Victory for OPEC and Iran

OPEC and non-OPEC partners agreed to cut their combined oil production by 1.2 mb/d next year as part of efforts to preserve a balance in oil supply and demand.

The decision was made during the fifth meeting of the OPEC/non-OPEC Joint Ministerial Monitoring Committee (JMMC) in Vienna. 

Meantime, one of the most sensitive and the toughest ever OPEC ministerial meetings ended on a positive note despite all speculation that the Organization of the Petroleum Exporting Countries would fail to reach consensus.

OPEC member countries agreed to cut 800,000 b/d from their output, while non-OPEC producers agreed on 400,000 b/d cut during the first half of next year. Iran, Libya and Venezuela were granted exemption.

The 175th meeting of the Conference of the OPEC was a big test for the oil producer group. In the run-up to the meeting, meddlesome remarks by US President Donald Trump about OPEC's output had dissuaded some oil producers from cutting output, and Qatar even decided to pull out of the body. Consequently, some analysts called into question OPEC's survival and even spoke of its collapse.

Nonetheless, the outcome of the ministerial meeting was a big victory for OPEC and an oil diplomacy success for Iran. In the wake of the meeting, OPEC saw its standing get stronger in political and economic equations for combating US political pressure despite the suspicious presence of US envoy in Vienna.

The failure of the US to win over OPEC and non-OPEC oil producers in its sanctions policy and economic steps taken by this organization sent a clear message that the world has reached political and economic maturity and it will no longer buckle down to illogical pressure. Even self-styled superpowers will no longer be able to impose their illegitimate demands on other nations.

The fifth JMMC meeting recorded a diplomatic victory for Iran and a big achievement for Iran's minister of petroleum, Bijan Zangeneh.

As acknowledged by international media, Iran emerged winner in the 175th meeting of the OPEC Conference.

Iran Exempted From Output Cut

Zangeneh Emerges Winner in OPEC Oil War

Iran once again proved its influential standing within the Organization of the Organization of the Petroleum Exporting Countries (OPEC).  The OPEC 175th ministerial meeting was held on December 6-7 amid expectations for the oil producer group to reduce output in order to shore up prices.

Saudi Arabia insisted that all member states had to reduce their production without any exception.

However, Iran’s petroleum minister, Bijan Zangeneh, said from the very beginning that Iran had to be excluded from any production decline, as the country is under US  unilateral oil embargo.

In the end, OPEC agreed to reduce its output by 800,000 b/d as of next year. Iran, Venezuela and Libya were exempted from the decision.

Iran’s Zangeneh was the final winner of the OPEC meeting.

Tough and Sophisticated Meeting

The 175th OPEC Conference was one of the toughest in OPEC history. On one hand, small OPEC member Qatar unveiled its decision to leave the body mainly due to some OPEC members’ submission to US President Donald Trump’s demands in recent years. Qatar said it preferred to focus on gas rather than oil.

Furthermore, on December 5 – one day before the OPEC meeting – Brian Hook, the of Iran Action Group and Senior Policy Advisor to the Secretary of State, traveled to Vienna and met with Saudi Minister of Energy Khalid al-Falih. The Saudi minister said he had “received” the US government’s plans and views about sanctions against Iran.

As soon as the US re-imposed sanctions on Iran’s oil sector in November, some OPEC members like Saudi Arabia moved to ramp up their production in a bid to keep oil prices from falling sharply, as Iran was expected to be eliminated from the market. Due to production hike by some OPEC member states, oil prices fell by about $30 a barrel. The downward trend in prices was such that the OPEC/non-OPEC Joint Ministerial Monitoring Committee (JMMC) agreed in its May meeting upon production decline. Saudi Arabia said the 175th OPEC Conference would discuss OPEC production cut, calling on fellow members to reduce their output in order to restore balance in the market.

In response, Hossein Kazempour Ardebili Iran’s governor for OPEC said: “OPEC’s objective is to strike a balance [to the market] and secure acceptable income for all member states.”

“If some members are to harm others with their production that would be like using OPEC in an economic war” he added.

 

Hook’s ‘Unprofessional’ Behavior

Brian Hook’s meeting with the Saudi minister and remarks by US allies left impacts on the market and the OPEC basket price was down $1 to reach $60.08 on December 5.

The US and Saudi Arabia were seen to have come closer to their objective of agreement by OPEC member states to reduce output levels without any exemption for sanctions-hit Iran. The dominant atmosphere gave cause to such impression.

Known well for frankness and firmness in his stands within OPEC, Zangeneh reacted to Hook’s meeting with some OPEC ministers.

Upon arrival in Vienna, he said: “If Mr. Hook has come to Vienna to apply for US membership of OPEC, and this is the reason why he meets some OPEC ministers, this request is subject to review.”

“Otherwise, he has adopted an unprofessional, naive and meddlesome approach. OPEC is an independent organization and is not part of the U.S. Department of Energy to take instructions from Washington.”

Iran, Saudi Firm on Stands

The remarks by Zangeneh showed basic differences between the OPEC 175^th Conference and previous ones. The oil war that had been triggered by the US and its allies was reaching its zenith on the day of OPEC meeting. Iran was not open to backing down from its position of being exempted from production cut. At the same time Saudi Arabia insisted that no country should be exempted.   

Zangeneh reiterated his position even when he entered his place of residence, saying: “Iran has always supported OPEC and its stances for market stability. But under the present circumstances and as long as sanctions continue, Iran will not joint any agreement on the OPEC oil output level and it must be exempted from any decision about output levels.”

Saudi’s Falih said all member states must become ready to join the production cut. He stressed that no exception would be applied.

Assadollah Qarekhani, spokesman for Energy Committee of Iran’s parliament, was accompanying Zangeneh in Vienna. He said: “Iran was faced with tough conditions at the meeting. Prior to the meeting, some countries had made arrangements to direct the meeting in favor of materialization of the US’s anti-Iran policies.”

 

Interviews Banned

Normally, OPEC ministers show up to answer journalists’ questions, but this time it was decided that the ministers would not be allowed to talk to reporters. Although it was no secret to anyone that OPEC was to discuss reduction in its output levels, this meeting has become very tough because of the obligation for all member states to cut output. Iran remained opposed to such obligation, while Saudi Arabia did not cease to back it.

Apparently, everything was ready for the US decision to materialize. However, Iran’s petroleum minister expressed his opposition. Journalists present in Vienna said that Zangeneh’s insistence and firmness did not let the US-desired decision come true. Meantime, ministers turned up to talk to reporters.

As usual, Zangeneh was inundated with journalists as everyone knew pretty well that his remarks would hint at the final outcome of the 175th ministerial meeting.

Although unlawful US sanctions have cut Iran’s oil exports, the country – a founding member of OPEC – wields clout with fellow members. Iran’s view has always influenced OPEC decisions. Even if all OPEC members oppose Iran’s decision, no agreement would be achieved without Iran’s green light. That means nothing but Iran’s victory.

Iran Exception Normal

Ahead of the closed meeting of OPEC ministers, Zangeneh said: “Exempting Iran from the output cut agreement is not abnormal.”

When asked if Iran was seeking exemption, he replied: “Naturally! Anything other than that would be abnormal.”

“All of Iran’s financial transactions are in currencies other than US dollar. Since Iran is under conditions it has to be exempted from production cut, it will not join any agreement on production cut as long as sanctions have not been fully lifted,” said the Iranian minister.

“It’s very clear that under the present circumstances where we are faced with sanctions imposed on Iran’s oil, we cannot remove more oil from the market and reduce our production any further,” he said.

Zangeneh said OPEC members “must understand our conditions and we expect them to cooperate with us.”

“This is minimum cooperation. Should they refuse to do so we will not agree to any other decision,” he added.

US in No Position to Dictate Decisions

The Saudi energy minister told reporters the OPEC meeting was to discuss production cut between 500,000 b/d and 1.5 mb/d.

“Regardless of the outcome, all our efforts will be focused on supply-demand balance,” he said, adding: “Then we can be assured that the market will not return to the conditions of increased crude oil storage.”

The Hook-Falih meeting and Zangeneh’s remarks about US meddling with OPEC affairs had made the conditions more difficult for the Saudi energy minister.

The Falih-Hook meeting came while OPEC has in recent years sought to be independent in its policies. The US has always made efforts to influence the view of its OPEC allies; however, it was the first time that the US sent an envoy to Vienna to hold talks with some OPEC members just one day ahead of their meeting. Everything hinted at the outbreak of an oil war.

Asked if Hook had repeated President Trump’s demand for not cutting output, Falih said: “The US envoy is not in a position to dictate anything upon us. Our policy of supply decline will be in the interest of the Saudi kingdom and all other participants.”

In response to a question if Saudi Arabia was not worried about Trump’s warnings against production cut, he said: “Mr. Trump is speaking for US consumers. The US is the largest consumer of oil as it accounts for 20% of world oil consumption. Just like French or Indian consumers, US consumers are looking for lower-cost energy. Therefore, the US is in its right to look for inexpensive energy for its citizens. However, what would happen, will be in favor of balance between supply and demand.”

No Agreement after 6 Hours

The long-awaited 175th OPEC meeting started behind closed doors. Any speculation about the outcome of the meeting was difficult due to Zangeneh’s firm position for Iran to be exempted from any production cut. Six hours after, the ministers left the meeting. Zangeneh said the meeting was very tough, adding: “We will make efforts for the conclusion of talks.”

For his part, the Saudi minister just told reporters that the talks would continue. Iraqi Oil Minister Thamir Ghadhban also said talks would continue on OPEC output levels.

Novak Meets with Zangeneh, Falih

The ministerial meeting ended inconclusively and everything was postponed to the following day. On December 7 OPEC and non-OPEC partners were planned to hold a meeting on production cut.

Non-OPEC producer Russia’s Energy Minister Alexander Novak met with Zangeneh. The meeting was followed by talks between Novak and Falih.

The meetings and talks raised expectations for an OPEC agreement. Some foreign media initially claimed Iran had agreed to OPEC production cut while the Iranian delegates expressly said any agreement was out of the question. The Iranian delegates said that no OPEC agreement would be achieved as long as Iran’s request has not been accepted.

Rumors and Media War

As talks lingered on rumors of Iran’s agreement were strengthened. On one side, some analysts believed that due to the impact of US sanctions on Iran the involvement or non-involvement of Iran with an OPEC production cut would be ineffective. In their view, Iran had no option but to obey OPEC’s decision. Rumors also spread of Zangeneh’s threat that Iran would quit OPEC membership if its demand is not met. All proved to have been media speculation against Iran.

Dismissing rumors, the Iranian delegates said Zangeneh had never uttered such threat of Iran’s OPEC exit. Iran is a founding member of OPEC, now 57 years, and has no intention of leaving it.

All these rumors and speculation made it difficult to predict the outcome of the ministerial meeting. There was also news that the 175th meeting of the Conference would end inconclusively. Breath-taking hours were passing.

Saudi Firm on Stance

Although Iran insisted on its position, the Saudi minister reiterated that everyone has to contribute to OPEC production cut.

Reuters market analyst John Kemp tweeted that Saudi Arabia’s insistence on not exempting Iran was strange as Iran was already producing and exporting below its capacity. He wrote that Saudi Arabia was giving the control of the kingdom’s oil policy to Tehran without having realized it for the moment.  

10hr of Talks and Iran Exemption

After nearly 10 hours of talks during two days, white smoke came out of OPEC’s chimney. OPEC ministers agreed to reduce their output by 800,000 b/d for a six-month period starting January 1, 2019. OPEC members will revise the decision in April 2019 for next step. Iran, Venezuela and Libya were exempted from production cut. The revelation of OPEC decision led to a 2% rise in oil prices.

Zangeneh’s insistence on Iran’s exemption from OPEC production cuts was indicative of his foresight for the country not to lose the market.

“We did our best to not allow Iran’s oil market share be affected in the long term,” the minister said.

Asked about the meeting by CNN, Zangeneh said: “Iran’s exemption from the OPEC production cut is good for us because we are under US pressure and it was unfair to be pressured additionally by OPEC.”

Exemption Not Symbolic

Some media announced that Iran’s exemption from OPEC production was symbolic, but Zangeneh said: “The market reaction shows us how well this agreement has been. From the very beginning we wanted exemption and we were finally granted exemption.”

Regarding the share of countries in the agreement, the Iranian minister said: “Finally, it was agreed that the production be declined 2.5%, but in the final statement nothing has been mentioned about the quota of different countries. It has only referred to the 2.5% cut.”

US Attempts Futile

Asked if the presence of Brian Hook meant the US interference with oil affairs, Zangeneh said: “I don’t know when the US president and administration would learn that it would not be acceptable for OPEC to be openly pressured.”

“First I thought he was there to submit the US request for OPEC membership, but I realized then he had come to push OPEC members to pressure Iran,” he added.

“Although the US efforts seem to have failed for that purpose, I don’t know when the US will learn a lesson from this kind of behavior vis-à-vis other nations and independent organizations,” said Zangeneh.

Non-OPEC 400,000 b/d Cut

In addition to OPEC members’ agreement on production cut, non-OPEC oil producers decided to cut 400,000 b/d from their output. Oil giant Russia was instrumental in the non-OPEC output cut deal.

“Russia is not influential within OPEC, but its role could not be disregarded in the agreement between OPEC and non-OPEC,” said Zangeneh.

In a concluding statement, the 5th OPEC and non-OPEC Ministerial Meeting, “following deliberations on the immediate oil market prospects and in view of a growing imbalance between global oil supply and demand in 2019, hereby decided to adjust the overall production by 1.2 mb/d, effective as of January 2019 for an initial period of six months. The contributions from OPEC and the voluntary contributions from non-OPEC participating countries of the ‘Declaration of Cooperation’ will correspond to 0.8 mb/d (2.5%), and 0.4 mb/d (2.0%), respectively.”

“The Meeting decided that the next OPEC and non-OPEC Ministerial Meeting will convene in Vienna, Austria, in April 2019,” it said.

Challenging but Effective Agreement

Russia’s Novak described the oil cut agreement as challenging.

“In the past several years, Russia’s cooperation with OPEC members has proven effective and has produced positive results in the market,” he said.

“We have shown the market that through joint action we are able to overcome one of the toughest market crises and we can react to all market challenges in case prices fluctuate unreasonably,” he added.

Novak said the agreement for 1.2 mb/d oil output decline was a democratic move aimed at reasonable regulation of the market.

Zangeneh, the Triumphant Face

The OPEC 175th ministerial meeting, which was compared with an oil war between the US allies and Iran, ended and Tehran did not back down from its position.

President Trump resorted to every tool at his disposal to influence OPEC decisions and keep prices from rising OPEC and non-OPEC allies finally reached consensus to reduce output for a 6-month period.           

Iran emerged as a winner from the contentious talks, saying it’s secured an exemption from cuts as it suffers the impacts of US sanctions, wrote Bloomberg.

OPEC finally broke an impasse over production curbs, agreeing on a larger-than-expected cut with allies after two days of fractious negotiations in Vienna.

“Crude surged as much as 5.8 percent in London, raising the risk that the deal could anger President Trump, who had urged OPEC to keep the taps open and prices low,” Bloomberg wrote.

“Given how much expectations were down played around the outcome of this meeting, this result comes as a welcome surprise,” said Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas. “OPEC has given the oil market a rudder that appeared largely absent.”

Producers will use October output levels as a baseline for cuts and the agreement will be revised in April. Russia has proposed a contribution equivalent to a 2 percent reduction from that month, according to one delegate, who said figures are still under discussion. Such a cut would be 228,000 b/d, Bloomberg calculations show, higher than its initial pitch for no more than 150,000 b/d.

 

 

Iran OPEC Governor:

Oil Producers Lose $9bn over Price Slump

Iran’s OPEC governor says OPEC and non-OPEC allies have suffered $9 billion in losses in recent months due to a sharp decline in oil prices.

“Although some nations increased their production to compensate for losses resulting from price decline, the number of loss-producing countries is still higher,” Hossein Kazempour Ardebili Iran's governor for OPEC said.

“The approximate loss incurred by OPEC and non-OPEC [oil producing] nations due to the oil price decline over the past three months is estimated at $9 billion. That is while the profit gained by some of these nations is about $2.7 billion,” he added. “Of course even those who made profits only gained higher net revenue, otherwise they have sold their products at low prices.”

Kazempour Ardebili said Iran “is currently suffering losses from both oil price decline and production fall resulting from US unilateral sanctions”.

“But if some members are to harm others by increasing their own production, that would be like using OPEC in an economic war,” he said.

He said that OPEC was seeking to strike a balance in supply and demand and help all member states make “acceptable income”.

More Exits Likely

He referred to Qatar’s future exit from the Organization of the Petroleum Exporting Countries, saying: “This country (Qatar), along with some other nations, are unhappy with the autocratic and uncommitted moves of the JMMC (the Joint OPEC-non-OPEC Ministerial Monitoring Committee), because they were committed to applying any change in production after informing OPEC members and winning their consensus or probably after coordination with non-OPEC members.”

Kazempour Ardebili said some other minor OPEC members were likely to follow suit.

“Some producers have limited production capacity. Therefore, they may be faced with lower demand for production, while on the other hand they lack any spare capacity for increased production if need be. That strengthens the probability of exit by minor member states. That is not impossible,” he said.

“If the "Declaration of Cooperation" is set to change or be renewed, the figure of production has to change in light of prevailing decision for members to cut output,” he added.

‘Harmful’ Impacts

Iran's governor for OPEC said some OPEC members have had “harmful impacts” on the market over recent months, creating a political tool against Iran.

“Therefore, the "Declaration of Cooperation "is unlikely to be renewed. At least, some member states will not join it, in which case any renewal will be out of the question,” he said.

“Of course, that does not mean that if Iran or any OPEC fellow member which refuses to adhere to OPEC-non-OPEC agreement, will see its OPEC standing be harmed. Rather, it can pull out of any such cooperation in protest to a behavior which had sharply decreased oil prices,” said Kazempour Ardebili.

“However, this trend (output hike) continued due to political and economic motivations and for the purpose of gaining a bigger share of market,” he said.

 He added that the JMMC agreed to production hike by some nations that had spare capacity “in a self-styled attempt to make up for void left by the possible impact of [US] unilateral sanctions on Iran”.

He said that the production hike by these countries elicited objection from some other countries as they “violated OPEC’s previous resolutions”.

“[US President] Donald Trump granted sanctions waivers to some buyers of Iran’s oil, thereby creating an opportunity for Iran to continue its oil supply. Therefore, no sharp decline occurred in the market. That coincided with a significant increase by some OPEC members (in the run-up to the Iran oil embargo) and therefore oil stocks increased while prices have fallen on average by $30 a barrel over the past three months,” he said.

Lukoil Iran Operation Depends on Sanctions Lift

Russia’s second largest oil producer Lukoil will start projects in Iran following removal of sanctions, Chief Executive Officer Vagit Alekperov said.

“Technical talks for the development of Iran’s oil fields have been concluded and we have to wait for the lifting of sanctions on Iran to be able to start work,” he told reporters in Vienna.

A new round of US sanctions against Iran took force starting November 5. They cover Iran’s oil exports and more than 700 banks, companies and individuals.

However, the US authorities granted temporary waivers for eight countries, among them Greece, India, Italy, China, Turkey, South Korea, Taiwan, and Japan.

Alkeperov had earlier said: “Sanctions that have been imposed against Iran, do not allow us to invest in projects there. In the middle of the year, we actively worked at the Mansouri field, the contract is almost ready, and we are currently finalizing it, though the signing is unlikely - we will not sign it until sanctions are removed.”

He also said that Lukoil would follow any order from Russia’s Ministry of energy regarding the amount of oil production.

He was in Vienna as OPEC and non-OPEC allies were meeting to cut oil production in order to shore up prices.

2-No Tehran-Seoul Oil-for-Food Deal

Iran’s foreign ministry denied media reports about an oil-for-food deal between Iran and South Korea as US sanctions take effect.

“Some media have reported the signature of an oil-for-food deal between Iran and South Korea, which I deny,” foreign ministry spokesman Bahram Qasemi said.

“Rumormongering and fake remarks like oil-for-food [deal], which are announced from certain centers, are unfounded,” he said.

Asked about talks under way between Iran and Europe regarding the latter’s Special Purpose Vehicle (SPV), a mechanism designed to facilitate Iran’s oil sales, Qasemi said: “We are optimistic and we hope that this process will go ahead smoothly.”

He said Iran was waiting for the European countries to decide which government would host the SPV head office.

“Talks are under way between the Europeans. Some of them had no possibility to host the SPV and some others have notified us of their readiness. We are waiting for the process to be finalized,” he added.

“The US pressure on these countries is serious and this issue has its own complications, but we have already seen positive determination on the part of Europe and I think they are looking for options to launch suitable mechanisms,” Qasemi said.

3-100 Oil, Gas Wells Drilled and Completed

A senior official at National Iranian Drilling Company (NIDC) says 100 oil and gas wells have been drilled and completed onshore and offshore across Iran since last March.    

Mohammad Al-e Khamis said the 100th well had been completed at Rag Sefid. Drilling was done by Fath 63 rig.

He said that Fath 63 was among drilling rigs owned by the NIDC Directorate of Onshore Operations.

“The drilling and completion of the last well lasted 125 days and delivered to National Iranian South Oil Company (NISOC) for operation,” he added.

Al-e Khamis said: “Based on documents, since the beginning of current Iranian calendar year, 40 development wells, five appraisal wells and 55 workover wells have been drilled and completed by drilling fleet at the disposal of NIDC in onshore and offshore areas across the country.”

He added that most of NIDC drilling devices had been installed in areas run by NISOC. Other drilling rigs, said Al-e Khamis, area spread in areas run by the Petroleum Engineering and Development Company (PEDEC), Arvandan Oil and Gas Production Company (AOGPC), Iranian Offshore Oil Company (IOOC) and Iranian Central Oil Fields Company (ICOFC).

“Based on an agreement signed between NIDC and the Directorate of Exploration of National Iranian Oil Company (NIOC), operations have started for drilling two exploration wells in Khuzestan Province with Fath 32 and Fath 33 drilling rigs. The project is progressing well,” he said.

4-IGTC to Use Domestic Space Technology

The Iranian Gas Transmission Company (IGTC) has signed a memorandum of understanding (MOU) with the Iranian Space Agency (ISA) for the application of domestic spatial technologies.

The MOU was signed in line with the general policies of Iran’s 6^th Five-Year Economic Development Plan.

Morteza Barari, deputy minister of telecommunications, told the signing ceremony, the main objective of the MOU was to plan and implement the pilot phase of satellite telecommunications services to IGTC.

“Cooperation in the feasibility phase and designing mission for telecommunications satellite, presenting necessary technical data to ISA, contribution to and supporting investment are among IGTC’s obligations in this MOU,” he said.

According to Barari, ISA has pledged in the MOU to make arrangements for the provision of satellite telecommunications services to IGTC within the framework of projects agreed upon between them.

Saeed Tavakoli, CEO of IGTC, said: “With the full implementation of this MOU by ISA, IGTC will be able to clear the way for further cooperation, and become the ISA ambassador in the gas industry.”

He said the MOU would be in effect for four years. “Safety and sustainability of communications and assurances about data safety are among concerns of Iran’s gas transmission network. These concerns will be allayed by operating satellite systems.”

5-Amine Recovery in South Pars Refinery

The operations for the recovery of contaminated amine have been successfully accomplished at the 10^th refinery of South Pars gas field. The operations were aimed to guarantee the cleanness of gas sweetening process.

Soheil Rafii said the recovery operations ended in the recovery of about 350 mcm of diluted amine.

He said that methyldiethanolamine (MDEA) is used in sweetening operations in oil and gas refineries.

Methyldiethanolamine is an alkanolamine used in tail gas treating and hydrogen sulfide enrichment units for selectively removing hydrogen sulfide from gas streams containing carbon dioxide.

These units will, in most cases, permit 60 to 80% of the carbon dioxide to remain in the treated gas stream. Methyldiethanolamine is also used in natural gas plants for the bulk removal of carbon dioxide.

“With the turn of time and under the impact of chemical reactions, this substance is partly destroyed. In some cases, due to operational problems and defective equipment this highly valuable substance is likely to be contaminated. Under such conditions, the sweetening process becomes impossible,” said Rafii.

He added that due to the high value of this material and the near-impossibility of its supply under current sanctions, the feasibility and simulation and recovery of amine were entirely done by Iranian engineers.

The contaminated amine at the 11^th refinery, SP13, was received and processed to give more than 38 tonnes of pure amine.

Rafii said the operation would recover 700 tonnes of pure amine valued at over $2 million.

6-New Buyers of Iran Oil

Iran’s first vice president has said that the country has found new customers for its oil amid US sanctions targeting its petroleum sector.

Regarding the impact of US sanctions on Iran's oil exports, the vice president told Japan’s Kyodo news agency Iran has "found new customers and  we sold our oil to them."

While he did not reveal the identity of the "new customers," he said his government has started "serious negotiations" for selling more oil to Russia and to China and other Asian countries, for example.

Jahangiri anticipated that Iran could restore its oil exports to the  same level before Nov. 4 even after expiration of the six-month waivers.

He called the stated US goal of getting all the nations to reduce their imports of Iranian oil to zero "very dangerous," but at the same time "very unlikely."

"I assure the world that if Iran would be deprived of its main source of income, we would not be silent and will take appropriate measure in the right time."

Under a 2015 deal struck between Iran and six major powers - Britain, China, France, Germany, Russia and the United States - Tehran agreed to curb its nuclear activities in exchange for the lifting of crippling economic sanctions.

Gov’t Welcomes Japan Business

Jahangiri said Iran stands ready to address the concerns of Japanese companies willing to continue business with the country, even as the United States pressures its allies to get tough on Iran and to stop importing its oil.

"We are ready to negotiate with Japanese companies who are interested in continuing their business in Iran for reaching new solutions in order to ease their concerns," he said.

"The Japanese government and companies have always had their own ways to pass US pressures and we hope again they use their initiatives to stay as a major oil importer from Iran," he added.

Japan is among eight nations that received six-month exemptions from US sanctions on importing Iranian oil.

Jahangiri praised Japan's stand in supporting global peace after World War II, but called it to use its power and influence to put an end to "US unilateralism" in the world.

"Japan must stand against US unilateralism, which is threatening independent countries and might go beyond Iran's nuclear issue to encompass other issues around the globe," he said.

7-Petchem Research to Be Commercialized

The CEO of National Petrochemical Company (NPC) has called for the commercialization of petrochemical research achievements.

“I believe that widespread and quick action is needed with regard to the commercialization of current activities of ” the Tehran branch of Petrochemical Research and Technology Company (PRTC) ”, Behzad Mohammadi said.

“Certain measures have already been taken, leading to contracts, but planning is needed for technical knowhow commercialization to reach maturity,” he added.

Mohammadi described the petrochemical industry as a dynamic and burgeoning one with an influential role in national economy. He said that PRTC was playing a vital role in technical logistics.

“Should we fail to win assurances from industries for the technical and research capabilities of this company, all efforts and valuable achievements of this sector will remain fruitless,” he said.

Mohammadi added that Iran’s petrochemical industry can prove instrumental in reducing dependence on foreign knowhow particularly under the present circumstances.

He called for effective steps to be taken for cooperation between PRTC and Iran’s petrochemical sector.

8-Investment Talks Under Way despite Sanctions

The director of investment at Iran’s National Petrochemical Company (NPC) has said that despite US sanctions on Iran negotiations with foreign investors continue.

“Notwithstanding the sanctions, foreign companies are in regular talks for investment in the petrochemical industry. Necessary measures are under way to that effect,” Hossein Ali-Morad said.

“In my view, being neighbor with 13 countries and having access to their markets will alleviate the pressure of sanctions on the country,” he said.

“As the previous round of sanctions upgraded our industry and we managed to have good interaction with neighboring countries, we will cross this round of sanctions, too.” he added.  

Ali-Morad said the Ministry of Petroleum and NPC would offer their support to foreign investors who would prove their real intention and technical capacity.

Ali-Morad also said that 25 mcm/d of gas was being supplied to Qeshm Free Zone for its development with a view to becoming an energy hub.

He added that any petrochemical project on Qeshm Island would primarily need allotment.

“The objectives of development must be elucidated because development is required to be balanced and sustainable,” said Ali-Morad.

“Furthermore, the administrator of infrastructure for utilities must be specified because a technical supervisor is needed for coordination in order to manage the development of petrochemical industry,” he added.

“The number of projects under construction is 56, which require $35 billion in investment,” said Ali-Morad.

9-$7bn Petchem Investment in Qeshm

The former head of National Petrochemical Company (NPC) has said that $7 billion had been invested in the petrochemical sector of Qeshm Free Zone.

Reza Norouzzadeh said four major petrochemical projects were envisioned in Qeshm.

“The foreign investor is starting its $7 billion investment in this zone,” he added.

Norouzzadeh said NPC had made necessary planning for the development of new zones.

“The Parsian, Qeshm, Chabahar and Jask free zones enjoy unique advantages like access to high seas, abundant feedstock, necessary utilities, land, and infrastructure for export and transit of goods, customs exemption for commodity and equipment as well as tax exemption,” he added.

Norouzzadeh said investment in the petrochemical industry would be profitable and risk-free due to “huge hydrocarbon resources, the economic and regional status of the country, access to high seas and transportation infrastructure.”

Referring to the formulation of roadmap for the development of petrochemical industry by NPC, he said: “This company has valuable experience in engineering, supply and procurement of commodity, as well as provision of technical knowhow.”

“NPC plans to implement more than 100 petrochemical projects to attract $100 billion in investment,” Norouzzadeh said.

10-Bandar Abbas Refinery Set to Enhance Output

The Bandar Abbas oil refinery is set to see its output capacity increase after the operation of an azote gas production unit and the installation of a power generation gas turbine.

Furthermore 17 storage facilities have become ready for stocking refined petroleum products.

A plan for boosting capacity and improving quality at the Bandar Abbas oil refinery is nearing completion.

The remaining units include an amine processing unit, sour water treatment unit and sulfur recovery section, which are all near completion. They are forecast to become operational before January.

The implementation of this national project lies within the framework of Iran’s resilient economy.

With the startup of the gasoil hydrotreating section, the sulfur content of the gasoil produced at the Bandar Abbas oil refinery was reduced to below 50 ppm, and the Euro-4 gasoil output reached 15 ml/d at the refinery.

At the hydrotreating section, impurities like sulfur, nitrogen and oxygen as well as some metals in the feedstock like nickel, vanadium, arsenic, lead and copper are separated from gasoil. Furthermore, more than 35,000 tonnes a year of solid sulfur is recovered while the release of about 7 million tonnes of SOx into the air is prevented.

With a rated capacity of 50,000 b/d, this section is the largest unit at the Bandar Abbas oil refinery to have been built based on the state-of-the-art technology. An air preheater (APH) has been used in this section for energy efficiency. APH is any device designed to heat air before another process (for example, combustion in a boiler) with the primary objective of increasing the thermal efficiency of the process. They may be used alone or to replace a recuperative heat system or to replace a steam coil.

Furthermore, hydrotreating produces light gas which is sent to the gas treatment units to be used at the fuel gas network of the refinery.

11-Iran may Double Petchem Output to $40bn

Iran’s petroleum minister, Bijan Zangeneh, has said the country may double the value of its petrochemical production to $40 billion.

“The petrochemical production [in Iran] is currently valued at about $20 billion, but this figure can reach $40 billion,” he said.

Zangeneh said Iran’s petrochemical sector is making great contribution to currency generation.

“The National Petrochemical Company (NPC) and the Ministry of Petroleum have been instrumental in striking a balance to the hard currency market,” he added. 

Zangeneh said the most significant obligation upon the NPC was to make the necessary preparations for the financing of petrochemical projects.

“There is still room for maneuvering in the downstream petrochemical industries and more has to be done,” he added.

Zangeneh said: “The NPC has no statutory regulatory role in private petrochemical projects, but it can help them resolve their problems and facilitate their communications with the Ministry of Petroleum.”

He said that necessary resources must be allocated to petrochemical units.

“Financing is not difficult in the country, but proper planning is needed for reaching genuine production and profitability because for example during a specific period of time many units were built to produce urea and methanol, which reduced prices and was loss-producing for everyone,” the minister said.

Zangeneh expressed hope that the petrochemical sector would see a major jump before the current administration bows out in 2020.

“Private companies are doing their own job, but we can make reasonable planning to help this industry make progress,” he said.

Zangeneh gave a positive assessment of feedstock availability in Iran, saying: “We need to inject ethane to national grid for consumption next Iranian calendar year, because we will have extra ethane.”

Zangeneh said the necessary financing in hard currency for petrochemical projects needs to come through “financing” as long as Iran is under sanctions.

He also said that NGL 3100, NGL 3200 and NGL Kharg will provide additional feedstock.

Petchem Diversity

Behzad Mohammadi, the new CEO of NPC, said the company has to exercise its strategic role in order to be able to help develop Iran’s national petrochemical industry and generate value-added.  

He said that the diversity of petrochemical products was an advantage for this industry.

He also highlighted the abundance of petrochemical feedstock in the country.

Mohammadi also stressed the need for the development of downstream pe

Iran Petroleum Ministry Shakeup

Who Are Iran’s New Oil Managers?

Iran’s petroleum minister, Bijan Zangeneh, appointed new heads for three of main subsidiaries of the ministry. The decision was line with a recently enacted law banning the reappointment of retired managers.

The main changes targeted CEOs of National Iranian Oil Company (NIOC), National Iranian Gas Company (NIGC) and National Petrochemical Company (NPC).

Furthermore, three new Board members were replaced at NIOC whose CEO appointed a replacement to Bijan Alipour at the head of National Iranian South Oil Company (NISOC).

Masoud Karbasian, New NIOC Chief

Masoud Karbasian took over from Ali Kardor at NIOC. In a letter appointing Karbasian, Zangeneh highlighted his experience at high economic and executive levels, saying: “I expect you to have constructive instruction with NIOC Board of Directors in implementing projects and carrying out the significant obligations assigned to NIOC particularly in the conditions of sanctions."

Before being appointed to this post, Karbasian was minister of economy and finance. He served in other posts like head of Iran Customs Administration, deputy minister of petroleum for commercial affairs, deputy minister of commerce for foreign commerce, deputy minister of commerce for planning and deputy minister of heavy industries.

Karbasian has pledged to put into practice options of countering international sanctions as long as he would be in the post.

"In this regard, certain policies have been made at the level of Ministry of Petroleum, the government and the Islamic Republic. Their implementation would help blunt the unfavorable impact of sanctions," he said.

New NIOC Board Members

NIOC Deputy CEO for Engineering and Development Gholam-Reza Manouchehri and director of Petroleum Ministry's debt collection committee Ali Asghar Hendi also bowed out as Board members due to retirement. They were replaced by Saeed Khoshroo and Zahra Goudarzi as NIOC Board Members.

Zahra Goudarzi is the first Iranian woman to be named NIOC Board member. She has studied international trade and petroleum law from two Iranian and a Scottish university. She has already served as contracts and legal suits expert at the NIOC Directorate of Legal Affairs, member of Oil Contract Restructuring Committee and senior legal negotiator in upstream oil contracts.

Khoshroo, who is currently deputy head of NIOC for international affairs, has studied economy at the universities of Tehran and Isfahan. For more than 20 years, he has been engaged in various sectors of petroleum industry. He has been with the NIOC international affairs department for ten years now.

His most important positions so far include deputy head for marking petroleum products, director of petroleum products and gas condensate at NIOC office in China, gas condensate sales manager and petroleum products pricing director.

New NIGC Boss

Zangeneh also named Hassan Montazer Torbati as the new CEO of Iran's state-run gas firm NIGC. Torbati, a graduate of the Amir Kabir University of Technology, had earlier served as director of NIGC dispatching, director of NIGC consolidated planning and director of Iran Gas Engineering and Development Company.

He has underscored generation of wealth and expansion of gas supply as objectives of NIGC, saying: "Huge gas resources in the country, high-voltage lines and giant refineries alongside gas distribution companies prepare the ground for the production, transmission and distribution of natural gas in Iran."

New NPC Chief

Zangeneh also named Behzad Mohammadi as CEO of NPC, expressing hope for the materialization of the second jump in petrochemical production in Iran through use of financial resources available in the country and consulting experts in light of the abundance and diversity of petrochemical feedstock.

Other points highlighted in Zangeneh's letter of appointment for Mohammadi include increased exports and completion of petrochemical industry value chain by supporting balanced development between midstream and downstream petrochemical industries.

Mohammadi has studied chemical engineering at the University of Shiraz. He earlier served as CEO of Oil Industries Engineering and Construction Company (OIEC), Oil Industries Commissioning and Operation Company (OICO), director of commissioning for SP9 and SP10 at OIEC and R&D manager of Farabi Petrochemical Company.

New Deputy Minister Named

Veteran oil manager RokneddinJavadi, who was serving as deputy minister of petroleum for supervision on hydrocarbon resources, was replaced by Mohsen Paknejad.

In the letter of appointment for Paknejad, the focus is on the necessity of enhancing recovery from operating fields.

Paknejad is a graduate of Amir Kabir University of Technology. His previous positions include advisor to minister of petroleum, head of ministerial committee for supervision on fuel supply, director of gas fields development, director of supervision on oil products exports and technical inspection of Ministry of Petroleum, Board Member of the Iran Central Oil Fields Company (ICOFC), director of consolidated planning at NIOC, director-general of supervision on petroleum products exports at petroleum ministry and CEO of Iran Oil Commercial Company.

New NIOC Appointments

The new head of NIOC, Karbasian, appointed Ahmad Mohammadi at the head of NISOC.

In the letter of appointment for Mohammadi, Karbasian laid emphasis on such points as reviewing the structure and methods with a view to bringing about transparency, facilitating and accelerating accomplishment of tasks, creating opportunities for specialized and committed manpower, development of education for the staff at all levels, prioritizing development projects with a focus on jointly owned fields, attention to development of and maximum efficient recovery from oil and gas reservoirs, enhancing production capacity and output, retrofitting existing installations and making necessary arrangements for flexibility in production based on plans and obligations as well as crude oil export needs.

Karbasian also named Jahangir Pourhang as CEO of Arvandan Oil and Gas Production Company, stressing the need for the reconsideration of structure to handle 1 mb/d oil production, planning for maximum engagement of local manpower in Khuzestan Province and coordination with the Petroleum Engineering and Development Company (PEDEC).

Karbasian also named Abdollah Mousavi as the CEO of National Iranian Drilling Company (NIDC), calling on him to make plans for boosting drilling efficiency and reducing waiting time, benefiting from knowledge-based companies and universities, applying modern drilling methods, supporting domestic manufacturing and upgrading domestic manufacturing in the drilling industry, particularly in HSP.

 

No Alternative to Iran Oil on World Market

One month has passed since the United States re-imposed sanctions on Iran’s oil sector, initially claimed to be aiming at zeroing Iran’s oil exports. In the meantime, some OPEC members plus non-OPEC oil producer Russia lifted their oil output.

But as oil prices declined, Saudi Arabia announced after the 11th Joint OPEC-non-OPEC Ministerial Monitoring Committee (JMMC) that it would reduce its oil supply by 500,000 b/d in December month-on-month.

Mohsen Qamsari, who served as deputy CEO of National Iranian Oil Company (NIOC) for international affairs, and was directly involved in oil export for two decades, tells "Iran Petroleum" that Iran’s oil exports would never be cut to zero.

He notes that there is no alternative to Iran’s oil in global markets despite a recent attempt by Saudi Arabia and Russia to increase their oil supply to fill void left by US sanctions on Iran’s oil.

The following is the full text of the interview Qamsari gave to "Iran Petroleum":

Some believe that the US has imposed tougher ever sanctions on Iran and will reach its goal of reducing Iran’s oil exports to zero. What do you think? Is that possible?

That’s by no means possible. We don’t take this round of US sanctions very seriously. They are trade sanctions imposed [unilaterally] by the US. Before signing the JCPOA (Iran’s nuclear deal with six world powers), the sanctions were politically motivated, which had been endorsed by the UN Security Council. This time, the US has unilaterally enforced sanctions on Iran. And you can see that US President Donald Trump’s remarks show that the sanctions were targeting trade and the US is open to deal. After quitting the JCPOA, the Americans said they would cut Iran’s oil exports to zero, but sanctions have taken effect and Iran’s oil exports has not and will not be zeroed.

 

Why did the US fail to zero Iran’s oil exports?

The reason is that the current sanctions rather than being economic are political. Furthermore, the imposer of sanctions is pursuing economic interests rather than political interests. Now, if its interests are served it will not insist on sanctions. Another issue is oil market oversupply including light crude oil to super heavy crude oil. When we look at the classification of crude oil we realize that undersupply is observed in the category of Iran’s crude oil, which is not easy to be supplanted.

If you review news you see that immediately after the US raised the issue of imposing sanctions on Iran’s oil, Saudi Arabia and Russia were said to be able to produce sufficient oil to make up for Iran’s future absence. However, those involved in oil trading were assured from the very beginning that such allegations were mere bluff. The reason is clear. Saudi Arabia is currently producing 10 mb/d of oil, mainly light, superlight and extra light crude oil, while its medium oil output stands at 1.8 mb/d. Therefore, it would not be able to replace Iran’s medium crude oil. What Saudi Arabia has said pertains to light crude oil. As far as Russia is concerned, I have to say that Russia’s Ural oil could never supplant that of Iran because it is lighter than Iran’s oil. Now, you can see that these two countries (Saudi Arabia and Russia) are not able to produce oil which is neither light nor heavy (medium oil). Russia and Saudi Arabia may be able to increase their medium crude oil production over one or two months and take over Iran’s place, but they will not be able to supply medium crude oil on a sustainable basis. That is why I’m saying that these sanctions are fragile.

Are you sure that the sanctions are fragile?

Yes, because we have already experienced sanctions. During the previous round of sanctions, they tried to exert pressure on the Ministry of Petroleum, thereby driving buyers of Iran’s oil to purchase synthetic crude oil instead of Iran’s oil. To that effect, they blended South American crude oil with Saudi Arabia’s light crude oil to produce what they claimed to be medium crude oil. But in light of the current circumstances in Venezuela, this country is not able to supply oil sustainably and therefore, one cannot count on this country’s production like before. Therefore, when you juxtapose all these issues you can see that this round of sanctions is fragile and they could not push Iran’s crude oil exports down to zero. I think even if these sanctions are serious, Iran’s oil exports will be still higher than the pre-JCPOA period. Under the tough UN Security Council sanctions, we were exporting 800,000 b/d of oil, while I think our oil exports would vary between 1.3 mb/d and 1.5 mb/d this time.

Last time 11 countries were granted sanctions waiver, while this time they are only 8. Do you still believe that the previous sanctions were tougher?

Yes, I reiterate what I said. Last time everything was well thought out and quotas had been determined for the buyers of Iran’s oil. For instance, it was said that the buyers had to reduce their oil purchase from Iran by 20% every six months. But this time no precise figure has been given. In my view, these sanctions are mainly US trade sanctions.

In light of the present conditions, is it not possible for the buyers of Iran’s crude oil to modify their refineries technically so as to use blended or light crude oil and replace Iran’s oil?

A number of issues are concerned here. First and foremost, modifying the basic design of refineries is not easy. Second, if the refineries apply such changes which direction should they take and how should they enhance their potential? They should either choose to process light crude oil or choose to treat heavier crude oil. Both will require big investment which is not lucrative for the refineries now. Another issue is secure oil supply. I don’t intend to speak highly of NIOC, but all refineries have acknowledged that NIOC has a good background in terms of secure oil supply. All refiners in contract with NIOC are well aware that the company never halted its oil supply even under the most difficult conditions and it always respected customers. After the implementation of the JCPOA we managed to take back our market share, although many could not believe it. But we did so because of our customers' confidence in NIOC. Another point is Iran's geopolitical position and proximity to oil shipment lanes, allowing refineries to get their oil from Iran anytime they want. For instance, India is near Iran and its refiners will naturally prefer to buy oil from Iran. For these reasons, I don't think that technical modification of the refineries would be possible to dispense the need for Iran's oil.

Nevertheless, some refiners stopped buying oil from Iran and the oil prices did not jump as they were expected and even declined.

We should not think that all refiners would obey US instructions and are protected by that country. They also take into account their own interests. However, we have to acknowledge the fact that the US represents a big market, which all countries are using. That plays well into US hands to press other nations to execute its orders. I remember well that during the previous round of sanctions, the Obama administration's secretary of state Hillary Clinton used to travel to Asia, particularly India, aboard a plane which was carrying American industrialists and refiners. She used to pressure Indian refiners by threatening to deny them catalysts. Economic pressure on nations helps the US reach its objectives. Under the present circumstances, it would be very important for us to withstand US pressure. There is no alternative to Iran's oil; otherwise it had already been replaced.

During the second half of the year, demand for oil declines and it would be more probable to make up for supply shortages. Does it mean Iran's oil export reduction?

It's natural for us to see demand fall in the summer, and therefore decline in exports is natural. But as I mentioned I don't think that Iran's oil exports would fall below 1.5 mb/d.

We have to be realistic. The US hostility with Iran is deep-rooted. Before the 1979 Islamic Revolution, nearly 65,000 Americans were administering all state affairs in Iran. After the Revolution they felt they had lost their regional island of stability. Therefore, their enmity and hostility against Iran is fundamental. We should also stop wishful thinking that with sanctions in effect everything is alright and nothing will happen. However, I reiterate that in this round of sanctions, the pressure on Iran is not as tight as it was (pre-JCPOA).

With the intensification of sanctions, how likely is it for Iran to sell its oil via dealers?

It's impossible. NIOC Directorate of International Affairs has always opposed the sales of Iran's oil via intermediary dealers. During the previous round of sanctions, the then administration (under Mahmoud Ahmadinejad) was pressing the Directorate to give oil to intermediaries to sell in a bid to maximize Iran's oil sales. I did not agree and I was dismissed (2009). I've always said that intermediaries cannot sell even a single barrel of Iran's oil. Were it not for NIOC Directorate of International Affairs' resistance, we would have dozens of so-called sanctions-busters [facing fraud charges]. I should also tell you that if the dealers are to sell Iran's oil, the buyers will get confused and once sanctions have been removed, it will not be clear what would happen in the market. Iran is currently selling its oil via NIOC and we have no dealers for that purpose.

Some news agencies like Reuters claimed that Russia would market Iran's oil due to US sanctions. Minister of Petroleum Bijan Zangeneh denied such allegations, but rumors are banded about. Has the International Directorate sold its oil via a third country?

That's not true at all. Of course some managers with political thoughts wrongly imagine that Russia could help Iran during time of sanctions. The Russians were expected to refine Iran's oil at their own refineries and then sell it on the market. But the point is that Russia has no possibility of processing crude oil. Another point is that even if Iran's oil is sent to Russia, it has a long distance to go (the Black Sea or the Baltic Sea), which would inflict heavy costs on Russian refiners. That is why major Russian refiners did not step in. Moreover, the Russians are exporting oil and it would be unreasonable to sell Iran's oil.

Amid attempts by some OPEC members to take Iran's share of oil market by supplying more oil and even considering reduced payments for their customers, is Iran using this tool for preserving the market or even giving oil for free to customers?

First of all, we give no free oil to any country, but we grant discount to some of our oil buyers, but not the discount normally referred to. The discount we grant to our customers is for competitive purposes. We take into account the issue of competitiveness when it comes to selling oil. If we decide to sell at high prices no buyer would purchase oil from us. But we do not sell our oil at very low prices. However, some countries like Iraq are increasing their output. Iraq is also granting discounts to its oil buyers in order to boost its market share.

Given your experience in selling Iran's oil, what's your proposal for Iran to withstand oil sanctions?

NIOC Directorate of International Affairs knows its job perfectly and knows what to do. We deliver oil to the buyers, but the issue is the transfer of oil money into Iran. I think that Iran's banking system needs to envisage a reliable system for money transfer because Iran's oil buyers consider us as a reliable supplier.

 

South Pars Gas Output Exceeds 600mcm/d

South Pars is the largest gas field in the world, whose development is aimed at supplying gas needs in Iran in the household and business sectors, injecting gas to oil fields, powering industrial units and power plants, feeding petrochemical plants, exporting gas, condensate, liquefied petroleum gas (LPG) and sulfur.

Highly prioritized by Iran’s Ministry of Petroleum, the field has seen its output grow from 282 mcm/d in 2013 to above 600 mcm/d now. Such output hike under the aegis of efforts by the Ministry of Petroleum allayed people’s concerns with winter cold and fuel shortage. However, oil and gas managers remain concerned as widespread activities have got under way for the overhaul of refineries and gas production units to work efficiently in cold months.

The overhaul of South Pars refineries was carried out during 156 days, starting in April. The 9th, 3rd, 4th, 7th, 6th, 8th and 10th refineries were overhauled. 

This annual process is carried out for technical inspection, gauging reparation needs, and applying methodology of management of physical assets by choosing equipment based on technical data and scientific calculations for the purpose of optimizing costs.

Wintertime gas supply, which mainly depends on the development of South Pars gas field, reached stability with the startup of new phases that would increase natural gas production. However, since gas consumption increases uncontrollably, gas production needs to increase on an annual basis. Therefore, gas production companies are required to bring their output to a specific level.

Furthermore, according to plans, in addition to the regular annual recovery from other phases, 28 mcm/d (1 bcf/d) of sour gas would be recovered from SP22-24 for winter fuel supply.

Except for SP11, all other blocks located in Iran’s section of South Pars, which is shared with Qatar, are complete. SP13, SP22 and SP24 are set to become operational by next March and part of SP14 will be completed next year. By March 2020, all South Pars phases, except for SP11, will have been completed. Therefore, the process of completion of South Pars phases is under way and completion of this puzzle will boost gas supply in Iran.

Latest Developments

CEO of Pars Oil and Gas Company (POGC) Mohammad Meshkinfam said SP13 and SP22-24 would be producing 56 mcm/d of sour gas during winter.

He said that POGC has a production and a development division, working in parallel.

“The production division is tasked with producing gas from South Pars, which is vital for National Iranian Oil Company (NIOC) and the entire country,” said Meshkinfam.

“In the refinery section of SP13, two sweetening trains are waiting to receive offshore gas and one train is ready to come online. In the refinery section of SP22-24, two sweetening trains are ready to receive sour gas from the offshore section of these two phases. In total, the first stage of each of these phases, which includes a 28mcm/d production chain, is to become operational before winter this year,” he added.

Meshkinfam said the offshore sector’s activities were among other links in the completion of production chain.

“Currently, in most wells of the aforesaid gas projects, perforation operations are under way. After the end of these operations, the wells of these projects will be ready for gas production,” he said.

He said in the drilling and perforation phase, there must be focus upon safety principles.

“Committing any mistake when the well is reaching production will be harmful and irreparable,” he added.

SP13 Refinery Connected to IGAT6, IGAT9

The manager of SP13 development said the refinery of this phase had been connected to Iran Gas Trunkline 6 (IGAT6) and IGAT9.

Payam Motamed highlighted the simultaneous, cohesive and coherent operation of the refining and offshore sections for the purpose of expediting the development of SP13.

“Thanks to efforts by service workers of the contractor and client teams, a pipeline carrying sweet gas from the refinery of SP13 to SP1 and SP2 was done successfully,” he said.

He added that drilling, scrubbing, cutting, fit-up, welding and testing had been done by SP13 group. These operations lasted four days.

The refinery of SP13 is now able to send sweet gas to IGAT6 and IGAT9.

Asked about arrangements made to prevent pressure buildup in IGAT6 due to the operation of several refineries on Site 2, he said: “IGAT9 will carry the excessive gas from the refineries of Site 2 to IGAT3 and IGAT10 of Site 1.”

Motamed said that the refinery of SP13 is expected to come on-stream in December. Once the last train of sweetening is launched at the refinery, it will receive 1 bcf/d of sour gas from offshore wells to supply winter fuel.

SP14 Platform Gas Recovery

The manager of SP14 development said sour gas recovery from the second gas platform of SP14 began after the launch of 14C satellite platform in the Persian Gulf.

Hamid-Reza Masoudi said the startup of the second offshore platform of SP14 had been successful, adding that rich sour gas recovery capacity from 14C was 500 mcf/d (14.1 mcm/d).

“As it had been earlier promised, the startup of the second gas platform of SP14 development, the combined gas production from the offshore section of this project has reached 1 bcf/d or 28.2 mcm/d. Furthermore, the first stage of development of the offshore section of SP14 became fully operational,” he said.

Masoudi referred to the end of pipe laying operations for the transfer of sour gas and injection of glycol from 14C satellite platform to 14A main platform.

“The sour gas recovered from this platform is carried to the refineries at Pars 2 industrial zone in the Kangan area before being fed into national trunkline,” he said.

The current Iranian calendar year has seen 30,000 villages and 1,150 cities connected to national gas grid. That means 99% of Iran’s urban population and 85% of its rural population are enjoying gas.

 

SP13 Nears Full Operation

Iran has increased its gas production by 300 mcm/d over the past five years and is expected to see another 100 mcm/d hike in gas output by next March, which marks the turn of Iranian calendar year, in case development plans in the giant offshore South Pars gas field go ahead on schedule. In other words, Iran’s gas production will near 1 bcm/d by then.

The South Pars gas field – known to be the world’s largest reservoir – is jointly owned by Iran and Qatar in the Persian Gulf waters. Although Qatar was outperforming Iran in gas recovery from South Pars, Iran has moved to accelerate the development of its own part of South Pars in recent years.

All remaining phases of South Pars, except for SP11, are planned to have become operational by March 2020. They include SP13, SP14 and SP22-24.

As South Pars development plans go ahead and Iran’s gas production and transmission capacity increases, Iran will no longer depend on importing gas from Turkmenistan and will be even able to supply gas to Iraq and Turkey.

Among remaining South Pars phases, SP13 has recently seen major developments in both offshore and onshore sector. Iranian oil and gas industry officials are making every effort to bring the SP13 file to conclusion this year.

The third train of sweetening in SP13 has become operational and the last train is set to come online soon. The first two trains of this phase process about 16 mcm/d of sour gas, which will soon reach 25 mcm/d. SP13 is currently more than 92% complete in the refinery section. The gas recovery capacity of each of the main and satellite platforms in SP13 development stands at 500 mcf/d.

The first offshore topside in SP13, weighing 2,200 tonnes, was installed this month at the site of Platform 13B.

Payam Motamed, director of SP13 development, said topsides for 13B and 13D were loaded together on Sadra Industrial Yard recently to be installed in their offshore position.

“However, due to changing weather conditions and the significance of safety obligations, Platform 13B was installed as soon as weather conditions allowed,” he said.

The installation of this platform was done after berthing near HL 5000 offshore crane. Following separation from FLB 124 vessel, Iranian engineers, technicians and service workers installed it on the pre-installed jackets.

The main platform of SP13 has a recovery capacity of 500 mcf/d (or 14.2 mcm/d). The topside is expected to become operational in January after hookup operations and activities related to platform joints are implemented.

Furthermore, the installation of the second platform in SP13 development will go ahead in case of suitable weather conditions. Platform 13D, which was loaded out along with Platform 13B, will be soon installed at its location.

Once operations for the installation and startup of Platform 13B (the main platform) and Platform 13D (the satellite platform) have been over, gas recovery from SP13 will start at the rate of 1 bcf/d (28.4 mcm/d).

Efforts have been under way in recent months for the SP13 gas pipeline to come online in the shortest possible time. Offshore pipe-laying operations in SP13 are now over.

SP13 development is aimed at fulfilling the recovery of 56 mcm/d of sour gas, 75,000 b/d of gas condensate, 400 tonnes/day of sulfur, 10.5 mt/y of liquefied petroleum gas (propane and butane) and 1 mt/y of ethane to feed petrochemical plants.

The development of SP13 involved drilling, laying subsea pipes, offshore platforms and onshore refinery. The operations started in 2010 by Iranian engineers with an investment of $5.184 billion. At the start of its operation, SP13 was receiving sour gas from SP6, SP7 and SP8.

In light of current operations in SP13, Iran is expected to be feeding 1 bcm/d into national gas grid.

In SP13 development, 38 gas wells are planned to be drilled. So far, drilling operations for 36 wells, deep 145 kilometers, have been done. Totally, 160 kilometers of gas well would be drilled in SP13. The drilling of these wells is expected to be completed by next March. The gas from these wells will be carried onshore via a 105-kilometer pipe. SP13 supplies 105 of national gas needs.

Gas production from each phase of South Pars earns Iran $5 million in direct income. Consumption of liquid fuel at power plants and elsewhere aside, each South Pars phase earns Iran totally $10 million. Any delay in the operation of SP13 and SP22-24 would inflict $40 million in losses on Iran’s economy.

After 15 years of efforts and investing $70 billion, Iran has nearly completed its mission of South Pars development. So far, 85% of the work has been done and except for SP22, the remaining phases would have become operational within a year and a half.

There are at total of 413 wells, 40 offshore platforms, 3,500 kilometers of offshore pipeline and 13 refineries in South Pars.

Once SP13 comes online, South Pars would be producing 730 mcm/d of gas, 1 mb/d of condensate, 10 million tonnes a day of LPG and 10 million tonnes a day of ethane, as well as 5,000 tonnes a day of sulfur.

EOR Envisaged for Bangestan Reservoir

Iran hopes to bring its oil output to over 5 mb/d under its 20-year vision plan by investing in ageing fields. Some of oil fields in Iran are already mature. Their oil has partly been recovered, but cutting edge technologies are needed to extract the remaining oil.

Thanks to existing technologies, it would be possible to raise oil recovery rate from different reservoirs to over 80%.

One of reservoirs that Iran has specifically counted on is Bangestan in the Mansouri oil field. Mansouri was among fields proposed for development under the Iran Petroleum Contract (IPC) model, the restructured model of oil contract.

Over recent years, production from the Bangestan reservoir of Mansouri has been studied by Committee of Advisors at the Directorate of Reservoirs of National Iranian Oil Company (NIOC).

According to NIOC Directorate of Corporate Planning, various scenarios envisaged for enhanced recovery from this field include natural depletion, gas injection and water injection with a view to studying various parameters including output flow and downhole pressure.

This field enjoys very good potential for production and development. More studies are needed in the future to study the Bangestan reservoir of Mansouri field. These studies focus on artificial lifting, hydraulic fracturing and enhanced oil recovery (EOR) methods.

Iran’s petroleum industry and particularly National Iranian South Oil Company (NISOC), over recent years, has focused on the development of Mansouri in order to increase its crude oil output and enhance its processing capacity. The project is 97.5% complete now. The only remaining section from phase 1 of Mansouri field development is the completion of production and desalting plant.

The high rate of recovery from Mansouri has added to the significance of this field. The latest studies indicate that the average rate of recovery from oil fields in Iran is about 28%, while the Asmari reservoir of Mansouri has a recovery rate of 47%, which is indicative of the high potential of this oil field.

The Mansouri field is located 60 kilometers south of Ahvaz (the provincial capital of Khuzestan), 50 kilometers west of Mahshahr Port and 40 kilometers east of Ab Teimour field. Discovered in 1963, the Mansouri field started production in 1973.

The first well in the Mansouri field was drilled in 1963 to allow for oil recovery from the Asmari reservoir. Oil production from the Bangestan reservoir began in 1974 after drilling Well No. 2.

After the establishment of the Mansouri production unit in 1979, the processing of the Bangestan oil was transferred from the Ahvaz production unit to the Mansouri production unit.

The Mansouri field is administered by Karoun Oil and Gas Production Company that is the largest NISOC subsidiary with an output of over 1 mb/d.

The Bangestan reservoir has a production unit with a rated capacity of 75,000 b/d, a desalting unit with a rated capacity of 35,000 b/d and a gas compressor unit with a rated capacity of 30,000 b/d.

Bangestan is estimated to hold 15 billion barrels of oil in place with an output of 60,000 b/d that may be increased to 79,000 b/d. So far, 347 million barrels of oil has been extracted from the Bangestan reservoir.

The average production from each onshore oil well has fallen to 2,000 b/d, down from 26,000 b/d recorded between 1970 and 1972. There were a total of 270 wells when Iran was supplying its maximum oil output. There are currently over 1,500 oil wells.

According to official data, the average oil production rate in Iran stands at 24%, while in many countries it varies between 45% and 65%.

Iranian Petroleum Ministry officials say the average recovery rate from oil fields in Iran stands at around 24%, ranging from 7% in Soroosh oil field to 35% in Ahvaz oil field.

Iran targets Maximum Efficient Rate (MER). MER means the maximum sustainable daily oil or gas withdrawal rate from a reservoir which will permit economic development and depletion of that reservoir without detriment to ultimate recovery.

If oil is extracted from a reservoir at a rate greater than the maximum efficient rate of recovery, then the natural pressure of the reservoir will decline resulting in a decrease in the amount of oil ultimately recoverable.

MER is also commonly used to denote the rate of field production that can achieve the maximum financial return from the reservoir operation. However, the figures of two rates hardly coincide.

In the 1940s, the average production from Iranian oil wells was said to stand at 18,000 b/d. After so many years, the figure is down to 2,000 b/d.

As Iran's oil wells enter their second half of life, between 330,000 and 350,000 barrels per year of oil is lost in onshore wells.

Therefore, enhanced recovery from mature reservoirs like Bangestan is essential for Iran’s petroleum industry.

Output Hike Possible in Salman Oil Field

Salman oil field located in the Persian Gulf is jointly owned by Iran and the United Arab Emirates (UAE). The offshore shared field has high-pressure gas layers, too. Discovered about 45 years ago, the Salman field has since been supplying oil.

It is located in Hormuzgan Province and more specifically 144 kilometers south of Lavan Island.

Due to the existence of about 70% of oil and gas layers of this oilfield in Iran’s territorial waters and its shared status, its development has always been a priority for Iran’s petroleum industry. In the 2000s the platforms of this field that had been damaged during the 1980-1988 Iraqi war were renovated.

A couple of years ago in Tehran, the Iran Offshore Oil Company (IOOC) nominated Salman along with the Norooz, Dorood, Foroozan and Soroosh as candidates for development under the newly developed contractual framework known as the Iran Petroleum Contract (IPC).

In compliance with the Ministry of Petroleum’s policy of prioritizing development of jointly owned fields, Salman is the most important of the five fields for development.

Given the history of oil production in the Salman field, it seems that the main objective of Iran’s petroleum industry in such ageing fields as Salman has been to apply cutting edge technology for maximum efficient recovery and enhancing the rate of recovery from these fields.

Despite the high recovery rate in the Salman field, some layers of this field have yet to be depleted. Therefore, it is possible to increase output from this mature brownfield.

Salman contains light crude oil with API gravity varying between 33 and 37. Renewed development of the Salman field allows for increased output. If enhanced oil recovery (EOR) methods are applied, a much higher output is envisioned.

The Salman field incorporates an asymmetric anticline measuring 14 kilometers long and 11 kilometers wide. Geologically, it is composed of three oil production layers dating from the Jurassic and Cretaceous eras.

The Salman field also incorporates a gas layer.

The field was discovered in the 1960s by Lavan Petroleum Company. The first exploration well in this field was drilled in 1956 to allow for production three years later.

According to the latest data, the Salman field has 44 oil and 10 gas wells. Based on studies currently under way, gas production from Salman could rise after making some arrangements.

The field is owned 67% by Iran and 33% by the UAE. There is not precise figure about gas production from Salman whose rate of recovery stands at 51%.

The oil extracted from the Salman field is carried to Lavan Island via a subsea pipeline of 22 inches in diameter for final processing on onshore facilities and then exported or stored to feed the Lavan refining facility.

Despite being ageing, Salman still has an acceptable level of deposits. A timely development of this field would boost its output. Five platforms are currently operating in this field.

Among the three reservoirs in Salman, the one located at a depth of 10,000 meters under seabed accounts for 70% of the Salman output. A layer located at a depth of 8,000 feet accounts for 20% of the Salman output and a third layer at a depth of 5,000 feet for 10%.

Salman is estimated to contain 4.5 billion barrels of oil in place. Since 1999 onwards, when a number of oil and gas fields were developed under buyback deals, studies on the Salman field were carried out under the supervision of Petroiran Development Company (PEDCO) and the Petroleum Engineering and Development Company (PEDEC).

The primary processing of crude oil is one on platform before being carried in a 144-kilometer-long pipe for secondary processing, storage and exports to Lavan.

Gas produced from the nine wells in this field is carried to Siri Island via a 36-inch pipe.

Domestic Manufacturing Guarantees Petroleum Industry Future

A policy adopted by Minister of Petroleum Bijan Zangeneh for the domestic manufacturing of "ten groups of commodities" with a view to reducing the petroleum industry's dependence on foreign-made equipment motivated Iranian companies to upgrade their manufacturing potential. 

Today, the main four subsidiaries of the Petroleum Ministry are identifying the technological needs of the petroleum industry in addition to facilitating marketing of technology.

To learn more about the domestic manufacturing of commodities, Iran Petroleum has interviewed RaminQalamborDezfuli, director of manufacturing logistics and commodity supply of National Iranian Oil Company (NIOC).

When was the manufacturing of 10 groups of commodities defined as a Petroleum Ministry policy and what has been done so far to that effect?

The history of 10 projects dates back to March 2014 when Supreme Leader [Ayatollah Ali Khamenei] ordered support for domestic manufacturing and empowering domestic manufacturers. Minister Zangeneh immediately put the Supreme Leader's instruction high on the Petroleum Ministry agenda and related work started in May that year. Then the 10 shortlisted projects were announced by the Minister of Petroleum based on views of advisors and advice of the managing directors of the four main subsidiaries of Petroleum Ministry in light of priorities and needs of petroleum industry. The then Kala Naft Co. was assigned the mission to conduct feasibility study on the project. We started our work at Kala Naft in late May. For each project, a manager and some specialized working committees were selected. The working committees were all petroleum industry experts coming from main companies and their offshoots. Finally, ten projects were assessed and put to feasibility study. We submitted the first report to Mr. Zangeneh in September 2014. MinisterZangeneh spent three and half hours to listen to our reports. We could only detail five projects. In the end, the minister said: "What you've done is beyond my imagination and you inspired me with hope that this project is possible even though only some of them may be implemented". That was a relaxing phrase from Mr.Zangeneh after three months of unabated activity. After that, a steering committee was established based on Mr. Zangeneh’s instruction. Chaired by the then deputy minister of petroleum for research and technology Mohammad Reza Moqaddam, the committee was granted special authority by the then CEO of NIOC RokneddinJavadi. For instance, decisions made by this working committee were as authoritative as the decisions of NIOC Board of Directors and five NIOC Board members sat at the steering committee.

Therefore, everything started systematically in October 2014. Based on the Kala Naft steering committee's instructions and currently at the Directorate of Manufacturing Support we receive approach and methodology to be put into practice. After that phase, the first step we took was to conduct preliminary studies on the projects proposed by manufacturers who could make all ten items. In compliance with legal and statutory obligations, we issued notice in mass circulation newspapers four times. The information we received after the notice by specialized working committees comprising the representatives of the main companies and their subsidiaries were measured and scored on an equal basis over two to three months. Finally, companies that had received the minimum required score went to the next phase to take part in the tender bid.

In the preliminary assessment, more than 240 companies submitted their feasibility study data to us for the ten projects. Some 116 to 118 companies cleared the first phase.

The second report was on progress in work, shortlists and requirements for holding tender bids, which were given to Minister Zangeneh in January 2014. The minister then ordered us to first hold a tender bid for the drill bit project. If no problem occurred within one and a half month, we were authorized to hold the remaining tenders.

In line with the Petroleum Minister's order, we held the tender bid in February 2014 and in the following month based on our timeframe we announced the successful bidders. The agreements were also signed, but financial affairs were postponed to the following months.

In March 2014, we submitted a report on the tender bid and the signature of four agreements for drilling bits to Mr.Zangeneh and got permission for other tender bids. In March 2014, after the tender for the drilling bit was held, tender papers for seven other projects were also prepared and distributed. That coincided with the dissolution of Kala Naft Co. In March 2014, Kala Naft was dissolved and NIOC Directorate of Manufacturing Support and Commodity Supply was formed. However, no halt was called to the implementation of the projects and we followed up on the tender bids that we had held. The laws had been amended and the working committee was required to receive endorsement. Therefore, four more projects were finalized in the following months and after winning approval, related agreements were signed. In total, tenders were held for five projects and agreements were signed.

For which projects agreements were signed?

Project No. 1: Wellhead equipment and downhole completion string

Project No. 2: Wellhead and downhole pumps, which are high-tech items destined for increased and sustained production (currently only two or three companies are manufacturing such pumps)

Project No. 3: Drilling bits which included PDC (polycrystalline diamond compact) bits and rock bits.

Project No. 5: Pipes which are of paramount significance

Project No. 9: Drilling measurement tools which are high-tech and sensitive

Earlier foreign companies were supplying such tools and therefore the data of all wells and reservoirs were controlled by foreigners who may exploit them by denying us necessary tools and parts.

Therefore, five projects were finalized, for which 53 agreements were signed. Two agreements were cancelled due to financial shortages by the client. Currently we have 51 active contracts valued at approximately IRR 4,000 billion plus €598 million.

How many items were subject to import bans since 2014?

In 2014, under the aegis of cooperation on the part of all ministries, significant measures were taken in cooperation with the Petroleum Ministry for banning the purchase of foreign-made products whose similar domestic ones were available. The Ministry of Petroleum was among the most active ministries to cooperate with the Ministry of Industry, Mine and Trade. It is noteworthy that when we speak about domestic manufacturing, some misperceptions arise as some may think that every commodity which we may be able to produce in Iran should be banned from imports. But sometimes domestically made commodities may not thoroughly satisfy the petroleum industry demand. We may be able to manufacture 10 items, while we need 100 items. Such commodities would not be subject to purchase and import bans because we will run into troubles for the supply of the remaining 90 items. Therefore, we try to inform the Ministry of Industry, Mine and Trade of items which can meet our needs in terms of production quantum, quality as well as field, operational and pilot tests at the petroleum industry.

In light of all these issues, in 2015 we benefited from the experience and potential of Kala Naft at the Directorate of Manufacturing Support and Commodity Supply, sought views of National Iranian Gas Company, National Petrochemical Company and National Iranian Oil Refining and Distribution Company to announce the list of our commodities whose importation was prohibited to the Ministry of Industry, Mine and Trade. In that year, 66 items out of the 181 items which had been banned by the Ministry of Industry, Mine and Trade, were specially used in the petroleum industry while the remaining ones were shred with the Ministry of Defense, Ministry of Health, etc.

In 2016, again under the auspices of Mr.Moqaddam, and later on his successor HabibollahBitaraf, the Directorate of Manufacturing Support and Commodity Supply continued the process and lists were submitted. Of a total 141 items banned by the Ministry of Industry, Mine and Trade, 50 were specially used in the petroleum industry. In that year, 118 items of domestically manufactured commodities were endorsed in terms of quality and price, and were then banned.

In the current year, there are 84 items on the blacklist. Purchase of wellhead equipment and well cap, desalting package, anti-corrosion materials, sulfur recovery catalyst, and wellhead control panel is banned for the petroleum industry.

Among measures undertaken by the NIOC Directorate of Manufacturing Support and Commodity Supply based on the law requiring maximum use of domestic anufacturing in 2016 and 2017,  something like 10 to 12 directives and circular letters were served on the subsidiaries of NIOC to ban the foreign purchase of all items which may be manufactured domestically as mentioned in the portal of the Ministry of Industry, Mine and Trade. Meanwhile, in the last directive served, foreign purchase for all subsidiaries and their contractors is banned. The CEO of NIOC also enforced a ban on the purchase of any items which could be manufactured domestically. That was among the most important action taken by NIOC in line with resilient economy and supporting domestic manufacturing.

How much has the manufacturing of the ten groups of commodities progressed this year?

The average progress in the implementation of the 51 agreements has so far been 47%. Of course, some projects have had 70-80% and some others 20-30% progress.We have also filled 17% of orders. In some agreements, delivery has been done fully and in some others our delivery rate has been at 80%. However, due to financial and other issues, in some agreements the progress has been at 10% and no production has thus far started. Of course, that matches our projections because we needed to import foreign technology to build some of this equipment. But over the two years since the implementation of project started, we have seen 47% progress in the projects.

What has the Ministry of Petroleum done to support domestic manufacturers after banning the purchase of similar foreign commodities?

The basic measure which has been taken over the past four months by NIOC to support domestic manufacturing for future increase in oil and gas production was that in the tender documents submitted to the contractor we listed all domestically manufactured basic items (a total of 27) whose imports would be costly and announced the names of companies. That was a big step which blocked any attempt by domestic or foreign EPC companies to purchase foreign commodities and required them to purchase from domestic manufacturers. Given the potentiality of domestic manufacturers, the only challenge which they are grappling with is that they cannot receive any international certificate or bid for international projects.

To what extent has foreign currency spending been contained after the implementation of the 10 projects?

In2015 and before that, we put out to tender the CRA pipe manufacturing project, each meter of corrosion-resistant alloy pipes cost the country on average €1,480. After the tender was held, the global price declined 20-30% and when the agreement was signed the average price was down to €900. In case the previous round of sanctions had continued and Mr. Zangeneh did not assume such a risk to pay for €560 per meter from domestic-foreign companies, we had to pay €900 to €1 billion for each meter of CRA pipes. Therefore, in this contract only, about €300 million was saved. Another significant result came in the drilling bits project. That helped the country save about IRR 4,000 billion because we used to purchase all drilling bits from foreign companies.

Furthermore, NIOC purchased 80% of wellhead and downhole equipment from domestic suppliers, but none of contractors were involved in the projects and every purchase was done from abroad.

Regarding downhole completion string, 14 agreements were signed with three companies and we tried to prevent any monopoly in the contracts. In other words, we would have at least two companies active in each sector except for several cases where the volume of demand was insufficient and was not commercial, for instance building two pipe manufacturing plants in Iran while the mills we already have can meet national need by running at half capacity, and the rest of their products has to be exported. Therefore, at present, in all sectors, two to four companies are active and so far 14 agreements worth about $1,300 billion have been signed (according to calculations, 50% of this figure would mean saving hard currency). Meantime, the issue of banning the purchase of commodities with domestically manufactured prototype by private and EPC contractors led companies to turn to domestically manufactured wellhead and downhole equipment, all of which contributed to saving the country hard currency and striking deals using the Iranian currency.

Which arrangements has the Ministry of Petroleum made to make up for losses inflicted on manufacturers due to foreign exchange fluctuations?

Domestic manufacturing companies have hit a major problem due to the foreign exchange fluctuations because in one case, steel producers calculate the price of their products based on the free market conversion rate of the dollar and the euro. We are currently seeking to resolve this challenge faced with by manufacturers. Our manufacturers have been wronged. We held tender bids based on the 2014 prices. In 2015 the prices were set and one year later in 2016 the manufacturers were paid. There were still no problems by March 2018, but now if I say that these companies sell at the price they have spent, I may be exaggerating because they are even suffering losses.

 Kharg Oil Output Up

International experts had forecast Iran's oil exports to drop to nil when the US was preparing to re-impose tough sanctions against Iran's oil sector. But Iran's oil exports were not cut to zero and even Iran continues to sell oil.

The Kharg Oil Terminal is one of Iran's oil exports terminals where the Kharg operational center is located.

Abbas Rajabkhani, manager of the Kharg operational center at the Iran Offshore Oil Company (IOOC), says oil production in the Kharg area has not reduced and oil exports are under way despite the re-imposition of US sanctions.

IOOC is among leading offshore oil and gas production companies in Iran. It operates development and production at oil and gas fields located in the Kharg, Bahregan, Siri, Lavan, Kish and Qeshm operational centers. The Kharg center is of paramount significance as it houses the Abuzar, Dorood and Foroozan fields. The Kharg center accounts for half of IOOC oil output. The oil exported from this area with API gravity of 34 and 35 is known under Foroozan brand.

Production Capacity

Rajabkhani touched on such operations as workover of wells, lifting and drilling new oils, saying production from this area had increased in the first half of the current Iranian year.

He added that the Foroozan output is expected to increase by the end of the current calendar year on March 20.

Regarding the quality of produced oil at this area, he said: "The oil currently being exported from Dorood-3 is of high quality and needs no processing."

Furthermore, he added, the activation of DCS-based monitoring system on the Foroozan and Dorood-3 platforms has helped enhance the quality of oil produced by these fields and practically oil flow has not stopped.

Rajabkhani touched on the Foroozan oil output, saying: "Since Saudi Arabia's share of this jointly owned field is higher than Iran's, it will naturally recover more oil. Therefore, given its share, Iran is not lagging behind."

Foroozan is located 100 kilometers southeast of Kharg Island. It is known as Marjan in Saudi Arabia.

In Iran's segment of the field, oil is being transferred via a subsea pipeline, measuring 20 inches in diameter, to onshore facilities for processing and storage.

Oil Pits Gathering

Rajabkhani said gathering oil pits has been among environmental projects under way in the Kharg area.

The project was implemented with a view to purifying industrial wastes, he said, adding that industrial wastes used to deposit in oil pits.

"But now it is possible to separate oil and water from the wastes," said Rajabkhani.

"After separation and the flow of pure water into the sea, the oil in the pit will be evacuated and the sludge remaining there will be auctioned off to be used in such projects as bitumen," he said.

"There have been drilled some wells in underground layers to absorb water accumulated on the platforms. That would help avoid water wastage and we can restore water to the storage tank," he added.

Rajabkhani said that the first well in the Abuzar field had been drilled, while more wells are coming online over the coming two to three years.

Kharg Island is located 57 kilometers northwest of Bushehr and 28 kilometers from Genaveh Port. The island is among the most important oil export terminals in Iran. Another advantage with this area is the location of the Abuzar, Dorood and Foroozan oil fields. About 270 wells have so far been drilled there, 65 of which are producing oil.

In a bid to improve the quality of its export oil service, IOOC has implemented certain procedural reforms there, including the quality of oil exported form Dorood-3.

Oil production from Abuzar is not easy due to tar sands. The existence of tar sand in oil will damage oil installations, thereby affecting production. Any loss in production would impose hundreds of thousands of dollars on the operating company.

The small size of pebbles in the Abuzar oil field causes them to enter the well stream, causing corrosion of pipes and valves.

To resolve this problem, the sand management technology has been employed because using this tool in Iran has become indigenized.

Sand management is an operating concept in which traditional sand control means are not normally applied and production is managed through monitoring and control of well pressures, fluid rates and sand influx. Sand management has proven to be an effective tool in North Sea oil and gas production wells.

Sand management has proven to be workable, and has led to the generation of highly favorable well skins because of self-cleanup associated with the episodic sand bursts that take place. These low skins have, in turn, led to higher productivity indexes, and each of the wells where sand management has been successful has displayed increased oil or gas production rates.

After certain procedures, the quality of oil produced by Dorood is being delivered to export terminals.

 

Iran, Iraq Continue Energy Cooperation

Iran and Iraq started upgrading political, economic and social ties in the aftermath of the downfall of Saddam Hussein's dictatorial regime in 2003. Today, the volume of trade exchanges between the two neighboring nations stands at billions of dollars.

New Iraqi President Barham Salih travelled to Tehran in his fourth regional visit in November in a bid to turn the page in ties between Tehran and Baghdad.

The unilateral tough sanctions imposed by the United States against Iran failed to dissuade the Iraqi president from travelling to Iran.

Upon arrival in Tehran, Salih said he was visiting Iran to "reiterate Iraq's determination for continued cooperation with Iran amid US sanctions" and help the two nations benefit from "shared interest".

Before Salih's visit, diplomatic talks held between Iraq and the US led Washington to grant exemption from Iran sanctions to Iraq in gas trading and foodstuff.

The Iraqi Central Bank announced last August that economic bonds between Iran and Iraq were so close that the Iraqi government had no option but to request sanctions waiver from the US.

Without being impacted by US sanctions, Iran and Iraq have expressed their determination to bring their trade to $20 billion through cooperation in different sectors, particularly oil and gas.

After leaving Iran and during a visit to Italy to attend a conference, the Iraqi president said: "Iraq lays emphasis on better ties with regional nations including Iran, and Baghdad attaches significance to ties with Tehran."

"We share 1,400 kilometers of border with Iran and the two countries share cultural values and roots. It is very important for us to have good ties with Iran," said Salih.

Iraq is the second largest market for Iran's non-oil exports. Iran exports billions of dollars in goods to its western neighbor.

Oil and gas cooperation was a main topic of discussion between Iran and Iraq during Salih's visit. Iran is supplying gas to Baghdad and providing electricity to Basra.

Iran's President Hassan Rouhani held talks with his Iraqi counterpart on oil exploration and production.

After their meeting, Rouhani said: "Today we held talks with the Iraqi president about electricity exchange, gas, petroleum products and the two countries' activities in oil exploration and recovery."

In the meeting, the two sides stressed the need to continue with developing political, economic and cultural ties, saying there are many grounds for the two nations to improve their relations.

Rouhani said the environment was another significant issue for Iran and Iraq. "Some of our people living along western and southern borders are faced with the problem of haze. The two countries should cooperate to resolve this issue," he added.

The Iraqi president visited Iran at a time the US is ramping up pressure on Iraq to cut its economic ties with Iran. Washington has asked Baghdad to honor US sanctions on Iran.

Gas Exports Continue

Under an agreement signed between Iran and Iraq, Baghdad is receiving between 7 mcm/d and 25 mcm/d of gas. Iran has so far exported more than 1.2 bcm of gas to Iraq via Naftshahr terminal.

Two border terminals in Naftshahr and Shalamcheh are planned to deliver natural gas to Iraq. For that purpose, two lines branching out of the Iran Gas Trunkline 6 (IGAT6) – 231-kilometer Kuhdasht-Naftshahr and 141-kilometer Ahvaz-Shalamcheh pipelines – have been built. Gas exports to Baghdad started via Naftshahr last June.

Gas is pumped to Baghdad via the network operating in Ilam and Kermanshah to feed power plants. Any increase in the volume of gas exports to Iraq depends on domestic consumption.

Under the Iran-Iraq agreement, with the completion of IGAT6, gas exports to Iraq will start from 7 mcm/d, which could be brought to 25 mcm/d. Increasing gas exports to Iraq, particularly in the cold months of the year, depends on domestic production-consumption balance. National Iranian Gas Company (NIGC) fulfill its obligations with regard to gas exports, but the more gas is saved in Iran the more the government can generate revenue from gas exports.

The CEO of NIGC recently said the Shalamcheh terminal would deliver gas to Basra and gas has been injected into the Ahvaz-Shalamcheh pipeline. As soon as the Iraqi side expressed its readiness, Iran's gas exports to Basra will start. Like the Baghdad case, gas delivery to Basra will start at the rate of 25 mcm/d. All necessary infrastructures are ready in Iran for pumping gas to Basra, but on the Iraqi side, the infrastructure has not become ready yet.

Under the Iran-Iraq deal, Iran will be exporting between 7 mcm/d and 35 mcm/d to Iraq. The amount of gas export will depend on Iran's domestic consumption, as well as the needs of power plants in Baghdad and Basra.

Gas export is a priority enshrined in Iran's Vision Plan, as well as national five-year economic development plan. Over the past four years, NIGC has been following up on gas exports in light of enhanced output from the South Pars gas field, the offshore giant field shared by Iran and Qatar.

A major clause in Iran's resilient economy is gas export. On this basis, the issue of exports has been emphasized in the Vision Plan, as well as five-year national development plans. In addition to gas exports to Iraq, delivery of gas to newly built towns and parks along the Iran-Iraq gas pipeline is also high on the agenda.

Iran is also exporting 1,200 to 1,300 MW/hour of electricity to Iraq which is suffering from load shedding.

Iran-Iraq Energy Projects

Notwithstanding US sanctions on Iran, Iran and Iraq are proceeding with their energy projects. The two countries currently have five energy megaprojects under negotiations or under implementation.

Hamid Hosseini, spokesman for the Iranian Oil, Gas and Petrochemical Products Exporters' Union (OPEX), said Kirkuk oil swap has started between Iran and Iraq.

Talks are also under way with the Iraqi gas company for Iran to export gas to feed industries in Iraq.

Talks have also started for cooperation in the liquefied petroleum gas (LPG) sector.

The Iraqis are interested in using Iran's LPG experience for cars and big residential compounds.

"Since Iran secured the release of Iraq's Beiji refinery from the Daesh grips, reconstruction of this refinery will be awarded to Iranian companies," Hosseini said.

"In other words, Iranian companies can be contractor in the reconstruction of the refinery," he said.

TurkStream; Russia, Turkey Eye Europe Market

The offshoresection of TurkStream or Turkish Stream, a natural gas pipeline running from Russia to Turkey, was recently finalized in the presence of Russian and Turkish presidents in Istanbul. The project crossed its most significant phase.

Strategically and economically speaking, this gas pipeline is of paramount significance. The pipeline would connect Russia and Turkey via the Black Sea.TurkStream will not only bring Ankara and Moscow closer together, but also it would provide Russia and Turkey a new chance for exporting energy to Europe. That comes at a time the United States is opposing the completion of the Nord Stream 2 pipeline project, which is planned to carry Russia's gas to Europe and Germany via the Baltic Sea. Therefore, TurkStream takes up added significance.

TurkStream Pipeline

The TurkStream pipeline has so far seen ups and downs. Its construction came to a halt in November 2015 following the downing of a Russian warplane by Turkey along the border with Syria.

The pipeline is set to carry natural gas from Russkaya compressor station near Anapa in Krasnodar Region across the Black Sea to Kıyıköy on the Turkish Thrace coast.

Composed of two 930-km pipelines, TurkStream is able to supply over 30bcm/year of natural gas from Russia to supply Turkey's needs.

After the construction of the offshore section, the onshore section on Turkey's soil remains to be constructed for this project to be completed. According to schedule, Russia's gas is planned to be exported to Turkey via this pipeline by end-2019.

Although Moscow and Ankara are the main parties to the TurkStream pipeline, this project will not be limited to these two nations. After carrying gas from Russia to Turkey, it is forecast to take gas to other European countries like Bulgaria, Serbia, Greece and Italy. In fact, once this project becomes operational Russia's gas will go to southern and southeastern Europe via Turkey's western borders.

Advantages for Russia

Over recent years, energy-related equations have been instrumental in expanding political and economic ties between Russia and Turkey. Russia is the second gas supplier to Turkey. Ankara receives 76% of Moscow's total energy exports. Turkey signed a deal in 1986 to buy 6 bcm/year of natural gas from Russia for 25 years. A similar agreement was signed in 1998 for 8bmc of natural gas. In addition to bilateral energy deals, Russia and Turkey have lots of projects to carry energy from Russia to Europe via Turkey's territory. Meantime, cooperation between the two countries in the energy sector is not limited to fossil energies. Over the past years, Moscow has expressed readiness to sell atomic reactors to Turkey and fuel them. Turkey has welcomed the offer.

Construction and operation of the TurkStream gas pipeline will enable Russia to reduce its dependence on the Ukraine pipeline for carrying gas to Europe. That is a big advantage for diversification of energy resources, which has been a policy followed by Russia vis-à-vis Europe. Europe is interested in laying out the Nabucco pipeline and using gas sources in Turkmenistan and Azerbaijan, but Russia asserts it can realize its objectives of diversifying sources of energy supply to Europe through diversifying gas pipelines as well as gas transmission routes to Europe.

In a bid to upgrade the security of gas supply to Europe, Russia has made efforts to diversify routes of gas transfer to Europe, one of which is the TurkStream pipeline project. This route can diversify Russia's gas exports to Europe and avoid to a great extent damage from possible interruption in gas exports by the countries located on the pipeline route. Therefore, for the following reasons Russia attaches great significance to Turkey.

First, Russia views Turkey as a very important corridor to carry its energy to markets in Europe, Middle East and North Africa and therefore shows interest in the expansion of the pipeline linking the two nations. Materialization of this objective will allow the Russians to carry their energy to the Mediterranean without having to cross the Bosporus Strait. Therefore, Turkey can become the route for the transfer of Russia's energy to Europe.

Second, Ankara is able to obstruct the construction of pipelines that would carry oil and gas from the Caspian Sea and Middle East regions to Europe. In fact, in light of Europe's interest in diversifying its oil and gas supply sources, using the Turkey route will help improve Russia's standing in rivalry with other pipelines like Nabucco.

Therefore, Turkey is of high significance for Russia in terms of energy transfer.

On the political front, while Russia is making efforts to distance Turkey away from NATO towards itself, economic benefits and mutual needs in the energy sector could serve as an effective tool in Russia's hands to push ahead with its policy.

Advantages for Turkey

Turkey is also enjoying benefits from the TurkStream project. In 2008, the Turkish Foreign Ministry released a national energy strategy, which laid emphasis on Turkey growing into the main hub of energy transmission to Europe in Central Asia, Caucasus, the Middle East, the Balkans and Russia.

Turkey has since invested in realizing this objective and plans under its long-term economic and political perspective to turn Ceyhan Port into an energy terminal in the region. To that effect, Turkey has in recent years been a major party to discussions on energy transfer to Europe. Therefore, Russia is of strategic importance in the energy sector for Turkey for at least two reasons as follows:

First, Russia provides the bulk of Turkey's energy needs. Simultaneously with the pace of industrial production growth in Turkey, this country has seen its energy consumption grow. Therefore, amid conditions of fast growth in energy demand in Turkey, energy giant Russia can play a significant role in oil and gas supply to Turkey. That is particularly important, as in their view, Middle East nations cannot be a stable source of energy for Turkey due to instability and insecurity.

The second reason stems from Russia's significant role in Turkey's energy strategy. Turkey is willing to be an intermediary nation in oil and gas exports from Russia and the Caspian Sea region to Europe. Ankara is determined to become the main focal point of transit between oil and gas producing areas and markets in Europe. In case this strategy of Turkey reaches a result, it can then turn into the vital link in the energy stream which connects the Caspian Sea region to Europe. Therefore, under conditions where Russia remains the most important and the main supplier of energy to the European Union, the Turks know pretty well that it is impossible without cooperation with Russia.

Therefore, the TurkStream project is instrumental in supplying Turkey's natural gas demand and will be able to supply necessary gas supply to Turkey's Marmaris where industrial production is high.

Furthermore, Turkey is currently purchasing more than 14 bcm of natural gas via Ukraine, Moldavia, Romania and Bulgaria, while the TurkStream project can provide natural gas at a much lower price because natural gas would be directly pumped into Turkey via TurkStream.

In addition to that, the TurkStream pipeline will guarantee the security of transmission of gas to Turkey without being affected by relations between those countries and Turkey or Russia.

When part of gas supply to Europe goes via Turkey's territory, it would help this country bolster its strategic standing, which would turn Turkey into a bridge for energy exports from producers to consumers. Turkey has in the past years worked on other projects like the Trans-Anatolian Natural Gas Pipeline (TANAP) and the Trans Adriatic Pipeline (TAP) for energy transmission through its territory.

If Turkey becomes the energy hub in the region it would mean Turkey's political standing has strengthened vis-à-vis European nations, which would influence future interactions between Ankara and Brussels and even Turkey's EU membership bid.

Four Subsea Wells Planned in Gabon

BW Offshore has taken an investment decision for the Tortue Phase 2 project offshore Gabon following successful appraisal drilling on the western flank of the Tortue field.

Phase 2 will feature four additional horizontal development wells. The company has placed orders for long-lead equipment including subsea trees, wellheads, drilling casing and completion equipment, and has also signed a letter of intent for the drilling rig.

BW estimates 2P reserves for Tortue field Phase 1 and Phase 2 (six wells in total) at 30-40 MMboe.

In addition, the company has approved two further appraisal wells in the greater Ruche area as part of the Phase 2 drilling program to assess high-grade prospects.

Negotiations continue over a 10% farm-in by Gabon Oil Co. to the surrounding Dussafu license.

Barge Upgrade for Offshore Cambodia Project

KrisEnergy subsidiary, SJ Production Barge has contracted Keppel Shipyard to modify and upgrade a production barge for the Apsara oil development offshore Cambodia.

The work scope covers installation of a power generation module, electrical house, new accommodation units and other refurbishment activities. All work should be completed next summer.

At the field, the barge will be capable of processing up to 30,000 b/d of fluid and will have gas, oil, and water separation facilities.

Value of the contract is around $21.7 million, with part of the payment on deferred terms.

Apsara is in block A in the Khmer basin in the Gulf of Thailand; water depths in the concession range from 50-80 m (164-262 ft).

Phase 1A of the development will feature a single unmanned minimum facility 24-slot wellhead platform producing to the moored barge.

From there, produced crude will be sent through a 1.5-km (0.9 mi) pipeline for storage to a permanently moored floating, storage, and offloading vessel.

 

Browse JV, Chevron Sign Australia Gas Accords

The North West Shelf Joint Venture offshore Western Australia has signed non-binding preliminary agreements with the Browse Joint Venture and Chevron, the leaseholder of the Clio-Acme fields.

This involves processing of the respective offshore gas resources through the North West Shelf (NWS) facilities on Western Australia’s Burrup Peninsula, said NWS operator Woodside Energy.

The aim is to extend the operating life of the NWS Project’s Karratha Gas Plant for decades beyond 2025, said Woodside CEO Peter Coleman.

 “Central to our vision for the Burrup Hub is the transition of the Karratha Gas Plant into a third-party tolling facility as the NWS Joint Venture fields reach the end of their lives.

“The Browse Joint Venture will be the anchor tenant underpinning that transition and this preliminary agreement enables the participants to progress toward an earlier final investment decision to develop the gas resource, targeted for 2020.

“Gas from Clio-Acme is planned to be brought to the Burrup Hub through the Woodside-operated Pluto offshore infrastructure and then transported via the proposed Pluto-NWS Interconnector pipeline to be processed at the Karratha Gas Plant.”

Woodside also operates the Browse Joint Venture and Pluto LNG.

Iguana Gas Field Goes Online Offshore Trinidad

DeNovo Energy Ltd. has delivered first natural gas from the Iguana field in block 1(a) offshore Trinidad and Tobago.

The Iguana field remained undeveloped for more than 34 years until DeNovo became the operator in 2016. It is the first gas development campaign in the Gulf of Paria.

The operator awarded Chet Morrison Contractors LLC the engineering, procurement, construction, installation and commissioning (EPCIC) contract for the project.

Work scope for the Iguana field development included facilities for three development wells installed through a conductor supported platform (CSP) and a 45-km (28-mi), 14-in. diameter subsea natural gas export pipeline connecting the Iguana CSP to a newly constructed onshore gas processing unit on the Port Lisas Industrial Estate, with commissioning for first gas delivery.

The water depth at the Iguana platform is ~27 m (88.6 ft).

Morrison said that it safely managed the offshore and shore crossing conditions to complete this development in record time and installed and commissioned the pipeline and offshore facility last month.

Morrison was able to achieve 80% local content and safely delivered the project with more than 370,000 combined man-hours while achieving zero recordable incidents (0-TRIR). It worked with its joint venture partner, Trinidad Offshore Fabricators Unlimited (TOFCO), in the support of many aspects of this project including the hook up through mechanical completion.

Shell Completes Transaction for Offshore Norway Fields

A/S Norske Shell has completed the sale of its interests in the Draugen and Gjøa fields offshore Norway to OKEA for NOK4.52 billion ($526 million).

These comprised a 44.56% operated stake in Draugen and 12% (non-operated) in Gjøa, collectively comprising 14% of A/S Norske Shell’s production in 2017.

As part of the transaction 153 staff will transfer to OKEA.

“Today’s deal completion…was made possible by good collaboration between Shell and OKEA and with constructive dialogue with the Norwegian authorities,” said Rich Denny, managing director of A/S Norske Shell.

Shell stressed it remained committed to Norway, where it is operator of the Ormen Lange and Knarr fields and a partner in Troll, Valemon, and Kvitebjørn.

It is also technical service provider at the Nyhamna gas processing plant that receives Ormen Lange’s gas, and in the Norwegian Full Scale CCS (carbon capture and storage) project Northern Lights and the CCS test facility at Mongstad.

Pipe Rupture Threatens Peru Oil Project

Canada’s Frontera Energy Corp could be forced to halt operations in Peru’s largest oil block if a key pipeline ruptured amid indigenous protests is not promptly repaired, state oil company Petroperu said.

The pipeline, in a remote corner of Peru’s Amazon, was attacked earlier this week in protests over municipal election results, causing it to spew thousands of gallons, Petroperu said.

The rupture has already forced Frontera to slash production by 12,000 barrels of crude daily, Manuel Ugaz, manager for Petroperu subsidiary Oleoducto Peru, told reporters.

“If the problem isn’t immediately solved, either with a provisional repair or a permanent one, Frontera will need to shut down production at all its wells,” Ugaz said.

Frontera operates Block 192, an oil-rich concession in the Amazon with reserves of 100 million barrels of petroleum. The company’s contract expires in 2019.

Vandals have repeatedly attacked the 1,106 km (687 mile) pipeline over the past several years, wreaking havoc on production and spooking investors. The pipe transports crude from jungle oil blocks tapped by Frontera to Petroperu’s refinery on the Pacific coast.

Ugaz said the Canadian oil company could lose $200,000 daily if it is forced to halt production.

Petroperu estimates that 8,000 barrels of oil spilled following the attack on the pipeline, although it says none of that oil has reached waterways. The state oil company has since stopped pumping crude through the pipe.

Beatriz Alva Hart, a Petroperu manager for relations with communities near the pipeline, said villagers from the Morona district confessed to the attack.

But law enforcement has been unable to stop the ongoing protest, contain the spill or fix the pipe, she said.

“To date, they are not allowing us to fix the pipe,” she said. “It’s an environmental attack that affects all Peruvians.”

Representatives from the indigenous community could not be immediately located for comment.

 

 Keystone XL Pipeline Subject to Additional Review

The U.S. State Department will conduct another environmental review of TransCanada Corp’s long-pending Keystone XL oil pipeline, a U.S. official said, a move that could lead to additional delays of the project.

The so-called supplemental environmental impact statement was ordered by Judge Brian Morris of the U.S. District Court in Montana in his ruling on Nov. 8 that blocked construction of the pipeline planned to bring heavy crude from Canada’s oil sands to the United States.

Morris said in his ruling that previous environmental analysis of Keystone XL fell short of a “hard look” at the cumulative effects of greenhouse gas emissions and the impact on Native American land resources.

The $8 billion pipeline, which is supported by Canadian oil interests and U.S. refiners, but opposed by landowners and environmentalists, has been pending for a decade.

President Donald Trump announced a permit for the project soon after he took office. Former President Barack Obama nixed the pipeline, saying it would do little to help U.S. consumers and would add greenhouse gases.

TransCanada spokesman Terry Cunha said that the State Department’s announcement of an additional review was expected after the judge’s ruling.

TransCanada asked Morris, the District Court judge, to allow it to resume some U.S.-based pre-construction activities blocked by the initial ruling.

Morris’ decision gave the Calgary, Alberta-based company permission to resume some activity on the pipeline project, including project development work and stakeholder meetings.

It is not allowed to resume physical field work like moving pipe and equipment, preparing work camp sites or undertaking road upgrades at this time, Cunha said. Morris is set to rule on that work after Dec. 5.

 “It is too soon to say what the injunction will mean to the timeline of the Keystone XL pipeline but we remain confident the project will be built,” Cunha said.

US Drillers Add Oil Rigs for Fifth Straight Month

U.S. energy firms added oil rigs for a third week in four and increased the rig count for the fifth month in a row, even though oil prices this week fell to their lowest since October 2017.

Drillers added two oil rigs in the week to Nov. 30, bringing the total count to 887, General Electric Co’s Baker Hughes energy services firm said in its closely followed report.

For the month, the rig count was up 12 in November, matching last month and its fifth monthly increase in a row.

The U.S. rig count, an early indicator of future output, is higher than a year ago when 749 rigs were active because energy companies have spent more this year to ramp up production to capture prices that are higher in 2018 than 2017.

Looking ahead, crude futures for calendar 2019 and 2020 were trading around $52 a barrel.

U.S. crude oil output hit a new all-time high of 11.5 million barrels per day in September, the fourth consecutive month of record highs, according to the government, as production in Texas and North Dakota climbed to fresh peaks.

U.S. financial services firm Cowen & Co this week said the exploration and production (E&P) companies it tracks have provided guidance indicating a 23 percent increase this year in planned capital spending.

Cowen said the E&Ps it tracks expect to spend a total of $89.1 billion in 2018. That compares with projected spending of $72.2 billion in 2017. Cowen said early 2019 capital spending budgets were mixed.

Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week forecast the average combined oil and natural gas rig count would rise from 876 in 2017 to 1,031 in 2018, 1,092 in 2019 and 1,227 in 2020.

Year-to-date, the total number of oil and gas rigs active in the United States has averaged 1,028. That keeps the total count for 2018 on track to be the highest since 2014, which averaged 1,862 rigs. Most rigs produce both oil and gas.

Eni in Talks to Grow Presence in Persian Gulf

Italian major Eni is in talks to grow its footprint in Oman and the United Arab Emirates as part of plans to build its asset base in the oil-rich Persian Gulf and offset its reliance on Africa, a source close to the matter said.

The international oil company has a limited presence in the Middle East, where some of the world’s biggest oil and gas reserves lie, producing more than half its output in Africa.

“Eni is in talks with Oman for various opportunities,” the source told Reuters, adding recent geopolitical tensions in the area had not curbed its interest.

Last year Eni sealed its first deal in Oman, winning a majority stake in offshore acreage and selling on part to Qatar Petroleum.

This year it took a first step into Abu Dhabi, paying $875 million for stakes in two oil concessions and then buying part of the giant Ghasa gas field from state oil group Adnoc.

The source said Eni had submitted an expression of interest for a minority stake in Adnoc’s refinery business, confirming an earlier Reuters report.

Abu Dhabi has put on sale 40 percent of Adnoc’s refining unit valued at $8 billion but will never sell to a single company, the source said, adding many others were interested including Chinese and Indian firms and France’s Total.

“Eni is also interested in other downstream opportunities,” the source said, pointing to Adnoc’s ambitions in that area.

Last year Adnoc presented a 2030 strategy plan to open up its energy markets to foreign operators and attract the skills needed to develop E&P, refining and petrochemical industries.

Thanks to bumper gas discoveries in Mozambique’s Mamba field and Egypt’s Zohr, Eni has one of the strongest discovery records in the industry and one of the fastest time to market records.

“Getting into refining would give Eni a natural hedge to all its upstream business as well as allowing it to diversify away from Africa,” said Santander oil analyst Jason Kenney.

Sources have also told Reuters Eni is in the race to get into Qatar’s plans to expand its liquefied natural gas industry, saying teaming up with Qatar Petroleum in Mexico was a preparatory move.

Polish, Danish Grid Firms Agree to Norway Gas Link

The Polish and Danish gas grid operators have taken a final investment decision to build a gas pipeline linking Poland to Norwegian fields via Danish territory and the Baltic Sea, Poland’s state-owned Gaz-System said.

The 900-km (560-mile) pipeline, known as the Baltic Pipe, aims to reduce Poland’s reliance on Russian gas. The Baltic Pipe is expected to be ready in 2022 when Poland’s long-term deal with Russian gas company Gazprom expires.

“Construction of the section under the Baltic Sea will start in Spring 2020,” Piotr Naimski, the Polish government official responsible for power and gas infrastructure, told a news conference to announce the decision by the state company.

He said environment and other permits from the authorities were still required before construction could start.

The pipeline’s capacity will be 10 billion cubic metres (bcm) a year, with almost all of it booked by Polish state-run gas firm PGNiG. The company plans to produce 2.5 bcm a year of gas from holdings in Norwegian deposits.

Polish Energy Minister Krzysztof Tchorzewski told the news conference that Baltic Pipe was part of the North-South Gas Corridor a project to link Poland to a liquefied natural gas (LNG) terminal in Croatia, via the Czech Republic, Slovakia and Hungary.

The Baltic Pipe, costing about 1.6 billion to 2.1 billion euros ($1.8 billion to $2.4 billion), will run from the north of Poland through Swedish waters in the Baltic Sea and Danish territory where it would be linked to a North Sea pipeline.

Sten Arve Eide from Gassco, Norway’s gas system operator, said the new link to Denmark would offer “one more exit point available for gas deliveries.”

“Gassco will deliver the gas in accordance with the gas owners nominations. This will not affect the total gas exports from Norway,” he said.

Norway meets about a quarter of Europe’s natural gas needs and is the second largest supplier after Russia. Most of its deliveries are via a network of offshore pipelines to Britain, Germany, France and Belgium.

In 2015, Poland opened its first LNG terminal on the Baltic Sea as part of its efforts to diversify its sources of supply. Poland aims to expand the facility.

 Russia Yamal LNG Transfers Anger US

Allowing ship-to-ship transfers in Norwegian waters from Yamal in Arctic Russia, one of the world’s largest liquefied natural gas (LNG) terminals, undercuts Europe’s energy diversification efforts, the U.S. State Department said.

By transferring LNG to more conventional tankers in Norway, the Arctic vessels cut in half the distance they would cover to deliver gas to Europe, enabling more frequent shipments from the Novatek terminal and increasing Russia’s gas exports.

The first such transfer took place off the Norwegian Arctic port of Honningsvag.

Asked what was the U.S. position on the activity in Norwegian waters, the U.S. State Department told Reuters: “At a time when Russian gas comprises a growing proportion of Europe’s energy imports, additional volumes of Russian gas will undercut Europe’s energy diversification efforts.

“We are working closely with our European partners to increase their energy security by promoting diversification of energy fuel types, energy routes, and energy source countries.”

Russia condemned the U.S. position.

“Such statements are a definitive example of resorting to political instruments for the sake of unfair competition, (and) direct infringement of trade freedom principles,” the Russian embassy in Oslo said in a statement.

The United States has been pressing Europe to cut its reliance on cheap Russian gas and buy much more expensive U.S. LNG instead, which many European countries, including industrial heavyweight Germany, have so far resisted.

It has called on European countries to reject Russian gas pipelines, which Washington says are being used to cement Moscow’s grip on Central and Eastern Europe.

In particular, the United States has said it could impose new sanctions on Russia to try to block the construction of the Nord Stream 2 pipeline across the Baltic Sea to the European Union.

Norway, Europe’s second-largest supplier of gas after Russia, said it was not “concerned” by the ship-to-ship transfers.

“Europe has a well-functioning gas market. The planned ship-to-ship transfers of Russian LNG in northern Norway are a commercial project,” the Norwegian Ministry for Oil and Energy told Reuters.

 “The fact that LNG is brought to the market via such transfers is not a concern for the ministry.”

Thanks to the ship-to-ship transfers off Norway, Yamal is expected to export as much as 11.7 million tonnes of LNG in the next seven months, according to the port hosting its ship-to-ship operations and Reuters calculations.

The ramp-up in output puts the Novatek terminal, in operation for less than a year, in excess of its nameplate capacity, with the Norwegian transfers the only way it can deliver the additional LNG to the market.

Yamal uses Arctic-class LNG tankers to carry the gas through the Barents Sea; these vessels then transfer the cargo to more conventional tankers in Europe, enabling them to return sooner to the facility and pick up more supplies.

Energy Transfer Defends Mariner East 2 NGL Pipe Plan

Energy Transfer LP representatives headed to Pennsylvania’s capital for a hearing before utility regulators to defend the company’s plan to put the Sunoco Mariner East 2 natural gas liquids pipe into service by year end.

Energy Transfer wants to temporarily connect an existing 1930s-era 12-inch (30.5 centimeter) pipe to the parts of its long-delayed 20-inch Mariner East 2 pipeline that it has already completed so it can start transporting liquids for customers.

Those customers have been waiting for more than a year to ship liquids on Mariner East 2. When Energy Transfer first started working on the $2.5 billion project in February 2017, it had planned to put the 350-mile (563-kilometer) pipe into service in the third quarter of 2017.

Mariner East 2 and another Energy Transfer project, the Rover natural gas pipe from Ohio to Michigan, were delayed over the past year in part because the projects together racked up more than 800 state and federal permit violations while the company raced to build them.

Those opposed to Energy Transfer’s plans for Mariner East 2 asked the Pennsylvania Public Utility Commission (PUC) to stop construction on Mariner East 2 and also stop the company from transporting liquids on the existing Mariner East 1 pipeline.

The administrative law judge at the PUC scheduled to hear the case is Elizabeth Barnes, the same judge who heard a case earlier this year that sought to stop the Mariner East project.

In that case, Judge Barnes ordered Energy Transfer to stop transporting gas on Mariner East 1 and stop work on Mariner East 2 in West Whiteland Township after sinkholes were discovered near the pipeline.

In the latest case, seven residents of Delaware and Chester Counties in southeast Pennsylvania argued Energy Transfer did “not provide adequate notice of procedures sufficient to ensure the safety of the public in the event of a leak or rupture.”

In response, Energy Transfer spokeswoman Lisa Dillinger said in an email “We do not believe the claim is valid...The integrity of our Mariner East 1 and 2 pipelines has been verified in the last few months” by state and federal regulators.

Mariner East transports liquids from the Marcellus and Utica shale fields in western Pennsylvania to customers in the state and elsewhere, including international exports from Energy Transfer’s Marcus Hook complex near Philadelphia.

LNG Canada Gets Another Buyer

LNG Canada, the $30 billion liquefied natural gas (LNG) export project, has bagged another client after project shareholder Petronas signed an initial sales deal with trading house Vitol.

Royal Dutch Shell decided in October to construct the export terminal. It was the first major investment decision in a new North American LNG export project for two years and was expected to launch a new wave of such projects in the region.

Petronas, the Malaysian oil and gas company that bought a 25 percent stake in the project in May, will supply Vitol with 0.8 million tonnes per year (mtpa) of LNG starting from 2024 for 15 years, Vitol said in a statement.

 “The primary supply to Vitol will come from LNG Canada as well as from (Petronas’) other global LNG supply portfolio,” Vitol said.

Vitol joins Asian utilities Tokyo Gas, Toho Gas and Korea Gas Corp (Kogas) as buyers, committing to offtake around 2.4 mtpa collectively.

Such long-term agreements normally underpin project finance and are critical before a final investment decision is taken.

But because Shell and partners Petronas, PetroChina, Mitsubishi and Kogas are such large players in the LNG market, they can absorb the output into their global portfolios without needing to find significant other buyers.

Under previously announced deals, Toho Gas will buy 0.3 mtpa, Tokyo Gas 0.6 mtpa and Kogas 0.7 mtpa from LNG Canada.

Basra Gas Co Output to Increase 17%

Output from Iraq’s Basra Gas Company (BGC) is expected to reach 1,050 million standard cubic feet per day (mcf/d) by the end of 2018, an increase of 150 million mcf/d from current levels, the oil ministry said in a statement. Iraq’s gas development plans have long focused on BGC, a $17 billion joint venture between Royal Dutch Shell, state-run South Gas Company and Mitsubishi.

The Basra gas project is seeking to reach a targeted level of capturing and processing 2,000 mcf/d, the statement said.

The project was designed to aggregate gas from fields in the south including West Qurna 1, operated by Exxon Mobil Corp , Zubair, operated by Italy’s Eni, and Rumaila, developed by BP.

To boost power generation, a deal has been reached with the electricity ministry to allow General Electric and Siemens to install liquefied natural gas-operated mobile power units at some small southern fields, Iraq’s deputy oil minister told the al-Sabah state newspaper.

The mobile power units will help Iraq process gas from small fields that could reach up to 15 (mcf/d) to feed the country’s power grid, Hamid al-Zobaie said.

In October 21, Iraq signed agreements with General Electric and Siemens to develop the country’s power infrastructure.

Zobaie did not elaborate on when the work could start to install the mobile power units or give any details on the small southern fields.

Iraq relies heavily on Iranian gas to feed its power stations.

The United States said earlier this month that Iraq can continue to import natural gas and energy supplies from Iran for a period of 45 days, as long as Iraq does not pay Iran in U.S. dollars. U.S. sanctions on Tehran’s oil sector took effect on Nov. 5.

Iraqi government officials said last month it will not be possible to stop imports of Iranian gas for now and the government needed more time to find an alternative source.

“The mobile power units will help cut Iranian electricity imports but not to stop it. Iraq will remain dependent on Iranian electricity for at least two more years,” said a senior government official and a member of Iraq’s ministerial energy committee.

Rosneft to Supply 2.4mt/y Oil to ChemChina

Russian oil giant Rosneft said it had signed a contract with China National Chemical Corp (ChemChina) to supply up to 2.4 million tonnes of ESPO blend crude oil ESPO-DUB via Russia’s Pacific port of Kozmino in one year.

The deal allows Rosneft to increase crude oil supplies to a strategically important market, the Russian company said in press release.

Supplies under the new contract are most likely to start in February as Rosneft allocated all its January volumes of ESPO Blend to China’s CEFC, two trading sources told Reuters.

Chemchina didn’t immediately respond to a Reuters request for a comment, sent after normal business hours in Beijing.

Chemchina has been a term buyer of Rosneft ESPO Blend crude oil since 2015, purchasing 1.2 million tonnes to 2.4 million tonnes per year under annual contracts.

The latest supply contract between Rosneft and Chemchina ended in mid-2018 and the companies paused ESPO Blend crude oil supplies for half a year to renegotiate the terms, three industry sources told Reuters.

One of the sources said Rosneft was not sure if it had enough ESPO Blend volumes to fulfil all its term agreements on the grade supplies to the end of 2018, due to capped production under an OPEC agreement and an increase in ESPO supplies to China via the pipeline.

Rosneft increased pipeline supplies of ESPO Blend to China’s Petrochina in July this year.

Rosneft will stop supplying Petrochina with seaborne crude oil cargoes of ESPO Blend ex-Kozmino port in January 2019, according to the quarterly export schedule for exports from Kozmino, which gives Rosneft spare volume to renew supplies to Chemchina, Reuters sources said.

Rosneft agreed to supply Petrochina with 1.7 million tonnes of ESPO Blend loading from Kozmino port in 2018.

In 2018, Rosneft supplied most of its ESPO Blend crude oil cargoes to China’s CEFC.

Refinery Overhaul Done by Iran Technicians

Imam Khomeini Oil Refining Company (IKORCO), located in Markazi Province, has been overhauled three times since the beginning of Iranian current calendar year in March; one overhaul in spring and two overhauls in autumn.

One of the most significant sections of the refinery in the overhaul process is the RCD unit which processes distillation tower residues. For the first time in Iran, residual hydrogen treatment unit with a capacity of 69,000 b/d has been designed and built with a view to reducing the sulfur content of distillation towers. This unit will prepare the necessary ground for converting heavy fuel oil to gasoline and lighter products. This unit has two sections, each of which can operate independently for treatment. Each section is incorporated with five reactors creating 385 degrees Celsius and 200 Bar pressure – which is the highest functioning pressure in refining units in the world – for the elimination of sulfur from heavy residues.

With 1,600 tonnes of catalyst, this unit is the largest hydrogen treatment unit in Iran. The main product of this unit is refined heavy residue to feed the residue fluid catalytic cracking (RFCC) unit. Diesel and naphtha are byproducts. Due to the significance of functioning of this unit, the overhaul of each section is done separately and independently.

Ali-Reza Amin, CEO of IKORCO, said: “Overhaul of ordinary units at refineries is done every three to four years, but in this unit we need overhaul every year because of heavy feedstock and quick inactivation of catalyst. Every year the catalyst is replaced.”

He said that this year’s overhaul was done in three phases. The first phase which occurred at the beginning of Iranian calendar year and lasted nearly one month was focused on five old operational units in Phase 1 of the facility. The second and third phases of overhaul were in units 12, 19 and 33 and an RCD line. This round of overhaul was done in October and November.

He said the next phase of overhaul will be for next spring.

Amin referred to the hiring of local contractors for the overhaul of the refinery, saying: “All phases of overhaul in Unit 14 RCD and Unit 19 sulfur production were handled by local contractors. We can say that 80% of staff (1,600 persons) were active from Markazi Province. Of course, specialist manpower from other parts of the country was engaged, too.”

Outlining Unit 19 (sulfur production), he said: “IKORCO has two sulfur production units. Gaseous hydrogen sulfide (obtained from amine treatment of gas) as well as the output gases of the sour water unit are feedstock for this unit where sulfur is produced by applying the Claus process.”

“The feedstock for this unit is first exposed to thermal treatment in a special furnace at over 1,100 degrees Celsius. Then, it is converted to melted sulfur in a two-phase reactor to be finally solidified and supplied on the market,” he added.

Amin said Unit No. 1 is producing 60 tonnes a day and Unit No. 2 is supplying 640 tonnes a day of sulfur with 99.5% purity in the form of granule and powder.

The refinery was launched in 1993 as the largest single-unit refining unit in Iran with a rated capacity of 150,000 b/d, which was boosted to 175,000 b/d after technical modification.

It is the first refinery in Iran, whose related studies were conducted following the 1979 Islamic Revolution amid Iraq-Iran war.

“With a view to maximizing gasoline production, reducing fuel oil output and generating value added, IKORCO teamed up with two Iranian companies – Sazeh and ODCC – and Chinese SEI to continue its work,” he said.

Amin added: “Despite all shortages and pressure due to international restrictions, thanks to God and in light of efforts by Iranian specialists this project was completed and came on-stream in February 2013.”

The startup of new units at the refinery by Iranian engineers and manpower under conditions of sanctions, in the absence of specialists and representatives of licensors, IKORCO has become the most specialized and the biggest refinery producing Euro-4 clean gasoline and gasoil by processing 250,000 b/d of crude oil.

The refinery is currently supplying such products as Euro-4 gasoline, gasoil, kerosene, light fuel oil, vacuum bottom, propylene, liquefied petroleum gas and sulfur granule.

Risk Assessment before Overhaul

During overhaul, the operational unit’s conditions are no longer normal, and therefore risks are totally different from normal conditions. Under such circumstances, different repair groups become active and each group is likely to cause risk to another one. Therefore, it would be of high significance to learn about risks and comply with safety regulations in order to prevent accidents.

Mohammad Sepehri Rad, head of maintenance at IKORKO, said: “First of all, safety courses are held for all staff who join the refinery for overhaul. Even during the process, a safety engineer is available to control safety conditions at each section. Since before overhaul, all possible risks are assessed and identified the contractors receive necessary training.”

He went on to speak about Units 12, 14 and 19, where overhaul has already been done.

“Unit 12 is a gasoline production unit whose overhaul was done this autumn. It accounts for one-fourth of gasoline production in the country. The overhaul process lasted 19 days,” he said.

Sepehri Rad said the RCD unit was overhauled in two phases, which involved Train B reactors and equipment.

Equipment and devices were repaired in 17 days, while reactors of Train B were unloaded and loaded during 28 days. Unit 19 of Train A was overhauled in 17 days.

Sepehri Rad said the RCD unit is a newly established unit in Phase 2 of IKORKO, which is tasked with treating the residue of atmospheric and vacuum residues for feedstock at RFCC. At RFCC, residual metals and sulfur are absorbed. But due to the heavy contents of the feedstock and absorption of metals and sulfur, the catalytic activity of reactors at this section decline gradually. Therefore, in order to preserve the quality of output products, new catalysts have to be incorporated.

“The overhaul in Phase 12 was over this year, and all equipment and devices, (about 202) were repaired. Furthermore, Unit 19, with 18 devices, and RCD with 34 devices were repaired. Unit 14 and Unit 19, which have two parallel trains, are repaired train-to-train in order to avoid any thorough halt in production,” said Sepehri Rad.

Mansouri Oil Field Poised for Technological Change

Field-oriented agreements with universities are the turning point in cooperation between the petroleum industry and universities. That started in 2014 and currently nine operating oil fields are exposed to such cooperation for the purpose of enhanced recovery. Previously, universities were individually involved in industrial projects, but under this agreement, the universities are recognized as an element of research projects.

Under the deal for technological studies on nine oil fields across Iran, South Azadegan was assigned to the Institute of Petroleum Engineering affiliated with the University of Tehran, Darquain was assigned to Amir Kabir University of Technology, Soroush was assigned to Sahand University of Technology, Ahvaz was assigned to the Research Institute of Petroleum Industry, Karanj to Islamic Azad University, Kupal to Sharif University of Technology, Mansouri to the University of Shiraz, Gachsaran to the Petroleum University of Technology and Bibi Hakimieh to the Enhanced Recovery Research Center.

Mehdi Escrochi, director of the Mansouri project at the University of Shiraz, said the agreement for studying the Mansouri oil field was signed between the University of Shiraz and the Ministry of Petroleum in 2014.

"The idea was first developed in the form of EOR consortium after a microbial EOR system was unveiled at the University of Shiraz," he told”Iran Petroleum”.

Escrochi said ever since the agreement was signed, the University of Shiraz and the National Iranian South Oil Company (NISOC), as the party to agreement, started planning for cooperation.

No Frustration with Halts

Escrochi said 19 priorities were defined based on the specifications of the Mansouri field, three of which were selected by the client. Finally, he added, one of them resulted in an agreement.

"Certain measures had been taken, but in 2016 the agreement was revised as approaches changed. Of course this change was not good for us, because it occurred at a time when we had finished the first phase of the project and consequently changes in approach called a halt to our previous work," he added.

Escrochi said: "The sudden change and halt in the agreement and changes in the approaches changed planning and the content of the previous agreement was transferred to the third phase (at least four years later). We were making efforts to boost motivations in the new approach."

"In the new agreement, the scope of authority, details and the value of agreement were not specified and have yet to be specified. That is while more than 16 months has passed since the first agreement was implemented and the first package of the agreement has to be completed" by next March, he added.

"This dilemma is the most significant weakness of the project. Nonetheless, we are happy with the process of work and cooperation on the part of NISOC and we are making efforts to benefit from this national chance in favor of national objectives," he said.

"But we expect other organs involved in the project to seriously and quickly approve the content, and avoid any delay in the conclusion of the project," said Escrochi.

He laid emphasis on the involvement of individuals who firmly believe in research work.

"Our main issue is that a small group of individuals involved in this project make no distinction between research and technological development and their long-term impacts on national economy on one side, and the work of an ordinary reservoir study company on the other," said Escrochi.

"Such sensitivity and attention already exists among senior managers and qualified experts of National Iranian Oil Company (NIOC) and those who strongly believe in this job, but among managers of lower position are there some key officials who restrict the implementation of job. Consequently, creativity, which is the most important ground for the conclusion of research projects, is destroyed due to insistence on old mechanisms of study. That is the case while the culture of technological development must exist on both sides of the contract," he said.

Touching on NISOC's all-out cooperation in the project, Escrochi said: "Our good cooperation started from the very beginning and they provided all necessary data to the University of Shiraz. We have had a common understanding of this project and therefore we can say that only marginal changes in the agreement caused problems for us."

"NISOC has a good impression of the University of Shiraz and such trust is a result of previous communications of knowledge between us," he said. "We've had many joint meetings over this time and the confidential data about the background of the field was provided to us on the first day," he said. "Although there are data shortages and uncertainty, which both sides are well aware of, we know pretty well why and when they had been caused."

"Since the very beginning up to now, NISOC has been informing us of any effective change and action," Escrochi said.

"Such circumstances are a result of mutual understanding between us and they know that our job generates value for them," he added.

No Impact from Management Changes

Escrochi said the University of Shiraz had been subject to major changes ever since the project began.

He said the university has seen three chancellors, three vice-chancellors for research affairs and two project managers.

"These changes have been time-taking and coupled with marginal changes, but fortunately all former chancellors agreed to this project and joint cooperation, and see it as an obligation upon university for the country," he said. 

"The chancellor of the University of Shiraz is directly engaged in the meetings related to the project which is continuing regardless of management changes," he added.

"In addition to the Mansouri oil field, the University of Shiraz has two projects under review; development of technical knowhow for methanol value chain and light naphtha isomerization," he said.

The University of Shiraz, now 70, launched its chemical engineering department in 1964. Iran's first PhD in chemical engineering was graduated from this university.

Research in petroleum engineering started at the university in 1995 when EOR-IOR research group was set up.

"Since 1999, we have had 10 research agreements with different sections of NIOC and that is why our cooperation is 20 years now and we have not been inexperienced," he said.

Escrochi said an agreement had been signed with NISOC to study water coning due oil production.

He noted that the agreements signed with the University of Shiraz were different from others as they involve enhanced oil recovery and improved oil recovery.

"The University of Shiraz considered a separate division for improved recovery. In light of integrated well-oriented and reservoir-oriented studies are expected to produce better results as the bulk of production problems and the low capacity of reservoir production stems from the well problems," he said.

"This project must be carried out in an integrated manner engaging reservoir engineering and operation engineering and NISOC has laid emphasis on this issue. The main focus is on this issue. In the future, an installations-oriented division will be added in the next phases as downstream sector," said Escrochi.

He said the field's identification process has concluded with reasons behind the low recovery rate having been explored.

"We have classified more than 100 wells of this field. The recovery rate in the Bangestan section is about 11% and in the Asmari section stands at 50%. However, our study has yet to reach the stage of recovery rate setting," he said.

But, Escrochi said, "our studies have not yet reached the phase of determining a new recovery rate. But we have to see to what extent the proposals offered would be applicable in terms of operation and financing for NISOC."

He said the Mansouri field could continue producing for long years, stressing the need for maximum efficient recovery.

"In this project, the University of Shiraz is seeking to leave long-term impacts on this field. We have identified similar reservoirs all across the globe and reported them. Based on similar fields, we have conducted screening for EOR," said Escrochi.

Recovery Rate Forecast

Escrochi said five potential methods were envisioned for predicting the rate of recovery from the Mansouri oil field in coming years.

"Some of these proposals have been submitted to be assessed. In case they win approved, we will present the final scope of the project and new projections for recovery" next year, he added.

Escrochi said the Mansouri field's specifications are shared by many other fields in their Bangestan and Asmari reservoirs.

"We can hope that good conditions and progress in the process in the Mansouri field would be of help in similar fields," he added.

"Of course, each field has its own certain conditions and generalizing such results is not reasonable. Each field has its own specific features and a separate process would be needed," said Escrochi.

 4 Technological Products

Escrochi also touched on the financing of the project, saying: "Advance payments have been made to the University of Shiraz for the new approach and at present the University of Shiraz can claim nothing from NIOC."

"In fact, the University of Shiraz has so far delivered four technological products, which are being examined for endorsement at the specialized committee. Four more technological products remain to be delivered," he said.

"The academic team active in this project at the University of Shiraz comprises 29 faculty members, manly from the University of Shiraz staff and young members with interdisciplinary specialties," he said.

He added that experts from the University of Persian Gulf, University of Bushehr, Isfahan University of Technology, Ferdowsi University and Ilam University are cooperating with the University of Shiraz based on needs.

"In the agreement, there is an obligation to hire a foreign partner while at the same time the process of development of technology is under way outside Iran. Universities have good experience of cooperation with neighboring and European nations. Applying such experience could be a value-added for us," said Escrochi.

"Transfer of technology is certainly good, but its advantages are short-term. We have to be able to institutionalize innovation in order to indigenize this technology," he added.

Escrochi expressed hope for the success of the project in light of cooperation on the part of the petroleum industry and the engagement of people with good knowledge of research.

 

10,000 Drilling Items Domestically Manufactured

Khuzestan Province’s tenth exhibition of domestically manufactured petroleum industry and drilling equipment was held November 22-25 in the provincial capital Ahvaz. At this exhibition, 220 Iranian companies showcased their achievements. Nearly 70% of exhibitors were manufacturers of oil equipment and commodities and the rest were knowledge-based companies and suppliers of commodities to petroleum industry.

A major objective pursued in this exhibition was to domestically manufacture basic and essential commodities of petroleum industry. Ahmad Mohammadi, CEO of National Iranian South Oil Company (NISOC), said more than 10,000 essential items of petroleum industry have been domestically manufactured over the 10 years since launching Khuzestan exhibition.

Mohammadi, recently appointed as the CEO of NISOC, said the exhibition has improved its quality each year. He added that manufacturers of petroleum industry equipment and commodities have managed to commercialize most of their products and reach mass production stage.

Referring to US sanctions targeting Iran’s oil sector, he said: “In cooperation with all those involved in the petroleum industry and other sectors, we will be able to skirt around sanctions. Holding such exhibitions would put on display the capabilities of Iranian companies towards self-sufficiency.”

Mohammadi said that drills were among strategic and widely used items in the drilling sector, some of which have so far been domestically manufactured under NISOC support.

He added that NISOC was planning to manufacture all necessary drills.

Referring to the development of domestic manufacturing of petroleum industry equipment, he said: “Development of manufacturing of commodities and indigenization of commodities and equipment needed in the petroleum industry have to be done gradually. However, we have no restrictions with regard to the development of domestic manufacturing of commodities and we even support the manufacturers.”

Client-Manufacturer Cooperation

About 80% of Iran’s crude oil production and 16% of its gas production are handed by NISOC which is based in Khuzestan Province. Proximity to the main oil production zones and close relations with operators and producers always motivate domestic companies to attend the Ahvaz exhibition. Although the annual Iran Oil and Gas show is largely welcomed by petroleum industry actors and a large number of Iranian and foreign companies participate in the annual show, the companies that were present at the Ahvaz exhibition highlighted their close ties with the buyers of their commodities.

During the 10th Ahvaz exhibition, eight domestically manufactured strategic items including lifting valve, seamless line pipes, gas compressor rotor and rock drills were unveiled.

Seamless Line Pipes

Mohammad Reza Mohebi is the manager of an Iranian company producing pipes.

He said until recently seamless pipes were not being manufactured in Iran and “oil companies had to purchase these pipes from European and even Chinese firms.”

Due to the high sulfur content of oil and gas extracted from wells, pipes made of special alloys need to be used in order to prevent the corrosion of pipes.

Despite such needs, Iranian companies had not managed to manufacture seamless line pipes to carry oil and gas.

Finally Luleh Gostar of Esfarayen (LGE) developed seamless line pipes with the thickness ordered by National Iranian Oil Company (NIOC).

“NISOC has expressed its readiness to conduct field tests on these pipes. We are assured that this stage will be passed successfully and we can enter the phase of commercial production,” said Mohebi, CEO of   LGE.

He said Iran’s petroleum industry needed nearly 120,000 tonnes a year of such pipes, adding that his company would be able to manufacture about 100,000 tonnes a year.

Touching on the US sanctions on Iran’s petroleum industry, Mohebi said: “Manufacturing such pipes has been in line with countering petroleum industry sanctions.”

“Under the present circumstances, in light of our potentialities we will be able to meet petroleum industry needs to a large extent,” he added.

Boost in Quality

Petroleum industry equipment manufacturers were very active in the 10th Khuzestan exhibition. Some of them expect the Ministry of Petroleum to offer full support to domestic manufacturing companies; some are worried about the consequences of the sanctions while some others view the sanctions as an opportunity for Iranian companies to prove themselves.

Asked how they felt now that foreign rivals are out of Iran’s market and possible decline in the quality of Iranian-made products, they say Iranian manufacturers of oil equipment have made good progress in recent years.

In their view, many domestically manufactured commodities are of high quality. The Iranian Ministry of Petroleum has been very tough with the quality of equipment and does not authorize any sales of low-quality products made in Iran.

Reza Mohammadnejad, chairman of an Iranian manufacturing company, gave an upbeat assessment of his company’s presence at the Khuzestan exhibition. He said: “Our production pertains to equipment used in storage facilities and columns as well as rotary equipment.”

“We entered this market in 2010 and we have now 30% of the market in our hands,” he added.

Asked about sanctions, he said: “We manufacture parts for the oil industry. We grew during the previous round of sanctions. We won the Petroleum Ministry trust. Now in light of tough sanctions imposed on the petroleum industry we can manufacture the commodities needed by the petroleum industry.”

“Of course we have to acknowledge that sanctions would pose a challenge to the entry of modern technology to Iran. However, we will go ahead definitely although it is difficult,” said Mohammadnejad.

He said that Iran is 20 years ahead in petroleum industry equipment than in other sectors like car manufacturing.

“Of course, Minister Zangeneh’s tough policies with regard to the importation of equipment and commodities have not been ineffective. However, in order to stay in the oil market we have to cooperate with companies that own petroleum industry modern technology,” he said.

Javid Kianfar, whose company started manufacturing valves under a European license, said: “We managed to indigenize the technology for the manufacturing of these valves in two years.”

Valves are among vital equipment in the petroleum industry. Therefore, their manufacturing in the country is of paramount significance for this sector.

The US re-imposed sanctions on Iran’s petroleum industry in early November. Earlier, during the previous round of sanctions imposed in 2010, Iranian manufacturers developed some equipment, which was used in the development of the giant South Pars gas field as well as in jointly owned oil fields in West Karoun.

Most of commodities whose manufacturing was monopolized by foreign companies were produced in Iran after sanctions were imposed on Iran.

International sanctions threaten foreign investment and technology transfer into Iran’s petroleum industry, but in 2010 that empowered Iranian companies to fill the void left in Iran’s lucrative petroleum industry market. The Ministry of Petroleum’s support was also instrumental in this regard.

The new round of US oil sanctions against Iran comes at a time the Ministry of Petroleum sticks with the policy of domestic manufacturing of widely used commodities. A number of manufacturing companies present at the Khuzestan exhibition said some commodities had just recently been manufactured in Iran. That means the Iranian Ministry of Petroleum has realized its objective of empowering domestic manufacturers to rely on upgrading the quality of products and break the monopoly over some equipment regardless of all restrictions imposed on Iran’s petroleum industry under US President Donald Trump.

Oil Age in Iran

All across the world, Iran is known to be a country sitting atop rich oil and gas reserves. Since more than a century ago when oil was discovered, Iran has turned into one of the major players in the industry. That caused Iran myriads problems, but Iran has since been an influential state in the oil market.

Iranians were familiar with oil and gas since ancient time. Archeologists have unearthed artifacts proving that Persians knew bitumen and its use. During the Elamite civilization, famous stamps were made from natural bitumen. Furthermore, bitumen was used for coating boats and coffins, and in the manufacturing of some vessels. These are just examples of use of bitumen, a derivative of oil, in ancient Persia, today known as Iran.

The use of oil, bitumen and gas in the following civilizations and particularly for religious purposes and the use of gas as fuel in ancient fire temples are among signs of the familiarity of ancient Persians with petroleum and its derivatives.

When we add military purposes and take into consideration oil-powered cannon ships of the Persian Army that the paramount significance of oil and its derivatives in ancient Persia and following periods could be realized.

Despite ancient Persians’ familiarity with oil, it was centuries later that Iran and the entire world appreciated the real value of this remarkable fluid.

The West was looking for an alternative to coal in order to speed up trend of its industrial revolution. To that end, it studied various spots in the world. One of them was Iran. British geologist, naturalist, explorer and archaeological excavator William Kennett Loftus visited southwest Iran in the 1800s and published his observations in Europe.

In his article about the geological specifications of Turco-Persian border areas, Loftus spoke about petroleum seeps.

Financial Woes

Petroleum seeps in southwestern Iran date from long time ago. Petroleum seeps are quite common in many areas of the world, and have been exploited by mankind since Paleolithic times. Natural products associated with these seeps include bitumen, pitch, asphalt and tar. In locations where seeps of natural gas are sufficiently large, natural "eternal flames" often persist. The occurrence of surface petroleum was often included in location names that developed; these locations are also associated with early oil and gas exploitation, as well as scientific and technological developments, which have grown into the petroleum industry.

Loftus’s article on petroleum seeps encouraged Western governments to test the likelihood of oil and gas in Iran. The opportunity for that purpose was created during the Qajar era. In 1872, Baron Julius Reuter won the first ever oil concession from the Government of Persia for exploiting mine and reservoirs. But the concession was scrapped very soon under pressure from Russia. One decade later, the Europeans made a fresh try to dominate Iran’s oil. In 1883, Dutch Albert Hutsen won a concession to extract oil in Iran in Dalaki. He had established a company to carry out exploration operations in that area. But no acceptable results were achieved and he had to stop work. His company went bankrupt and he sold it shares.

Reuter once again jumped to the fray in 1889 to explore oil. He established a bank and purchased the shares of Hutsen’s company. Since the only authorized zone for exploration was southern coasts, Reuter focused on Qeshm Island for oil exploration.

A 700-foot well was drilled in Qeshm Island, but no oil was found. After this failure, the exploration operation was halted in 1894. Everyone was frustrated with failed oil exploration operations, ranging from Western investors and economic planners to Qajar court and government officials who were grappling with financial difficulties.

Iran was facing a financial turmoil at that time and the government desperately needed money. The reason for such financial needs was the Qajar king’s luxurious lifestyle.

Two years prior to the time that Reuter stopped his operation in Iran, French archeologist and geologist Jacques de Morgan travelled to Iran and visited Qasr-e Shirin and southwestern Iran. He published his travelogue in a Paris paper, raising the possibility of oil reservoirs in western Iran.

When Antoine Ketabchi (of Georgian or Armenian origin), who was head of Iran’s Customs, was tasked with travelling overseas to find investor for Iran’s oil, he had basic knowledge of the existence of oil in Iran.

Ketabchi was supposed to inaugurate an exhibition in Paris, but his meetings and talks showed that he was looking for someone to invest in Iran’s oil. Ketabchi met with Reuter’s secretary whom he knew during Reuter’s presence in Iran. He also met with de Morgan who was assured oil existed in Iran.

Ketabchi, along with Morgan and de Reuter’s secretary, met with the British ambassador to Paris. The ambassador introduced a millionaire whom he knew quite well. He was William Knox D’Arcy.

D’Arcy was born in England in 1840. He later moved to Australia where he was a lawyer. He was also interested in betting in racing matches.

D’Arcy always took risks. Before coming to Iran, he took the risk of purchasing an abandoned gold mine in Australia. Later on, it was known that the mine was still rich in gold.

Gold mining revenue made D’Arcy a rich man. He returned to London as a millionaire. D’Arcy was looking for a place to invest his money in. He warmly welcomed the offer to come and invest in Iran’s oil.

He first sent his secretary to Iran in March 1901 to study conditions for investment. His meeting with the Shah of Iran came to fruition very soon. Some sources say D’Arcy had bribed some of Shah’s influential associates. The concession was awarded to D’Arcy in the same year for oil exploration. Under the concession, D’Arcy was authorized to explore, recover and export oil from Iran over a 60-year period. The authorized zone for that purpose was 480,000 square miles in southern Iran in a bid not to face opposition from Russia, the northern neighbor.

NIDC Weightlifting Team Seeks New Asian Title

MelliHaffari Company Ahvaz Sports Club is an Iranian multi-sports club affiliated to National Iranian Drilling Company (NIDC) and located in the southwestern city of Ahvaz. The club has been involved in different disciplines including football, futsal, golf and weightlifting, recording success in different matches. The club has shown brilliant performance mainly in weightlifting as it has nominated many national players and turned out to be successful on the national and international arenas. It has also won championship titles in Asia.

MelliHaffari Company Ahvaz (MHCA) came to the limelight in 1997 after competing in national weightlifting championship games. That was when the company started its professional activity in weightlifting.

Investment in local athletes, particularly young sportspeople, has always been a top priority of MHCA. From 2008 to 2018, MHCA weightlifting team in the youth category achieved eight championship titles across the country.

Championship in Rapid Succession

Investing in young weightlifters proved to be fruitful in MHCA Sports Club. After almost ten years, they have turned out to be the absolute champion of weightlifting among Iranian clubs. The first step towards championship was taken in 2007 when the team finished runner-up. But thanks to experience, it won the championship title three years later.

MHCA weightlifters finished runners-up again in 2016 and 2017. Finally in its 21st year of presence in Iran’s weightlifting matches, i.e. in 2018, they again finished runner-up to register a hat-trick in runner-up title.

Nonetheless, this brilliant achievement did not spell an end to MHCA’s presence in Iran’s weightlifting arena. Rather, MHCA weightlifters showed great performance on the international arena, too.

International Titles

MHCA Sports Club is considered among the most honored weightlifting clubs in the Asian continent.Their weightlifters represented Iran in Asian matches on six occasions, and won the championship title five times. They also finished runner-up in one competition.

Gaining championship titles is not bound to adults; rather young weightlifters of MHCA Sports Club also showed brilliant performance in the Asian matches. MHCA Sports Club’s young players claimed the top position in 2007 during the first round of Asian weightlifting championships, youth category, in the Syrian capital Damascus. One year later, they finished runner-up in South Korea.

Furthermore, MHCA Sports Club’s weightlifting team in the adult category finished champion in Uzbekistan in 2009, and in Qatar’s capital Doha in 2013 and 2016. The brilliant performance of MHCA Sports Club was not bound to Asia because the club’s weightlifters won the championship title in the Asian-African competitions in Uzbekistan in 2014.

In the adult category, MHCA Sports Club’s weightlifters finished runner-up again this year. Owing to their remarkable performance, they managed to berth a place in the Asian clubs championship matches.

MHCA Sports Club Weightlifting Coach:

We’re Poised to Show Strong Performance Across Asia

The head coach of MHCA Sports Club’s weightlifting team describes the club as leaders of weightlifting in Iran and in Asia. He cites championship titles on many occasions as proof of the good performance of the club.

FaramarzRamhormozi, whose team managed to finish runner-up this year, gave a positive assessment of the weightlifting premier league matches in the youth and adults category in this season.

“In this round of matches, we participated with 60% of local athletes. Fortunately, we achieved the championship title in the youth category and finished runner-up in the adult category,” he said.

“Definitely, if officials and organizers pay more attention, MHCA’s weightlifting team will prove itself like in previous years and will nominate numerous weightlifters for the national team,” he added.

He said that weightlifting, along with wrestling, has earned Iran the biggest number of Olympic medals.

“Officials and organizers may make more efforts to boost chances of winning medal in Olympic matches and future global competitions,” said Ramhormozi.

Noting that each weightlifter carries 10 tonnes per day, he said that they need to exhaust their forces to be able to show strong performance in the pro league matches.

“MHCA Sports Club has so far shown that it enjoys potential for championship in Asia. Therefore, if we are supported a bit further we will be able to fly the flag of petroleum industry,” said the head coach.

Ramhormozitouched on investment in local youth and children of MHCA staff, saying: “Among MHCA staff’s children and local youth in the province, there are many talented athletes who are highly interested in this discipline.”

“Therefore, by investing in them we have to prepare ourselves for coming years,” he said.

“From the very beginning, this issue has been viewed specifically at MHCA Sports Club and that should continue,” he added.

He said that all efforts made in boosting MHCA Sports Club’s weightlifting status have come to fruition in recent years.

“Therefore, I reiterate that these championship titles and successes are due to investing in youth and valuing them,” said Ramhormozi.

Neyshabour, Land of Turquoise

Neyshabour is the second largest city in Khorasan Razavi Province in northeastern Iran. Many renowned figures including Umar Khayam, Attar, Abu Saeed Abu al-Khair, Abu Bakr Khawrazmi, Abdul Qader Baghdadi and Abu Othman Maghrebi hailed from Neyshabour.

This ancient city has had ups and downs throughout history. In addition to historical monuments, Neyshabour is specifically known for its turquoise stones. Turquoise has long been known as a souvenir of Neyshabour.

In this edition, some tourist attractions of Neyshabour are reviewed.  

Khayyam Tomb

Khayyam’s tomb is a combination of astronomy, geometry and poetry to indicate the skills of Abolfath Umar bin Khayam Neyshabouri. Born in 5th century AH, Khayam gained fame for his expertise in astronomy and mathematics. Although his scientific skills outweigh his literature, he is further known today for his quartets.

Every year, many travel to Neyshabour to visit his tomb. His poems have been translated to foreign languages and have won foreign admirers.  

Haft Ghar Valley

A valley located north of Neyshabour is known as Haft Ghar (in Persian literally meaning seven caves). It refers to seven ravines seen there. After each rainfall, this valley takes a new shape due to its steep and waterfalls take shape in different sizes. The best time for visiting this valley is spring.

The outstanding features of this valley include the red color of soil which gives special effects to the area.

Wooden Village

"Dehkadeh Choubi" or Wooden Village refers to a place located in Mohammad Abad Aqazadeh village near Neyshabour. The village was built by Hamid Mojtaheid (d 2013). It has now become a tourist village in Neyshabour. The name was chosen based on its unique structures made from wood and the application of a modern method in its buildings to indicate the historical and cultural background of the place, as well as geographical and ecological conditions. Sight-seeing sites at this village include a wooden mosque, a museum and library, restaurant, store and bakery, green space, beautiful ecosystem as well as farmlands and animal breeding.

The village is said to be quake-proof.

Turquoise Stone

In addition to being home to science and culture, Neyshabour has won international fame for its precious turquoise. The first turquoise mine is located 53 kilometers northwest of Neyshabour, in a place named Firouzeh (literally meaning turquoise). Every year, 19 tonnes of topnotch turquoise is mined there. Turquoise owes its value and price to its color and smoothness. 

Kamal ul-Mulk Tomb

Next to Attar’s tomb is located the tomb of Mohammad Ghaffari, better known as Kamal ul-Mulk, the renowned Iranian painter and the most influential artist during the Qajar dynasty.

In 1962, a memorial monument was built in Sheikh Attar Garden based on a design presented by Iranian architect Houshang Seyhoun. The memorial place was dedicated to Kamal ul-Mulk.

 

Firoozabad Tower

 

The tower is located 17 kilometers south of the city of Bardeskan and in the village of Firoozabad. It is erected on the ruins of ancient Torshiz gate. Archeological evidence indicates a habitat that existed up to the 7th century AH.

This cylindrical minaret is 18 meters tall. The decorative elements there indicate a specific architecture applied to it. There are two inscriptions written in Kufi. A spiral staircase is also in the edifice.

The architectural evidence attributes the place to Seljukid period.

  

Firoozabad Tower

The tower is located 17 kilometers south of the city of Bardeskan and in the village of Firoozabad. It is erected on the ruins of ancient Torshiz gate. Archeological evidence indicates a habitat that existed up to the 7th century AH.

This cylindrical minaret is 18 meters tall. The decorative elements there indicate a specific architecture applied to it. There are two inscriptions written in Kufi. A spiral staircase is also in the edifice.

The architectural evidence attributes the place to Seljukid period.