of Onshore 3D seismic data in
Balaroud, Pardis and Tandis applying APSTM and APSDM.
Duration of Contract: 15 Months
Place of Services: Data Processing Center of Contractor Company
Bidder Requirements:
Legal person status;
Availability of equipment and tools pertaining to the scope of work of the tender and skilled manpower;
Sufficient experience related to the subject of tender;
Affordability of posting €113,408 security guarantee as performance bond in accordance with
regulations set out by Client, provided in the tender documents; and
Clearance from NIOC Security Division