Sanctions, Already Dud Policy

In spite of efforts made by industrialized nations to master sophisticated technologies with a view to developing and fostering non-fossil energies, oil still remains the most dominant energy carrier in the world. Oil is unlikely to be supplanted by any sustainable alternative at least for decades.

That explains why oil market has experienced ups and downs over the past century. The oil market is affected by the slightest global and even regional developments.

The establishment of the Organization of the Petroleum Exporting Countries (OPEC) was among the first steps taken aimed at supply management and adjusting supply and demand in the market.

Maintaining market stability and security for energy carriers, particularly oil, takes up added significance when one takes into consideration the fact that non-OPEC oil producers and even oil consumers are in continued interaction with OPEC in a bid to push ahead with their industrial, economic and social development plans without hitting any snags.

A prime example of such OPEC/non-OPEC cooperation was the recently held 10th Joint Ministerial Monitoring Committee (JMMC). The meeting underlined the need for the participating countries to conform to their quota obligations.

Under such circumstances, the Trump administration is seeking to re-impose sanctions on Iran’s oil sector. Such sanctions were already imposed on Iran by former US administrations, proving to be futile.

Despite threats and illogical measures taken by the US government in imposing unilateral sanctions on Iran, the oil market is not in position to remove supply from Iran which remains the world’s largest holder of hydrocarbon reserves.

Driving Iran out of oil market would require an extra capacity of 2.7 mb/d, which is currently impossible even by OPEC and non-OPEC producers together.

The second obstacle in the way of imposition of unilateral sanctions is the psychological impact of energy market that may experience a new price shock. That is not acceptable even to the US’s traditional allies.

Oil price volatility would hinder development plans in oil producing nations which heavily depend on petrodollars. However, developing nations are also facing budgetary shortfall, which would result in depression and social consequences. No country would be ready to accept such conditions just to appease Donald Trump.

Trump has so far triggered political and trade war with such countries as Canada, Mexico, China and Russia after making hasty decisions and pursuing adventurist policies.

Now he seems to have no rational analysis of realities on the ground in the oil market. He wrongly imagines that he would be able to force global community to follow him.

Iran will prove to President Trump that his wrong decision will produce no fruitful results, and imposing embargo on Iran’s oil will fail.

The JMMC Established by OPEC-non-OPEC; Not a Decision-Making Body

Iran’s Minister of Petroleum Bijan Zangeneh has said the Joint Ministerial Monitoring Committee (JMMC) is not legally competent to make decisions about adjustment of production quotas.

 In an interview with S&P Global Platts and Bloomberg News in Tehran, he said that “all decisions will be adopted only in the OPEC oil and energy ministers’ meeting in the presence of all member countries and based on consensus.”

The interview was carried out ahead of September 23 JMMC meeting in Algeria.

Will you attend the JMMC meeting next week?

I’m not going (to the meeting). Mr. Kazempour Ardebili, will head the Iranian delegation in Algeria. But Iran’s position in terms of the current agreement will be made in the ordinary meeting of the OPEC Conference.

 What are the positions of Iran in the Sunday meeting in Algeria?

 We believe that this meeting doesn’t have any decision-making mandate. The JMMC doesn’t have the authority nor is it legally qualified to reach decisions, not on any issue. Its observations aren’t determining either. It only observes and monitors and it just watches, observes and reports to the meeting exclusively for the ministers present in the meeting. The JMMC has no right to make any other decisions. I’m going to say something now in general about OPEC, there is something called the Declaration of Cooperation (DoC), we celebrate it and appreciate it a great deal. The non-OPEC members that have joined us in the past two years, especially Mexico and Russia, have worked with us and have really helped us stabilize the market very much. But, the DoC is not supposed to replace OPEC.

 My analysis now is that OPEC is the victim of a creeping movement that’s a result of both cooperating with the US and fear of the US NOPEC bill. They are sacrificing OPEC, they are slowly and gradually destroying OPEC without directly saying so, they want to gather some names together to create some sort of "Forum" to replace OPEC.

 We never believe in the idea that you should commit suicide for fear of death; so we’ll carry on what we’re doing. In the nearly 60 year life of OPEC this sort of thing has happened 10 times or more, and there will be more ups and downs. You mustn’t just sacrifice OPEC out of fear — in my view OPEC is one of the third world’s biggest accomplishments, not just in terms of oil producers, but it’s an organization that can impact the world’s economy and it has a good, strong foundation.

 And so there are some countries which want to dismantle OPEC and they want to make this thing [JMMC] much bigger than it is, out of proportion, pointlessly. If you pay attention you’ll see they are making this OPEC/non-OPEC meeting into a big deal while it’s not that important. This entire story around OPEC and non-OPEC was about cutting 500 thousand barrels. The rest of the countries haven’t cut anything. In fact, they didn’t have production capacity. Look at those countries which cooperated with us. We are thankful that they’ve cooperated politically and sympathized with us, but they all produced under their quotas and that’s why conformity of some of them reached nearly 200 percent and 180 percent. They couldn’t produce at all, apart from Russia and to some extent Mexico.

 Russia has helped a while and the point is that they’re not our problem in this situation right now, they helped and then that period will expire, and they can cooperate as much as they want based on their own interests as a country that is a non-OPEC producer. But expectations from the OPEC countries is higher, particularly in the current situation — and I’ve previously mentioned this many times — it’s not appropriate that two OPEC members start leading and taking on the leadership of an anti-Iranian movement.

Do you mean UAE and Saudi?

I’m not mentioning any names at all. But the two OPEC members are taking the helm of global anti-Iran campaign in the oil market, this is completely obvious and it’s not right. It’s not either right as neighbors or as partners. They take on this anti-Iranian tide and then they also take onboard cooperation with America in order to hurt Iran, and then they pull some non-OPEC members along with them who don’t necessarily understand the depth of the political complexity and the other aspects that I don’t want to explain here.

 For instance they will say something like ‘we won’t let there be a shortage in the market’, which on the surface is a very good idea to say or is economic. But in my opinion such a statement has nothing to do with economics and is 100 percent political and against Iran. Anyone who says they will compensate for the shortage in the market is speaking against Iran. And it’s a political statement; I do not see this as economical. There are not any economic principles in it. And contrary to what they say, they’re actually involving not only OPEC but also non-OPEC countries in a political game. But as this political game is one that is working in tandem with the US policies, some people don’t want to talk about it.

 Now, some OPEC and non-OPEC countries are working in line with moving along the approach of the US. Unfortunately, a part of the Secretariat is also moving in this direction and we have realized this. And I want to notify the Secretariat hereby to be careful about its work, a part of its works, and remind them that OPEC is an independent organization, it is not a subsidiary of the Department of Energy of the United States, and its officials must pay attention to this. What matters is the members' will. We don’t have big members or small members, all the members are equally participating in the Organization's activities and every member's views should be taken into consideration. And my main issue is that, the JMMC meetings is given the mandate to monitor market and report .As you may recall I was head of the OPEC's Ministerial Monitoring Subcommittee(MMSC) for eight years at one time ,and the body never had all this fuss and noise before.

 Even though, some non-OPEC countries participate in it, it doesn’t make much of a difference anyway.

You positively talk about Russia. But apparently, Russia and Saudi Arabia are together…

I said before. Some countries have complicated political objectives expressed in simple, economic terms, while they are not economic at all. When they say ‘we will sort it out [oil shortage in market],’ any wise person says ‘that’s right, demand and supply should be balanced naturally. But if you look at it a bit closely, it is not an economic argument. It is indeed a signal to the US: put as much as pressure you want on Iran, and we won’t let the market face any problem. This is what we should get. This is a political message. I don’t believe that Russia wants to cooperate with the US and blow a strike to us, but some others do.

What’s the JMMC’s role in pursuing the US will?

It is not to make a decision or determine or distribute quotas… a group here has made up something against Iran and assume that they can succeed. These are bad intentions. I announce here that what they do is not appropriate,”

Have you talked with other OPEC members and Russia to help reverse these moves that are in line with the US objectives?

I don’t say that Russia is acting in line with the US objectives. Russia is big enough not to do so. But some might take advantage of Russia’s cooperation. I have contacted some of the ministers, talked to them, wrote letters and explained to them, recently, and have drawn their attention to this issue.

Have you only talked to OPEC members?

No, I have also talked with non-OPEC, too.

We have heard that you have written some letters to the OPEC Secretary General about some members not abiding by the agreement.

 Yes, they are violating and they want to bring OPEC on board and pursue their illegitimate goals. They are both overproducing and insinuating a wrong understanding from the OPEC agreement. If they want to produce more, we cannot stop them, because there is no forcible instrument in OPEC. But they shouldn’t do it in the name of OPEC. They should announce ‘the US has phoned and told us to increase our output, and there is no other way but to do so.’ Today, some of these countries tell us ‘oh we cannot take much more oil from you [Iran]. Please understand us. We have long relation with US and we can’t ignore what it wants.’ Ok! We don’t want to fight with each other. But don’t say it’s what OPEC said [decided]. They should say it’s their own decision because they can, it is what it is, take it or leave it. They should say ‘we increase the production because we can and we don’t pay attention to anyone, and they should also say we can’t resist the US instructions. But don’t put it on OPEC, and I think that is why they are destroying OPEC.

Are you worried about OPEC as a founder member?

Yes, we are worried about OPEC but much more worried about Iran itself. I support that organization for Iran, not the other way around. We established an organization, from which the third world has benefitted so far. It can still play a role, but the world changes, and there are developments. We shouldn’t forget one principle which is power. Influence comes from power, not reasoning. This is very important…

OPEC has ups and downs. OPEC basically makes sense when it cuts output. When prices are high and the market is demanding, everybody does what it wants. OPEC is meaningful when it wants to cut production in order to raise prices. There, it is influential, I mean if we are not careful, we will be digging OPEC’s grave with our own hands.

Haven't the ministers to whom you wrote responded yet?

No, but they have received the letters.

Do you think Saudi Arabia and Russia can produce more than the amount they have poured into the market so far?

Some countries are relying on their inventories. They give some numbers for their inventories but I don’t know if it is true or not. I don’t know whether or not the volume of inventories that Saudi Arabia says it has outside the country and elsewhere are real. But from now on, I think, they will rely on their inventories rather than their production to pour oil into the market. I think they don’t have excess production capacity. But eventually, it won’t last long. No international analysis says that missing Iran’s oil can be tolerated in the long run.

Iraq is increasing its output…

No, it can’t. Iraq hasn’t increased its production. It is a long time that its production has stayed fixed. There is a reason,”

I don’t talk about production, neither about its figure, the exports, and destinations. I won’t say a word because the Americans have assigned resources, civil forces, not military ones, in many ports and countries and they are controlling, watching and carrying out an intelligent monitoring. They watch our people. I don’t want to give them additional information; I don’t want to brag today for them, neither do I want to explain my countermeasures. I don’t want to say how much we produce. These all would help them to obtain free information. I am not going to give them that. The oil industry is working with full force. I won’t give information. We will see eventually.

Do you confirm 35% down exports since April?

I don’t give any figures.

What about tankers and shipment, buyers?

I don’t give any information. Whatever I say, the US will take advantage of it against us. It is like ‘anything you say may be used against you in a court of law,” he said with a smile.

I won’t reveal what customer, what destination, what countries, with which tanker I ship oil, how I solve my insurance problem, I won’t give any information, and you can write that down.

Can you say who the buyers are?

No. Look, if America finds out anything that could work in favor of the U.S., I won’t talk about it. They will use whatever I say against us.

I’m not going to release the name of customers and shipping companies. I’m not going to disclose how we send our cargoes or how we solve our insurance problems. I’m not going to talk about these points, because they work to their advantage.

If the forthcoming JMMC meeting reaches a decision that’s beyond the authorized proposal, does OPEC have an approach on what to do?

It’s void. It’s invalid, it’s a void decision. Such a decision is illegal. The JMMC has no decision-making mandate. I will say this, that in general the JMMC has no right to make decisions. Any decisions made by JMMC are invalid. It can only observe and report. Decisions can only be made at OPEC meetings in the presence of all OPEC members and through consensus of members.

The place for decisions is at OPEC. This body [JMMC] is monitoring only. All this fuss, advertising, promotion and placards-this is just to propagate for pulling OPEC apart. 

If the JMMC enters the ministers meeting at OPEC...?

Well, ok. Without a moment of hesitation, I will definitely and definitely veto any decision that threatens our national interests. Vetoing means that the decision isn’t legal, it’s illegal if there’s a veto.

So, right now you won’t be at Algiers, if they make a decision.

They can’t. The Algeria meeting is not an OPEC Conference.

You will veto any decision that comes to OPEC?

I said that any decision that poses even the smallest danger to our national interest, without any hesitation at all, I would stand in its way. I’m there for my own national interest alongside everyone else, and this is true for everybody.

What are your views on this current agreement and its continuation?

The agreement doesn’t really exist anymore. It’s finished. Russia came long, cut 300 thousand barrels and then got that 300 thousand back, therefore it’s over. There’s no agreement left really. I talk to OPEC. I don’t have much to say to non-OPEC.I am addressing OPEC. I respect their [non-OPEC] cooperation in the future, but it doesn’t need all this propagated meetings, logistics and spending. 

So in December if they want to renew/continue this agreement, what will your position be?

We'll discuss it then.

Do you want a permnent seat on the JMMC?

No, whereas it is just observing and monitoring, indeed it only monitors the situation; there is no reason to need that. All my time and efforts and those of my colleagues are being focused right now on this economic war that America has launched against us.

Do you think the way that OPEC members, Saudi and Iraq do in terms of production increase; do you agree that they are using OPEC as a political tool?

 I said that some OPEC members, I haven’t mentioned any names. I’ve said some OPEC members, contrary to everything that they’ve said themselves and contrary to their own motto against politicizing OPEC, are actually politicizing the entire organization in order to materialize the will of the U.S. And they are paving the way for the US. When they say ‘we have no problem in securing the market’ what they mean is, ‘come on Mr. America, impose sanctions on Iran as much as you want and destroy the people of Iran and it’s not a problem, we are with you’. Politically, this is what it means. It means cooperation with the US in sanctioning Iran.

 Anyone who says this is cooperating with the US. Whoever says this, whoever at all, says ‘we will make-up for any shortfall in oil’ is going along with the Americans and is giving a greenlight to the Americans to sanction Iran, to exacerbate Iran and to deepen sanctions against Iran.

Have there been any new agreements with Russia?

There are always new agreements.

 Are the agreements in relation with oil exports or anything?

On exports, as I mentioned, I won’t provide any more information.

So, there are new agreements or they are in the process of being made, or they’ve been signed?

Now, the trend is good. We’ve moved forward.

In the time that there’s been this agreement, has share of any OPEC MCs gone to non-OPEC countries?

Look, OPEC won’t give any share of anything to anyone. The Persian Gulf countries won’t leave a single barrel of their market share to anyone, unless they cannot produce. Even what they cannot produce, that they won’t give that up either. Practically they don’t have it in hand, maybe they’ll tell the other side, we [give it] to you, but they haven’t been able to use it themselves. If there’s food that they can’t eat, maybe they’ll donate it somewhere. But they won’t even let one barrel go.

If you accept that Iran’s oil production will drop or its exports will drop, will we have negotiations with OPEC MCs beforehand like what we did in 2013 and 2014 for the return of Iran’s barrels to the market?

No, I’ve already written to them that, firstly rather than exports only production is part of the OPEC’s criteria. And in my previous communications I have mentioned, if anything happens to my exports or production level, after the problem is resolved, regardless of any decision, without the need for any approval at all, I will resume my original production trend. Without the need for obtaining any approval I will return to my prior production level. I’ve told this to OPEC MCs and I’ve said it repeatedly.

How do today’s sanctions and situation differ from the situation in 2011?

Well, that one was UN Security Council sanctions then. This is just the bullying of the US, at that time it was multilateral, international sanctions. Right now, no country apart from Zionist Regime and two other countries in the region — two of our Arab brothers — no one else is with the US.

But they are cooperating ...

No, it is not Cooperation… if someone is bullying and holding a sword, it is a different story ... but these sanctions are not legal and it’s not like everyone is afraid of the UN and contravening some laws.

 Right now, from one perspective it’s harder and from another perspective it’s simpler. It’s harder from this point of view that the US has all the experience of the previous round, and it’s already worked out some of our methods/workarounds and therefore we have to use more complicated, new methods and the US is a lot more persistent, especially given the US have made up its mind to cut out production to a great extent in November even if in a symbolic way. In my opinion this is very symbolic for them.

And we are doing our best, making all efforts, but I don’t want to say how much and to what extent we’ve been successful, because he (the US/Trump) will find out. That [previous] round was UN-related; UN sanctions are very heavy in terms of the law, meaning that anyone who violated the sanctions was subject to all the international laws and regulations. Now this is just America that is throwing its weight around, it’s holding up a sword and calling for challenge over everyone. And now, we’ll do our best and God Willing, God will help us if we are honest.

Rick Perry, Al-Falih and Novak met recently, do you think this was just promotional/propaganda or how much was it about affecting production?

No, I think this is all mostly propaganda. The Americans routinely go to different places, following, threatening, they go here and there and doing whatever is that they do and we know about what they do. Any company that contacts us, they contact them half an hour later, they talk to them, and they routinely monitor and eavesdrop and follow and keep an eye on our managers. They are clearly following everything.

What’s your analysis of the current market conditions and in the months ahead, considering winter is ahead, what does the market need? Some more barrels?

You need to understand from price change trends. The Americans are trying really hard to prevent prices from going up until November. But if you take a look, the trend for prices right now is upwards and they bring prices down with an intervention. But if they leave it alone, the price trend is to rise and to keep rising.

What’s a suitable price for oil right now?

Right now, a suitable price is $80. Now, the higher it gets the better it is for us. But it won’t. The US and some OPEC members are not allowing it through their meddling.

Some sources have said that Saudis want high prices, i.e. above $80.

 No, not right now. The US doesn’t want WTI to go up, if it goes up Trump won’t get the votes… They’re putting all their efforts into WTI not going up. He brought it under $60 and now it’s going up. As soon as it goes up, they throw in some from inventories, from here and there and they won’t ever tell the truth about what they’re doing. But the DOE report on production said that the market cannot sustain Iran’s absence from the market. It cannot tolerate Iran’s removal from the market.

Do you think that if production really drops heavily, how much will the price of oil go up; let's say in the worst case scenario?

The higher the better.

What needs to happen for these sanctions ... what has to happen, does Mr. Trump have to go? What will and needs to happen in your opinion, what can Iran do? Iran has to do something.

 Right now, I don’t want to enter these discussions.

Well something has to be done; Iran can’t just keep going till it hits a dead end?

Now Trump could do so and it would be good for him to suspend the sanctions.

In Vienna I remember you saying in terms of Russia’s oil supply, we’re neither permanent friends nor enemies [in terms of oil issues] — is that still your view?

It’s always my view. It’s not about being friends, brothers or enemies.

And Russia, what’s your view on the fact that it says on the one hand it’s against the sanctions but then on the other hand it will secure oil supplies?

Ask them, you need to ask them.

Can you update us on the Iraq-Iran swap situation?

It’s underway. It’s coming on trucks and it is being received.

Do you want to increase it?

Yes, we would like to and we are after increasing it.

And in terms of selling oil to Russia, are you seeking more than the current level [100 thousand barrels]?

We are keen to provide more oil to everyone.

Is Iran using discounts more now, as a tool?

No, it’s not really that important.

So what is Iran’s position on the current agreement, will you support it?

We’ll see at the time.

Would the US be able to reduce Iran’s oil exports to zero or it’s just a bluff?

I think that Mr. Trump has made such decision without consulting experts even within the US administration to reduce Iran’s oil exports to zero and he insists obstinately on implementing his decision.  But he recently realized that such decision is impossible and therefore he is seeking to reduce Iran’s oil exports to zero, albeit symbolically, for one month. Therefore, Mr. Trump is seriously trying his best to reduce Iran’s oil exports to zero. Of course, this is just one side of the coin as we have not our hands and feet tied. In addition to doing our best, we believe that divine hands are at work.

In the time that there’s been this agreement, has share of any OPEC MCs gone to non-OPEC countries?

Look, OPEC won’t give any share of anything to anyone. The Persian Gulf countries won’t leave a single barrel of their market share to anyone, unless they cannot produce. Even what they cannot produce, that they won’t give that up either. Practically they don’t have it in hand, maybe they’ll tell the other side, we [give it] to you, but they haven’t been able to use it themselves. If there’s food that they can’t eat, maybe they’ll donate it somewhere. But they won’t even let one barrel go.

If you accept that Iran’s oil production will drop or its exports will drop, will we have negotiations with OPEC MCs beforehand like what we did in 2013 and 2014 for the return of Iran’s barrels to the market?

No, I’ve already written to them that, firstly rather than exports only production is part of the OPEC’s criteria. And in my previous communications I have mentioned, if anything happens to my exports or production level, after the problem is resolved, regardless of any decision, without the need for any approval at all, I will resume my original production trend. Without the need for obtaining any approval I will return to my prior production level. I’ve told this to OPEC MCs and I’ve said it repeatedly.

How do today’s sanctions and situation differ from the situation in 2011?

Well, that one was UN Security Council sanctions then. This is just the bullying of the US, at that time it was multilateral, international sanctions. Right now, no country apart from Zionist Regime and two other countries in the region — two of our Arab brothers — no one else is with the US.

But they are cooperating ...

No, it is not Cooperation… if someone is bullying and holding a sword, it is a different story ... but these sanctions are not legal and it’s not like everyone is afraid of the UN and contravening some laws.

 Right now, from one perspective it’s harder and from another perspective it’s simpler. It’s harder from this point of view that the US has all the experience of the previous round, and it’s already worked out some of our methods/workarounds and therefore we have to use more complicated, new methods and the US is a lot more persistent, especially given the US have made up its mind to cut out production to a great extent in November even if in a symbolic way. In my opinion this is very symbolic for them.

And we are doing our best, making all efforts, but I don’t want to say how much and to what extent we’ve been successful, because he (the US/Trump) will find out. That [previous] round was UN-related; UN sanctions are very heavy in terms of the law, meaning that anyone who violated the sanctions was subject to all the international laws and regulations. Now this is just America that is throwing its weight around, it’s holding up a sword and calling for challenge over everyone. And now, we’ll do our best and God Willing, God will help us if we are honest.

Rick Perry, Al-Falih and Novak met recently, do you think this was just promotional/propaganda or how much was it about affecting production?

No, I think this is all mostly propaganda. The Americans routinely go to different places, following, threatening, they go here and there and doing whatever is that they do and we know about what they do. Any company that contacts us, they contact them half an hour later, they talk to them, and they routinely monitor and eavesdrop and follow and keep an eye on our managers. They are clearly following everything.

What’s your analysis of the current market conditions and in the months ahead, considering winter is ahead, what does the market need? Some more barrels?

You need to understand from price change trends. The Americans are trying really hard to prevent prices from going up until November. But if you take a look, the trend for prices right now is upwards and they bring prices down with an intervention. But if they leave it alone, the price trend is to rise and to keep rising.

What’s a suitable price for oil right now?

Right now, a suitable price is $80. Now, the higher it gets the better it is for us. But it won’t. The US and some OPEC members are not allowing it through their meddling.

Some sources have said that Saudis want high prices, i.e. above $80.

 No, not right now. The US doesn’t want WTI to go up, if it goes up Trump won’t get the votes… They’re putting all their efforts into WTI not going up. He brought it under $60 and now it’s going up. As soon as it goes up, they throw in some from inventories, from here and there and they won’t ever tell the truth about what they’re doing. But the DOE report on production said that the market cannot sustain Iran’s absence from the market. It cannot tolerate Iran’s removal from the market.

Do you think that if production really drops heavily, how much will the price of oil go up; let's say in the worst case scenario?

The higher the better.

What needs to happen for these sanctions ... what has to happen, does Mr. Trump have to go? What will and needs to happen in your opinion, what can Iran do? Iran has to do something.

 Right now, I don’t want to enter these discussions.

Well something has to be done; Iran can’t just keep going till it hits a dead end?

Now Trump could do so and it would be good for him to suspend the sanctions.

In Vienna I remember you saying in terms of Russia’s oil supply, we’re neither permanent friends nor enemies [in terms of oil issues] — is that still your view?

It’s always my view. It’s not about being friends, brothers or enemies.

And Russia, what’s your view on the fact that it says on the one hand it’s against the sanctions but then on the other hand it will secure oil supplies?

Ask them, you need to ask them.

Can you update us on the Iraq-Iran swap situation?

It’s underway. It’s coming on trucks and it is being received.

Do you want to increase it?

Yes, we would like to and we are after increasing it.

And in terms of selling oil to Russia, are you seeking more than the current level [100 thousand barrels]?

We are keen to provide more oil to everyone.

Is Iran using discounts more now, as a tool?

No, it’s not really that important.

So what is Iran’s position on the current agreement, will you support it?

We’ll see at the time.

Would the US be able to reduce Iran’s oil exports to zero or it’s just a bluff?

I think that Mr. Trump has made such decision without consulting experts even within the US administration to reduce Iran’s oil exports to zero and he insists obstinately on implementing his decision.  But he recently realized that such decision is impossible and therefore he is seeking to reduce Iran’s oil exports to zero, albeit symbolically, for one month. Therefore, Mr. Trump is seriously trying his best to reduce Iran’s oil exports to zero. Of course, this is just one side of the coin as we have not our hands and feet tied. In addition to doing our best, we believe that divine hands are at work.

sanctions against Iran.
Have there been any new agreements with
Russia?
There are always new agreements.Are the agreements in relation with oil
exports or anything?
On exports, as I mentioned, I won’t provide anymore information.
So, there are new agreements or they arein the process of being made, or they’ve beensigned?Now, the trend is good. We’ve moved forward.In the time that there’s been thisagreement, has share of any OPEC MCs gone tonon-OPEC countries?
Look, OPEC won’t give any share of anything toanyone. The Persian Gulf countries won’t leavea single barrel of their market share to anyone,
unless they cannot produce. Even what theycannot produce, that they won’t give that up either.Practically they don’t have it in hand, maybe they’ll
tell the other side, we [give it] to you, but theyhaven’t been able to use it themselves. If there’sfood that they can’t eat, maybe they’ll donate it
somewhere. But they won’t even let one barrel go.If you accept that Iran’s oil productionwill drop or its exports will drop, will we havenegotiations with OPEC MCs beforehand likewhat we did in 2013 and 2014 for the return of
Iran’s barrels to the market?No, I’ve already written to them that, firstly rather
than exports only production is part of the OPEC’scriteria. And in my previous communications Ihave mentioned, if anything happens to my exports
or production level, after the problem is resolved,regardless of any decision, without the need for anyapproval at all, I will resume my original production
trend. Without the need for obtaining any approval Iwill return to my prior production level. I’ve told thisto OPEC MCs and I’ve said it repeatedly.
How do today’s sanctions and situationdiffer from the situation in 2011?
Well, that one was UN Security Council sanctionsthen. This is just the bullying of the US, at that time itwas multilateral, international sanctions. Right now,
no country apart from Zionist Regime and two othercountries in the region — two of our Arab brothers— no one else is with the US.But they are cooperating ...
No, it is not Cooperation... if someone is bullyingand holding a sword, it is a different story ... butthese sanctions are not legal and it’s not like
everyone is afraid of the UN and contravening somelaws.
Right now, from one perspective it’s harder andfrom another perspective it’s simpler. It’s harderfrom this point of view that the US has all theexperience of the previous round, and it’s alreadyworked out some of our methods/workarounds
and therefore we have to use more complicated,new methods and the US is a lot more persistent,especially given the US have made up its mind tocut out production to a great extent in Novembereven if in a symbolic way. In my opinion this is verysymbolic for them.And we are doing our best, making all efforts, but
I don’t want to say how much and to what extentwe’ve been successful, because he (the US/Trump)will find out. That [previous] round was UN-related;
UN sanctions are very heavy in terms of the law,meaning that anyone who violated the sanctions wassubject to all the international laws and regulations.
Now this is just America that is throwing its weightaround, it’s holding up a sword and calling forchallenge over everyone. And now, we’ll do our best
and God Willing, God will help us if we are honest.Rick Perry, Al-Falih and Novak met recently,do you think this was just promotional/propaganda or how much was it about affectingproduction?No, I think this is all mostly propaganda. TheAmericans routinely go to different places, following,threatening, they go here and there and doingwhatever is that they do and we know about whatthey do. Any company that contacts us, they contactthem half an hour later, they talk to them, and theyroutinely monitor and eavesdrop and follow andkeep an eye on our managers. They are clearlyfollowing everything.What’s your analysis of the current marketconditions and in the months ahead, consideringwinter is ahead, what does the market need?Some more barrels?You need to understand from price change trends.Do you think that if production reallydrops heavily, how much will the priceof oil go up; let’s say in the worst casescenario?

Iran Oil Production to Continue Unabated
Iran’s petroleum minister,Bijan Zangeneh, has reaffirmedthe country’s readiness tokeep producing oil. “The US isdoing its utmost to prevent usfrom producing oil for marketsupply, but Iran will forcefullykeep producing crude oil,” he
said.“The best action for oil pricesnot to increase and removetensions from the market,would be the US liftingsanctions on Iran,” he added.Zangeneh said any decline inoil production and subsequentprice hike would inflict losseson China and European nationsthat are leading oil consumers.“Iran and the Organization
of the Petroleum ExportingCountries (OPEC) have noresponsibility in this regard.
Rather, Iran intends to produceoil at full capacity, but the US ismaking every effort to preventus from producing our oil,” headded.Zangeneh said the Joint
Ministerial MonitoringCommittee (JMMC) of OPECand non-OPEC producers in
its recent meeting in Algiersconcluded that the marketfaced no oil shortages “and
therefore there is no need forproduction hike”.The Iranian minister said
oil prices had exceeded $85a barrel, adding: “Mr. Trumphas announced OPEC is
responsible for oil price hikesand it must boost output, butwe have to say that OPEC isnot responsible, rather [USPresident] Donald Trump inperson is responsible for oilprice hikes.”“The oil market is facing noshortages now. Global oilprices have increased dueIran’s South Zagros Oil and Gas ProductionCompany (SZOGPC) is on the shortlist toreceive Energy Institute Awards 2018.The philosophy behind this selection isimplementing flare gas reduction system
(FGRS) in Farashband Gas Refinery insouthern Iran. Gholam-Hossein Montazeri,
CEO of SZOGPC, said it was the first time acompany affiliated with the Iranian PetroleumMinistry was on the EI Awards shortlist.He said that the FGRS project would preventthe flaring of 2.1 mcm/month of gas. “Thisproject was designed to reduce gas flare atthe Farashband refinery. It would help reduceenvironmental pollution and return gas tothe refinery fuel cycle,” he said. Montazerisaid the project would save Iran about $3.4million a year. The EI Awards event this year
is scheduled for November 22 at the SheratonGrand Park Lane Hotel, London.
Iran Company Shortlistedfor EI AwardsPutin Lays Blame onTrump for Oil Price HikeRussian President Vladimir Putin said hisAmerican counterpart is to be blamed forcurrent high oil prices. “President Trumpconsiders that the price is high; he’s partlyright, but let’s be honest,” Putin said at theRussian Energy Week conference in Moscow.“Donald, if you want to find the culprit for the
rise in prices, you need to look in the mirror.”The Russian leader pushed back againstescalating criticism of OPEC and its allies,which Trump has blamed for Brent crude’srise to a four-year high near $85 a barrel. Still,Putin said his country has already boostedoutput and has the capacity to add another200,000 to 300,000 barrels to the market.Putin’s comments come after Trump criticizedRussia and OPEC for a 2016 deal in which theyagreed to curb oil output in a bid to support
prices that had slumped in mid-2014 due to aglut in global supply.
to psychological issues andpolitical tensions artificiallyinsinuated into market by theAmericans,” said Zangeneh.“Trump’s motives aredoubled. On one hand, he
wants to remove Iran’s oil fromthe market and on the otherhand he wants low prices,”he said. Zangeneh addedthat the removal of Iran’s 4mboe/d of oil, petroleumproducts and petrochemicals“is not an issue to be toleratedeasily by the world, and priceswill keep rising.” “Oil priceshave already increased while
OPEC has not cut its output.Therefore, the issue of pricehike is psychological and nowthey expect OPEC to boost itsoutput,” he said. OPEC is nolonger able to boost its output,he said, adding: ‘”OPEC isproducing at full capacity and
has no surplus capacity.circumstances different fromthe present ones,” he added.
Manouchehri said most oilproduction projects, numbering34, would be operated byNational Iranian South OilCompany (NISOC).“Under relative stagnation,
implementation of so manyprojects would be instrumentalin the materialization of
objectives,” he added. Notingthat the projects would face nofinancing problems either inIranian or foreign currencies,he said that necessary permitshad been issued for issuingbonds in Iranian rials. “Whatis important in maintaining
and raising oil productionis to preserve cohesion andintegration of activities with
a view to pushing aheadwith affairs and preventingany waste of assets,” he said.
“This issue must be taken intoconsideration by both clientsand contractors by doingtheir utmost to implement theproject on schedule.”British Prime Minister Theresa May hasexpressed the readiness of her country forcooperation with Iran in the energy sector.May said in a meeting with Iranian President
Hassan Rouhani that Britain was willing tobroaden economic cooperation with Iran. Theywere meeting on the sidelines of the 73rdannual gathering of the United Nations GeneralAssembly in New York. May also stressed thesignificance of salvaging Iran’s 2015 nucleardeal with six world powers, known as the
Joint Comprehensive Plan of Action (JCPOA),following the US withdrawal. Rouhani said theUS “illegal” withdrawal from the JCPOA drew
surprise and opposition from the internationalcommunity. “We have to try our best and increasecooperation and continue negotiations in abid to reach a suitable practical framework forsafeguarding and implementing this agreement,particularly in the economic sector,” he said.
UK Eager for Energy Tieswith IranNational Iranian Drilling Company (NIDC)
and Petroleum University of Technology(PUT) have signed two agreements for
cooperation in training, research andconsulting. During the signing ceremony,
the significant role of education in thedevelopment of human resources and
expansion of cooperation between the twobodies was stressed.
Younes Bani-Saeed, director of humanresources at NIDC, said the agreements wereaimed at holding short-term, mid-term andlong-term training courses and trainingworkshops based on the scientific andtechnical qualifications and human resources.The agreements are expected to run for five
years.Ali Seyyedipour, director of physical assetsat NIDC, said the agreements would helpdevelop physical assets.NIDC, PUT SignTraining Agreement
The deputy CEO of NationalIranian Oil Company (NIOC)has announced Iran’s firmplan to proceed with liftingoil production. Gholam-RezaManouchehri said the oilproduction enhancement planwas aimed at job creation andbusiness prosperity for Iraniancompanies. “Therefore, despiteexisting restrictions, therewill be no question of halt [inproduction],” he said. “NIOCis determined to forcefully
preserve its production ceilingand we hope that once oilrecovery enhancement andpreservation projects comeonline, leading to further oilproduction, we would seeNo Haltin Iran OilSupply

Iran Able to Boost Gas
Export Capacity
The CEO of National Iranian Gas Company
(NIGC) has said the country is able to supply
more gas to foreign buyers.
“Iran enjoys necessary capacity and potential to
expand its gas exports to neighboring countries
and other buyers,” Hamid Reza Araqi said at an
international energy conference in Moscow.
He said that energy consumption in the world is
set to keep growing by 2030.
“Most energy consumption is in the power plants
and industries and gas will make up the main
source of energy in coming years,” added Araqi.
“In light of environmental issues, gas
consumption will follow an upward trend by
2030,” he said.
“Iran is among major producers of gas in the
world and in the near future most of Iran’s
neighbors will use Iran’s gas. That requires us
to prepare the ground for such conditions,” he
added. “With infrastructure created in Iran, the
country now owns the largest volume of gas
reserves in the world. Therefore, we can say that
a good future is awaiting Iran’s gas industry,” said
Araqi. “We have to focus on gas exports in order
to take maximum advantage of this God-given
endowment,” the NIGC chief said.
He said that all Iranian cities and 95% of Iranian
villages are connected to gas network, and most
industrial and petrochemical facilities are fed
with gas.

Euro-4 standards

Iran Polymer Highly Attractive

artificial leather,” he added

Iran, Good Partner for Foreigners

It would be no exaggeration if we say that Iran is among top countries in the region in the plastic industry. The growth of companies involved in this sector and their efforts to win bigger shares of global markets have led foreign companies to show interest in cooperation with Iranians.

At this year’s "Iran Plast", what was marking was the foreign companies’ trust in Iranian companies for business and trade. They described Iranian companies as reliable and honest partners, saying Iranian companies were supplying highest quality plastic products all across the region.

At "Iran Plast", the number of foreign companies was lower than last year, but Iran’s relative advantage in the energy sector could not be ignored easily by foreign companies. It becomes specifically important in the plastic industry, in which Iran claims to be a front-runner.

The presence of 15 business delegations from 13 countries, as well as individual visits by foreign investors indicate that involvement with Iran’s polymer and plastic industry would remain economical for foreign companies. That comes against the backdrop of threats by US President Donald Trump to foreign companies to stop doing business with Iran under the penalty of sanctions.

Most foreign companies interviewed by "Iran Petroleum" touched on the high quality of Iran’s plastic products. For them, Iranian companies are producing one of the best polymer and plastic products across the region. They noted that there were still mechanisms for sustainable cooperation between Iran and foreign firms despite attempts made by the United States to drive Iran out of energy market.

Interbanking Network a Must

The marketing manager of a Turkish company said he was happy with the level of cooperation with Iranian firms. He said a bright horizon was awaiting Iran’s plastic market, noting that he was interested in broader cooperation with Iranian companies.

The chief of Turkish exhibitors at Iran Plast said the reason for the participation of Turkish firms resulted from increased Iran-Turkey trade exchanges.

He expressed hope that Iran and Turkey would bring their trade exchanges to the highest level possible in coming years.

He said that removing foreign exchange rate fluctuations creating an interbanking network between the two nations, trading in the Turkish and Iranian currencies and removing customs hurdles would help facilitate Iran-Turkey business. He insisted that the US was alone in imposing sanctions on Iran.

Abbasev Aleskarovic, who represented a Turkmen company at Iran Plast, said broadening business ties with Iran would be of high significance.

When asked to explain why cooperation with Iran had taken up added importance, he replied: “It’s crystal clear. Iranian plastic industrialists and Iran’s market are reliable for us. Iranian companies are supplying high-quality products. That is why due to Iran’s relative advantage in the energy sector, their prices are appropriate for us.”

Iran, KRG First Choice

The chief delegate from the Kurdistan Regional Government (KRG) referred to the high quality of Iranian plastic products, saying: "Iran is unique in terms of manufacturing plastic industry products, particularly raw materials, across the region."

The Kurdish industrialists receive raw materials for their plastic products from Iran. According to them, Iran remains their top priority for raw materials they need in their disposable vessels.

Asked if they could also import raw materials from other countries, he said: "Sure we can, but the Iran market has so far been our only reliable market and we prefer cooperating with Iran."

He also highlighted some problems causing difficulties in the purchase of raw materials from Iran.

"Among obstacles currently in the way are the changing price of raw materials, fluctuations in rapid succession and subsequently unpredictable increase in the price of materials," he added.

Reliable Partners for Germans

A total of 17 German companies active in the field of plastic industry machinery and parts, were present at this year's "Iran Plast". Ina Vettkötter, affiliated with the plastic and rubber sector of Germany's Mechanical Engineering Industry Association (VDMA), said German companies would remain highly willing to cooperate with their Iranian partners.

"The Germans have reliable partners in Iran," said Vettkötter, who was also chief coordinator of German exhibitors at "Iran Plast".

"Owing to growing demand in the Iran market for plastic products, young and educated manpower have led the Germans to consider the Iran market as burgeoning," she added.

Vettkötter said that despite attempts made by the United States in recent months to scare foreign investors away from Iran, the European Union continues to respect Iran's nuclear agreement with six world powers, known as the Joint Comprehensive Plan of Action (JCPOA). The US pulled out of the JCPOA in May.

"Despite the US JCPOA withdrawal, the agreement remains alive and the EU backs investment in Iran," she said.

Asked how German companies would behave to overcome restrictions slapped on Iran, she expressed hope that the German government and the EU would close ranks in a bid to take effective steps for facilitating ties and serving public interests.

The representative of a German company present at the event said the main idea was to further know Iranian companies involved in raw materials production and export.

He noted that there were also foreign companies seeking non-oil transactions and business with Iran.

Technology-Based Firms

Italian trade commissioner in Tehran Augusto Di Giacinto said most Italian companies present at "Iran Plast" were technology-based ones.

Di Giacinto, who had organized the participation of Italian exhibitors at "Iran Plast", said Italian firms were ready to share their cutting edge technology with Iranian petrochemical industry in a bid to help Iran reach its export objectives.

"With the removal of obstacles in the way of banking transactions and money transfer, we hope to be able to facilitate ties between the two countries," he said.

Bhavin Vora, who heads the Indian exhibitors at the exhibition, said nearly 40 Indian delegates representing producers, importers and consumers of plastic and polymer were present at "Iran Plast" this year.

Referring to cooperation between Iranian and Indian companies, he said: "Iran's access to abundant hydrocarbon reserves has helped boost relations between Iran and India."

He said that Iran-India cooperation for developing Chabahar Port was aimed at deepening trade ties between the two nations.

Hyung-June Joo, foreign trade director at South Korea's Smajin Polytech, expressed hope that his company would be able to share technology with Iranian firms.

"We are well aware of potentialities in Iran's market and we need to maintain our contacts with the market in this country in a bid to benefit from future cooperation," he said.

He added: "In the future when ground would be paved for cooperation between us and the Iranian side, we will be able to study plans for the transfer of technology and training staff."

No Intention to Cut Iran Ties

A large number of European and Asian private companies that have entered Iran's polymer and plastic industry in recent years are happy with their cooperation with Iranian companies. When asked about the impact of US sanctions, they say they have no intention of cutting cooperation with Iran, citing the attractiveness of Iran's market.

Rudi Scheman, director of exports at a Swedish company, said his company had two representative offices in Iran.

"Sanctions may cause such problems as foreign currency fluctuations and make money transfer difficult; however, we will be present at the Iran market regardless of US pressure," he said.

Jean-Clause Girgenti, manager of trade development at a French firm, expressed hope that transfer of technology and equipment to Iran would face no US-led obstacles so that "our presence in Iran's petrochemical industry" would be strengthened more than ever.

"Political tensions and US-led pressure have caused problems for working at Iran's market. But we follow the French government's rules and regulations for external cooperation and I firmly believe that the current situation will change soon," he said.

Merlijn van Essen, sales manager at Austrian PureLoop (Erema Group), said Erema was one of the most reputable companies in plastic recycling. Erema Group has been present at "Iran Plast" from the first edition.

Referring to restrictions imposed by the US on doing business with Iran, he said: "The Iran market enjoys numerous potentialities and I hope for a bright perspective in our cooperation with the Iranian party."

Yannis Haritakis, export sales manager at Greece's PLASTIKA KRITIS S.A., said: "We are one of customers of Iran's petrochemical industry. Our minimum expectation from the Greek government is to bring back ties with Iran to the past levels."

The representative of China's Ruigao Machinery Factory said his company had markets mainly in the Middle East – Iran, Lebanon and Saudi Arabia – and South America –Argentina and Brazil.

"US sanctions could not hinder cooperation between Chinese companies and the Iranian side. I personally believe that a brighter horizon will open for Iran's petrochemical industry by the end of the year," he said.

"In addition to transfer of technology to Iran's petrochemical producers, we are willing to hold training courses for the staff," he added.

Italy Favors Bonds with Iran Petchem

Italy’s trade commission in Tehran Augusto Di Giacinto said his country was willing to cooperate with Iran’s petrochemical industry despite US sanctions.

“The Italians are keen to cooperate with Iran’s petrochemical industry,” he told "Iran Petroleum" at Iran Plast.

He said that nine Italian firms were present at this year’s Iran Plast. Italy’s trade agency (ICE), the Italian Plastics and Rubber Processing Machinery and Molds Manufacturers' Association (AMAPLAST), Macplas magazine, which covers plastics and rubber industry, and Italy’s international exhibition for plastics and rubber industries (Plast), which is held every three years, were among Italian coordinating bodies at Iran Plast.

The Italian companies that exhibited their products at the Tehran show included Bausano, which produces top-class extrusion plastic, COMAC, which designs and manufactures extruders and masterbatch production lines, Dimontonate Floccati, producer of flocked materials, IPM, manufacturer of upstream industrial equipment, ITIB, producer of extrusion lines, Penta, designer and manufacturer of material displacement systems and production automation, Piovan, involved in transportation technology, Profile Dies, designer and manufacturer of systems for dripping irrigation, and Zambello Group, which manufacturers gearbox for extruders used in the plastic industry.

Great Potential

Giacinto said the presence of AMAPLAST and other Italian entities at Iran Plast provided their belief in the potentialities of Iran’s market.

“The Italian firms attending this edition are mainly technology-based and they can share their advanced technology and equipment with Iran’s petrochemical industry in order to assist this country in reaching its export objectives.

He said Iran was a major manufacturer of petrochemicals which constituted a major share in the country’s export mix.

“We have numerous options to continue cooperation with Iran’s oil, gas, refining and petrochemical industry. However, we have to wait and see how developments would go on,” he said.

“Banking transactions are complicated due to pressure from the United States. That is why the European Union has firmly supported the JCPOA (Iran’s 2015 nuclear deal with six world powers) and is looking for solutions to facilitate transactions and money transfer, which we hope would reduce the negative impact of sanctions and improve ties between the two countries,” said Giacinto.

He also said that the presence of Germany, Austria and Switzerland indicated their willingness to stay in Iran’s market.

Iran Plast 12 in Tehran

Polymer Products Manufacturing Up 10% in 20 Years

Iran’s annual 12^th Iran Plast September 24-27 in the capital Tehran. A total of 35 countries showcased their products. Visitors came from 20 nations to hold talks with Iranian companies. Such number of visitors against the backdrop of US sanctions indicates the significance of Iran’s polymer and plastic industry at the regional and global levels. Due to the high quality of Iranian-made products and low cost prices, Iran remains highly attractive in this sector.

To that effect, Iran’s Ministry of Petroleum has been developing related projects in a bid to win a bigger share of global polymer and plastic markets. According to official data, Iran has brought the number of its polymer production plants from 4 in 2002 to 27 in 2018. Furthermore, Iran is close to launching 21 more polymer projects.

Minister of Petroleum Bijan Zangeneh said at Iran Plast that Iran’s petrochemical industry was making progress. He said that Iran Plast exhibition was an opportunity for Iranian and foreign companies to exchange views about broader cooperation in the future.

Noting that petrochemical plants were faced with no shortage of feedstock, Zangeneh said: “Petrochemical production in Iran has grown 7-8% year-on-year.”

He said more ethane was to be supplied to petrochemical plants across Iran, adding: “We are also trying our best to boost our exports despite problems.”

Owing to Iran’s relative advantages in the energy sector, polymer and plastic industry in Iran has seen a progressive trend over the past 17 years. In spite of all twists and turns in the polymer and plastic market, Iran’s products have attracted more buyers.

Domestic Manufacturing

Marzieh Shahdaei, a senior Petroleum Ministry official, said sanctions would help strengthen domestic manufacturing.

“Furthermore, given the commissioning of different petrochemical projects, we are witnessing growth in the plastic industry and raw material supply. Therefore, companies active in this sector are boosted,” said Shahdaei, a former CEO of National Petrochemical Company (NPC).

She referred to the development of Iran’s polymer market, saying: “In a bid to complete the value chain the petrochemical industry as fast as possible, we have to take steps towards applying modern technologies. Of course, those involved in this industry are making efforts towards such a goal.”

Shahdaei highlighted the significance of Iran Plast, saying: “In the previous Iran Plast exhibitions, we received positive feedback. We hope to see the same after the end of the current one too.”

Petrochemical Exports Grow

Reza Norouzzadeh, CEO of NPC, said Iran has been lifting its petrochemical exports.

He said Iran’s petrochemical exports grew 24% year-on-year during the first half of the current calendar year which started on March 21.

He added that there was no problem with petrochemical exports.

Norouzzadeh said Iran Plast provided a good chance for cooperation between producers and consumers.

“Since the start of Iran Plast in Iran, we have seen the number of participants grow. It shows the prosperity and progress of petrochemical industry,” she said.

Polymer Products Up 10-Fold

Ali-Mohammad Bosaqzadeh, director of NPC projects, said Iran’s polymer production rate has increased 10-fold since 2002 when the first round of Iran Plast was held.

“The number of polymer production plants has reached 27 now, from 4 in 2002. It shows the significance of plastic industry, domestic and global demand, and growth in this industry,” he said.

He said that production and consumption of polymer products was inevitable in Iran and elsewhere.

“Since the petroleum industry is intertwined with different sectors including car manufacturing, aviation and households, Iran Plast has always attracted visitors from various sectors,” said Bosaqzadeh.

He said that metal has been eliminated from many household products to be replaced with plastic and petrochemical products.

“In the car manufacturing industry, we have tried to increase the plastic share due to its light weight and low costs. Therefore, we have seen plastic consumption grow in this industry,” said Bosaqzadeh.

He said that Iran Plast was an event complying with global standards.

“Due to the rapid progress of technology in this industry and the diversity of needs related to plastic industry, this exhibition provides a good opportunity for the exchange of technical knowhow, supply and introduction of new products,” said Bosaqzadeh.

Iran Planning for Market Development

Farnaz Alavi, director of planning at NPC, said Iran’s petrochemical industry has been widely present in international markets.

“We have managed to supply our products at a good quality. We expect to preserve the current standing of Iran’s petrochemical industry due to the volume of hydrocarbon reserves we hold. In the future, we expect a stronger presence in global markets,” she said.

Referring to the private sector’s investment in this industry, Alavi said: “Due to the diversity of our products we may win more markets including in African and South American nations, and expand commercial chains.”

She said that Iran Plast provided a venue for “the upstream sector (supplier) and the downstream sector (consumer) to stand together, discuss their needs and prepare the ground for better commercial ties.”

“At this exhibition, with global actors present, we hope to be able to facilitate more interaction between consumers and producers, exchange experience and take advantage of potentialities in different sectors,” said Alavi.

Value Chain Completion Target

Qodratollah Farajpour, director of production control at NPC, said: “In order to complete the value chain, appropriate measures have been undertaken and efforts are under way to that end.”

“This international event is a good platform for cooperation, deepening communications between domestic actors of petrochemical industry and foreign participants. Undoubtedly, holding this exhibition regularly will be instrumental in the realization of these objectives,” he said.

He said the motto chosen for this year’s Iran Plast – Plastic Industry Business Prosperity – highlighted the objective of the exhibition for business development through more cooperation.

Long-Term Contracts

Mehdi Sharifi Niknafs, CEO of Petrochemical Commercial Company, said petrochemical industry was the beating heart of Iran’s development.

“Like a locomotive, the petrochemical industry can be the driver of growth in other industries,” he added.

He underlined the significance of Iran’s petrochemical industry due to exports, income generation and job creation.

Referring to the presence of domestic and foreign companies at Iran Plast, he said: “Given the diversity of petrochemical products, we expect petrochemical companies to cooperate more and be more integrated, in which case, long-term agreements would be signed between them.”

Sharifi Niknaf said some foreign buyers of Iran’s petrochemical products were willing to sign long-term contracts.

“In long-term contracts, the buyer and the seller both will make gains. Therefore, we are expecting long-term contracts between domestic and foreign firms,” he added.

The 12^th edition of Iran Plast covered 30,000 square meters, 27,000 square meters of which allotted to 500 Iranian companies. A total of 165 foreign companies were present at Iran Plast.

Iran to Build Oil Storage Tanks in Jask Port

An agreement has been signed between three Iranian companies for the construction of 10-million-barrel crude oil storage tanks and utilities in Jask Port. The Build-Operate-Transfer (BOT) contract was signed between Touraj Dehqani, CEO of Petroleum Engineering and Development Company (PEDEC), and Asghar Gorzin, CEO of Petro Omid Asia, and Ahmad Ebrahimi, CEO of Omid Investment Management Group.

Under this trilateral deal, 1 mb/d of crude oil would be transferred from Goureh oil terminal in Bushehr Province in southern Iran to Jask off the Sea of Oman. That would help Jask shot to prominence as the second oil export terminal in Iran.

With an initial investment of €200 million, the project will come online over three years. That would require the investor to finance and design the project, supply required commodities and equipment, and construct storage facilities. After that, the investor is required to be accountable for maintenance for a 15-year period. After 18 years, the storage site would come under ownership of National Iranian Oil Company (NIOC).

6mb/d Oil Output Capacity

Ali Kardor, CEO of NIOC, said Iran had potential to reach 6mb/d oil production capacity.

“Currently we can allocate 2.5 mb/d of oil to domestic refineries. With reliance on new investments the figure could be raised to 3 mb/d, and in this way we could also store surplus oil produced in the country,” he said.

Development of the Makran area, due to its proximity to East Asia, can contribute to diversification in Iran’s export terminals. Kharg Island is currently the main export terminal in Iran.

A chain of activities is needed for the transfer of crude oil from Goureh to Jask.

“Contractors in each and every segment of this chain are required to comply with timeframe set forth in order to prevent any delay in the implementation of the project,” said Kardor.

“Given Iran’s plans to raise crude oil production capacity and develop crude oil storage tanks, construction of storage tanks will be done in two phases; in the first phrase, the storage capacity stands at 10 million barrels and in the next phase it will double to 20 million barrels,” he added.

“Since 2014, NIOC has focused on the strategy of outsourcing. To that end, it has assigned the private sector operation of an oil field, liquefied natural gas (LNG) projects, as well as power plants,” Kardor said.

He said the deal signed for oil storage tanks at Jask was an instance of the private sector’s involvement in oil projects.

“I hope that Petro Omid Asia Co. and Omid Investment Management Group would go ahead with this project as planned,” said Kardor.

No Plan to Cut Output

Kardor dismissed speculation about plans by Iran to reduce its oil production.

“NIOC has access to its whole oil income and this year we have even experienced growth in revenue gained from selling crude oil,” he said.

Kardor added that NIOC was easily receiving money for crude oil shipments.

He also said that the Iranian Ministry of Foreign Affairs and the European Union were in talks to develop models to be applied under different circumstances.

Asked about any new deal under the newly developed Iran Petroleum Contract (IPC), he said: “We are currently in talks and we may sign our next contract with a consortium comprising Russian companies.”

Asked about insurance coverage for oil cargoes, Kardor said: “We are currently handling this procedure completely by ourselves and we have accepted to hedge risks.”

Oil, Gas Fields Development

Petroleum Ministry senior official Marzieh Shahdaei said petroleum industry is instrumental in Iran’s economy due to its big share in national revenue.

“The Ministry of Petroleum and NIOC have worked out mechanisms for this industry to remain dynamic. That would help us make gains from oil sales in addition to upgrading and stabilizing Iran’s standing within OPEC and world markets,” he said, referring to the Organization of the Petroleum Exporting Countries.

Referring to the development of oil and gas fields in Iran, Kardor said: “Development of the jointly owned South Pars gas field is still under way. We will see new phases come online this year and next year to contribute further to gas production.”

Shahdaei said NIOC was in talks with Iranian and foreign companies for the development of oil fields.

“Enhancing crude oil production capacity and building this terminal, we will be able to bring diversity to our crude oil export terminals,” she added.

“Earlier, the Ministry of Petroleum had started development in the Persian Gulf. Now it is pioneering development in Makran,” said Shahdaei, a former CEO of National Petrochemical Company (NPC).

She noted that implementing major oil projects would require domestic and foreign investment.

“However, sanctions provided a proper chance for further benefiting from domestic potential. We have to take advantage of these potentialities in the best possible way,” she said.

Maximum Use of Domestic Potential

Dehqani said PEDEC was determined to make maximum use of domestic manpower in developing Makran area and implementing the Goureh-Jask oil transfer pipeline project.

“The planned construction of oil storage tanks in Jask Port is part of the Goureh-Jask oil transfer project. This project is being followed up on seriously and will result in national development in southeast,” he added.

“In addition to the development of this sector, diversifying oil export origins and feedstock supply to downstream units are targeted in this project,” said Dehqani.

He said the Goureh-Jask oil transfer project and its utilities were estimated to cost $2 billion. “This project includes building of about 1,000 kilometers of pipeline, five roadside pumping stations, measurement and mechanical tools, oil storage tanks as well as an export jetty,” he added.

Access to high seas and big oceans, proximity to Indian subcontinent countries as well as the great Indian and Chinese markets, linking Central Asia, Russia and Afghanistan to high seas and the Indian Ocean via North-South Corridor, desirable sea depth, attractive and diverse beaches, geopolitically strategic and unique location, investment-friendliness and  being potentially able to house economic and development projects and proximity to the Persian Gulf, and  giant proven oil and gas resources, are among features of the Makran area.

NIOC Eyes More Export Terminals

South Pars to Export Products via Tombak

With the completion of new phases of the giant offshore South Pars gas field, including SP13, SP14, SP 22-24 and SP19, National Iranian Oil Company (NIOC) has decided to establish an export and service terminal in Tombak in Pars II, where eight refinery phases and one liquefied natural gas (LNG) project are located. The idea is aimed at exporting liquefied petroleum gas (LPG) and sulfur produced by South Pars. According to manager of oil and gas projects' logistics at the Pars Oil and Gas Company (POGC), Tombak will in addition to exporting products, help provide services to vessels navigating at the port. It would be able to export petrochemical products from plants in Kangan and the refined products of the Siraf refineries. With a depth of 37 meters, Tombak Port is the deepest port in Iran and the Persian Gulf region.

Iran is currently recovering 570 mcm/d of gas from South Pars. Development of South Pars is under way. Iran LNG and SP 11, SP12, SP13, SP14, SP19, SP22, SP23 and SP24 are located in Pars II zone (Kangan) covering 16,000 ha of land.

Moheyoddin Jafari, POGC oil and gas projects' logistics manager, has talked with" Iran Petroleum" about Tombak and its potential.

How come NIOC has decided to build an export and service port at Tombak?

As you know, South Pars phases are being completed one after another and its story will come to an end soon. But SP11, SP12, SP13, SP14, SP19, SP22, SP23 and SP24 and Iran LNG plant are located in Pars II zone. Some of these phases came online under the 11th administration and the rest is being completed. That is why a port is planned to be constructed at Tombak in order to export LPG from the foregoing phases. Furthermore, sulfur is a byproduct of sweetening operation in all refinery phases. The refining complexes located in Pars I zone in Assaluyeh deliver sulfur via the Pars Port Complex. However, due to the lack of a port to export sulfur produced at Pars II zone, they have to take a long distance to transfer the sulfur by land. The startup of Tombak port will facilitate the export of sulfur from the Pars II refineries.

When was the agreement signed for the construction of this port?

In 2014 an agreement was signed with Iranian contractors for the construction of the Tombak port and export port under an EPC contract. The project is now under way. It is expected to come on-stream in 2019. Iranian companies also did engineering design at the port; however, international companies were involved in the port engineering section.

Known as the deepest Iranian port in the Persian Gulf with a 37-meter depth, it has three jetties; two LPG jetties for LPG exports having each capacity to berth vessels carrying 5,000 to 50,000 tonnes of LPG and one sulfur export jetty able to load 14,000 tonnes a day of sulfur. According to plans, the LPG jetty is to come online by next March to allow LPG exports.

Is this port designed to export only LPG and sulfur?

The main mission assigned to this port is sulfur and LGP export; however, Tombak is an export and service port, which would be able to provide all necessary services to vessels including container services and bunkering. Of course, providing services to vessels will be at the discretion of NIOC. Tombak is the only NIOC port in the Pars II zone. Therefore, it is able to complete projects and provide any services for the entry of products and exports. But for the time being, it is only used for sulfur and LPG exports. However, in the future once Siraf refineries become operational; it may start exporting refined products. It may also help export petrochemicals from plants located in Pars II zone.

Could you update us about the supply of necessary commodities in this port?

The necessary commodities and equipment have been purchased for the port and the commodities have been moved to stores. There is no problem for operating different sections of this port. Furthermore, orders have been placed with domestic manufacturers for most of commodities needed in this port.

Is it the first port in which caisson material has been used?

Yes, that is true. Generally at Iran's ports, buttress and topdrive are often used in the construction of jetties, but due to low depth of water in Tombak Port and due to shortage of suitable stone resources, caisson concrete materials were used. That is new experience and it is the first jetty and waterbreak in which such materials are used. The western waterbreak or the main waterbreak has a cubic structure, whose stone section is complete, while its caisson section is under construction. The eastern waterbreak is smaller in size and is totally rock core.

Halegan Gas Field Up for Investment

Halegan is among Iran's ten gas fields whose investment plan was presented to a Tehran international conference a couple of years ago.

Halegan is located in Fars Province in southern Iran. It is 73 kilometers north of Assaluyeh and 25 kilometers south of Sefid Baghoun gas field. It neighbors Sefid Zakhour and Dey gas fields from north.

In a bid to gain a 15% share in global gas trading, Iran is implementing gas efficiency plans in the housing, commercial and industrial sectors and firmly seeking to increase its gas production capacity. To that effect, onshore fields are in the limelight for domestic and foreign investment due to easy access and low investment needed for their development.

National Iranian Oil Company (NIOC) intends to establish a gas hub in the south of Fars Province. NIOC's gas production and refining plan involves development of Sefid Zakhour, Sefid Baghoun, Halegan and several other gas fields.

Halegan was discovered in 2005 when a 2D seismic test project was carried out on 1,000 square kilometers of land a year earlier in Fars Province. The seismic test ended in the discovery of Halegan and several other gas fields.

Halegan measures 50 kilometers long and 11 kilometers wide. It holds 12.4 tcf of gas (355 bcm) of gas reserves in place, 8.938 tcf of which is recoverable thanks to a 70% recovery rate. Such high recovery rate is rare for gas fields in Iran.

Furthermore, Halegan is estimated to hold 249 million barrels of gas condensate in place, 98 million barrels of which is recoverable.

Halegan's gas and condensate deposits are estimated to be valued at $83 billion, while discovery of this gas field had cost only $36 million over 2.5 years. Development of Halegan would allow a sustainable output of 50 mcm/d of gas over a 20-year period.

The director of Exploration Directorate at NIOC has said that exploration drilling operations were very tough and slow due to stiff land composed of high-pressure layers. A 4,999-meter deep well was drilled in order to yield better results. Later on, several reservoir layers including Kangan, Upper Dalan, Nar and Lower Dalan, were appraised. In the end, the field was estimated to hold 12,400 bcf of gas. The significant point with the discovery of this gas field is that all geophysical, reservoir and petroleum engineering studies, as well as reservoir layer tests were handled by the Directorate of Exploration of NIOC.

Fars Province is a gas hub in the Middle East region. Some exploration studies in this province have proven the existence of huge gas reserves. Halegan is the latest gas reservoir whose existence was proven there. Compared with gas fields located nearby, Halegan has bigger dimensions.

Iran's efforts to return to its genuine standing among gas exporting countries herald a tough road ahead in coming years.

An analyst with energy consultancy Wood Mackenzie has highlighted $100 billion opportunities for investment in Iran's oil and gas industry, saying Iran needs big foreign investment.

He has highlighted the vastness of Iran's oil and gas facilities across the country, saying they require development activities on a large scale.

The analyst said in addition to exploration activities needed to expand facilities by attracting fresh investment; existing oil facilities are in desperate need of renovation due to the maturity of oil wells.

"With opportunities introduced by Iran for investment we have to see which companies and governments would take the initiative. These opportunities would benefit both sides," he said.

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."      

15 Petchem Projects Online in 5 Years

Until eight years ago, everyone was worried about incomplete petrochemical projects. But today, the same projects are offering a variety of petrochemicals, which largely contribute to the Iranian economy. The accelerated development of petrochemical projects under the 11^th and the 12^th administrations resulted in the development of a large number of products. Iran raised its annual petrochemical production capacity to 54 million tonnes last March, while the number of petrochemicals manufactured in Iran has reached 123. More importantly, over the past five years, a total of 15 petrochemical projects came on-stream, which we briefly review here.

Ilam Petrochemical Plant

Phase I of Ilam Petrochemical Plant was inaugurated in 2014 during a provincial tour by President Hassan Rouhani. The project came online with a capacity of 300,000 tonnes. The investment made in the project stood at $442 million with its output valued at $388 million. The Ilam plant remains a major industrial project in Iran, equipped with ethylene, high-density polyethylene, feedstock desulfurization and all utilities units. Creation of job in the province, optimal use of refined gas products and their conversion to petrochemicals of high value-added have been among objectives of implementation of this project.

Lorestan Petrochemical Plant

Lorestan Petrochemical Plant was inaugurated by Iran's first vice-president in April 2016 with an annual production capacity of 330,000 tonnes of low-density linear polyethylene (LDLP) and high-density linear polyethylene (HDLP).

Located on a 130-ha land, the Lorestan plant is fed by 234,000 tonnes a year of feedstock supplied by the West Ethylene Pipeline. This project was inaugurated with an initial capital of $300 million with the value of its products standing at $329 million.

Urmia Petrochemical Plant Sulfuric Acid Unit 

The Urmia petrochemical plant was inaugurated by President Rouhani in May 2016. The sulfuric acid unit of this petrochemical plant has an annual production capacity of 50,000 tonnes. The investment made in this project was $10 million with its production valued at $4 million. Due to allotment of human resources and utilities, it would be possible for the plant to boost production capacity.

Mahabad Petchem Plant

Mahabad Petchem Plant was officially inaugurated by President Rouhani in May 2016. The idea behind this project was to develop petrochemical products in Iran, create jobs and develop petrochemical exports, make optimal use of gas resources in Iran and generate value-added from national assets in partnership with Iran's National Petrochemical Company and private investment. The Mahabad plant is among the 12 petrochemical projects located along the West Ethylene Pipeline. The investment made in this project stands at $388 million with the value of its output estimated at $329 million.

Marvdasht Petchem Plant

Shohada-ye Marvdasht Petrochemical Plant was inaugurated by Iran's first vice-president in July 2016 with an initial investment of $627 million. It was designed by Petrochemical Industries Design and Engineering Company (PIDEC) with technologies provided by Switzerland's Casale SA and Japan's Toyo. Iranian engineers handled detailed design, purchase engineering, implementation, pre-commissioning and commissioning.

The project created 500 direct jobs and 4,000 to 5,000 indirect jobs. The value of its product is estimated at $264 million.

Takht Jamshid SBR/PBR Unit

The Takht Jamshid SBR/PBR Unit was inaugurated by Iran's first vice-president in February 2017. Takht Jamshid Petrochemical Company is located in Site 2 of the Special Economic Petrochemical Zone. In Phase 1, the project will be supplying 45,000 tonnes of SBR and PBR. The PBR unit, with a capacity of 35,000 tonnes a year, created 700 jobs throughout construction and 200 jobs during operation. The products of this unit are used as raw material for rubber industry. The Petrochemical Commercial Company has indigenized PBR production technology. TJPC incorporates an SBR production unit with a capacity of 30,000 tonnes a year and a PBR production unit with an annual capacity of 18,000 tonnes. The technologies used in this facility are Goodyear for SBR and Goodrich for PBR.

Karoun Petchem Plant

Phase 2 of Karoun Petchem Plant was inaugurated with the commissioning of the methylene diphenyl diisocyanate (MDI) unit with an annual capacity of 40,000 tonnes by Iran's first vice president in February 2017. Phase 2 of Karoun Petchem Plant has five units. It has cost $407 million with its products valued at $116 million.

Kurdistan Petchem Plant

Kurdistan Petchem Plant is one of 12 petrochemical projects lying in the category of resilient economy. It has had a big share in industrial development, creation of value-added and job creation in western and northwestern Iran. It was inaugurated in April 2017 by President Rouhani. A total of $378 million was invested in this project. Construction of the petrochemical plant started in 2005, but it faced a six-year halt before being resumed in 2011. The products of the Kurdistan plant are used as feedstock for downstream units, and in the production of polyethylene films, polyethylene foams, wire and cable coating and plastic materials.

Morvarid Petchem Plant's MEG Unit

The MEG unit of Morvarid Petchem Plant was inaugurated by President Rouhani in April 2017 with a view to producing ethylene glycol in different grades. This unit was designed and built to produce 554,000 tonnes a year of products. The main feedstock for this unit are 340,000 tonnes a year of ethylene supplied by the olefin unit of Morvarid Petrochemical Plant, and 368,000 tonnes a year of oxygen to produce 554,000 tonnes of ethylene glycol a year. The initial investment made in this project stood at $300 million, while 90% of equipment used in the MEG unit is domestically manufactured. The MEG unit's products are monoethylene glycol (MEG), diethylene glycol (DEG) and triethylene glycol (TEG).

Phase 2 of Kavian Petchem Plant

Phase 2 of Kavian Petchem Plant, known as the largest producer of ethylene in the Middle East, has an annual production capacity of over one million tonnes of ethylene. It was inaugurated in April 2017 with an initial investment of $313 million. Construction of the project started in 2006. Phase 1 became operational in 2012. The products of this plant are valued at $929 million.

Entekhab Industrial Group's Polystyrene Unit

The polystyrene unit of the Entekhab Industrial Group which has production capacity of 250,000 tonnes a year of polystyrene was inaugurated in April 2017 by President Rouhani. A total of $200 million was invested in this project. Technical knowhow provided by Norway and Germany has been used in this project whose output is estimated to be valued at $326 million.

Takht Jamshid Pars Petchem Plant's Polystyrene Unit

The Polystyrene Unit of Takht Jamshid Pars Petchem Plant was inaugurated by President Rouhani in April 2017. The construction of Takht Jamshid Pars Petchem Plant began in early 2015 with the objective of producing 65,000 tonnes a year of polystyrene products. The investment made in this project stands at $70 million with the products valued at $69 million.

Polystyrene is a synthetic aromatic hydrocarbon polymer made from the monomer styrene. Polystyrene can be solid or foamed. General-purpose polystyrene is clear, rigid, and rather brittle. It is an inexpensive resin per unit weight. It is a rather poor barrier to oxygen and water vapor and has a relatively low melting point. Polystyrene is one of the most widely used plastics, the scale of its production being several million tonnes per year. Polystyrene can be naturally transparent, but can be colored with colorants. Usages include protective packaging (such as packing peanuts and CD and DVD cases), containers (such as "clamshells"), lids, bottles, trays, tumblers, disposable cutlery and in the making of models.

Phase 3 of Pardis Petchem Plant

Phase 3 of Pardis Petrochemical Plant was inaugurated by President Rouhani in September with an annual production capacity of 1.75 million tonnes of urea and ammonia. The project, which was started in 2011, has cost $582 million. Phase 3 is estimated to bring its urea production to 522,000 tonnes, which would account for 70% of the target for this project.

Marjan Petchem Plant's Methanol Unit

The methanol unit of Marjan Petrochemical Plant has a production capacity of 1.65 million tonnes a year. The project was inaugurated by President Rouhani. During operation, it will create 250 job opportunities. The investment made in this project stands at $914 million with the products valued at $577 million a year.

Damavand Power Plant

The Damavand Power Plant was built to supply electricity to 24 petrochemical plants located in Phase 2 of the Pars Special Economic Energy Zone (PSEEZ). The initial investment made in this project stood at $366 million. This unit is currently supplying electricity to the Mehr, Morvarid, Kavian, Entekhab, Takht Jamshid, Marjan and Bushehr plants as well as compressed air separation unit among others. Equipped with two main boilers and an auxiliary boiler, the Damavand Power Plant is currently producing 780 tonnes an hour of vapor which is fed into the Mehr, Morvarid, Kavian and Marjan petrochemical plants. In the future, plants under construction in Phase 2 will be supplied with vapor from this power plant.

The Damavand project was inaugurated by President Rouhani.     

South Pars to See Output Hike Anew

Plans for the development of remaining phases of the giant South Pars gas field are under way by National Iranian Oil Company (NIOC). Extensive activities are under way at Bushehr Yard where 10 platforms for SP22-24, SP13 and SP14 have been under construction in recent months. Two platforms have already been loaded out for SP13.

The deputy CEO of NIOC for engineering and development, Gholam-Reza Manouchehri, has announced that the South Pars output would increase by 3 bcf/d up to March 2018 when new Iranian year begins.

He said the increased gas production was planned to meet domestic need in winter.

Manouchehri said the remaining platforms would have been moved offshore before next March, adding that six new phases would come online at South Pars with a combined production capacity of 6 bcf/d.

“Load-out of Platforms 13B and 13D, as the main and the satellite platforms of SP13, has been already done and these platforms would be installed on FLB124 to be transferred to their location in the Persian Gulf waters,” he said.

He noted that all stages from designing to construction of the two giant offshore platforms weighing about 2,200 tonnes each have been handled by Iranian engineers. He said that the equipment and commodities used in the construction of the platforms had been supplied by domestic manufacturers.

Once installed, the two platforms would increase the South Pars gas production capacity by 28 mcm/d. Other platforms under construction at South Pars are 14D, 23 and 24A.

Manouchehri said transfer of platforms by vessels had become difficult in the past, adding: “But owning to the client’s assistance, on-site engineers developed creative methods for the transfer of 2,500-tonne platforms from land to sea.”

“The commodities purchased from abroad became operational by private companies at high standard levels,” he said.

“At Bushehr Yard, 1,700 service workers are currently employed. When there was more activity, the figure stood at 3,500. There is equipment for both onshore and offshore purposes,” he added.

Manouchehri said Iranian engineers were doing a great job at South Pars, which would contribute to higher gas supply in winter.

Manouchehri said an obligation for a 100 mcm/d output hike in South Pars required round-the-clock work and efforts.

“Despite challenges lying ahead, contractors and operators have voiced their readiness for achieving this objective,” he added.

SP13 Case to Close

The third train of sweetening at SP13 has also become operational and the last train is set to come online by November. The first two trains have been processing about 16 mcm/d of sour gas, which would soon reach 25 mcm/d.

Manouchehri said SP13 was more than 92% complete in the refinery section. The recovery capacity of each of main and satellite platforms in SP13 is 500 mcm/d.

The installation of offshore platforms 13B and 13D is to be complete in November, allowing rich gas recovery from the South Pars offshore reservoir, which is shared with neighboring Qatar. That would bring SP13 gas recovery capacity to 1 bcf/d.

SP14, Most Iranian Phase

Manouchehri also expressed hope that the refinery of SP14 would start operation soon.

“The onshore section of SP14 is at a good stage of physical progress. One platform of this phase is producing with a capacity of 14 mcm/d while Platform C, which had been loaded out in September, is to come online soon,” he said. “Therefore, the capacity of recovery from the two platforms of this phase would reach 28 mcm/d, which is equal to the output of a conventional South Pars phase.”

The third offshore platform of SP14 is to come on-stream in winter to increase gas production from this phase to 42 mcm/d.

Installation of satellite platform 14C, the second platform of SP14, will be done after load-out and transfer to location.

When compared with other development phases at South Pars, SP14 has used maximum techno-engineering potential and domestic manufacturing. The manufacturing of more than 95% of refinery equipment including metal structures, pumps, power cables and instruments, drums, pressure tanks, towers and boilers has been assigned to Iranian companies manufacturing equipment for petroleum industry. No foreign contractor is currently present in the development of SP14.

SP22-24 Nearing Maximum Output

Manouchehri said a third refining train is to be added to the SP22-24, where two refining trains are already operational. The third train is to be fed by gas from SP6-8 in November.

Farhad Izadjou, who is manager of this project, said the refinery would receive gas in December.

The refinery of SP22-24 is more than 92% complete and according to plans, a sweetening train has come online, using sour gas supplied by SP6-8. In case required sour gas is received, sweetening operations would begin at the rate of 12.5 mcm/d, to be fed into national grid.      

US Emerges Loser in JMMC Meeting

The 10th meeting of the Joint Ministerial Monitoring Committee (JMMC) of OPEC and non-OPEC producers was held in Algeria against the backdrop of US President Donald Trump’s tweet threatening some Persian Gulf oil producers.

“We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!” tweeted the US president.

In response, Iran’s Minister of Petroleum Bijan Zangeneh described President Trump’s tweet as the biggest affront to regional governments and nations allied to the United States.

“I hope that such threats would not strike fears among some of my OPEC colleagues to persuade them to implement President Trump’s orders,” he said. “OPEC is an organization independent of the US and I hope it will be so forever.”

Consensus on Output Cut

Iran’s OPEC governor Hossein Kazempour Ardebili, who represented Iran in the JMMC meeting in Algiers, said all participants in the meeting had insisted on remaining fully faithful to oil production cut.

“No figure was bandied about for output hike in the OPEC/Non-OPEC JMMC meeting,” he said.

OPEC was announced to have met its quota commitments at 118% while non-OPEC had remained committed at 119%. In 2016, OPEC and non-OPEC oil producers had agreed to cut their combined production by 1.8 mb/d in a bid to shore up prices. The OPEC/Non-OPEC agreement remains in effect up to the end of year.

Kazempour Ardebili said participants at the JMMC meeting decided to set up a committee comprising OPEC and non-OPEC states in order to follow up on the proper implementation of decisions adopted by the oil producing nations and review their commitment to their production quota. Such committee would regularly hold meetings inviting ministers and experts.

Iran’s governor for OPEC also dismissed the idea of cutting Iran’s oil exports to zero, saying: “We should not let OPEC shares go to non-OPEC members.”

He said that conditions prevailing in the oil market and the status of oil producers did not allow finding a replacement for Iran’s crude oil.

“Global demand for crude oil will keep growing in case the US imposes sanctions on Iran’s oil exports for their reduction. But the question here is to know who could step into the market to make up for probable supply shortages,” Kazempour Ardebili said.

“Some countries like Saudi Arabia claim to have extra capacity, but we have so far not seen any increased supply or extra capacity on their part,” he said.

“Saudi Arabia may release from its petroleum stocks on the market and it may be possible in coming months in winter due to lower domestic consumption, but it could not replace Iran’s oil by itself. Therefore, in order to satisfy the US president, other parties that are able to supply extra oil jump to the fray.”

Kazempour Ardebili said: “Russia has currently extra oil capacity. It had earlier cut its output by 300,000 b/d and has now returned about 265,000 b/d to the market. I don’t think Russia would have much extra oil to supply on the market.”

“We know that production declines in some northern areas like Siberia in winter and Russia cannot continue [supplying extra oil]. Everyone is now facing a litmus test. We think that even all producers are not able to supply as much oil as demanded by Donald Trump, the president of America,” he added.

“Therefore,” said Iran’s governor for OPEC, “Trump has to show some flexibility vis-à-vis buyers of Iran’s oil, for instance up to a ceiling of 1.5 mb/d or 1.2 mb/d.”

“Given the present circumstances, Trump has no option but to back down from his plan to fully halt Iran’s oil exports,” he added.

“However, over a short period of time like for two months, they may tap their own strategic petroleum reserves and supply oil to the market to supplant Iran’s output. But that would not be possible in the long-term,” Kazempour Ardebili said.

“OPEC producers are not able to provide an extra 2.3 mb/d of oil up to November [when US oil sanctions on Iran take effect] to make up for Iran’s oil unless they decide to dip into their reserves, which would not meet market demand because it would be a short-term measure causing price hikes,” he added.

Kazempour Ardebili said that Tehran had so far resisted attempts even before US sanctions come into effect.

“Iran has maintained its production at the level of 3.805 mb/d and is sticking to this production. It means that Iran’s oil production is 7,000-8,000 b/d higher than its OPEC quota,” he said. “In the meantime, our domestic refineries are producing at full capacity and it is continuing.”

He said that Iran’s refined petroleum products would increase once new phases of the Persian Gulf Star Refinery become operational. That would help Iran export refined petroleum products to neighboring nations.

“We have also developed methods for controlling domestic consumption in order to preserve exports levels and meet national demand,” said Kazempour Ardebili.

He warned that the persistence of US sanctions against Iran would drive up prices sharply. "That would incite the international community against the US and lay the blame on it, but we have to wait and see what would happen next."

Trump Has No Option but Flexibility

Iran's governor for OPEC also played down the significance of President Trump's efforts to cut Iran's oil exports to zero.

"It seems that he will not succeed in his attempt and he will have to back down from his positions and show flexibility with regard to some consumers of Iran's oil because other suppliers of oil could not practically supplant Iran for oil shortages and that would probably push up prices," said Kazempour Ardebili.

"For this reason, the Americans are likely to grant waivers to different countries for buying oil from Iran. The ceiling for such waivers may be 1 mb to 1.2 mb barrels. This issue has happened in the past, in 2014 and 2016," he added.

Kazempour Ardebili touched on the honoring of the 2016 agreement between OPEC and non-OPEC producers, saying: "Iran was earlier in agreement with a 1.8 mb/d decline in OPEC/Non-OPEC oil output and had signed the agreement. It is not opposed to it either, and approves the agreement for the release of stocks."

"This agreement was signed in 2016 and two years have since passed. Members have since tried to consume supply glut which had been accumulated in the market from 2014 to 2014, causing price crash," he said.

Kazempour Ardebili said Iran had no role in the stocks because it was under sanctions during that period.

"At that time OPEC and non-OPEC agreed to reduce their oil output by 1.2 mb/d and 600,000 b/d respectively, totaling 1.8 mb/d annually," he said. "When there is talk of 100% commitment, it means such amount must be deducted from the output of all countries. This amount was divided between OPEC and non-OPEC members in order to reduce their oil production," he added.

Kazempour Ardebili said the oil producing nations have agreed on cutting about 360,000 b/d from their output, which has been endorsed by Iran.

Asked if oil prices would fall in global markets in case 350,000 b/d of extra oil would hit the market, Iran's governor for OPEC said: "What may be said about oil prices is that this price has rather been under the impact of psychological factors, propaganda and sanctions threats."

"These factors have influenced oil market to the extent that even production hike has not reduced prices," said Kazempour Ardebili.

"Oil stocks will finally squeeze prices and due to such conditions, oil prices are likely to move towards $60 a barrel. Therefore, OPEC members are mindful of this issue. Of course, the parties which have been asked by the US to raise output are trying to supply some extra oil on the market in a bid to appease the Americans and at the same time they tolerate the pressure resulting from prices," he added.

Referring to OPEC member states' view of oil price, he said: "All nations are making efforts to maintain the price at about $80."

"As far as we know, OPEC members, including Saudi Arabia, favor $80," said Kazempour Ardebili.

He said that some countries may agree to modify their oil output due to political motivations and in harmony with US sanctions.

"Saudi Arabia and the United Arab Emirates may do so. Of course, Russia, which has reached an agreement with OPEC, may raise output to some extent in a bid to stabilize its share in the future and then proceed with the same policy," he added.

"In any case, OPEC quota should not be given to non-OPEC nations. We are not member of market monitoring committee. This committee comprises six members, but we are legally authorized to attend its meetings and of course we have no right to vote. However, we attended the meetings in a bid to counter possible action against us. Apart from six member states, others attended to mark the anniversary of the 2016 deal and not for hearing a pro-Iran or anti-Iran agenda," said Kazempour Ardebili.

Among US objectives are ratcheting up the pressure on oil producers to raise output and prepare markets for oil sanctions on Iran.

OPEC neither Cartel nor Monopoly

Mohammad Sanusi Barkindo, OPEC Secretary General, said at the JMMC meeting that the Organization of the Petroleum Exporting Countries was neither a cartel nor a monopoly.

"I might add here that this transparency extends to everything we do as an Organization. As such, it should be evident that OPEC is neither a monopoly, nor a cartel, but a responsible global body that consistently strives to maintain stability in the oil markets, in the interests of both producers and consumers," he said. "We have a vested, mutual interest in the healthy growth of the global economy."

"Being back here in this magnificent city brings back so many memories of our extensive efforts in 2016 to restore stability in the global oil market that had rapidly sunk into a deep decline. Indeed, the industry had not seen such a downward spiral in decades," said Barkindo.

"Thanks to these courageous efforts and an unprecedented cooperation that transcended borders, there will be a chapter in the history books of this industry that will have a title such as 'The Algiers Accord—the turning point towards a new era of cooperation in the international oil industry'," he added.

"Today we are holding the 10th Meeting of the JMMC, a major milestone, and let us not forget the 10th anniversary of our Conference in Oran, where OPEC proactively rose to the grave challenges presented by the global financial crisis. Algeria, and indeed Algiers, has become the “city of turning points” for our industry," he said.

"And indeed, this afternoon, we will have the pleasure of commemorating these determining moments in our industry. What better place for this to occur than here in Algiers, where it all started in 2016," he added.

Barkindo said: "As part of our quest as a centre of excellence, we continue to promote information exchange and open dialogue on oil market developments and analysis."

"This afternoon, we will officially launch the 2018 version of the World Oil Outlook, which is the 12th edition of this flagship publication, and I invite all of you to attend this special occasion," he added.

"It is noteworthy that, over the years, our World Oil Outlook has come to be valued as one of the most sought-after reference materials for policymakers, corporate decision makers, analysts, the media and the general public," he said, adding: "Transparency of data is and always has been of utmost importance to OPEC. In this regard, mobile Apps are now available for the World Oil Outlook, the Annual Statistical Bulletin and the Monthly Oil Market Report, providing access to a vast amount of oil market data from 1960 to the present online and free of charge to all."

"In conclusion, this OPEC/Non-OPEC cooperation will continue to enhance dialogue and build bridges across the industry. It will work hard to ensure a sustainable stability in the global oil market, enabling steady and lasting economic growth across consuming and producing countries," Barkindo said. "From the beginning, OPEC Member Countries have endeavored to meet their customers’ needs in a reliable and secure manner. We continue to have open and inclusive dialogue with all major stakeholders, including consumers, in an effort to consider common issues of concern regarding market stability. And this feedback, naturally, factors into any decision taken by OPEC, and more recently, by our Non-OPEC friends as well."

Balanced Oil Market

The Tenth OPEC+ Joint Monitoring Ministerial Committee closed with a positive balance on 23September, after the evaluation of a report on results prepared by the Joint Technical Committee, about the evolution, in the short term, of world oil market, including the perspectives for year 2019.

The final statement shows that, based on the report submitted by the JTC, the members of the Organization of Petroleum Exporting Countries (OPEC), along with other oil producer nations, signatories of the Production Adjustment Cooperation Statement, a level of compliance of 129% was reached in August 2018 and of 109% in July 2018.

In accordance with a release issued by OPEC, JMMC members conceive these results as a reasonable progress, according to decisions taken during the 174th OPEC Conference Meeting dated 22 June 2018, and the subsequent OPEC and non- OPEC Ministerial Committee dated 23 June 2018, in order to adjust compliance to 100%.

In accordance with information issued by the Organization of Petroleum Exporting Countries (OPEC), the next Joint Monitoring Ministerial Committee meeting will take place on 11 November 2018, in Abu Dhabi, United Arab Emirates.

Oil exporting countries participating in the Declaration of Cooperation for Oil Crude Production Voluntary Adjustment, subscribed by OPEC+ nations intend to continue cooperating and making efforts to consolidate world oil market stabilization.

The 9th Meeting of the JMMC took place in Vienna on 21 June 2018. Meetings of the Joint Ministerial Monitoring Committee (JMMC), with the participation of Russia, Saudi Arabia, Kuwait, Venezuela, Algeria and Oman are held every two months.

On 30 November 2016, OPEC countries agreed to reduce daily oil output by 1.2 million barrels to keep it at 32.5 mb/d. On 10 December, in Vienna, 11 non-member countries, including Azerbaijan signed agreement with OPEC to reduce overall daily production by 558,000 barrels. Within the 172nd meeting of the OPEC Conference on 25 May 2017, OPEC and non-OPEC states agreed to extend the deal on oil production cut till the end of 1Q 2018.

Saudi, Russia Back Down from Urgent Hike

Saudi Arabia and Russia were planning in the run-up to the Algeria meeting to increase oil output, but in the face of oil market realities and Iran's position they could not practice any immediate, additional increase in crude output.

"I do not influence prices," Saudi Energy Minister Khalid al-Falih told reporters as OPEC and non-OPEC energy ministers gathered in Algiers for a meeting that ended with no formal recommendation for any additional supply boost.

Falih said Saudi Arabia had spare capacity to increase oil output but no such move was needed at the moment.

"My information is that the markets are well- supplied. I don't know of any refiner in the world who is looking for oil and is not able to get it," Falih said.

Russian Energy Minister Alexander Novak said no immediate output increase was necessary, although he believed a trade war between China and the United States as well as U.S. sanctions on Iran were creating new challenges for oil markets.

Oman's Oil Minister Mohammed bin Hamad Al-Rumhy and Kuwaiti counterpart Bakhit al-Rashidi told reporters after the JMMC's talks that producers had agreed they needed to focus on reaching 100 percent compliance with production cuts agreed in June.

That effectively means compensating for falling Iranian production. Al-Rumhy said the exact mechanism for doing so had not been discussed.

Falih said returning to 100 percent compliance was the main objective and should be achieved in the next two to three months.

Although he refrained from specifying how that could be done, Saudi Arabia is the only oil producer with significant spare capacity.

"We have the consensus that we need to offset reductions and achieve 100 percent compliance, which means we can produce significantly more than we are producing today if there is demand," Falih said.

"The biggest issue is not with the producing countries, it’s with the refiners, it's with the demand. We in Saudi Arabia have not seen demand for any additional barrel that we did not produce."

Global oil and Asian product market, September

The market's need to adjust to the squeeze on Iranian exports, which has become veryvisible in the last few weeks, will remain a short-term focus. The cycle into autumnmaintenance has so far not been too pronounced in crude and the overall tightness in thebalance should provide a solid base to pricing even if more softening becomes apparent indemand. Russian crude and condensate output could top October 2016 levels in Q4 ascompanies ramp up production of newer fields. Condensate production should also increase together with natural gas ahead of the winter months.

After a couple of months of relatively lower readings on implied Chinese stock builds forcrude in line with slightly softening refinery intake. This will be driven at least by higher intake,which we expect to grow strongly y-o-y, and potentially by additional buying for stocks aswell, which could effectively tighten the Q4 balance even further.

While Brazilian crude output looks disappointing in the short term, the expectation is  strong uptickof 200,000 b/d y-o-y in 2019 on the back of close to 1 million b/d of additional capacitycoming online over the course of this and next year.

Asian Product Markets

Light Distillates (gasoline, naphtha)

Atlantic Basin naphtha cracks have come down in line with a weakening gasoline complexPostpeakdemandseason.Weseerelativelylowchancesofareversaloverthenearterm,keeping naphtha firmly pressured. Additionally, steam cracking margins, whileremaining overall healthy, have shown signs of weakening, meaning players may not runas high as they did over the past few years. We could be looking at a return of naphthademand in the Americas, where rising ethane prices and strong aromatics prices maypull naphtha cracking capacity back into the market.

Asian naphtha cracks have remained relatively better supported, with overall lower pressureapparentonthelightendsEastofSuez.Seasonal turnaroundsscheduledforH2Arewellunderway, with demand elsewhere remaining firm. Tightening balances over Q4should help relief some of the pressure on West of Suez cracks.

Middle Distillates (gasoil, jet fuel)

Gas oil/diesel cracks east of Suez were range over the reporting month, but similar totheir counterparts in the West, continue to be well supported overall. Customs data out of Vietnam has confirmed that the Nghi Son refinery neared commercial production overJuly-August, with imports of diesel dropping by close to 40% y-o-y, providing somepressure on the wider market. Turnarounds and seasonally rising demand should providea firm floor for cracks going forward.  Asian jet regrades remained firmly in negative territory on a barrel basis over the reportingmonth,withcracksneverthelessperformingwell.

SeasonallylengtheningbalancesinEuropearelikelytoweighsomewhatontheattractivenessofarbmovements,andunlessJapanfacesanotherstrongwinter,wewouldExpectregradestorefrainfromspikingtothelevelsseenlastyearoverthiswinter.

Fuel Oil

The collapse in HSFO cracks originated in Singapore before spreading to the West ofSuez. The fall came about from a confluence of factors, notably: 1) a lengthening of400,000 b/d in the Middle Eastern fuel oil balance between June and October; 2) astrong uptick in arrivals from West of Suez; 3) the loss of powergen demand from Pakistan;and 4) a still open NWE/Singapore arb spread, indicating that arrivals from the West should remain elevated even after peak demand. These factors trounced the mainsupportive factor, which came from Iran. Iranian fuel oil availability has already tight-ened in September on the back of refinery maintenance that lasted the whole of August at the Iranian Bandar Abbas plant, while interest in volumes loading beyond Septemberis likely to be very low given the resumption of US sanctions on Iranian oil exports inNovember.  As in the West of Suez, the expectation is fuel oil cracks to stabilize a little over thenext two months before continuing their decline in line with IMO 2020 pressures. 

-Namibia Clears Eco, Partners for Offshore Well

Eco (Atlantic) Oil & Gas has received an environmental clearance certificate from Namibia’s Ministry of Environment and Tourism for an exploration well on the Osprey prospect.

The structure is in the ‘Cooper’ (PEL 30) block in the offshore Walvis basin.

Eco has completed seven years of studies on the block, including regional geological and fracture analysis, a slick review, and assessment of 2D and 3D seismic.

It also contracted independent studies from Petroleum Geo-Services, Azinam, Tullow Oil, and Gustavson Associates.

The PEL 30 partners identified Osprey in 300 m (984 ft) water depth as an 882-MMbboe Aptian/Albian target within a sand-filled channel and fan system in the Cretaceous sequence.

Work continues to determine the optimum location for the well.

Colin Kinley, Eco’s COO, said: “With the final environmental certificates now in place we anticipate moving shortly to selection of drilling location, rig contract discussions and engineering planning for a well in 3Q 2019 or 1Q 2020.

“The company’s strategy in Namibia has been to maintain a careful and cautious pace, to fully and completely understand the region and to de-risk each asset by using industry learnings, successes and experience…

“To the south of the Cooper block, PEL 37 was recently drilled by Tullow, and although it was disappointing commercially for our partners and friends, it has provided Eco with valuable data to help better understand the characteristics of our field.

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2----Commercial Gas Confirmed in Myanmar

Total has participated in a successful appraisal well on the Shwe Yee Htun-2 gas discovery in the A2 block offshore Myanmar.

The well, drilled to a final depth of 4,820 m (15,814 ft), intersected 40 m (131 ft) of net gas pay. Early analysis has confirmed good reservoir quality, permeability, and production deliverability.

It follows the Shwe Yee Htun-1 and Pyi Thit-1 gas finds on the same block in 2016-17. Total estimates combined resources in the range of 2-3 tcf.

Woodside Energy is technical joint operator for exploration and appraisal operations, its partner being MPRL E&P. However, Total, which has a 40% interest in the block, will assume operatorship in the development phase.

Elsewhere in Myanmar, Total operates the M5 and M6 blocks on the Yadana offshore gas field, which began operations in 1998 and which currently supplies half of the country’s gas and around 12% of gas consumed by neighboring Thailand.

Last year, Total also started production from the Badamyar project, designed to extend Yadana’s plateau output beyond 2020.

3----Oil Find in Western Australia

Wood Mackenzie has issued some thoughts on Quadrant Energy’s recent Dorado oil discovery in the Bedout basin offshore Western Australia.

Australasia upstream senior analyst Daniel Toleman said that sometimes, exploration throws up a result that no one saw coming.

Prior to drilling, both WoodMac and Quadrant had viewed the Dorado-1 well as one of the top gas wildcats to watch in the region in 2018. The aim had been to find 545 bcf of gas, but the actual outcome appears to be a large commercial oil find.

Toleman said most offshore operators had given up on finding liquids offshore Western Australia, the last discovery in the region holding more than 50 MMbbl dating back to 2003, and the last 100-MMbbl discovery to 1996.

For block partners Quadrant and Carnarvon finding oil makes development much easier, as oil has a lower-risk profile and does not require gas contracts or infrastructure, which means it is easier and faster to monetize.

Appraisal drilling will be needed to firm up the resource, but according to Toleman, a base case of 150 MMbbl for Dorado would be easily commercial.

Quadrant executive Fred Wehr has said that the potential upside is staggering, claiming that this was something he had never seen during his 35-year career.

But it also remains to be established whether the find is mainly light oil or so light that it is in fact a condensate, normally a natural liquid that ‘drops’ out of wet gas production.

4----Petrobras Gains Extension Offshore Brazil

Petrobras has awarded the Transocean ultra-deepwater drillship Petrobras 10000 a 790-day contract extension offshore Brazil.

The contract is extended through October 2021 and includes a blend and extend modification to the previous contract day rate, effective September 2018. The additional net contract backlog is about $185 million, including cost escalations.

Additionally, Transocean will receive a 5% royalty per day, totaling approximately $16 million, estimated to be from October 2018 to October 2021 associated with the use in Brazil of the company’s patented dual-activity technology on the Petrobras 10000.

5----More Gas Find Beneath UK Shetland

Total has confirmed that its Glendronach exploration well west of Shetland in UK waters has discovered gas.

The well was drilled in around 300 m (984 ft) water depth on block 206/04a, to a final depth of 4,312 m (14,147 ft), in a formation below the producing Edradour reservoir.

It encountered 42 m (138 ft) of net pay of gas. Initial analysis has confirmed a good-quality (Lower Cretaceous) reservoir, permeability and production deliverability, with recoverable resources estimated at around 1 tcf.

Total believes the find could be developed quickly with the existing infrastructure around the Edradour field and the Laggan-Tormore pipeline system, which is connected to the Shetland Gas Plant.

“Glendronach is a significant discovery for Total which gives us access to additional gas resources in one of our core areas and validates our exploration strategy,” said Arnaud Breuillac, president Exploration & Production.

Other partners are Ineos E&P UK and SSE E&P UK.

Total also operates the Culzean gas field development in the UK central North Sea, due to start up next year.

U.S. Crude Output Hits Record 10.96mb/d

U.S. crude oil production rose 269,000 barrels per day (bpd) to a record 10.964 million bpd in July, led by record output from Texas and North Dakota, the U.S. Energy Information Administration said in a monthly report.

The agency revised its June production figure slightly higher to 10.695 million bpd in June.

U.S. crude production has surged thanks to a shale boom and now rivals top producers Russia and Saudi Arabia.

Oil production in Russia averaged 11.347 million bpd between Sept. 1 and Sept. 27 and was on track to reach another post-Soviet high, an energy sector source told Reuters. Saudi Arabia meanwhile, produced about 10.4 million bpd in August.

Saudi Arabia is concerned that rising U.S. shale production over the next year could create another glut, especially if a stronger dollar and weaker emerging market economies reduce global demand for oil.

Production in Texas inched higher to a record 4.47 million bpd and output from North Dakota also hit a peak, rising by 41,000 bpd to 1.26 million bp, EIA data showed.

Still, the rate of production growth in the Permian basin, the biggest U.S. oilpatch which spans Texas and New Mexico, is slowing amid transportation bottlenecks as pipelines have filled.

Drilling companies cut oil rigs for a second consecutive week as new drilling stalled in the third quarter with the fewest additions in a quarter since 2017, data showed.

Total U.S. oil demand was up 3 percent in July compared with last year, driven by strong demand for distillates, EIA data shows.

Distillate demand jumped 6.8 percent, or 251,000 bpd, in July year-on-year, while gasoline demand was up 0.7 percent, or 67,000 bpd, in July compared with last year, EIA data showed.

Meanwhile, natural gas production in the lower 48 U.S. states rose to an all-time high of 92.7 billion cubic feet per day (bcfd) in July, up from the prior record of 90.9 bcfd in June, according to EIA’s 914 production report.

Output in Texas, the nation’s largest gas producer, increased to 24.6 bcfd in July, up 1.5 percent from June. That was the most since April 2016.

In Pennsylvania, the second biggest gas producing state, production rose to a record high 17.0 bcfd in July, up 3.0 percent from June. That compares with output of 14.7 bcfd in July 2017.

2----U.S. Oil Drillers Add Fewest Rigs

U.S. energy companies cut oil rigs for a second consecutive week as new drilling stalled in the third quarter with the fewest additions in a quarter since 2017 due to pipeline constraints in the nation’s largest oil field.

Drillers cut three oil rigs in the week to Sept. 28, bringing the total count down to 863, General Electric Co’s Baker Hughes energy services firm said in its closely followed report.

For the third quarter, the increase of five oil rigs was the smallest since drillers cut three rigs in the fourth quarter of 2017. They added 50 rigs in the first quarter and 61 rigs in the second quarter of 2018.

For the month of September, meanwhile, the oil rig count was up one, the same rise as in August.

The U.S. rig count, an early indicator of future output, is higher than a year ago when 750 rigs were active as energy companies have been ramping up production in anticipation of higher prices in 2018 than previous years.

The rig count has held mostly steady since June as spot crude prices in the Permian region in western Texas and eastern New Mexico WTM- WTC-WTM have collapsed due to a lack of pipeline infrastructure needed to transport more fuel out of the region.

On a quarterly basis, drillers in the Permian are still adding rigs, but the pace of those additions has slowed each quarter this year to just 13 added in the third quarter from 31 in the second quarter and 44 in the first quarter.

Production in the Permian is forecast to rise to 3.5 million barrels per day in October, just below output from Iran, OPEC’s third largest producer.

More than half the total U.S. oil rigs are in the Permian, the country’s biggest shale oil formation..

Overall, U.S. oil production rose to a record high 11.0 million bpd in July, according to federal data, rivaling output from top producers Russia and Saudi Arabia.

Consortium to Pay Rosneft $230mn to Settle Row

Russia’s Sakhalin-1 consortium, led by ExxonMobil, has agreed to pay Russian energy giant Rosneft $230 million in an out-of-court settlement of an oil production dispute, an executive of an Indian consortium partner said.

Rosneft had filed a $1.4 billion lawsuit in the Sakhalin district arbitration court in Russia’s far east, accusing the consortium of unjust enrichment, an allegation the consortium denied.

The dispute centred around how oil should be shared between the Sakhalin-1 concession and an adjacent Rosneft field.

“Rosneft was demanding that it should be paid $1.4 billion ... We have agreed for an out-of-court settlement and will be paying $230 million as Rosneft entered the other area in 2011,” N.K. Verma, managing director of India’s ONGC Videsh, a partner in the Sakhalin-1 consortium, told Reuters.

Rosneft, which also has a stake in the Sakhalin-1 consortium, declined to comment. ExxonMobil in Moscow declined immediate comment.

 “We don’t have anything we can share,” said Suann Guthrie, an ExxonMobil spokeswoman in the United States.

P.K. Rao, director for operations at ONGC Videsh, said the out-of-court settlement was reached about 10 days ago.

The row was over oil “cross-flows” from Northern Chayvo oilfield, controlled by Rosneft.

Sakhalin-1, off Russia’s Pacific Ocean coast, is operated by Exxon Neftegaz Ltd, through which ExxonMobil owns 30 percent in the project. Rosneft and ONGC control 20 percent each. Japanese consortium Sodeco owns 30 percent.

ONGC’s Verma said production at Sakhalin-1 reached 250,000 barrels per day (bpd), up from some 200,000 bpd, as Russia had lifted output restrictions as part of a global deal with OPEC.

Russia’s total oil production hit a post-Soviet high of 11.347 million barrels per day.

The dispute between Rosneft and the Sakhalin-1 consortium unfolded against the background of a wider rift between Russia and the United States over what Washington called Moscow’s meddling in a 2016 presidential election.

Exxon had to quit some joint projects with Rosneft, including developing Arctic oil and gas, over sanctions imposed on Russia by the United States. Participation in Sakhalin-1 is not punishable by sanctions.

4---Mexico President to Honor Existing Oil Contracts

Mexico’s president-elect, Andres Manuel Lopez Obrador, assured private energy executives in a closed-door meeting their contracts will not be canceled if they meet existing terms, the head of the country’s main oil producers’ association said.

Lopez Obrador, who has often expressed skepticism of private sector involvement in Mexico’s oil industry, met for the first time with oil and gas executives, striking what was described as a diplomatic tone with them.

“The president-elect told us on various occasions that they will respect contracts so long as we obviously comply with all of the contracts’ commitments,” said Alberto de la Fuente, president of Mexico’s AMEXHI producers’ group, following the meeting with Lopez Obrador.

 “We left feeling at ease that our contracts will be honored,” added De la Fuente, who also is head of Anglo-Dutch oil major Royal Dutch Shell in Mexico.

Set to become Mexico’s first leftist president in modern history when he takes office in December, Lopez Obrador did not speak to reporters following the closed-door event.

But his designated energy minister, Rocio Nahle, confirmed the incoming administration’s support for the contracts.

 “We will respect the rule of law and the agreements that have been made with the outgoing government,” Nahle said.

She said the Lopez Obrador administration also will help companies deal with any regulatory delays they face.

“We made a commitment that we will talk to the regulators, or more to the point that we will review the regulators because there is a constant complaint that they take too much time,” said Nahle.

Lopez Obrador earlier pledged to review for possible corruption the more than 100 exploration and production contracts that have been awarded under a sweeping oil opening finalized in 2014.

The pledge to address regulatory bottlenecks could cheer companies starting exploration and production ventures, some of which have criticized the slow pace of approvals.

“The whole regulatory process is difficult and you have to have a lot of patience,” said Alfredo Bejos Checa, chief executive of Grupo Diavaz, at a conference in Acapulco.

Grupo Diavaz is a longtime service provider to Pemex and now operates fields on its own.

At the same conference, Maria Moraeus Hanssen, CEO of Germany’s DEA Deutsche Erodoel AG, singled out oil safety regulator ASEA as slow moving.

“Sometimes, we get the impression that things are not completely coordinated (among government agencies),” she said. “Processes before ASEA have been time-consuming.”

5----Wintershall, DEA to Create Oil/Gas Business

Chemicals group BASF and LetterOne signed a merger agreement to combine their respective oil and gas businesses Wintershall and DEA to create an independent European oil and gas company, the companies said.

The new company called Wintershall DEA will be headquartered in Kassel and Hamburg and will seek to list itself through an initial public offering, BASF said.

Under the deal, LetterOne will put all its shares in a vehicle of Russian billionaire Mikhail Fridman’s DEA into Wintershall Holding GmbH against the issuance of new shares of the company to LetterOne.

BASF will initially hold 67 percent and LetterOne 33 percent of Wintershall DEA’s ordinary shares.

The Joint Venture will aim for daily production of 750,000 to 800,000 BOE between 2021 and 2023 and is expecting synergies of at least 200 million euros ($232.80 million) per year are expected as of the third year following the closing of the transaction.

The new independent company will be led by the chief executive of Wintershall, Mario Mehran, and Maria Moraeus Hanssen, CEO of DEA, will be the deputy CEO and chief operating Officer of the joint venture.

6---Shell to Handle Contract US Refinery Talks

Royal Dutch Shell Plc said it looks forward to handling industry negotiations on a national contract covering 30,000 U.S. refinery and chemical plant workers represented by the United Steelworkers union (USW).

The talks begin formally in January and Shell, which has represented its peers since 1997, is lead negotiator on behalf of companies including BP, Chevron Corp, Exxon Mobil Corp and others.

The refining industry this year has enjoyed strong profits, near-full utilization rates and record product exports. In the June quarter, the margin on turning crude to gasoline, diesel and other products was the highest since 2015.

“Our goal in the bargaining process will be to reach an agreement with the USW which ensures that our employees continue to receive competitive pay and benefits while keeping the industry competitive in the global marketplace,” Shell spokesman Ray Fisher said in a statement.

Shell’s statement was similar to that made by the head of the USW’s oil bargaining program. The union is aiming for a three-year contract with wage increases of about 6 percent per year.

“Our goal is a mutually beneficial agreement for our members and the companies they work for,” Kim Nibarger, chairman of the union’s national oil bargaining program, said in an interview.

Union members with four years’ experience currently earn about $40 an hour, Nibarger said.

The current contract expires on Feb. 1. The one to be negotiated between Shell and United Steelworkers will set the pattern for contracts between local unions and refineries, chemical plants and pipeline operators.

7---Croatia Extends Deadline LNG Terminal Project

Croatia has again extended a deadline for submitting binding bids for the use of a planned floating liquefied natural gas (LNG) terminal in the northern Adriatic.

“The deadline has been moved from Sept. 28 to Dec. 20 this year,” state-owned LNG Croatia said in a statement on its website.

The decision was taken after a request from potential bidders, it added.

The first time the deadline was extended in early August was for the same reason.

The terminal on the northern Adriatic island of Krk is planned as part of the European Union’s efforts to diversify from Russian energy imports. The targeted markets are countries in central and southeastern Europe.

The value of the terminal is seen at 250 million euros ($291.63 million) with the European Union financing just over 120 million euros.

The capacity of the terminal, which has a tentative date for operation from early 2020, will eventually depend on demand.

Local media reported earlier this year that initial demand for the terminal had been rather low, causing a delay in the final investment decision originally planned for last June. LNG Croatia refused to comment on the bidding procedure.

8=====Saudi Aramco to Produce More in Q4

State oil giant Saudi Aramco will bring new crude output capacity of some 550,000 barrels per day (bpd) online in the fourth quarter from two fields - Khurais and Manifa - giving it the ability to boost production if there is demand, a source said.

The expansion of crude output capacity from Khurais field, which produces light sour crude, will add around 250,000-300,000 barrels per day boosting the field potential to 1.5 million bpd, one source familiar with the matter said.

The resumption of production from the giant Manifa field, which pumps heavy sour oil, after resolving some maintenance issues will add another 300,000 bpd to Aramco’s crude output capacity, the source said.

Saudi Arabia, the world’s largest oil exporter, is the only major producer with oil output capacity of about 12 million bpd. The additional output increase will not raise Aramco’s capacity above the current 12 million bpd.

But that would give the company more flexibility to boost supplies and reach higher production levels sooner than before.

Saudi Arabia currently pumps around 10.5 million bpd and will quietly add extra oil to the market over the next couple of months to offset a drop in Iranian production.

Saudi Energy Minister Khalid al-Falih said production from Manifa would return to 900,000 bpd soon after a pipeline issue has been resolved which has caused output decline from the field over the past months.

The Khurais expansion project is crucial to help Saudi Arabia sustain its spare capacity and help reduce pressure on ageing fields, long seen by the market as a crucial cushion that can balance the market during times of oversupply or shortage.

Spare capacity is the kingdom’s tool to allow it to raise output quick enough in case of any sudden supply outage or to keep oil prices in check.

9----Malaysia Oil Firm to Double Production

Malaysian oil and gas exploration and production company Hibiscus Petroleum is aiming to double its oil output in the United Kingdom and Malaysia to 20,000 barrels per day (bpd) by 2021, a senior company executive said.

It needs an additional $50 million by 2020 to boost production from about 10,000 bpd now, Kenneth Pereira, managing director of the company, told reporters.

“That’s our maximum negative cashflow for projects already identified and that’s based on a $60 per barrel oil scenario,” he said.

“So at $70 per barrel oil, it will be something like $40 million.”

The company, which develops small oil and gas fields in Asia, has two major producing assets.

One is the Anasuria Cluster in the North Sea in the United Kingdom. The other is in Malaysia, the 2011 North Sabah production sharing contract (PSC), which includes the Labuan crude oil terminal.

It also owns a discovery in Australia that has not produced first oil yet, Pereira said.

Hibiscus has a 10-year marketing and offtake agreement with BP Oil International to sell crude from the North Sea, and a three-year agreement to sell crude from the Malaysian oil field to commodity trader Trafigura.

Malaysia’s largest asset management firm, Permodalan Nasional Bhd (PNB), expects talks to acquire commercial assets within London’s Battersea Power Station to complete in the fourth quarter of this year, its CEO said.

The ongoing talks are “positive” and the fund may seek another extension to continue the discussions, PNB CEO Abdul Rahman Ahmad said.

The government-linked fund, alongside state pension fund Employees Provident Fund (EPF), had in January proposed to buy the Power Station building within phase two of the development for a total of 1.608 billion pounds ($2.11 billion). The asset consists mainly of retail and office spaces.

Both funds first agreed to extend the period for talks until Sept. 30.

“We are still in the process of finalising the transaction, we are nearly completing our due diligence exercise. We would probably have better clarity in the fourth quarter,” Abdul Rahman told reporters at a briefing.

10----Total Sees Output Boost From Deepwater Projects

Oil and gas major Total said it expected deepwater oil and gas operations to make a strong contribution to its output and cash flow thanks to major developments in the West Africa’s Gulf of Guinea region, Brazil and U.S. Gulf area.

Production from deepwater projects is expected to reach 500,000 barrels of oil equivalent per day (Kboe/d) by 2020, contributing to its 6 to 7 percent output growth target per year from 2017 to 2020.

“Deepwater is today for us a growing and very profitable part of the portfolio,” Total’s President for Exploration and Production Arnaud Breuillac, told investors in New York.

Deepwater production will increase to more than half a million barrels of oil per day by 2020 with cash flow from operations at over $30 per barrel at an oil price of $60 per barrel, Breuillac said.

 “Deepwater is approximately 15 percent of the group’s production but it will contribute to more than 35 percent of cash flow from operations in the coming years,” he said during a presentation.

Total’s deepwater projects on the West African coast includes Moho Nord in Congo, Kaombo North in Angola which began production in July. Production is expected to start at its Nigeria’s Egina field by the end of the year, and at Kaombo South by the summer of 2019.

Breuillac said the French company had a number of significant projects in pipeline in Brazil’s “pre-salt” or deep offshore projects, including Lapa, Libra and Lara projects which could add around 100 kboe/d by 2022.

In the Gulf of Mexico, the Ballymore giant discovery is being appraised, while production and more developments were ongoing at its Jack and Tahiti operations.

Total is also exploring in several new deep water areas in Guyana, Mauritania and Senegal, and in South African and Namibia.

“We have a strong deepwater exploration portfolio with numerous drill targets in large areas, targeting significant areas to be drilled in the next two to three years,” B

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Japan: 2030 National Energy Plan and Gas Demand

Japan is one of the top five developed economies in the world, and its advanced industries and large population require a vast amount of energy. Significantly, this island on the shore of the Pacific Ocean does not hold fossil fuels reserves, in particular, natural gas. Historically, Japan has not been self-sufficient in terms of energy needs, depending heavily on imports of fossil fuels.

Following the Fukushima disaster in 2011, Japan became increasingly dependent on fossil fuels, and imports boosted reliance on coal and LNG. For instance, in the three years following the Fukushima disaster, Japan spent an additional annual average of about $30 billion, on fossil fuel imports. The government chose LNG to substitute for lost nuclear generation.So far, in Japan eight nuclear reactors have come back into operation, and three reactors have had their operating lifetimes formally extended from 40 to 60 years.

All three reactors were due to be assessed when their original 40-year licenses expired, but it will be harder for the remaining plants to be granted the same extensions. As a result, Japan will fall short of its nuclear targets, and the difference will be compensated by higher coal and gas-fired generation. The other point about Japan is that the infrastructure and gas transportation systems belong to private energy companies, and insufficient investments have resulted in poorly connected gas transportation systems. This created some serious problems, especially after Fukushima nuclear power accident. The country faced energy shortages at a time when oil and LNG prices were particularly high. The natural gas market was liberalised and, as a result, the electricity and heating sectors were accelerated to overcome the disconnectedness of the networks.  With the implementation of the Revised Gas Business Act in 2017, the formerly regulated gas sector became competitive. Because the Japanese government aims to facilitate access to the LNG supply chain, from import terminals to distribution to end users, LNG markets were also affected. Japanese energy companies depend on the spot market to meet their domestic obligations, and for that reason prefer more flexible gas contracts.

Japan 2030 National Energy Plan (NEP)

Last July, Japan’s ministry for the economy, trade and industry (METI), published a new version of the “Basic Energy Plan”, called “National Energy Plan” (NEP). This is the country’s fifth energy plan, and it was published after approval by the Japanese cabinet, and public consulting. In Japan, the government is required by law to re-evaluate and publish a revised energy plan at least every three years. The last time the national energy plan was revised and evaluated in 2014. The 2030 NEP is an important document, as it is used by government departments and industry, to guide investments in the energy sector of the country. The plan is driven by safety and the ‘Three Es’: Energy security, Economic efficiency, and Environment. The 2030 NEP aims to increase domestic energy self-sufficiency to 24% by 2030, compared with 8% in 2016, and to trim emissions by 26% by 2030, and 80% by 2050, compared to 2013 levels. According to the plan, gas and coal share will return to the pre-Fukushima levels, oil will drastically reduce, and nuclear energy will recover.

 It is expected, 22–24% of the power generation mix will be supplied by renewable energies (8.8–9.2% hydropower, 7% solar, 3.7–4.6% biomass, 1.7% wind, and 1–1.1% geothermal), which is a major shift in government policy, 20–22% will be supplied by nuclear energy, and 56% will be supplied by fossil fuels (26% coal, 27% LNG, and 3% oil). Furthermore, the country intends to cut the share of fossil fuels in its energy mix to 76% by 2030, down from 92% currently. Comparison of pre- and post-Fukushima power generation mix with the 2030 NEP targets, shows a marked shift from fossil fuels to renewables and hydro development. Although the government’s policy is still strongly supportive of nuclear restarts, public opposition still remains.

Restarts to date have been far slower than expected, and all reactors have faced legal challenges from local residents. The nuclear target is ambitious and can only be realized if nearly all nuclear plants are granted permission to come back online under the stricter post-Fukushima regulations, and if their lifetimes are extended beyond the standard 40 years. According to the new safety rules, before nuclear beginning to restart, operators must meet new regulatory safety standards, as well as getting approval from local Japanese governments. According to the GECF projections, these factors will contribute to the significant role that LNG and renewables will play in Japan’s energy mix. However, if the 2030 NEP is borne out by reality, according to the plan LNG imports will fall from 80.7 MN MT per year in 2017 to 62-64MN MT per year by 2030, and will keep the same levels by 2040. Hence, as mentioned above the share of gas in the Japanese electricity generation mix will drop to about 27% in 2030.

 On the other hand, due to the energy security issues, coal will be producing 26% of Japan’s power by 2030, close the pre-Fukushima levels, but lower than the 33% that seen in 2017. During the last two years Japan opened eight new coal-fired power plants, and also aims to open another 36 coal-fired plants in the next 10 years (about 8 GW between 2015 and 2030). Actually these can supply more electricity than the 26% designated in the NEP 2030, and probably will, if nuclear fails to meet the NEP 2030 target.

 To sum up, according to the GECF forecasts gas demand in Japan energy mix declines from 23% in 2017 to 19% in 2040 (from 125 bcm to about 91 bcm, accordingly). This is attributed to flat electricity demand and lower gas consumption in the power generation sector. Gas demand will be hampered by reinstated nuclear power capacity, coupled with aggressive renewables deployment designated by the new 2030 National Energy Plan (NEP).

Iran Oil and Two World Wars

Barely had two years passed since the construction of an oil refinery in the Iranian city of Abadan when World War I broke out. Later on, documents revealed that a major objective pursued in the bloody conflict was dominance on oil and gas resources all across the globe.

The Triple Entente treaty was reached among Britain, France and Russia on how to divide global oil resources after the end of the war. French politician Georges Clemenceau had said that one drop of oil would be equal in value with one drop of blood. British politician Lord George Nathaniel Curzon had predicted that the Allies would go through oil to reach victory.

The involvement of Turkey's Ottoman Empire in the global war posed a serious threat to the Anglo-Iranian Oil Company (AIOC). When in November 1914 a war erupted between Britain and the Ottomans, it was announced that Iran's oil facilities would be within the reach of the Turks. German Consul Wilhelm Wassmuss, who was based in Bushehr, had already identified oil-rich zones in Iran. He had good information about the extension of Masjed Soleyman-Abadan oil pipeline. Moreover, he had once met with the head of Masjed Soleyman. On February 6, 1915, Wassmuss incited local tribesmen to explode the pipeline. AIOC stores were plundered and communications lines were cut. That might be the most important and the only WWI-era even in Iran to result from the fact that the country sat atop huge oil reserves. At the beginning of WWI, roughly 25,000 tonnes a month of oil and petroleum products was being exported from Abadan. That amount was so important for Britain's Marines to urge the British government to take action.

British forces were deployed in Basra while Indian soldiers were deployed in Khuzestan. The Indians' presence in Khuzestan produced cultural and social impacts in addition to military issues. Khuzestan was dotted with military barracks and camps which housed Indian troops. Such titles as "Sahib" became common in those areas.

In different areas of Khuzestan, including Masjed Soleyman, the Indians were housed. The Allied forces' dependence on oil and the significance of oil facilities for them led to the expansion of AIOC activities in Iran from 1915 to 1919. In the In the meantime, a paved road was built connecting Masjed Soleyman to Darkhazineh. New transportation means like passenger cars and truck were used. Masjed Soleyman's power generation plant was developed and the capacity of the Abadan refinery was enhanced with the construction of a new pipeline.

Oil extraction and export rose from 274,000 tonnes a year in 1914 to 1.385 million tonnes in 1920. Iran's oil flow was serving as a bridge to victory. Britain and its allies did spare no efforts to protect this valuable source of energy.

The end of the war resulted in the development of petroleum industry in Iran. AIOC recorded progress to the extent that its Board of Directors managed to sell three million bills printed for the company's assets. At the same time, conflicts emerged between Iran and AIOC, which resulted in the revision of terms of the D'Arcy Concession and the signature of the 1919 Agreement. In the years following the war, activities were developing. In late 1992, the Abadan refinery had brought its annual treatment capacity to three million tonnes. In 1924, a small railway was built to connect Darkhazineh and Masjed Soleyman. That helped circumvent mountainous areas. New exploration work was under way. In 1928, huge oil reserves were discovered in Haftkal. In 1930 only, about one million tonnes of oil was extracted from that area. In the same year, the Abadan refinery's treatment capacity reached five million tonnes. From WWI to WWII, important political events transpired Iran. The transition of power from the Qajar to the Pahlavi dynasty and the new Shah's efforts for empowering the central government forced the company’s administrators to resort to government forces in order to protect their interests. The termination of the D'Arcy Concession and the 1933 Treaty were among important events which happened between the two global wars. The world was bracing for new events which would not spare Iran. When WWII broke out, Iran's oil proved its significance and influence in international relations for a second time. The invasion of Iran by the British forces and their allies in September 1941 destabilized Iran.

The main objective sought by the Allied forces in their invasion of Iran was to deliver ammunitions to Russia; however, it may not be denied that the Allies were concerned with safeguarding Iran's petroleum industry. The conditions changed drastically after Japan intervened in the war because the Japanese managed to free Indonesia and Burma, which were both major resources of hydrocarbon for the Allies. Then, Iran became the unique source of revenue for the Allies. Not long before the breakout of WWII, a facility that had been built to produce jet fuel was installed at the Abadan refinery.

The factory started work in 1940, but two years later it became clear that it would not supply enough gasoline for the warring Allied forces. Therefore, during the war new sections were added to the refinery until in 1944 the refinery was able to produce one million tonnes a year of jet fuel, which was a record in the world.

From the second year of the war it became known that Iran had to supply petroleum products to the Allies. Therefore, development of AIOC was restarted. The British and American governments decided to send necessary equipment to Iran. That marked the start of the US's silent presence in global politics and economy, which resulted in new conditions for the entire world. Extraction from new reservoirs including in Aghajari started to provide kerosene to the Allies. During the November 1943 conference in Tehran between Joseph Stalin, Franklin Roosevelt and Winston Churchill, Stalin proposed negotiations about the extraction and distribution of Middle East oil in the post-war era. Roosevelt and Churchill opposed, saying the issue had to be discussed later on. In fact, Russia was seeking to plunder Middle East oil, particularly Iran's oil after the war. As soon as the war ended, the Americans also eyed Iran's oil. Sinclair Oil Corporation and Standard Vacuum Oil Company came to Iran in the hope of winning oil concessions.

The downfall of Reza Shah and the transition of power to his son were important events during that period of Iran's history, which resulted in more events in Iran's interaction with AIOC. Development of oil industry in Iran continued after the war. In 1946, Iran was recovering 19.19 million tonnes of oil, which increased to 31 million tonnes in 1950. The reason for such increase in oil production resulted from new operations in Gachsaran, Aghajari, Omidieh, Lali, Haftkal, Ahvaz and other oil-rich regions.

Post-WWII world was different and changes in global diplomacy were leaving their impact on Iran. During the two world wars, Iran's oil helped the Allies reach victory. That is why Iran's oil industry development continued. Furthermore, after the war, a new wave of nationalism spread across the world. The emergence of the United States, as a new power, had changed traditional political and economic ties. Everywhere, there was talk of nationalization of petroleum industry.

Paulo Sérgio Bento Brito:

I’m Enjoying Iranian Football, Culture and Food

Amir Sadeqi Panah

Portuguese trainers have always enjoyed a high standing in Iran. Carlos Queiroz is a case in point as he managed to lead Iran’s national soccer team to the World Cup matches and prove a good performance.

Another Portuguese football coach currently working in Iran is well-known Paulo Sérgio Bento Brito, who is currently training Sanat Naft Abadan football team.

Sérgio may not have yet become popular enough among football fans; however, his ideas could definitely push Sanat Naft Abadan to a high position if they are turned into practice. Sanat Naft Abadan is a leading soccer team in Khuzestan Province.

The following is an exclusive interview with Paulo Sérgio Bento Brito:

In your home country, you are credited with lots of honors. How come you accepted to come and train an Iranian team?

As a matter of fact, in addition to Portuguese teams, Chinese and Uzbek teams had also offered me coach jobs. But I always like to experience new challenges. That is why when I received the offer from Sanat Naft, I consulted some of my friends and decided to travel to Iran.

Don’t you regret your choice now?

In Abadan, we have still many shortages and we may not do our job as we desire; however, I am happy with the current conditions. I’ve come here to work; anyone who wants to work has to overcome difficulties.

Did you talk to other Portuguese coaches like Carlos Queiroz and Nelo Vingada who have experienced working in Iran?

I talked to Vingada and sought his views. He spoke very highly of your country and I was really encouraged to come to Iran to get familiar with your culture and nation. I do really like Iran and I am happy with my presence here now.

How is your relation with Queiroz?

Queiroz is a great coach and I feel pride to see my countryman being such successful. I have no problem with Queiroz and I am happy to see him training Iran’s national team. Iran’s World Cup performance stunned everyone and that was largely owing to Queiroz's performance. I hope that he can lead Iran’s nation to Asian Championship title.

But you think differently from Queiroz when it comes to football. Your team does not follow the national team’s defensive style, does it?

Each coach has his own methodology. For me, coaching is a style and each coach has his own style. You cannot expect two coaches to train their players similarly. Were it such all football teams would play identically and there was no pleasure of watching soccer. Football is an emotional sport. Today, football is not limited to a sport discipline. In many parts of the world football has turned into a stimulant and that is why you enjoy watching different styles and supporting different teams. This diversity of styles makes you love football. I said all this so that you would no longer compare two football coaches and their styles.

Many, in Iran, say defensive style is not a good method for Iran’s football team.

Now I ask you a question. Did you know any other better method to face Portugal and Spain in World Cup matches? I don’t think so. In my view, if you accept Queiroz as the head coach of Iran’s national football team you need to respect his ideas and style.

Aside from that, you are living very tough days at Sanat Naft. Some fans are not happy with your performance. Is that true?

Football coaches across the globe try their best to satisfy their fans. I am doing my job and I am trying to do it in the best possible manner. All our efforts are focused on satisfying football fans. I feel happy to see that our clubs are packed in all matches. That is the beauty of football. In the meantime, I understand that football fans always want to see their desired team emerge winner. But how long have I been in Iran now? I have been in your country for less than three months. Did I choose these players for Sanat Naft? I agreed to work with them. Ok! But I need more time to arrange affairs and execute my tactics. Before coming here, I did not even know your culture. Now my conditions have improved. I have even learnt a bit Persian. For instance, I know “Salam! Khoubi?” (Hi, how are you?). I’m doing my job and I hope to do my best. I am striving to make football fans and club managers happy. I have nothing else in mind.

You said Iranian food. Are you happy with Iranian food?

Sure! Iranian food is excellent. I love kebab. I had eaten kebab so much that when I went to Portugal for family visit everyone told me I had put on weight! I love a food made with fish in Abadan. I love it so much. It does not agree with my body, but I really love its taste.

So you are enjoying yourself in Abadan, aren’t you?

Your country is excellent. I had a white drink, known as yoghurt drink, in Isfahan. It was delicious. We have such drinks in Portugal, but the one I had in Isfahan had a different taste. Iran is really beautiful and I now understand why Queiroz has stayed here seven years now. [Laughing]

How long do you think you will stay in Iran?

I don’t know. You’ve to ask Sanat Naft managers. I follow their rules. But I will enjoy everything as long as I’m here. I enjoy football, foodstuff and culture of your country. Even after I go I will relate good memories of Iran to my family. Let me tell you a story: One day in Lisbon, I ran across Tony Oliveira. You must know him because he worked for Tractor Sazi. Tony had become very popular in Tabriz and all fans of Tractor Sazi loved him. After going back to Portugal, he said he liked to return to Iran and die there! I hope he would live long years. But we, as foreign coaches, really enjoy working in Iran. Everything goes ahead smoothly.

Do you make any promise to supporters of Sanat Naft Abadan?

I can’t make any promise, but I will try my best to push the team’s ranking up. That is my main objective.

Ilam, Beauty of Zagros

Ilam Province is located west of Zagros Mountains. It neighbors Khuzestan Province to the south, Lorestan Province to the east, Kermanshah Province to the north and Iraq to the west. The main cities in this province are Ivan, Dehloran, Mehran and Shirvan. The provincial capital bears the same name as the province. Owing to its abundant natural attractions, Ilam which is surrounded by mountains and jungles is known as the beauty of Zagros, and weather is mild in Ilam.

In addition to natural attractions, Ilam Province is also home to historical monuments, some of which are briefly reviewed as follows:

Siahgal Fire Temple

Siahgal Fire Temple is among ancient monuments in Ilam Province. It was built under the Sassanid dynasty. It is situated 15 kilometers southwest of Sartang village.

The fire temple is among few pre-Islamic intact monuments. Standing on four legs, it has a single-wall dome.

More than 1,700 years old now, the fire temple is made of stone and sarooj (a water-resistant mortar) used to burn up to the Safavid dynasty.

Gav-Mishan Bridge

Gav-Mishan Bridge dates from the Sassanid era. It lies northeast of Darreshahr over Seymareh River. The bridge takes its appellation from Gav (cow) and Mish (sheep) as it used to a pasture. There are stories about the appellation of this bridge which has been restored throughout centuries.

Seymareh City

This historical city is located southwest of Darreshahr. It used to be named Madakto. Seymareh was built in the final years of the Sassanid era. The area of this city is more than 200 ha.

Raziyaneh Ravine

This ravine is known as a geo-tourism area in Ilam Province. This wide and deep ravine s located in a green area where a river is flowing. Seventy-five ha of land in this ravine was registered as national/natural heritage in 2009 in Iran. It was registered by the International Union for Conservation of Nature (IUCN; officially International Union for Conservation of Nature and Natural Resources).

Siah Gav Twin Lakes

Siah Gav twin lakes are known as Ilam's natural aquarium. Surrounded by deserts and tall mountains, it is among the rarest natural phenomena in Iran. The lakes offer attractive and fascinating perspectives in spring and autumn. A major feature of this aquarium is its transparent water, which may be seen up to the depth of 30 meters.

One of the lakes is upstream and the other one downstream, each with dept of 20 meters. They are connected together via a 10-meter river canal.

Siahgal Fire Temple

Siahgal Fire Temple is among ancient monuments in Ilam Province. It was built under the Sassanid dynasty. It is situated 15 kilometers southwest of Sartang village.

The fire temple is among few pre-Islamic intact monuments. Standing on four legs, it has a single-wall dome.

More than 1,700 years old now, the fire temple is made of stone and sarooj (a water-resistant mortar) used to burn up to the Safavid dynasty.

Drooping Tulips

Drooping tulips are among unique and beautiful attractions in Ilam Province. Botanists believe that these tulips are rare and threatened with extinction. The best time of year to visit the drooping tulips is March and April. The tulips surface out of snow-capped summits.