Interactive Diplomacy Guarantees Stability

One of the major concerns of oil producers and consumers is market stability. Supply, demand and price constitute the main three pillars of oil market and are determining factors of balance. The three factors are organically involved in oil market stability.

For oil producers, market stability is sufficient demand at reasonable prices that would let them make long-term planning for implementing industrial and social development plans.

For oil consumers, market stability means secure supply at suitable price, based on which they would make planning for industrial and development growth. Furthermore, they expect a stable market to keep factories running while easily meeting social demand for fuel and energy.

Under normal conditions, the market automatically regulates reasonable prices for producers and supply security for consumers based on their mutual needs and it can keep functioning in full stability.

Any social and political tensions in the major production or consumption centers may disturb the balance in the market and lead to instability. The oil market instability in recent years emanated from the US government’s tension-creating and profiteering meddling in the Middle East is a case in point. The latest in date is the US’s unlawful and unilateral imposition of oil sanctions on Iran.

In the run-up to the November re-imposition of US sanctions targeting Iran’s petroleum sector, American officials from President Donald Trump to Congressmen were ranting about the impact of sanctions in a bid to threaten the buyers of Iran’s oil. Nonetheless, this trend slowed down after the US had to grant sanctions waivers to a number of Iran’s oil customers.

This issue was followed by the US failure to prevent an agreement between OPEC and non-OPEC partners for oil production cut from which Iran was exempted. That proved that Iran, which holds the largest hydrocarbon reserves in the world, could not be eliminated from the market and that oil producers will not bow to the US bullying and President Trump’s illogical decisions.

Iran’s oil and gas diplomacy is crystal clear, reasonable and based on the realities of oil market; stability and security for both producers and consumers and guaranteeing development planning with a view to future production stability.

Another pillar of such diplomacy is expanding global interaction and cooperation in favor of global serenity and welfare – something which is apparently incomprehensible for some US politicians.

SP13 Sulfur Recovery Unit Starts Up

The first sulfur recovery unit (SRU) of Phase 13 of South Pars gas field has become operational in order to prevent the burning of acid gas in the refinery flares, manager of SP13 development said.

Payam Motamed said: “The first train of SRU 108 of SP13 refinery became operational owing to round-the-clock efforts by the client and the contractor.”

He added that the unit started work with the delivery of 6 tonnes per hour of acid gas to the furnace.

Noting that SRU is an environmentally significant refinery project in SP13 alongside gas sweetening trains, he said: “Currently, acid gas from the first and the second trains of SP13 refinery is being delivered to SRU 108 at the rate of 25 tonnes per hour and 20% hydrogen sulfide concentration.”

The sulfur recovered from this unit is very instrumental in removing environmental impacts and reducing air pollution.

“With the completion of SRU units at SP13 refinery, sulfur production capacity at this refinery will increase to 400 tonnes a day,” said Motamed.

“Furthermore, with the injection of sour gas from SP6-8 to the third sweetening train of SP13 refinery, the last sweetening train of the refinery of this phase came on-stream,” he added.

Motamed said the remaining three trains – 1st, 2nd and 4th – had already come online. He added that the third train gas at SP13 refinery would be fed into national grid soon.

SP13 development is for the recovery of 56 mcm/d of rich gas from the giant offshore South Pars reservoir. Once fully developed, it will be producing 50 mcm/d of sweet gas, 75,000 b/d of gas condensate, 400 tonnes a day of sulfur as well as 1 mt/y of ethane and 1 mt/y of propane and butane.

Euro-4, Euro-5 Gasoil Output, Distribution Up

The startup of gasoil hydrotreating unit of the Bandar Abbas and Tabriz oil refineries has increased Iran’s Euro-4 and Euro-5 gasoil production by 17 ml/d, a senior official said.

Saeed Madah Moravej, chief production supervisor and coordinator at the National Iranian Oil Refining and Distribution Company (NIORDC), said the gasoil output hike showed 75% increase in national production rate.

“In line with the Petroleum Ministry’s environmental obligations, the gasoil hydrotreating units of the Tabriz and Bandar Abbas oil refineries were launched,” he said.

“With the startup of these units, the sulfur content of gasoil supplied by these refineries has dropped from 10,000 ppm to 50 ppm and in some units from 10,000 ppm to 10 ppm. That represents a big jump in high-quality product supply,” he added.

High-Quality Gasoil Distribution

Mohammad Reza Mousavikhah, CEO of National Iranian Oil Products Distribution Company (NIOPDC), said Euro-4 and Euro-5 gasoil distribution was under way in Iran.

He said the high-quality gasoil distribution was aimed at protecting the environment, as pledged by the Petroleum Ministry.

“Clean air and reduced pollution is the outcome of high-quality gasoil distribution in the country,” he added.

Mousavikhah said the Bandar Abbas oil refinery accounts for 14 ml/d of Euro-4 and Euro-5 gasoil, adding that the product was being distributed in the cities of Bandar Abbas, Chabahar, Bushehr, Kerman and Shiraz.

“3 ml/d of gasoil is produced at the Tabriz refinery for distribution in the provinces of East Azarbaijan, West Azarbaijan, Kurdestan and Ardebil,” he added.

Mousavikhah also referred to Bandar Abbas, Bushehr and Chabahar as the three main ports in Iran, saying: “Euro-4 and Euro-5 gasoil distribution in these three major export ports, which represent a big section of national transportation, is of paramount significance.”

Jump in Urban, Rural Gas Supply

The director of gas supply at National Iranian Gas Company (NIGC) has announced a big jump in gas distribution in cities and villages.

“Gas supply to power plants and industries and financing of related projects are among outstanding measures in recent period,” Saeed Momeni said.

He said 127 cities were connected to the national gas gird over the past five years, adding that the number of villages receiving natural gas had increased from 14,000 to more than 27,000.

Momeni said since 2014, 10 villages had been connected to gas grid per business day.

“In the current Iranian calendar year, NIGC was faced with very special conditions in terms of financing. Fortunately, we have been through,” he added.

Momeni said except for one power plant, all other power plants in the country were running on natural gas, citing economic benefits of gas supply to the power plants.

Ultra Heavy Drilling Mud Made in Iran

Iranian drilling engineers at National Iranian South Oil Company (NISOC) have managed to build ultra heavy drilling fluid for the first time in the country, NISOC CEO Ahmad Mohammadi said.

“Due to unconventionally high pressure in one of wells at the Bibi Hakimieh field, numerous approaches were looked into for well inhibition and finally ultra heavy drilling fluid weighing 174 pcf was developed,” he said.

“The heaviest available mud weighs 164 pcf, and we had to inject a far heavier mud in order to tolerate the well’s 2,400 psi pressure and prevent blowout,” he added.

Mohammadi said the weight of drilling mud needs to be calculated with prevision to not penetrate the formation besides preventing blowout.

He said the 174 pcf mud built in Iran was sufficient to overcome well currents.

Mohammadi said the drilling mud was an achievement recorded at the Office of Deputy NISOC for Drilling.

“We are now ready to share the knowhow for building and injecting this ultra heavy drilling mud with other Iranian and foreign companies drilling high-pressure reservoirs,” he added.

Mohammad Reza Pasand, director of NISOC drilling training affairs, said blowout prevention was possible by Iranian technicians.

He said a 50-day well control training program was to start based on standards of International Well Control Forum (IWCF).

“Under this program, 12 staff from the Department of Drilling Engineering and Operations will learn necessary skills to indigenize well blowout prevention,” said Pasand.

“The main issues taught during the training period would be general information, blowout control, well pressure equations, phasic well control, auxiliary equipment, well control and kill forms, well blowout challenges, operating drilling systems, drilling by changing parameters and operating simulators,” he added.

35 Wells to Produce at South Azadegan

A total of 35 wells are to start production at the South Azadegan oil field by February, CEO of Petroleum Engineering and Development Company (PEDEC) Touraj Dehqani said.

He added that PEDEC planned to launch a mobile processing unit in the field which Iran shares with Iraq.

“Building a mobile processing unit for the first time in Iran is among important development measures at the South Azadegan oil field. This project is being installed by a foreign company to come online in coming months,” he said.

Dehqani said the startup of mobile processing facility and the completion of new wells would add about 50,000 b/d of oil to the South Azadegan oil field. He expressed hope the production capacity would reach 150,000 b/d.

He also said that PEDEC brought production at South Azadegan from 30,000 b/d to nearly 100,000 b/d after the completion of 50 new wells.

Dehqani said development of the South Azadegan oil field was one of the biggest oil development projects in Iran, which was financed domestically. The remarkable progress in drilling operations by Iranian contractors is among the main achievements of operation in South Azadegan, he said.

Dehqani said two oil and gas separators were close to coming online soon.

He said National Iranian Oil Company (NIOC) was determined to enhance recovery from South Azadegan.

“To that end, significant measures have been undertaken, which are not limited to the mobile processing unit. For instance, in order to support domestic manufacturing and engaging domestic manufacturers, orders placed for purchasing commodities which could be manufactured in the country were cancelled,” said Dehqani.

“PEDEC is seriously supporting the policy of maximum engagement of domestic potential,” he said.

$8.5bn Petchem Projects Under Way

CEO of Persian Gulf Petrochemical Industries Company (PGPIC) said nine petrochemical projects worth $8.5 billion were under way in Iran.

Jafar Rabiei named them as Bid Boland refinery, NGL 3200, Hengam, Apadanda, Gachsaran, Sadaf, Lordegan and Ilam.

In a meeting with CEO of National Petrochemical Company (NPC) Behzad Mohammadi, Rabiei said PGPIC was the largest holding in Iran.

He said PGPIC was ranked the second in Iran in terms of selling index, noting it was the first exporter of non-oil products in the country.

He said PGPIC output totaled 24 mt/y. “The company’s output crossed 20 mt for the first time in 2017. The holding’s subsidiaries account for 37% of Iran’s total petrochemical output.”

Rabiei said PGPIC accounted for 41% of Iran’s total petrochemical exports, adding that the holding’s exports reached 8.5 mt in 2017.

Explaining about one of PGPIC projects, he said: “Under the aegis of cooperation between petrochemical and oil sectors, operations have recently begun for gathering flare gas in southern oil-rich areas.”

“Preliminary studies have been completed for the project and I hope that we will be able to fulfil our obligations for ending the burning of flare gas in two to three years,” he added.

Rabiei said PGPIC’s global ranking was indicative of the success and influence of this company in the region and the world.

“PGPIC’s exports are exclusively handled by the Petrochemical Industry Commercial Company. Fortunately, we are working in a coordinated and centralized manner with regard to exports at PGPIC and its subsidiaries,” he added.

Rabiei said PGPIC and its four subsidiaries: Petrol, Mobin, Fajr and Pars were in the list of the Iran Mercantile Exchange. He said they made up 13% of IRMEX stocks.

“The exchange is very tumultuous, but we have offered reasonable support to our stockholders,” he said.

Ilam Gas Refinery Saves $1mn

The Ilam gas refinery has saved $1 million a year after switching to domestically manufactured commodities, the refinery’s manager said.

Shahryar Daripour, CEO of Ilam Gas Refining Company, said 10 projects were under way to support domestic manufacturers and domestic products.

He said the projects included a cooling unit to overcome the temperature challenge in gas recovery units, launching filter and heater system on gas and condensate injection, revising and updating risk studies and equalizing safety levels, reviving used chemicals, supply of necessary chemicals with the help of domestic producers, building storage facilities for used amine and utilities, building wastewater recycling unit, studying aluminum transducers, enhancing the output of air coolers and reconsidering the fire extinguishing system.

“The company is making efforts to procure its necessary commodities from domestic suppliers without dependence on foreign countries. That will help us save $600,000 by next March”, said Daripour.

He said that the 10 projects would also help reduce maintenance costs and fully eliminate environmental pollutants caused by industrial wastes.

“With the completion of these projects, useful results will be achieved. In addition to sustained production and increased output, it will contribute to upgrading the safety level of processing facilities,” he added.

13 Petchem Commercialization Deals Struck

Petrochemical Research and Technology Company (PRTC) has signed 13 contracts with Iran’s petrochemical industry for commercialization of petrochemical products, CEO of PRTC Ali Pajouhan said.

He added that the commercialization agreements included “contracts for producing catalysts, chemical agreements and processing agreements.”

Pajouhan reaffirmed National Petrochemical Company (NPC)’s support for domestic production, saying: “PRTC’s technical achievements have become much more practical and technologies have become more mature.”

He said that it was unreasonable to expect quick income generation after knowhow is provided to the industry.

Referring to the high potential of human resources at PRTC, Pajouhan said: “Starting up plants and supplying products would increase creativity and motivation in PRTC researchers.”

He said that PRTC was serving as the link connecting the industrial sector with universities, adding that the industry partly owed its knowhow to cooperating with universities.

He said five catalyst production plants were under construction, adding that all five plants would become operational over two years.

“The necessary investment for building these units will be provided by the private sector,” said Pajouhan.

He also touched on PRTC’s activities in petrochemical processing, saying: “For instance, this company is working on the demo plant of polypropylene process and we hope that it would be commercialized next [calendar] year.”

MOU Signed for Gas Field Development

A memorandum of understanding has been signed for the development of the Toos gas field.

The MOU was signed between the Iranian Central Oil Fields Company (ICOFC) and Petropars for the development of the Mozdouran reservoir, as well as appraising the Kashfroud and Shourijeh formations in Toos.  

Ramin Hatami, CEO of ICOFC, said the MOU would be in effect for three months. “In light of Petropars capabilities and background, we expect this feasibility study project to have been done on time,” he said.

Referring to the significant role of gas field development in economic prosperity in the country, Hatami said: “Development and operation of the Toos gas field will result in the economic prosperity of the region and sustainable energy supply to north and northeast Iran.”

He highlighted the strategic location of the Khangiran operational zone and the East Oil and Gas Production Company, saying such location would require  paying due attention to projects. 

Located 100 kilometers northeast of Mashhad and south of the Khangiran and Gonbadli fields, Toos was discovered in 2009. So far, an exploration well has been drilled in the field.

Petchem Sector Open to Private Investment

National Petrochemical Company (NPC) is ready to facilitate private sector investment in order to reduce risks, the director of NPC investment division said.

“The private sector, particularly small and medium-sized companies in Europe and some big Asian companies would like NPC to have a big share in petrochemical industry investments due to its governing role,” Hossein Alimorad said.

He said NPC was legally barred from investment, noting that investment was authorized only in specific cases.

“NPC believes that the private sector is mature enough to take steps for managing investment risks and partnership with foreign companies under NPC support,” he added.  

“The government prefers a bigger share in investment for the private sector. However, it may seem that using domestic potential and technical savvy would pose big risks to the private sector,” said Alimorad. “Therefore, NPC can emerge as a supporter in the process of investment and application of domestic potential and technical savvy.”

“For instance, to reduce investment risks in a specific project by using domestic technical knowhow, it can support an investor’s contract with Petrochemical Research and Technology Company (PRTC),” he said.

“In support of resilient economy and domestic manufacturing, I hope that NPC would be able to support investment in such projects in line with state laws,” said Alimorad.

“I believe that NPC’s contribution to the process of investment in this industry will help its development, and will accelerate manufacturing and production,” he said.

Alimorad said a number of foreign companies were considering investment projects in Iran in light of international developments.

He said the European Union’s mechanism of Special Purpose Vehicle (SPV) would facilitate investment not only in the oil sector but also in the petrochemical sector by small and medium-sized European companies.

High-Quality Gasoil Distribution

Mohammad Reza Mousavikhah, CEO of National Iranian Oil Products Distribution Company (NIOPDC), said Euro-4 and Euro-5 gasoil distribution was under way in Iran.

He said the high-quality gasoil distribution was aimed at protecting the environment, as pledged by the Petroleum Ministry.

“Clean air and reduced pollution is the outcome of high-quality gasoil distribution in the country,” he added.

Mousavikhah said the Bandar Abbas oil refinery accounts for 14 ml/d of Euro-4 and Euro-5 gasoil, adding that the product was being distributed in the cities of Bandar Abbas, Chabahar, Bushehr, Kerman and Shiraz.

“3 ml/d of gasoil is produced at the Tabriz refinery for distribution in the provinces of East Azarbaijan, West Azarbaijan, Kurdestan and Ardebil,” he added.

Mousavikhah also referred to Bandar Abbas, Bushehr and Chabahar as the three main ports in Iran, saying: “Euro-4 and Euro-5 gasoil distribution in these three major export ports, which represent a big section of national transportation, is of paramount significance.”

Jump in Urban, Rural Gas Supply

The director of gas supply at National Iranian Gas Company (NIGC) has announced a big jump in gas distribution in cities and villages.

“Gas supply to power plants and industries and financing of related projects are among outstanding measures in recent period,” Saeed Momeni said.

He said 127 cities were connected to the national gas gird over the past five years, adding that the number of villages receiving natural gas had increased from 14,000 to more than 27,000.

Momeni said since 2014, 10 villages had been connected to gas grid per business day.

“In the current Iranian calendar year, NIGC was faced with very special conditions in terms of financing. Fortunately, we have been through,” he added.

Momeni said except for one power plant, all other power plants in the country were running on natural gas, citing economic benefits of gas supply to the power plants.

Ultra Heavy Drilling Mud Made in Iran

Iranian drilling engineers at National Iranian South Oil Company (NISOC) have managed to build ultra heavy drilling fluid for the first time in the country, NISOC CEO Ahmad Mohammadi said.

“Due to unconventionally high pressure in one of wells at the Bibi Hakimieh field, numerous approaches were looked into for well inhibition and finally ultra heavy drilling fluid weighing 174 pcf was developed,” he said.

“The heaviest available mud weighs 164 pcf, and we had to inject a far heavier mud in order to tolerate the well’s 2,400 psi pressure and prevent blowout,” he added.

Mohammadi said the weight of drilling mud needs to be calculated with prevision to not penetrate the formation besides preventing blowout.

He said the 174 pcf mud built in Iran was sufficient to overcome well currents.

Mohammadi said the drilling mud was an achievement recorded at the Office of Deputy NISOC for Drilling.

“We are now ready to share the knowhow for building and injecting this ultra heavy drilling mud with other Iranian and foreign companies drilling high-pressure reservoirs,” he added.

Mohammad Reza Pasand, director of NISOC drilling training affairs, said blowout prevention was possible by Iranian technicians.

He said a 50-day well control training program was to start based on standards of International Well Control Forum (IWCF).

“Under this program, 12 staff from the Department of Drilling Engineering and Operations will learn necessary skills to indigenize well blowout prevention,” said Pasand.

“The main issues taught during the training period would be general information, blowout control, well pressure equations, phasic well control, auxiliary equipment, well control and kill forms, well blowout challenges, operating drilling systems, drilling by changing parameters and operating simulators,” he added.

35 Wells to Produce at South Azadegan

A total of 35 wells are to start production at the South Azadegan oil field by February, CEO of Petroleum Engineering and Development Company (PEDEC) Touraj Dehqani said.

He added that PEDEC planned to launch a mobile processing unit in the field which Iran shares with Iraq.

“Building a mobile processing unit for the first time in Iran is among important development measures at the South Azadegan oil field. This project is being installed by a foreign company to come online in coming months,” he said.

Dehqani said the startup of mobile processing facility and the completion of new wells would add about 50,000 b/d of oil to the South Azadegan oil field. He expressed hope the production capacity would reach 150,000 b/d.

He also said that PEDEC brought production at South Azadegan from 30,000 b/d to nearly 100,000 b/d after the completion of 50 new wells.

Dehqani said development of the South Azadegan oil field was one of the biggest oil development projects in Iran, which was financed domestically. The remarkable progress in drilling operations by Iranian contractors is among the main achievements of operation in South Azadegan, he said.

Dehqani said two oil and gas separators were close to coming online soon.

He said National Iranian Oil Company (NIOC) was determined to enhance recovery from South Azadegan.

“To that end, significant measures have been undertaken, which are not limited to the mobile processing unit. For instance, in order to support domestic manufacturing and engaging domestic manufacturers, orders placed for purchasing commodities which could be manufactured in the country were cancelled,” said Dehqani.

“PEDEC is seriously supporting the policy of maximum engagement of domestic potential,” he said.

$8.5bn Petchem Projects Under Way

CEO of Persian Gulf Petrochemical Industries Company (PGPIC) said nine petrochemical projects worth $8.5 billion were under way in Iran.

Jafar Rabiei named them as Bid Boland refinery, NGL 3200, Hengam, Apadanda, Gachsaran, Sadaf, Lordegan and Ilam.

In a meeting with CEO of National Petrochemical Company (NPC) Behzad Mohammadi, Rabiei said PGPIC was the largest holding in Iran.

He said PGPIC was ranked the second in Iran in terms of selling index, noting it was the first exporter of non-oil products in the country.

He said PGPIC output totaled 24 mt/y. “The company’s output crossed 20 mt for the first time in 2017. The holding’s subsidiaries account for 37% of Iran’s total petrochemical output.”

Rabiei said PGPIC accounted for 41% of Iran’s total petrochemical exports, adding that the holding’s exports reached 8.5 mt in 2017.

Explaining about one of PGPIC projects, he said: “Under the aegis of cooperation between petrochemical and oil sectors, operations have recently begun for gathering flare gas in southern oil-rich areas.”

“Preliminary studies have been completed for the project and I hope that we will be able to fulfil our obligations for ending the burning of flare gas in two to three years,” he added.

Rabiei said PGPIC’s global ranking was indicative of the success and influence of this company in the region and the world.

“PGPIC’s exports are exclusively handled by the Petrochemical Industry Commercial Company. Fortunately, we are working in a coordinated and centralized manner with regard to exports at PGPIC and its subsidiaries,” he added.

Rabiei said PGPIC and its four subsidiaries: Petrol, Mobin, Fajr and Pars were in the list of the Iran Mercantile Exchange. He said they made up 13% of IRMEX stocks.

“The exchange is very tumultuous, but we have offered reasonable support to our stockholders,” he said.

Ilam Gas Refinery Savs $1mn

The Ilam gas refinery has saved $1 million a year after switching to domestically manufactured commodities, the refinery’s manager said.

Shahryar Daripour, CEO of Ilam Gas Refining Company, said 10 projects were under way to support domestic manufacturers and domestic products.

He said the projects included a cooling unit to overcome the temperature challenge in gas recovery units, launching filter and heater system on gas and condensate injection, revising and updating risk studies and equalizing safety levels, reviving used chemicals, supply of necessary chemicals with the help of domestic producers, building storage facilities for used amine and utilities, building wastewater recycling unit, studying aluminum transducers, enhancing the output of air coolers and reconsidering the fire extinguishing system.

“The company is making efforts to procure its necessary commodities from domestic suppliers without dependence on foreign countries. That will help us save $600,000 by next March”, said Daripour.

He said that the 10 projects would also help reduce maintenance costs and fully eliminate environmental pollutants caused by industrial wastes.

“With the completion of these projects, useful results will be achieved. In addition to sustained production and increased output, it will contribute to upgrading the safety level of processing facilities,” he added.

13 Petchem Commercialization Deals Struck

Petrochemical Research and Technology Company (PRTC) has signed 13 contracts with Iran’s petrochemical industry for commercialization of petrochemical products, CEO of PRTC Ali Pajouhan said.

He added that the commercialization agreements included “contracts for producing catalysts, chemical agreements and processing agreements.”

Pajouhan reaffirmed National Petrochemical Company (NPC)’s support for domestic production, saying: “PRTC’s technical achievements have become much more practical and technologies have become more mature.”

He said that it was unreasonable to expect quick income generation after knowhow is provided to the industry.

Referring to the high potential of human resources at PRTC, Pajouhan said: “Starting up plants and supplying products would increase creativity and

More Potential Buyers for Iran Oil

Iran’s deputy minister of petroleum for international affairs and commerce, Amir-Hossein Zamani-Nia, has said the number of potential buyers of Iran’s oil has increased despite US threats of sanctions.

“Regardless of US pressure, the number of potential buyers of Iran’s oil has increased due to the competitive nature of the market and growing cupidity for more profitability,” he said.

Zamani-Nia, however, said the countries that recently received sanctions waiver from the US would not buy even an extra one barrel of oil from Iran.

He did not deny the adverse impact of US sanctions on Iran’s petroleum industry and on the livelihood of Iranians, either.

US President Donald Trump pulled out of Iran’s historic nuclear deal with six world powers last May. The agreement, formally known as the Joint Comprehensive Plan of Action (JCPOA), was signed between Iran and the world powers in July 2015 after nearly 12 years of intensive talks. International analysts described the JCPOA as one of the best agreements over recent years.

Except for Saudi Arabia and Zionist Regime, each and every other country in the world condemned Trump’s exit from JCPOA.

After the withdrawal, the US re-imposed sanctions that had been previously lifted under the JCPOA. The sanctions targeting Iran’s petroleum sector were re-enforced in August.

Iran’s crude oil exports hit a record 2.617 mb/d in April, just before Trump ordered withdrawal from the JCPOA.

Zamani-Nia said the Iranian Ministry of Petroleum had mobilized all its forces to blunt the impact of US sanctions on the country’s oil sector.

“Selling oil is currently the top priority of the Ministry of Petroleum so that Iran’s oil market share, which was regained after the JCPOA, would not be lost but be safeguarded,” he added.

He said the objective was to maximize oil sales in order to serve the country.

“Under four decades of embargo [since the 1979 Islamic Revolution], National Iranian Oil Company has managed to work out creative mechanisms for selling oil, but the US financial pressure and clout is such that China, India, South Korea and all other countries which the US granted waivers to buy oil from Iran, would not even buy an additional one barrel of oil from Iran,” he added.

Zamani-Nia drew a parallel between US unilateral sanctions on Iran and growing corruption, trafficking and money laundering in the international oil market.

The JCPOA went into effect in January 2016, but the P5+1 group had from the very beginning dragged its feet on facilitating Iran’s trade with the world. P5+1 includes the US, France, Britain, China and Russia (the five permanent members of UN Security Council) plus Germany.

Trump Sinking US Policy

French President Emmanuel Macron, British Prime Minister Theresa May and German Chancellor Angela Merkel joined the Russian and Chinese leaders and the European Union foreign policy chief Federica Mogherini to condemn Trump’s withdrawal and express their firm support for the JCPOA.

The firm position adopted by the P4+1, the EU and the world was expected to alleviate pressure on Iran, but it did not happen in practice.

“Politicians from across the globe, except for Saudi Arabia and Zionist Regime, condemned the return of sanctions and reaffirmed Iran’s political behavior. They have also expressed concerns over President Trump’s non-diplomatic policy. However, it must be noted that international firms run by the private sector do not follow their politicians,” explained Zamani-Nia.

He said it was normal for foreign companies to work for maximum profitability.

Referring to the Special Purpose Vehicle (SPV), designed by the EU to facilitate trade with Iran, he said: “This executive mechanism will be triggered and will be helpful, but it will not resolve the problem entirely.”

“In fact, every action the Europeans intend to do will be faced the US influence,” said Zamani-Nia.

“Europe’s frustration in tackling the US unilateral sanctions on Iran has resulted in profound awareness within Europe and raised expectations for Europe to not remain the US’s political and economic hostage,” he added.

“Such awareness will change the quality of Europe-US relations and the US politico-economic clout within Europe and everywhere else in the world will gradually decline,” he said.

The EU is continuing to endorse implementation of the JCPOA, providing Iran with support to fulfill its nuclear-related obligations. The EU is also committed to ensuring that EU-Iran trade and economic relations continue to benefit from the positive impact of lifting the sanctions. The EU has already introduced

measures to alleviate the effects of US sanctions on European firms, and has announced the creation of a new mechanism, SPV, to facilitate financial transactions with Iran.

Analysts are split on the SPV effectiveness. Some dismiss it as a symbolic gesture which would have no effect, but some others say it would be a beginning for Europe to end its dependence on the US financial system.   

Pakistan Determined to Get Iran Gas

In the wake of the US withdrawal from the JCPOA and President Trump’s threat to penalize companies doing business with Iran, many companies put their negotiations or business on hold.

However, Iran kept making efforts. Iran’s Petroleum Ministry follows up on oil and gas talks. One of these projects is Iran’s gas exports to Pakistan, which have been delayed for years due to the US sanctions.

Zamani-Nia said the new Pakistani government has expressed its political will to broaden its economic ties with Iran and is following up on the gas project.

“To that end, Pakistan has established two (financing and sanctions) committees to facilitate the process of Iran’s gas exports to Pakistan. The findings of the committee’s ongoing studies are expected to end in a meeting between Iranian and Pakistani petroleum ministers in coming months to lead to the materialization of the agreement,” he added.

Zamani-Nia said it was more profitable for Pakistan to receive gas from Iran than from any other nation.

“The legal aspects of this agreement will be definitely discussed if the petroleum ministers of the two nations meet,” he said.

In 1990, a “peace” gas pipeline was planned to be built connecting Iran to Pakistan and India. It was expected to promote peace and friendship in the Indian subcontinent. Under the initial agreement signed between the three countries, a 2,700-km pipeline was planned to carry gas from Iran to India, while cutting through Pakistan’s territory. Under the initial deal, 1,100 kilometers would be laid out in Iran, 1,000 kilometers in Pakistan and 600 kilometers in India.  The IPI pipeline would pump 150 mcm/d of gas to Pakistan and India – 90 mcm/d to India and 60 mcm/d to Pakistan. The project was alas killed.

Then, Iran and Pakistan were to build a pipeline between themselves. Under the pretext of sanctions and foreign pressure, Pakistan has so far failed to meet its commitments for completing its own section of the pipeline. 

A deadline given to Pakistan to complete its own section of the pipeline expired in 2014. Iran has however built its own section of the pipeline stretching from the giant offshore South Pars gas field to the Pakistani border.

Islamabad claims it is making its best to complete its own section of the pipeline, 700 km long, to be able to receive Iran’s natural gas to meet its energy shortages.

Lost Opportunity

Iran failed to make maximum gain from the JCPOA due to domestic criticism of the new model of oil contract – the Iran Petroleum Contract (IPC) – which the Petroleum Ministry developed to lure back foreign investors.

History will never forget delays in the endorsement of the IPC by relevant bodies in the country to allow for the signature of oil contracts before Trump’s withdrawal.

Zamani-Nia agrees with analysts who believe that Iran lost big opportunities created post-JCPOA.

“Iran had 17 months starting from the implementation of JCPOA to the US’s exit to benefit from this opportunity and the international community’s support, but in practice it didn’t happen and the JCPOA opportunity to some extent was lost,” he said.

Citing the example of Phase 11 of South Pars development, he said: “Had the agreement with [France’s] Total been signed two years earlier and this company had invested $1 billion in Iran, I assure you that it would not have left Iran so easily.”

“Even if Total left Iran, it would bring the project to stage which Iranian engineers could continue up to the end,” he said.

“Had Iran concluded several international agreements instead of a single one, Mr. Trump would have been more cautious in re-imposing the sanctions,” said Zamani-Nia.

He said he was not seeking any “blame game” in the oil sector, adding: “Nobody predicted that someone like Mr. Trump would be elected US president to target the JCPOA due to his enmity with [his predecessor] Mr. [Barack] Obama.”

“That is alas politics and everything is not predictable,” he said.

South Pars Gas Output to Hit 630mcm/d

Mohammad Meshkinfam, CEO of Pars Oil and Gas Company (POGC), has said Iran would bring its gas recovery from the giant offshore South Pars gas field to more than 630 mcm/d.

Development of the supergiant gas reservoir, which Iran shares with Qatar in the Persian Gulf, is envisaged in 27 phases. Up to last March, 21 development phases became operational.

Iran’s Minister of Petroleum Bijan Zangeneh has said that the offshore section of three more phases of this field are coming on-stream this year to help raise gas output from South Pars.

The rivalry between Iran and Qatar for extracting gas from South Pars has entered a new phase after Qatar pulled out of the Organization of the Petroleum Exporting Countries (OPEC) to focus on gas production from its sector of South Pars.

Under the administration of President Hassan Rouhani, Iran has further developed South Pars and made 10 standard phases operational to minimize distance from Qatar. Iran has doubled its gas production capacity in South Pars. Qatar intends to concentrate its efforts on exporting liquefied natural gas (LNG).

Fresh Record amid Sanctions

Meshkinfam highlighted the enhanced gas production capacity in South Pars, saying: “According to our planning, our recovery capacity will exceed 630 mcm/d by the end of the current [calendar] year, in which case we will set a fresh record in production from the South Pars megaprojects.”

After US President Donald Trump walked away from Iran’s 2015 nuclear deal with six world powers and subsequently imposed tough sanctions against the Islamic Republic’s petroleum industry, the Iranian Ministry of Petroleum has done its utmost to develop the petroleum industry by using its own potentialities in a bid to minimize the impact of sanctions. To that effect, in light of the significance of recovery from South Pars and Qatar’s efforts to increase its output, POGC, which is in charge of South Pars development, is accelerating its development of South Pars for higher production in a bid not to lag behind Qatar.

Supplying 70% of Iran Gas Needs

South Pars covers 9,700 square kilometers, 3,700 km of which belongs to Iran. Iran’s sector of South Pars contains 14 tcm of gas plus 18 billion barrels of gas condensate. South Pars makes up 8% of total world reserves and nearly half of Iran’s gas reserves.

South Pars is currently supplying 70% of Iran’s gas needs in the household, commercial, industrial and power plant sectors.

In light of increased gas penetration rate among Iranian households and industries, the South Pars gas field’s standing takes up added significance in gas supply in Iran. Furthermore, as gas production capacity increases in this field, Iran has ended its dependence on gas imports from Turkmenistan during cold months of the year.

Given the significance of sustainable gas supply in Iran in winter, operation of South Pars development phases has picked up speed in recent years. Although US sanctions on Iran’s petroleum industry are tough, the remaining trains of South Pars phases are becoming ready one by one. Owing to their experience from the previous round of sanctions, Iranian contractors have managed to develop many offshore and onshore sections of South Pars without any assistance from foreign companies. Therefore, they are more mobilized this time to push ahead with the South Pars development.

SP13, SP14 and SP22-24 are among phases whose offshore and onshore sections are coming online gradually in order for South Pars to register a new record in gas production.

SP13 4th Train to Come Online

Meshkinfam gave a positive assessment of the pace of progress in the development of SP13 and SP22-24 in the refinery section, saying: “Currently three phases of sour gas sweetening in each of refineries have become operational and the fourth sweetening train of SP13 is close to coming online.”

Referring to obligation for operating three 1bcf/d chains in each phase of South Pars, he said: “By operating two gas platforms in SP14, the first chain of production from this phase will become operational with 28 mcm/d of sour gas recovery."

He said that the second 1 bcf/d chain would require the completion of operation of two offshore platforms of SP13.

He added: “Platform 13B was recently installed on its location in the Persian Gulf. Hookup and operation will be finished soon.”

In case of favorable weather conditions, the second offshore topside of SP13 would be installed. According to timeframe, as pipelines of this satellite platform are connected to the main platform, 13D will become operational in January.”

“Therefore, sour gas production from SP13 will reach 1 bcf/d” by mid-January, said Meshkinfam.

SP22-24 Refineries Ready for Sour Gas Feed

SP22-24 are other phases whose development has accelerated in recent months. The offshore topside of SP12 has been installed after the end of drilling operations and is about to become operational. If weather conditions turn out to be favorable it is expected to come online with an output of 500 mcf/d of sour gas to be delivered to SP22-24 refineries.

“Platform 24A is the last offshore topside that is to be installed in SP22-24 with the objective of completing a production chain of 1 bcf/d of gas,” said Meshkinfam.

This offshore topside drive is ready for load-out now. After the transfer of installation vessels from SP13 to Sadra industrial yard in Bushehr, load-out and transfer will start.

Rapidity in SP Megaprojects

Time and quality are among factors upon which Meshkinfam lays emphasis. In his view, development of phases must go on faster in order for the South Pars megaprojects to become operational in the shortest possible time.

He said that POGC has always taken effective steps in support of Iranian contractors and the prosperity of business environment for the active involvement of the private sector.

Iran is currently recovering 580 mcm/d of gas from South Pars, which is planned to exceed 630 mcm/d by the end of the current calendar year in March 2019.

The startup of each phase of South Pars boosts gross national product (GNP) by one percent. No other sectors of the economy is such significant.

South Pars Turns 20

$80bn Investment Produces $250bn in Revenue

Pars Oil and Gas Company (POGC) was established 20 years ago to develop the giant offshore South Pars gas field, which Iran shares with neighboring Qatar in the Persian Gulf.

Addressing an event to mark the POGC 20th anniversary, CEO Mohammad Meshkinfam said nearly $80 billion had been invested in the gigantic gas reservoir over the past two decades.

“The outcome of such investment has been the production of 1,300 bcm of rich gas from the South Pars gas field. If we value each 1,000 cubic feet at 18 cents the revenue from total production from this field amounts to $250 billion for the past 20-year period,” he added.

Iran’s gas production capacity from South Pars has now reached 600 mcm/d.

Besides South Pars, POGC has been responsible for the development of the North Pars, Golshan and Ferdowsi gas fields.

Iran’s total gas reserves in the South Pars, North Pars, Farzad A, Farzad B, Golshan, Ferdowsi, Balal and Kish gas fields  is 673 tcf.

Development of the Kish gas field was recently assigned to POGC. Phase 1 of Kish was developed by the Petroleum Engineering and Development Company (PEDEC) and remaining phases will come online in the future.

There are totally 13 gas refineries in South Pars, 8 of which have so far become ready for commissioning. There are also five refineries in Tonbak and Akhtar (Site 2 of South Pars). Refinery-19 and Refinery-12 have so far become operational.

SP Gas Output Doubles

Meshkinfam said: “Except for SP11, all other border blocks [along the Qatar sector] are operational. By the end of the current [calendar] year [in March 2019], the sour gas production capacity in under-developed phases (SP13, SP14 and SP22-24) would increase.”

Ever since the South Pars development began up to 2013, before President Hassan Rouhani took office for his first tenure, Iran was recovering 285 mcm/d of gas from 110 wells drilled in the field.

In light of the significance of development of jointly owned oil and gas fields, Iran’s Petroleum Ministry focused on this field. Under the first administration of Rouhani, 10 phases became operational.

“The gas production capacity from this joint field has reached 600 mcm/d from 267 wells, and has more than doubled,” said Meshkinfam.

“Furthermore, with the operation of four gas condensate storage facilities in South Pars with a total capacity of 2 million barrels, the condensate storage capacity in South Pars has practically increased,” he said.

Total sour gas production from South Pars has reached 1,348 bcm over the past two decades. The figure was 596 bcm up to 2013, which means it has more than doubled in five years.

Gas Output Up 85 mcm/d

Meshkinfam said since 2013gas production has accelerated in South Pars, adding that Iran’s recovery from South Pars experienced a 372 mcm/d increase over five years.

National Iranian Oil Company (NIOC) is required to add another 85 mcm/d increase to the South Pars gas output by the end of the current calendar year.

“So far, SP14 has seen its output increase 28 mcm/d. Another 56 mcm/d increase is expected to materialize by February 2019,” said Meshkinfam.

Currently, three sweetening trains in SP13 and SP22-24 are operational. The last sweetening train in SP13 has also become operational. The last train of SP22-24 will come online by February 2019.

Meanwhile, the third offshore platform in SP14 will be installed and launched by next March to bring its production capacity to 42 mcm/d.

SP11 Operator Changing

A nearly $5 billion agreement for the development of SP11 was signed in July 2017 between NIOC and a consortium of France’s Total, China’s CNPC and Iran’s Petropars.

After US President Donald Trump walked away from the 2015 Iran nuclear deal, which had lifted sanctions on the country to allow for foreign investment, Total pulled out of the project due to US threats of penalties.

Meshkinfam said the Total-led consortium spent nearly $90 million in SP11 with the French giant accounting for about $45 million.

Regarding the future of SP11 development, he said: “The process of assignment of SP11 development from Total to CNPC is in its final stages.”

He added that the contractor for SP11 development would be known by next March.

“Since the signature of the agreement, Total has designed compressor technology for Iran. Therefore, we can say that the preparations for using hits technology to construct gas compression platforms have been made in Iran, which is a great achievement,” said Meshkinfam.

He added that necessary documents related to the technology needed for building gas compression platforms have been submitted to CNPC.

Building nearly 20,000-tonne gas compression platforms was a new experience for Total as few countries have already experienced such platforms, he said, adding: “The first step in building such platforms has to be taken properly because such heavy platforms are also to be built in other South Pars blocks.”

Meshkinfam touched on the jacket built by Petropars for SP11 development, saying: “This jacket is situated in the Qeshm Island yard. After the conclusion of studies on Block 11, it will be installed at 11B location.”

RIPI, NIOC to Conduct New Gas Hydrates Research Project

Gas hydrates represent a commercially viable alternative for oil and gas producing nations. A large number of developed countries have invested heavily in conducting studies on the sector. Several decades later, as oil and gas reserves keep dwindling, there may be no option but to resort to gas hydrates among other unconventional hydrocarbon resources.

Iran’s petroleum industry has already taken effective steps in this regard. Phase 1 and pilot research has already concluded. In Phase 2, the Research Institute of Petroleum Industry (RIPI) and National Iranian Oil Company (NIOC) "Exploration Directorate" are cooperating in the Sea of Oman.

“Discovering gas hydrates in the Sea of Oman – due to the geopolitical position of this region and proximity to high seas and Pakistan’s border as a strategic market and particularly the [Iranian] government’s special concentration on the development of the strategic Makarn area – can turn this region into an energy hub in the future,” Saleh Hendi, NIOC exploration director, said.

The agreement for Phase 2 of gas hydrate research project was signed between Hendi and RIPI director Jafar Tofiqi.

Under this agreement, which would be financed by NIOC Directorate of Research and Technology, access to the value chain of gas hydrate exploration technology will be studied during a 48-month period.

Elaborating on the project status, Hendi said: “With the implementation of Phase 1 of this project, gas hydrate and natural gas reserves (conventional and unconventional reserves) were identified in the Sea of Oman. In light of high deepwaters exploration costs in this region it was decided that Phase 2 of this research project be implemented in order to add to the certainty of the findings, which resulted in the signature of today’s agreement.”

He said RIPI’s research activities constituted a unique chance for the petroleum industry.

“This institute enjoys great potential and should we fail for whatsoever reason to benefit from these potentialities, that would constitute a fault to blame on the petroleum industry,” said Hendi.

Ebrahim Taleqani, acting head of NIOC Directorate of Research and Technology, referred to 14 macro-research projects pertaining to upstream oil industry.

He gave a positive assessment of interaction with research and academic centers, saying: “Planning to establish a center to study de-asphalting at the Amir Kabir University of Technology is among the results of such academic cooperation, which is on the agenda. That will be particularly effective in de-asphalting in West Karoun fields.”

He named the Kimia and Persian Gulf Pearl as two successful projects which RIPI has already accomplished, expressing hope that the new gas hydrate project would produce effective results.

For his part, Tofiqi said RIPI-NIOC cooperation would lead to further interaction.

He said: “I feel delighted to cooperate with NIOC directors who appreciate research and technology and value it. Placing trust in Iranian researchers is a cause of honor, and RIPI undertakes to use everything at its disposal for the optimal accomplishment of this project.”

Exploration Blocks for Iran E&P Firms

Following the signing ceremony, Hendi held a press conference to answer questions about exploration agreements.

He said plans were under way to award exploration blocks to Iranian E&P companies.

“In the near future, at least three exploration blocks will be awarded to domestic companies,” he added.

During Iran’s last Oil Show earlier this year, 14 exploration blocks were introduced to Iranian and foreign firms.

“Although the idea was to award these exploration blocks for the purpose of attracting foreign investment, in light of the current sanctions we have decided to push this process under the aegis of cooperation and negotiations with Iranian E&P companies," said Hendi.

He forecast three or four blocks to be awarded to Iranian companies in coming months.

The exploration blocks include blocks with high exploration potential located in mature sedimentary zones, as well as blocks in the new sedimentary zones.

Four blocks in the Zagros sedimentary zone include one block in Lorestan Province, one block in Fars Province and two blocks in Khuzestan Province (one near Dezful and one in Abadan Plain).

Three offshore blocks in the Persian Gulf area and three exploration blocks in Kappeh Dagh in northeastern Iran, one exploration block in the Moghan sedimentary area in northwestern Iran with proven hydrocarbon system, one exploration block in central Iran as well as the Taibad and Sistan blocks as two new sedimentary exploration blocks in eastern Iran were among other exploration blocks unveiled by NIOC Directorate of Exploration. Iranian E&P companies are expected to process some of them.

60% Success Rate in Exploration

Hendi also said that so far 60% of Iran’s total area had undergone exploration studies, adding that the rate of success in exploration wells (i.e. the ratio of successful wells to the total drilled wells) stood at 60%.

He said hydrocarbon was likely to exist in Bostanabad and Mianeh in northwestern Iran. “We will start studies in coming months in this regard, but generally speaking the Azarbaijan area has great potential.”

Touching on the Persian Gulf Pearl project, Hendi said: “The client in this project was the Iranian Offshore Oil Company (IOOC). Owing to fruitful cooperation between this company and NIOC Directorate of Exploration, exploration costs in the Persian Gulf have been significantly reduced; however, we should keep in mind that the results of exploration projects need to be updated regularly.”

He said that technological needs at NIOC Directorate of Exploration had been identified.

“In the research sector, we are faced with knowledge and management problems more than financial problems. We need to reach the conclusion that research is a late-yielding product and market. Therefore, in order to deal with future challenges we have to take advantage of research opportunity now,” he added.

Hendi said signature of agreements with five universities for developing technological and scientific infrastructure for hydrocarbon exploration was an outcome of the identification of technological needs by this Directorate.

He said that NIOC Exploration Directorate had upgraded the level of its cooperation with universities and research institutes in recent years with a view to forming a network of innovation and technology.

“Fortunately the research agreements signed with universities are progressing well and Phase 1 of these agreements has already been concluded or is in the final stage,” he said.

Iran Private Sector Building Vessels

The Iranian Offshore Oil Company (IOOC) has signed memorandums for cooperation with four Iranian companies to supply offshore vessels and standardize imported flexible oil pipes.

These memorandums lie within the framework of general policy to support Iranian manufacturers in providing flexible oil pipelines in Iran.

Hamid Bovard, CEO of IOOC, expressed hope that such memorandums would help Iranian offshore vessels be able to continue operating.

The memorandums were signed on the sidelines of a marine industry exhibition in Kish Island between IOOC on one side and Barzin Energy Noavar, Parto Tadbir Pars, Morvarid Parsian Kish and Batservice Contracting, on the other.

Three of the MOUs are on the supply of offshore vessels to IOOC and the fourth one is on standardization of flexible oil pipes.

“The policy and strategy pursued by the Petroleum Ministry is to make maximum use of domestic manufacturing potential, in which case MOUs have been signed for building offshore vessels in line with Petroleum Ministry’s objectives,” said Bovard.

Currently 85 vessels are operating in IOOC-run areas, 95% of which are owned by foreign entities. The figure has been cut to 30% in the past two years.

IOOC expects the MOUs to bring all offshore vessels under the ownership of Iranian entities.

Bovard said the MOUs comprised private sector investment, manufacturer and operator.

“IOOC has undertaken to create jobs for investment in the domestic building of marine vessels,” he added.

Flexible Pipe Standardization

Bovard touched on the MOU signed for the standardization of flexible oil pipes, saying: “This MOU has been signed in the form of comprehensive management software aimed at improving maintenance of pipelines.”

Iran’s offshore pipeline network in the Persian Gulf measures nearly 3,500 kilometers long. Some of these flexible pipelines are not manufactured in Iran. Standardization and future manufacturing of such pipes are envisaged.

The MOU between IOOC and Parto Tadbir Pars is aimed at the transfer of knowhow and technology to standardize flexible pipes over a two-year period.

Saba Qasemizad, director of fluids division at Parto Tadbir Pars, said maintenance of flexible pipes is among methods currently common in the petroleum industry.

“One of objectives in signing this MOU is to standardize flexible oil pipes enable us to optimize the process of their purchase and guarantee them longer lifetime,” she said.

She added that the technical knowhow for flexible pipes is possessed by Western European companies.

“Our company’s technical knowhow belongs to Dunlop of the United Kingdom. “Since we’ve now learnt its manufacturing technology, we plan to transfer it into Iran,” said Qasemizad.  

She added that the project had been operated by Iranian manufacturers from A to Z, noting that the agreement would be implemented without foreign companies.

Untapped Capacity of Iran Manufacturers

By signing these MOUs, IOOC hopes to benefit from the untapped capacity of Iranian companies in the offshore sector and construction of vessels. The MOU signed with Barzin Energy Co. is aimed at the construction of tugboats for petroleum industry, repair boats and loading and export vessels. These vessels are required to be built on Iran’s territory so that the Iranian manufacturers’ potential would be used.

Salman Khosravi, director of IOOC contracts affairs, said: “These agreements were signed in application of the recent instruction by the Minister of Petroleum for using Iranian-flagged vessels.”

He said construction of each vessel would cost $10 million. “The Iranian company Barzin Energy Noavar is expected to build vessels in three years and deliver them.”

Multi-Purpose Supply Vessels (MPSV)

A third MOU was signed with Batservice Contracting for the construction of multipurpose passenger boats, made from aluminum, in cooperation with a Norwegian company.

Such vessels would carry 80 passengers, as well as cargoes at the same time. The investment envisioned for this project amounts to $5.2 million. Two vessels are initially planned to be constructed by the Iranian company in less than four years.

The MOU signed with Morvarid Parsian Kish is about the building of two Anchor Handling Tug Supply (AHTS) vessels tasked with providing drilling services. Estimated to cost $20 million, the project would last three years.

Normally, offshore drilling services vessels were provided by foreign companies, but now IOOC hopes that such vessels would be built in Iran. 

Therefore, orders will be placed with Iranian manufacturers of vessels. Domestic companies will also account for necessary investment.

According to official data, IOOC offshore and drilling services have saved Iran more than $237 million in the past two years.

28 Oil/Gas Reservoirs NISOC Priority

National Iranian South Oil Company (NISOC) is a subsidiary of National Iranian Oil Company (NIOC), accounting for 80% of Iran’s total oil output.

The priorities envisaged by current NISOC managers pertain to human resources, social corporate responsibility, health, safety, environment (HSE), maximum efficient recovery and ageing hydrocarbon reservoirs and their installations.

“Following Petroleum Ministry and NIOC approach, we started operation-based mode [for development of fields] alongside development-based or field-based models two years ago,” Ahmad Mohammadi, newly-appointed CEO of NISOC, told "Iran Petroleum".

He added that due to the high number and diversity of the fields run by NISOC, as well as the geographical extent of hydrocarbon resources, the company gave priority to the preparation of projects and development plans by focusing on the development of a large number of these fields during a short period of time.

“After receiving primary green lights, we received necessary permits from NIOC and other sectors in order for these fields to be awarded to new contractors cleared by the Petroleum Ministry within the framework of EPCF and EPDF models,” said Mohammadi.

He said some 28 reservoirs were short-listed within the framework of 27 packages.

“In addition to production objectives, an objective constantly pursued by the Petroleum Ministry in the development of these fields has been job creation, creation of business environment and employment of untapped potential in oil-rich areas, particularly in Khuzestan Province and other oil-rich provinces,” he said, adding that this significant objective would be reached after new contractors would start work.

Mohammadi said the Mansouri oil field had been put out to tender in November and “the successful bidder was chosen and an agreement will be signed with an Iranian company soon.”

“The Ahvaz-2, Ahvaz-3 and Ahvaz-5 packages have been assigned to another qualified Iranian company. In a unique measure, five tender bids were launched in a single day recently for Ramshir, Lali Asmari, Kaboud, Balaroud and Gachsaran Khami reservoirs with their successful bidders have been known,” he added.

The tender for the Mansouri-Asmari package was valued at IRR 13 billion and the tender for the other five projects totaled IRR 27 billion.

Three percent of the value of contracts will be allocated for the construction of location and seven percent for the supply and manufacturing of commodities and equipment. The six packages are expected to become operational by early next calendar year.

Each drilling rig will create more than 200 direct jobs, while hundreds of others will be employed in other projects including the construction of locations, installations and pipe manufacturing.

“Besides production and business environment, a major objective pursued in the development of the 28 reservoirs is to support Iranian companies, Iranian-made commodities and attract Iranian investment,” said Mohammadi. “We welcome the participation of foreign investors and companies to finance the projects and invite them in.”

Referring to the mechanism worked out for the implementation of production enhancement contracts, he said: “An integrated and all-inclusive project will be awarded to the contract altogether, and the project is executed by the contractor who also provides equity.”

“Then, after the completion of each section, the costs will be compensated,” he added.

Mohammadi said the client would be responsible for the monitoring of the job in terms of both quantity and quality. But, he added, the client would have no role in the supply of commodities and “the contractor will be responsible for the operation from A to Z.”

“The client will monitor the process of work technically and operationally and receives progress report from the contractor,” he said.

Mohammadi said the 28 reservoirs run by NISOC are estimated to cost IRR 350,000 billion for development. He added that finalization of six tenders so far would give rise to significant developments in terms of job creation and reinforcement of infrastructure in Khuzestan Province.

“The client has undertaken to earmark 4% of the value of each contract for priority social responsibility projects including combating haze, reinforcing the infrastructure, education and so on,” he said.

Mohammadi said the role defined for NISOC in social responsibility would be supporting executive bodies and organs which have their own budget share.

“In light of the geographical extent of NISOC, covering the five provinces of Khuzestan, Kohguiluyeh Boyer Ahmad, Bushehr, Fars and Ilam, valuable work has so far been done,” he added.

“Our special job has been to identify underprivileged areas and give them priority so that in cooperation with local and provincial officials we would be able to make social responsibility projects materialize within the framework of a cohesive timeframe for the residents,” said Mohammadi.

He said that sustainable development and security would definitely materialize through paying attention to local inhabitants.

“I have serious plans in this sector and through an interactive approach with local officials I will prioritize areas which are faced with infrastructural problems,” said Mohammadi.

He said that a Social Responsibility Committee would be established soon at NISOC to focus on this sector in cooperation with residents and local people.

“We believe that human resources are not limited to petroleum industry manpower. The same people who are active around our installations, the same people who see flares when they sleep at night and who see derricks, installations and pipes when they wake up, the children who see oil installations as soon as they are born and learn walking by touching oil pipes are all human resources,” he said.

EOR Tops NIOC Agenda

Mohammadi said enhanced oil recovery (EOR) was an issue which should be pursued seriously.

“NISOC has long been injecting gas into 50-60% of oil fields it runs,” he said, adding that gas injection had improved the rate of recovery from the Gachsaran Bibi Hakimieh, Parsi Pazanan, Haftkel Aghajari and Maroun reservoirs.

“Meantime, in order to enhance recovery, we plan certain pilot measures in the 28 reservoirs. After receiving results, we will be able to take field-scale steps for enhancing the rate of recovery,” Mohammadi said.

“One of NISOC priorities with regard to plans drawn up by Petroleum Ministry and NIOC has been to seriously follow up on flare gas gathering,” he said.

He expressed hope that flares would be turned on just whenever necessary “because we cannot reach absolute no flaring”.

“One of appropriate measures taken to that effect was in the Ahvaz 3 production unit to make the flares smokeless. That has had economic benefits in addition to protecting the environment,” he said.

Mohammadi said HSE was a NISOC priority, adding that renovation of installations was a must as some of them are more than half a century old.

“Most of rotary machinery and oil pipelines are ageing and they need to be renovated. That is a priority for Petroleum Ministry and NIOC,” he said.

He warned that non-renovation of the decrepit installations would affect the function of installations and trigger life-threatening threats.

“We have to be very careful and observe protocols,” said Mohammadi.

He said that Iran’s southern oil-rich zones, which are now 110 years old, and the machinery which was first used in the petroleum industry would be attractive to everyone.

“I believe that industrial tourism is an issue that has been neglected. By benefiting from this potentiality in this sector, we can attract tourists so that in addition to the younger generation, everyone else would also know the history of petroleum industry which was born in Masjid Soleyman,” he said.

“It would not be wrong to say that the fundamentals of reservoir engineering, petroleum engineering, processing and bi-phase fluids have their roots partly in Iran and Masjid Soleyman, Aghajari and Haftkal, and therefore they owe Iran,” added Mohammadi.

National Iranian Oil Company

Exploration Directorate

Notice of Request for Qualification

International Tender No 97126
“Integrated Processing of  6,000 sq. km of Abadan Plain 3D Seismic Data

Applying Anisotropic PSTM (APSTM) and Anisotropic PSDM (APSDM)”

National Iranian Oil Company Exploration Directorate (NIOCEXP) intends to put out to two-phase international tender the foregoing project whose details are outlined hereunder. Qualified companies are invited to bid.

The tender bid is estimated at €4.92 million.

A: Required Services: “Integrated Processing of 6,000 sq. km of Abadan Plain 3D Seismic Data Applying Anisotropic PSTM (APSTM) and Anisotropic PSDM (APSDM)”                 

B: Term of Contract: 15 months

C: Place of Contract Services: Data Processing Center of Contractor Company

D: Bidder Requirements:           

1-Being legal person

2-Having tender-related equipment and facilities as well as as experienced manpower

3-Being sufficiently experienced in the subject of tender

4- Affordability of posting €129,264 security deposit as performance bond in accordance with regulations set out by Client, provided in the tender documents

5- Given that the project-related payments are planned to go through a deferred-payment scheme with a lag time of 2 years from the Client's approval on the corresponding invoice, the tenderers shall furnish adequate documents proving their affordability to engage in such arrangements.

6- NIOC Security clearance

Candidates shall submit the official translation of their last audited financial statement (2017) and introduce a duly authorized representative in writing to receive qualification documents no later than the working hours on January 9, 2019 to 1st Floor, NIOCEXP building, Khoddami St, Seoul Ave, Tehran. Iran. Telephone: +98 21 82703227 – Fax: +98 21 88604584. The requested information shall be provided by the candidates to the above-mentioned address no later than the working hours on January 23, 2019 in a CD and hard copy. The documents submitted afterwards shall be considered as void. The tender documents will be distributed among qualified bidders at the discretion of NIOCEXP.

The place, the date and the deadline for receiving tender documents and opening of financial proposals will be announced subsequently. The approximate date for opening financial proposals is April 9, 2019.

www.SHANA.ir
www.niocexp.ir

wwW.iets.mporg.ir

NIOCEXP Public Relations

Iran Petchem Industry on Path to Commercialize Technology

Iran's petrochemical industry has worked out plans and taken steps towards the commercialization of locally developed knowhow through identifying petrochemical licenses needed in Iran and prioritizing them based on the plans of National Petrochemical Company (NPC). These technologies include the knowhow for methanol processing, ammoniac processing, propylene production from methanol, polyethylene as well as catalysts, and wisely used chemical materials.

Domestic producers are playing a more significant role by benefiting from local knowhow and transferring technological savvy into Iran. Research and technology have taken the most fundamental step in industrial and economic development, particularly in the petroleum industry in recent years. Domestic manufacturing is a strategic priority towards sustainable development.

Currently, a chain of researchers and technologists involved in Iran's petrochemical industry follow up on development projects. Support provided by the government and attention paid by the Ministry of Petroleum and senior petrochemical industry managers for the development of knowhow and access to technical knowhow and its domestic development have turned the Petroleum Research and Technology Company (PRTC) into a rival for peers.

Development of dozens of new research and technological products has strengthened the foundations of resilient economy. Furthermore, the valuable achievements made in this sector could strengthen the pillars of Iran's petrochemical industry and drive Iran onto the road towards thorough self-sufficiency. Currently 30 locally developed instances of knowhow are ready to be granted.

Behzad Mohammadi, CEO of NPC, said PRTC has signed lucrative agreements with the petrochemical industry and has moved towards commercialization in the sector of developing technical savvy for catalyst production.

Relying on the diversity of products, Iranian petrochemical companies can serve as a good example for the construction of new petrochemical plants in the future. Such diversity could be instrumental in the market stability of petrochemical companies, he said, adding: "And we plan to switch from diverse feedstock to diverse products."

PRTC has moved towards commercialization in the field of developing technical knowhow to produce catalysts, said Mohammadi.

"Furthermore, valuable measures have been taken in terms of technical knowhow of processes and chemicals, and we hope that we would be able to supply the bulk of industrial needs in the near future with the help of this company and assist the industry," he said.

Mohammad said: "Petrochemical industry specialists have taken great steps in catalyst supply, development of related knowhow, marketing catalyst and conversion to new catalysts and I hope that in upcoming months that would be largely provided to the industry."

"Supplying technical knowhow for the process and catalysts related to GTTP, i.e. converting natural gas to methanol and propylene and then producing polypropylene in three steps constitute a big link in Iran's petrochemical chain, and we support such an atmosphere," he added.

"We seriously support research and we have to firmly take the final step of commercialization. The structural view at PRTC must be commercialization. The outcome may be excellent, but it has yet to prove itself in the industry," said Mohammadi.

Meanwhile, technological changes based on the needs of global community in the petrochemical industry are occurring at a very high speed and very clearly. The high diversity of petrochemical production on one hand and increased expectations from consumers in terms of quality and cost price on the other, have led producers of petrochemical products to look for options to diversify products and constantly improve their products quantitatively and qualitatively.

A brief review of the production of some leading companies and their changes over the past one decade will shed light on this fact.

For instance, Basel, which is a licensor and a leading producer of polyolefin in the world, has diversified its products from 600 to 1,100 grades over five years. Meantime, it has phased out more than 200 grades and instead developed nearly 700 new polyolefin products. Basel is just a case in point; otherwise, all leading producers of petrochemicals in the world follow the same procedure.

Such changes may even occur on a daily basis in the world. In order to diversify petrochemical products permanently and even on a daily basis, it is no longer possible to go through purchasing new licenses and even improving the existing ones.

The only way to outdo rivals in the market and diversify products would be to acquire technical knowhow for supplying new products.

Development of technical knowhow can prepare the ground for new changes and reforms with a view to improving existing savvy and subsequently developing new products. This issue takes up added significance particularly with regards to upgrading existing units technically, and supply of new products.

Another significant point which must be taken into consideration is that improving the quality of products or reducing production costs would generate more value-added and bring about a bigger market share. Therefore, in order to acquire a bigger market share and generate value-added, diversification of products and development of products of higher quality and lower costs should top the agenda of every company in rivalry with others.

As it was mentioned earlier, the pace of changes is in a way that higher-quality production with bigger margins is monopolized by the proprietors of technical knowhow.

Therefore, in Iran, there is no option but to acquire technical knowhow and become familiarize with production procedures.

PRTC is serving as the main arm of NPC and other manufacturing companies.

Diversity in Production Portfolio

Mohammadi touched on the future plans of Iran's petrochemical industry, saying: "We need to upgrade the level of production and revenue generation in the petrochemical industry, and this will depend on acquiring new technologies and attracting fresh investment."

"We should also make efforts and be careful so that the industry would shift to mass production of diverse products," he said.

"Given the diversity of feedstock in the country, petrochemical production must be also diversified because diversity in production would contribute to the stability of petrochemical companies and therefore we have to distance ourselves from concentration on the extra production of some products," he added.

"PRTC is a subsidiary of NPC. It can help us supply the bulk of our industrial needs. This company has already started its work, but I will try my best for the maturity of objectives that have so far been achieved so that the achievements of this company would be transmitted to the industry," said Mohammadi.

"Many research agreements have been signed and we have to create conditions in which PRTC would be able to meet its research needs," he said.

Commercializing Research

Mohammadi also laid emphasis on strengthening the procedure of commercialization of PRTC activities.

He said that connection between industry and PRTC has never been as significant as today.

He stressed the need for PRTC's more active role, saying: "Should we fail to convince the industry to rely on PRTC's technical and research potential, all efforts and valuable achievements of this sector will remain fruitless."

"Meantime, the petrochemical industry will be able to give assurances about the commitment and knowledge of this company and gradually reduce dependence on foreign knowhow particularly under the current circumstances in order to become active and prosperous in various sectors," said Mohammadi.

He said the ultimate objective was to fully benefit from PRTC's potentialities and achievements in the industrial sector.

"I believe that widespread actions must be taken as quickly as possible for the commercialization of current activities of this center. Of course, certain measures have been taken in this regard, leading to the signature of agreements. However, there is still room for planning until we can reach the point of maturity in the commercialization of technical knowhow," he added.

Removal of Obstacles

Mohammadi said removal of obstacles and challenges in the way of ongoing projects was a major policy of NPC.

"A major policy pursued by NPC is to support ongoing projects and help overcome obstacles and challenges in the way of these projects," he added.

Due to its feedstock advantage and petrochemical plants, as well as suitable access to foreign markets, Iran has long been the destination of various foreign licenses for the construction of polyolefin plants.

In line with the slogan of self-sufficiency in Iran's petrochemical industry and with a view to providing necessary license for ongoing petrochemical projects, PRTC has relied on research work in polyolefin processes and catalysts to launch the first semi-industrial unit for the production of high-density polyethylene (HDPE). Iranian researchers then fully mastered technology for slurry HDPE process.

Further efforts by PRTC experts and researchers have led to the development of multi-modal process (MMP)-HDPE process on semi-industrial scale.

Bushehr Petrochemical Company has chosen to apply MMP-HDPE, which has been developed by PRTC, as its knowhow of choice for the production of 310,000 tonnes a year of HDPE. Therefore, Iran is now among countries granting HDPE production license.

To that end, PRTC has developed the two catalysts of SACIR 510 and SACIR 511. SACIR 510 can meet 35% of demand for polyolefin catalysts. It enjoys many advantages over foreign-made ones, including a simpler production process, more effective control of the process of polymerization, manufacturing of products of higher value-added and usability in pressured pipes and injection products.

Furthermore, due to the high rate of activity and the suitable density of polymer mass, it facilitates production higher than 10% of nominal capacity in polyolefin units. But SACIR 511 has been specifically developed for MMP-HDPE process and is able to produce multimodal grades. 

Iran's petrochemical industry has in recent years embarked on a project for conducting research projects on the production of biodegradable polymer materials, leading to significant results.

PRTC has implemented project for production of polyethylene-based biodegradable materials along with starch and exo-peroxydants and mastered the necessary technology. The final products may be used for different purposes including food packaging, disposable table mats, plastic bags used in shops, etc.

In order to provide various services to downstream petrochemical industry, completion of necessary infrastructure for this industrial sector was high on the agenda, years ago. The infrastructure includes equipment of laboratories, operational workshops and other necessary facilities for development, creation of a management system and a transparent and integrated structure for effective and efficient use of research potentialities, development of joint research projects based on the principles enshrined in the research guideline with domestic and international institutes and the monitoring and updating scientific database, presenting approaches for quantitative and qualitative optimization and increasing the output of production, development of technical knowhow and new catalysts and indigenization of existing technologies.

Reshadat Field Needs Cutting Edge Technology

Iran's petroleum industry has introduced about 50 oil and gas projects, worth $185 billion, hoping to sign agreements for them up to 2020.

One of these oil projects pertains to the development of the offshore Reshadat oil field. Reshadat is one of the most significant oil recovery enhancement projects in post-sanctions Iran. Development of Reshadat will lift its production ceiling.

Discovered in 1965, Reshadat which is located 110 kilometers southwest of Lavan is among Iran's offshore oil fields in the Persian Gulf.

The field primarily started production in 1969 after exploration drilling and installation of three platforms.

Reshadat is facing production problems due to pressure fall-off in the reservoir. The only way to resolve this problem would be to apply best-in-class technologies of enhanced oil recovery (EOR).

Geologically, Reshadat is composed of three oil layers – Shoayba, Arab and Mishrif. The bulk of oil is trapped in Shoayba. However, all the three layers are producing crude oil with high water and low gas content.

Light crude oil production started in Reshadat in 1968 after 33 wells were drilled and Reshadat 3, Reshadat 4 and Reshadat 7 platforms were installed.

The high-quality oil recovered from Reshadat, with an API gravity of 36, has international buyers. That can make the field attractive to potential foreign investors.

During the imposed war (1980-1988), Reshadat's platforms were targeted by missile attacks on many occasions.

The full reconstruction of Reshadat's installations marked the end of destruction left by Saddam's invasion in areas run by the Iranian Offshore Oil Company (IOOC).

Currently, two new processing platforms – P4 and Q4 – are being built in Sadra yard for the development of Reshadat. Furthermore, wellhead drilling platforms W0 and W4 have been installed and most wells have been drilled.

Development of Reshadat needs foreign capital and technology more than ever.

A total of 28 new wells have been drilled within the framework of development of Reshadat. Five of these wells have been drilled by using the processing installations of the old platform. New wells are being spudded.

Once all wells have been drilled and water has been injected into Reshadat, the output will grow significantly. However, completion of the project and production from the field will largely depend on financing and clarity on the conditions of Iranian contractors.

Reshadat was first developed by Italy's IMINICO. Currently, oil is being produced only by Platform R-4. The other platforms are non-operational now. Once new wells have been completed, R-4 will be also off the operation. Development of Reshadat started in the late 2000s for lifting its output by up to 75,000 b/d. To that end, the drilling of 30 wells, construction of a storage facility to hold half a million barrels of oil, as well as construction of an 185-km oil pipeline were put on the agenda.

Based on future plans, new drilling rigs are expected to be moved to the field's location for completing two wells with a view to raising the Reshadat production.

Operators have mobilized all capabilities at their disposal and offshore logistics, and reconstruction sections have made their best despite bad weather conditions to lay pipes, install separators and conduct necessary tests. Pre-commissioning operations have ended safely while oil and gas have been injected from an offshore pipeline into R-4 to reduce risks significantly.

Reshadat is being developed in five phases in order to reach the output of 78,000 b/d. The development project is under way in Lavan Island in the five phases of drilling, jacket installation, installations on platforms, pipeline and a storage facility.

In the Reshadat development plan, the drilling phase is behind all other phases. Once problems of this phase have been resolved, drilling and completion of wells will last two to two and a half years as two drilling rigs are planned to be operating there.

 

New Chance for Investment in Darquain

West Karoun has shot to prominence in recent years in Iran. Located along Iran-Iraq border, this area is expected to form a new petroleum civilization in Iran.

Iran now plans to boost its crude oil production by relying on the 11 oil fields located in the West Karoun area.

Darquain oil field has a major share in West Karoun. Darquain is located in Khuzestan Province, more specifically 45 kilometers north of Khorramshahr and 100 kilometers south of Ahvaz.

Darquain is currently producing 160,000 b/d of crude oil, which is expected to hit 220,000 b/d once its third phase becomes operational.

Darquain was among a group of 49 oil fields Iran has introduced for investment within the framework of the newly-developed oil contract structure – the Iran Petroleum Contract (IPC).

Darquain was discovered in 1964 after the drilling of one exploration well. It is estimated to hold over 5 billion barrels of oil in place, 1.3 billion barrels of which is recoverable. The Darquain oil is light with an API gravity of 39. Darquain supplies oil into Ahvaz-Abadan pipeline.

The investment envisioned for Phase 3 development of Darquain is estimated at $1.5 billion.

In Phase 3 of Darquain, two new reservoirs – Ilam and Sarvak – are planned to become operational. Furthermore, the undeveloped section of the Fahlyan reservoir is also envisioned in this project. Combined water and gas is to be injected into Sarvak and gas alone into Fahlyan.

Other activities required for Phase 3 development of Darquain include the drilling of 31 oil production wells, 6 gas injection wells, ground crude oil processing facilities including pipelines, processing installations, gas compressor stations, and infrastructure including tank farm, repair stations and roads.

Phase 1 and Phase 2 of Darquain have already been developed by Italy’s Eni under buyback deals. One of the best-in-class technologies, i.e. gas production simultaneously with the injection of associated petroleum gas into reservoirs, is currently applied in this oil field.

An agreement was signed with an Iranian consortium for the development of Phase 3 of Darquain in August 2011. That came after Eni decided to pull out of Iran due to the toughening of sanctions on Iran’s petroleum industry. Nonetheless, this consortium failed to develop Darquain and the project is now up for grabs by international investors and companies.

In Phase 1 and Phase 2 development of Darquain crude oil was recovered from the Fahlyan formations. In Phase 3, oil would be extracted from the Ilam and Sarvak layers, too.

Phase 1 of Darquain came on-stream in May 2005. Phase 2 drew an investment of about $1.3 billion, requiring also 7.5 million square meters of demining operations. Phase 2 of Darquain came on-stream in February 2011 with an output of 160,000 b/d.

The timeframe set for Phase 3 of Darquain was five years. Three years have already passed and the field is far from new development. According to plans, in the first stage 14,000 b/d of crude oil and in the second stage 46,000 b/d of heavy crude oil would be produced from the Ilam and Sarvak formations of this field.

Phase 3 of Darquain mainly relies on the heavy crude oil layers of Ilam and Sarvak, as well as the undeveloped sections of Fahlyan. Eni was authorized to conduct feasibility studies on Phase 3. The findings of Eni confirmed the possibility of heavy crude oil recovery from the Ilam and Sarvak layers.

Due to its heavy crude oil reserves, Phase 3 is essentially different from Phase 1 and Phase 2.

To that effect, negotiations with foreign companies and Iranian and foreign consortiums are on the agenda for Phase 3 development.

The recoverable crude oil from the Fahlyan, Ilam and Sarvak is initially estimated at 293 million barrels. The oil produced from Ilam and Sarvak will be gathered in clusters to be moved to new processing units which are independent from those built for Phase 1 and Phase 2. The processing units include separators, desalting facility and stabilization tower.

OPEC; New Crisis or New Horizon

The OPEC 175th ministerial meeting held in Vienna at a time some member states were unhappy with unilateral decisions adopted by some fellow members without having won OPEC consensus.

After the meeting, OPEC decided to cut 800,000 b/d from its output while non-OPEC participating countries in the "Declaration of Cooperation" reached agreement on cutting 400,000 b/d from their production – a total 1.2 mb/d – in a bid to shore up oil prices.

Nonetheless, the output cut decision failed to prevent the emergence of discrepancies between member states. OPEC developments have given rise to the following question: "Will OPEC continue to remain an influential oil body or will it be entangled in a serious crisis and go to the brink of collapse?

Challenges

Over the past two years, OPEC has seen numerous developments, some of which have been internal and some others imposed from outside or at last accepted by some member states. Some of major issues OPEC has been grappling with are as follows:

US Continued Political Meddling: Under President Donald Trump, the United States has more than ever meddled evidently with OPEC affairs. The Trump administration is seeking to push ahead with its objectives owing to its influence on Saudi Arabia. Over the past two years, President Trump has not ceased to demand that OPEC raise its output so that oil prices would fall. In addition to the objectives Trump is pursuing in the US economy, restricting Iran's role in global markets and ratcheting up the pressure on Tehran has been one of the most important US intentions behind its interference with OPEC affairs. To that effect, the Trump administration has constantly called on Saudi Arabia and some other OPEC member states to raise their output so that the oil market would not face a big shock as a result of the US pressure for limiting Iran's oil exports.
Politicization by Member States: A pillar of OPEC has been a requirement for member states to economically look at the issue of energy. But some members like Saudi Arabia have in recent years adopted a political approach vis-à-vis energy and have been trying to use their capacities against other nations. Saudi Arabia's violation of OPEC output cut deal with the political motivation to fill Iran's void is a politicized move within OPEC. Undoubtedly, the continuation of politically motivated measures and marginalizing economy-oriented analyses would strike an irreparable blow at OPEC and turn this energy body into a venue for political conflicts.
Russia's Greater Role in OPEC Decisions: Ever since the issue of OPEC production freeze and output decline was raised, Russia emerged as a major non-OPEC partner. Moscow has undeniably been instrumental in the conclusion of OPEC-non-OPEC deal and the success of the production freeze deal. Russia has since won clout with OPEC members. Although cooperation between Moscow and OPEC has proven fruitful, Russia is a non-OPEC state and its growing influence may pose a challenge to the internal mechanisms of the largest oil producer group.
Qatar Exit: When new countries join OPEC the entire organization will be strengthened, but when a member quits the organization will become weaker. Qatar was a minor member state whose exit would not inflict any serious harm on the organization; however, this withdrawal which resulted from political conflicts will have major consequences. Needless to say, Qatar pulled out of OPEC due to its political disputes with Saudi Arabia, and its exist is likely to widen the gap between OPEC member states in addition to between Arab states. Therefore, Qatar's exit from OPEC would not be good news and may bring changes to political groupings within OPEC. Furthermore, the exit of a country from OPEC would have also psychological impacts because it may prove the inefficacy of the organization and persuade other members to follow suit.

OPEC Outlook

Over recent years, convergence or divergence among OPEC members has been the major factor in the success or failure of the organization. Therefore, the factor that could help clarify OPEC developments in the future is cohesion within the body and approaches pursued by member states. In case OPEC members decide to look at energy market developments politically, the organization will be faced with serious challenges because political differences would hinder any reasonable decision-making based on economic criteria and that could pose a challenge to OPEC decision-making under sensitive circumstances. Furthermore, in case the US continues its political differences within OPEC internal affairs and pushes its own objectives and interests within OPEC via its ally Saudi Arabia, more divergence is likely to transpire the organization.

Meantime, OPEC has to shed light on its mode of interaction with non-OPEC oil producers. Cooperation with countries like Russia is very helpful for controlling oil prices in the world markets, but such interaction does not rely on any structured framework and such agreement is likely to be killed under the impact of a sudden event. Therefore, in order to systematize its relations with other oil producers, OPEC is required to envisage a well-structured mechanism.

OPEC is also required to preserve its attractiveness for member states. If for whatsoever reason the interests of member states are not pursued, they will no longer be willing to remain member. Collective decision-making, avoiding politically-motivated conflicts, respecting the interests and conditions of fellow members and averting any meddling by non-members in the decisions are among issues which could persuade member states to stay within OPEC.

Undoubtedly, if such issues are not taken into consideration, member states will quit this big organization one after another because if the interests of a country are ignored or all OPEC decisions turn out to be unilateral and in favor of certain members others will have no motivation to remain in the Organization.

 

1-Subsea FEED Under Way for Senegal Field

Woodside Energy and its partners have agreed to initiate front-end engineering design (FEED) for the deepwater SNE oil field development offshore Senegal.

This follows the award of the subsea FEED contract for Phase 1 of the project to the Subsea Integration Alliance of OneSubsea, a Schlumberger company and Subsea 7.

Woodside, recently approved to assume the role of operator by the Senegalese Minister of Petroleum, expects further FEED contracts to follow in early 2019.

The FEED work involves activities required to finalize the costs and the project’s technical definition ahead of a final investment decision, targeted for mid-2019.

SNE will produce through a 100,000 b/d-capacity FPSO and subsea infrastructure, with the facilities designed to accommodate future development phases, including options for gas exports to shore and subsea tiebacks from other reservoirs and fields.

Phase 1 will target around 230 MMbbl of oil from the lower, less complex reservoirs and an initial phase in the upper reservoirs, with 11 producing wells, 10 water injectors and two gas injectors. Start-up should follow in 2022.

In parallel, the Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore joint venture continues to progress project financing and the environmental and social impact assessment.

2-CNOOC to Ramp Up Exploration Offshore

Wood Mackenzie has issued more details on CNOOC’s announcement that it has signed strategic cooperation agreements with nine international oil companies.

According to research director Andrew Harwood, these cover two offshore areas in the Pearl River Mouth basin of the South China Sea, considered prospective for ultra-deepwater, high-pressure/high-temperature, or low porosity/low permeability reservoirs.

The IOCs - Chevron, ConocoPhillips, Equinor, Husky, KUFPEC, Roc Oil, Shell, SK Innovation, and Total - all have existing E&P operations in the country, and the agreements underline their commitment to involvement in China’s energy sector, Harwood said.

Should the agreements be converted to full exploration contracts, CNOOC will retain operatorship. Wood Mackenzie expects the company to increase its domestic exploration expenditure and to become more active in exploration in 2019.

“The Pearl River Mouth basin is believed to hold significant deepwater gas and shallow-water oil potential,” Harwood said, adding that the bulk of future exploration investment is likely to target this area.

“CNOOC has set its sights on raising gas reserves by 50% by 2025 and developing further its deepwater expertise. These agreements will help the company achieve its targets and hone its technical skills set.”

 

3-Noble Wins Three Contracts Offshore Australia

Noble Corp. has issued an update on its offshore drilling rig fleet.

In the Gulf of Mexico, W&T Offshore has contracted the drillship Noble Sam Croft. Drilling is expected to start in 1Q 2019 and end in 2Q 2019.

Offshore South America, an undisclosed operator awarded the Noble Sam Croft a one-well, firm term contract. It is expected to start in mid-2019.

Offshore Australia, the jackup Noble Tom Prosser has received three contracts. The contract with Santos is expected to start in March/April 2019 and end in October 2019. It includes 2x1 well options. CarbonNet/AGR’s contract is expected to last from November to December. Esso’s contract is expected to start in January 2020 and end in April 2020. It includes 6x1 well options.

In the UK North Sea, Spirit Energy has extended the contract for the jackup Noble Hans Deul into late July 2019.

Saudi Aramco has extended the contract for the jackup Noble Joe Beall to late April 2019. In addition, Aramco has extended the contract for the jackup Noble Gene House to late December 2018.

4-Petrobras Foresees Steep Production Growth

Petrobras anticipates growing its oil production in Brazil next year by 10% and 7% globally, due to start-up of five new production systems this year and three more in 2019.

During 2019-23, it expects to start up 13 new systems, with its oil and natural gas production in this period rising on average by 5% per year.

Cost efficiency measures and presalt lifting costs of less than $7/boe should drive the company’s average lifting cost to less than $10/boe from 2020 onwards.

Further divestments are likely as the company continues to pursue active portfolio management, and these could realize $26.9 billion in sales over the five-year period.

5-Sverdrup Process Topsides Head to Norway

The topsides for the Johan Sverdrup processing platform in the Norwegian North Sea is setting sail from the Samsung Heavy Industries yard on Geoje Island, South Korea.

Aker Solutions was responsible for engineering and procurement management for the topsides. According to Johan Sverdrup operator Equinor, since construction finished in May, there have been numerous tests to ensure the processing facility is completed to the fullest extent possible prior to installation next spring at the field location.

 “Having built this as a complete topside gave us a unique opportunity to test a lot of systems that we normally wouldn’t have been able to test prior to installation offshore,” said Jill Sale, project manager for the processing platform and responsible for the Johan Sverdrup project in South Korea.

“This has given us a better picture of the quality of the work undertaken and helps safeguard the plan towards start-up of the field next year.”

The topsides is now sailing to Norway onboard the heavy-transport vessel Boskalis Vanguard. Its initial destination will be the Kværner yard on Stord, off western Norway, where two pedestal cranes will be mounted, and where further preparations will follow before the structure is lifted into position in one single lift by the Pioneering Spirit.

Norway’s Petroleum Safety Authority has approved Equinor’s request to undertake drilling and well operations on the Fram field in the northern Norwegian North Sea, 20 km (12 mi) north of Troll and in 350 m (1,148 ft) water depth.

Next month the semisubmersible Deepsea Atlantic will start drilling three production wells with the program set to last 300 days.

1-Croatia Plans to Modernize Rijeka Refinery

Croatian energy group INA plans to invest more than four billion Kuna ($616 million) to modernize its largest refinery but a second, smaller refinery will be converted into an industrial plant, it said.

The investment plan, approved by INA’s management board, is aimed at stemming losses in its refining division, currently running at around one billion Kuna a year.

INA owns two refineries in Croatia, one in the northern Adriatic port of Rijeka, and a smaller one in the central town of Sisak.

The plan foresees major investment in Rijeka to turn it into a top-level European refinery, INA said in a statement.

“Total investments are worth more than 4 billion Kuna, which would represent the single largest investment project in the history of the company,” it said.

“The final investment decision is planned for 2019, provided all preconditions assuring return on investment are met,” INA said. The modernized refinery should be ready to operate in 2023.

INA’s biggest shareholder is Hungary’s MOL which owns slightly below half, while the Croatian government controls close to 45 percent.

Under the investment plan, the Sisak refinery will be turned into another type of industrial facility.

The Sisak site would remain a major employer, but it was necessary to convert it from loss-making crude oil processing to “viable alternative industrial activities,” the statement said.

The new business in Sisak may include bio-component refining and petrochemical production, INA said, adding that it could also involve a modern logistics hub, bitumen, renewables and lubricant production.

Without giving details of possible job losses at Sisak, INA said it was prepared to offer alternative jobs to affected workers and severance payments significantly higher than the Croatian average.

Workers at Sisak have repeatedly voiced concerns in recent years about MOL’s alleged plans to shut down the plant, putting pressure on the Croatian government to prevent it.

The company estimated that, if fully implemented, its plans would increase average yearly core profit, or EBITDA, by more than one billion Kuna.

MOL and the Croatian government have been at odds for several years about management rights and investment policy at INA. Two years ago, the Zagreb government announced it intended to buy back INA shares from MOL, but little has happened since.

Croatian Prime Minister Andrej Plenkovic recently said that a final decision would depend on the price set by MOL.

In the first nine months of this year, INA’s revenues were 16.23 billion Kuna, 21 percent more than in the same period last year. EBITDA amounted to 2.7 billion Kuna, roughly the same as in the first nine months of 2017.

2-Bulgaria BEH Likely to Appeal EU Fine

State-owned Bulgarian Energy Holding (BEH) said it would very likely appeal the hefty fine the European Union antitrust regulators slapped on it for blocking rivals’ access to key gas infrastructure in Bulgaria between 2010 and 2015.

The European Commission fined BEH 77 million Euros ($88 million), saying the company abused its market dominance to hinder competition.

BEH’s gas supply unit, Bulgargaz, and its gas network operator, Bulgartransgaz, are also subject to the fine.

BEH and its units denied any wrongdoing and said they believed the access to the Balkan country gas network and its gas storage facility had always been granted in line with the law. They also said the imposed fine was disproportionate.

“The companies will carefully look at the decision and will probably appeal it by challenging both the allegations and the amount of the fine,” BEH said in a statement.

BEH said although the fine should be paid within three months, in the case of an appeal it can either make a provisional payment of the fine or provide collateral.

The Bulgarian government says the European Commission would have agreed to a settlement only if Sofia sold a majority stake in Bulgatransgaz to a European strategic investor as a guarantee that market would not be distorted.

Bulgaria, which still meets all of its gas needs through one route from one supplier — Russia’s Gazprom — says such an option is unacceptable, as its gas pipelines were strategic infrastructure. “On the final line of the negotiations we proposed all kinds of options that should guarantee transparency and control ... including selling a minority stake,” deputy Prime Minister Tomislav Donchev told ministers.

“Naturally, no-one from the government would seek an agreement for a majority stake sale,” he said in minutes from a cabinet meeting, published by the government’s press office.

Sofia plans to keep Bulgargaz and Bulgartransgaz as BEH’s units, which is in line with EU energy rules.

The country is working to diversify its gas routes and suppliers. It also wants to build a new pipeline that is likely to transport mainly Russian gas from the TurkStream pipeline to central Europe, bypassing Ukraine.

3-Canada Gives Struggling Oil Sector Big Boost

The Canadian government said that it would spend C$1.6 billion ($1.19 billion), mostly through loans, to assist the country’s oil and gas industry, which has struggled to move energy to U.S. markets due to full pipelines.

Natural Resources Minister Amarjeet Sohi said in Edmonton, Alberta, that the aid package would include C$1 billion for energy exporters to invest in new technologies, boost working capital or find new markets.

Canada is producing a record 4.9 million barrels of oil per day this month, according to National Energy Board estimates, but pipeline capacity has not expanded as quickly to move crude to U.S. refineries. The bottlenecks have resulted in steep price discounts.

The federal aid package also includes C$500 million in commercial financing spread over three years to help high-risk oil and gas companies weather current market conditions, Sohi said. Another C$100 million will go toward energy projects through an innovation fund, and C$50 million will fund projects that involve reducing environmental damage from resource extraction.

The funds will stabilize struggling oil companies, but they really need greater access to markets, said Mark Scholz, president of the Canadian Association of Oilwell Drilling Contractors.

The struggles of the oil sector, concentrated in the western province of Alberta, have generated rallies in the past month demanding that Ottawa do more to help. Prime Minister Justin Trudeau’s Liberal government bought the Trans Mountain pipeline in the summer with plans to expand it, but a Canadian court quashed government approval of the project.

4-Colombia Cancels 2 Oil Exploration Auctions

Colombia has canceled two auctions of rights to explore for oil in dozens of areas of the Andean nation and plans to relaunch bidding early next year, the government said.

The Sinu-San Jacinto round of bidding on 15 blocks in northern Colombia was scrapped after interested companies withdrew, and a round known as the Permanent Competitive Procedure was canceled because of a judicial ruling, the National Hydrocarbons Agency said in a statement on its website.

It plans to relaunch bidding in February.

Colombia last held auctions in 2012 and 2014, when it awarded 76 blocks. The government subsequently held off further auctions because of low international oil prices.

Under the Permanent Competitive Procedure, companies can apply for exploration in areas that have not been offered by the government, but a ruling by the Constitutional Court forced the government to define areas for the exploration and exploitation of hydrocarbons.

Colombia needs to boost foreign investment to revive its stagnant crude and gas production. The nation has 1.78 billion barrels of reserves, equivalent to about 5.7 years of consumption but wants to increase that to at least 10 years of consumption.

It produces some 860,000 barrels per day (bpd) of crude, half for export. The government expects to increase output to 900,000 barrels of oil equivalent a day this year.

In the past, Colombia used auctions in which it defined exploration blocks and assigned them every two or three years in a tender process in which the company that made the best economic offer was awarded them. If a block was not delivered it was waiting for a new tender

5-Dutch Energy Company to Be Sold in Auction

Dutch energy company Eneco will be privatized via an auction next year, the company and its shareholders said.

The decision marks the end of a heated battle between the 53 municipalities that own Eneco and the company’s board.

The shareholders voted by a large majority to sell the company in October last year, but the board said it would prefer a stock market listing or partial sale that would ensure continuity as a renewables-oriented company.

The dispute led to the dismissal of both, the company’s CEO and chairman as well as an investigation into board decisions.

The decision to opt for an auction, however, was finally supported by all parties, spokesman Edwin van der Haar said, with a final decision on the sale expected by the end of next year.

Eneco, estimated by analysts to be worth about 3 billion Euros ($3.4 billion), is heavily invested in sustainable energy projects and could appeal to energy companies that want to increase exposure to renewable energy production.

6-Russia Crude Exports Set to Fall

Russia’s crude oil exports and transit volumes from Kazakhstan and Azerbaijan are set to fall to 61.7 million tonnes in the first quarter of 2019 from 63.8 million in the final quarter of this year, a quarterly schedule issued by the Energy Ministry seen by Reuters showed.

OPEC and non-OPEC oil producing nations have agreed to cut output by 1.2 million barrels per day beginning in January to help clear inventories and support prices.

On a daily basis, January-March exports will fall by 1.1 percent compared to the October-December quarter, Reuters calculations show.

Crude oil export schedules from Russia include transit volumes of oil from Kazakhstan and Azerbaijan.

Exports and transit of Urals crude oil via Russia’s Baltic ports are set at 18.9 million tonnes compared to 19 million tonnes for the last quarter of 2018, the schedule showed.

January-March Urals crude oil exports from the port of Primorsk have been set at 10 million tonnes. Exports from the port of Ust-Luga have been set at 8.86 million tonnes including 2.5 million tonnes of transit crude from Kazakhstan.

Urals and Siberian Light crude oil exports and transit from the Black Sea port of Novorossiisk are seen at 8.6 million tonnes in January-March, down from 8.8 million tonnes in October-December 2018, the schedule showed.

That includes 1.5 million tonnes of Kazakh transit crude and 325,000 tonnes of Azeri transit crude.

Russia’s ESPO Blend crude oil exports via the Far East port of Kozmino are set at 7.5 million tonnes for the first quarter of 2019.

Russia’s ESPO Blend crude oil exports to China via the Skovorodino-Mohe pipeline are set at 7.4 million tonnes for January-March 2019.

Russia will supply China with 30 million tonnes of ESPO Blend via the route, according to a Russian-Chinese state agreement.

Russia’s crude oil supplies to China via Kazakhstan through the Atasu-Alashankou pipeline have been set at 2.5 million tonnes for the next quarter. Russia supplies 10 million tonnes per year to China via the route under a bilateral state agreement.

7-Lithuania to Import LNG Until 2044

Lithuania has given the go ahead to state-owned Klaipedos Nafta to purchase a liquefied natural gas (LNG) storage vessel by late 2024, as it shores up energy supplies and reduces its reliance on Russian natural gas.

Klaipedos Nafta is currently leasing a floating storage and regasification unit (FSRU), called Independence, from Norway’s Hoegh LNG.

The use of the vessel has allowed Lithuania to import LNG since 2014, breaking the monopoly Russia’s Gazprom had on natural gas supply to the country as well as neighboring Latvia and Estonia.

“This will keep us able, beyond 2024, to strengthen our energy security and ensure pricing pressure for the Russian gas,” Lithuania energy minister Zygimantas Vaiciunas said, as parliament voted to operate the country’s LNG import facility until at least 2044.

Natural gas use has been dwindling in Lithuania, partly in response to high gas prices before 2014. The government said use of LNG had forced Russia to cut its natural gas prices by a third, removing its ability to use fuel costs as a means of political pressure.

Klaipedos Nafta will run an international tender for a FSRU between 2021 and 2024, its CEO Mindaugas Jusius told Reuters. The current 10-year lease on Independence runs out at the end of 2024 but one option is to purchase the leased vessel.

The state will guarantee a loan to Klaipedos Nafta of up to 160 million euros to finance the purchase or replacement of the FSRU, Lithuania’s government said in a submission to the parliament.

Lithuania currently pays 66 million Euros a year to lease and operate Independence, and up to 30 million Euros to support it.

Lithuania’s state-owned energy company Lietuvos Energija, through subsidiaries, has a contract with Norway’s Equinor to import LNG until 2024.

Klaipedos Nafta launched a 27 million-euro LNG reloading station last year to pump the gas into LNG-powered vessels and onto road-going trucks.

8-Spain Firm to Design Plant in Abu Dhabi

State energy giant Abu Dhabi National Oil Company (ADNOC) and oil firm Cepsa have awarded a contract to design a linear alkylbenzene plant in Abu Dhabi to Spanish engineering company Tecnicas Reunidas, ADNOC said.

The plant, to be built in the Ruwais Derivatives Park, will be the first derivative unit developed under ADNOC’s 165 billion dirham ($45 billion) Ruwais downstream investment program.

ADNOC’s statement did not give the value of the front-end engineering design contract.

The plant making linear alkylbenzene - used to make detergents - will be jointly operated by ADNOC and Cepsa, a Spain-based energy company owned by Abu Dhabi state investor Mubadala.

When it comes on-stream, the plant will produce 225,000 tonnes of normal paraffins per year and 150,000 tonnes of linear alkylbenzene per year, the statement said.

9-Pemex Aims for Splash in Shallow Waters

Mexican state-run oil giant Petroleos Mexicanos will focus on existing shallow water assets and refining next year at the expense of riskier, deepwater projects under a new government that has vowed to turn around the ailing company.

The 2019 budget blueprint presented by officials of leftist President Andres Manuel Lopez Obrador calls for some $23 billion (465 billion pesos) in discretionary spending for the company known as Pemex, up about 14 percent from this year.

Almost half the Pemex budget is earmarked for exploration and production, mostly in shallow water and some onshore areas.

Setting out his plans, Pemex Chief Executive Octavio Romero said two previous governments had little to show for putting 41 percent of exploration funding into deep waters: “At best we’d have the first drop of oil by 2025,” he said.

Mexican crude output has fallen for 14 straight years. Pemex aims to increase production by almost 50 percent by the end of the six-year term of Lopez Obrador, who wants to reduce Mexico’s dependence on imported fuels.

To that end, the budget projects Pemex spending almost $2.5 billion on an oil refinery Lopez Obrador is building at the southern Gulf coast port of Dos Bocas. The facility aims to be able to process 340,000 barrels per day (bpd) of heavy crude.

“Pemex’s E&P unit and refining will total 98 percent of all capital expenditures. All other subsidiaries will get scraps,” said Gonzalo Monroy, a Mexico City-based oil analyst.

Another $245 million in funding is planned for upgrades to Pemex’s six existing domestic refineries.

The plan cuts funding for units focused on fertilizers, ethylene, drilling services and its corporate offices.

The budget also provides for about $6.2 billion in so-called non-discretionary spending to cover costs like debt servicing. Pemex has financial debts of some $106 billion, among other hefty obligations, fueling concern over its credit rating.

Pemex is state-owned and the senior management is hand-picked by the president, including the chief executive and the chairman of the board, who is also the energy minister.

10-Qatar Petroleum to Invest $20bn in US

Qatar Petroleum (QP) is looking to invest at least $20 billion in the United States over the coming few years, its chief executive told Reuters, after the Persian Gulf Arab state unexpectedly quit OPEC.

Saad al-Kaabi, who holds the energy portfolio of the world’s top liquefied natural gas (LNG) supplier, also said the company aimed to announce foreign partners for new LNG trains needed for an ambitious domestic scale-up by the middle of next year, but was keeping open the possibility of going it alone.

Qatar, a tiny but wealthy country is one of the most influential players in the LNG market due to its annual production of 77 million tonnes. It plans to boost capacity 43 percent by 2023-2024 and will be building four liquefaction trains for the LNG expansion.

As part of its more than $20 billion investment push in the U.S. QP is looking “at gas and oil, conventional and non-conventional,” Kaabi said.

Qatar Petroleum is majority owner of the Golden Pass LNG terminal in Texas, with Exxon and ConocoPhillips holding smaller stakes.

Kaabi said he expected to make a final decision on that investment and whether to move ahead with the project “by the end of the year, if not January.”

Qatar is a relatively small oil producer compared to its massive gas production. Its decision to quit OPEC this month was seen as a swipe at the group’s de facto leader Saudi Arabia, which along with the United Arab Emirates, Bahrain and Egypt, has imposed a political and economic boycott on Qatar since June 2017, accusing it of supporting terrorism, which Doha denies.

Kaabi said that proposed U.S. legislation known as “NOPEC”, or No Oil Producing and Exporting Cartels Act, which could open the OPEC group up to anti-trust lawsuits, was among the reasons for quitting the oil exporting club.

Qatar Petroleum announced separately it was partnering with Italian oil major Eni on three oil fields in Mexico, taking a 35 percent stake in deposits that will begin production in mid-2019 and ramp up to about 90,000 barrels per day by 2021.

The company is in talks with international oil firms about the LNG expansion project at home, including Eni, Kaabi said. Other partners already operating in Qatar include Exxon Mobil Corp, Total, Royal Dutch Shell and ENI.

QP said it will self-finance the LNG expansion rather than borrow a shift from previous practices where it used lenders to fund up to 70 percent of project costs.

Kaabi said it could carry out the expansion alone if no good offers from foreign firms were made.

“We are looking for a lot of things (in our partners) including asset swaps, things that will help me in my international expansion,” he said.

“If I don’t get good deals, nobody will come.”

The company currently pumps 4.8 million barrels of oil equivalent per day (boe/d) and aims to boost its output to 6.5 million boe/d in the next 8 years by expanding its upstream business abroad.

 

New Members Empower OPEC

The return of Gabon to OPEC and Congo Republic’s recent membership of the Organization of the Petroleum Exporting Countries are among the most significant changes having transpired the oil producer organization over the past two years.

The presence of Gabon and Congo – both African nations – within OPEC may be looked into from various aspects. In light of the significance of new members joining OPEC studying the conditions of each of these nations in the global energy markets and their impacts on OPEC’s future outlook would be important.

Gabon

The Gabonese Republic, a country at the Equator in West-Central Africa bordering the Atlantic Ocean in west, is bordered by Equatorial Guinea, Cameroon, and the Republic of Congo.

With an area of 267,668 km², the country is somewhat larger than the United Kingdom, or slightly smaller than Colorado State in the U.S.

Gabon has a population of estimated 1.5 million people. The capital of Gabon and its largest city is Libreville. Spoken languages are French (official) – a legacy of French colony – and a variety of Bantu languages. Gabon was under French colony from 1886 to 1960.

Gabon's economy is dominated by oil. Oil revenues constitute roughly 46% of the government's budget, 43% of the gross domestic product (GDP), and 81% of exports. Oil production is currently declining rapidly from its peak of 370,000 barrels per day in 1997.

Some estimates suggest that Gabonese oil will be expanded by 2025. In spite of the decreasing oil revenues, planning is only now beginning for an after-oil scenario. The Grondin Oil Field was discovered in 50 m (160 ft) water depths 40 km (25 mi) offshore, in 1971 and produces from the Batanga sandstones of Maastrichtian age forming an anticline salt structural trap which is about 2 km (1.2 mi) deep.

The Rabi Kounga oil field is an oil field located in Gabon’s Ogooué-Maritime Province. It was discovered in 1985 and developed by Royal Dutch Shell. It began production in 1989 and produces oil. The total proven reserves of the Rabi Kounga oil field are around 440 million barrels, and production is centered on 150,000 b/d.

Despite being one of the largest sources of oil production in Gabon, Rabi Kounga has seen its recovery drop in recent years.

Sitting atop two billion barrels of known oil reserves, Gabon is ranked the fifth among Saharan African petrostates. It follows Nigeria, Angola, Sudan (both Sudan and South Sudan) and Uganda.

Gabon’s OPEC membership has been through ups and downs. It first joined OPEC in 1975, but it quit in 1995 due to the organization’s rejection of its request for lower production levels.

More than two decades on, Gabon decided to rejoin OPEC. Its request was accepted during the 169th ministerial meeting. Gabon officially joined OPEC in July 2016.

A major issue pushing Gabon to join OPEC anew was the falling oil prices in 2014 onwards because when OPEC was taking steps to help shore up oil prices Gabon followed in Indonesia’s footsteps and filed request for membership.

With an output of 200,000 b/d, Gabon is currently the smallest OPEC member state. The Gabonese government has made huge efforts to explore offshore oil fields, but International Energy Agency (IEA) estimates show Gabon’s oil output is on the decline. Gabon has generally seen its oil production fall over the past two decades.

    [Gabon Crude Oil Production] .

Congo

The Republic of Congo’s request for OPEC membership was approved at the 174th ministerial meeting. Also known as Congo Brazzaville, the Republic of Congo is located in central Africa. It neighbors Gabon, Cameroon, Central African Republic, Democratic Republic of the Congo and Angola’s exclave of Cabinda.

Brazzaville was discovered in 1884 by Italian explorer Pietro Paolo Savorgnan di Brazzà, and then known as Pierre Paul François Camille Savorgnan de Brazza following French naturalization. De Brazza ruled in Congo for 11 years. Congo remained a French colony up to 1960. After winning independence, it was under Marxist rule up to 1992 when a brief civil war broke out in the country.

Congo’s economy depends on agriculture, industry and services, but oil extraction and sales constitute a major source of income for the country.

In early 1980s, increased oil revenues help Congo finance major exploration projects. That led to an average 5% economic growth rate, one of the highest rates in Africa. However, in the following years the government was forced to spend its oil money on certain sectors, which caused a huge income shortage. That was the consequence of low oil prices and the resumption of armed conflicts in December 1998. Congo’s economy was seriously harmed and a big budget deficit came up. After that, despite oil price hikes in global markets, the Congolese government was faced with major economic hardships since 2003. In 2008, the oil sector made up 65% of gross domestic product (GDP), 85% of state revenue and 92% of exports in Congo.

Congo is currently known to have about 1.7 billion barrels of oil with an output of 300,000 b/d.  Congo has also gas which is fully consumed domestically.

The following graph shows oil production in Congo over the past two decades.  

[Republic Of The Congo Crude Oil Production]

Congo is now the third largest African producer of oil in Sub-Saharan Africa. The Congolese government announced its decision to join OPEC in January 2018 as part of its efforts to increase its oil output. However, Congo has suffered losses in recent years due to a slump in crude oil prices. Consequently, state revenues have been cut by a third since 2015 while liabilities have been on the rise.

International Money Fund (IMF) estimates show that Congo’s economy heavily depends on oil production because about 87% of Congo’s export revenue and roughly 80% of state revenue come from oil sales.

Therefore, increased investment in the upstream sector and making revenue from the downstream sector through power generation and boosting gas capacity and refining, top the agenda of Congo’s oil ministry.

The main buyers of Congo’s oil are China (43%), the European Union (28%), the United States (12%), Australia (9%), India (6%) and Malaysia (2%). Since Congo’s major oil and gas exploration and production is offshore the country needs to attract investment and technology in this sector. Although a number of foreign companies like Italy’s Eni and France’s Total are operating oil projects in this country, Congo continues to face problems with regard to attracting foreign investment.

Equatorial Guinea

The Republic of Equatorial Guinea is located in western Africa, between Cameroon and Gabon. It has an area of 28,050 square kilometers. Major oil find in 1996 and ensuing extraction significantly raised state revenue and brought economic prosperity to the country. Oil sales turned the country of 1.27 million into Africa’s richest nation in terms of gross domestic product (GDP). Nonetheless, wealth distribution has been very unbalanced in the country with a few people benefiting from petrodollars.

Earlier known as an exporter of coffee, wood and cocoa, Equatorial Guinea became the third largest producer of crude oil in Sub-Saharan Africa, after Angola and Gabon, since 2004.

Equatorial Guinea sits atop 1.1 billion barrels of oil, one of the largest oil reserves in Sub-Saharan Africa. It is currently exporting 176,000 b/d of oil.

Equatorial Guinea was admitted as an OPEC member during the OPEC 172nd ministerial meeting of the Organization in May 2017.

After winning full membership of OPEC, it invited other African producers to follow suit as a show of unity to support their oil resources.

Gabriel Obiang, the minister of energy, mines and industry, underlined the significance of cooperation among oil producers due to exploration across Africa.    [Equatorial Guinea Crude Oil Production]

Equatorial Guinea recorded its highest oil output in 2005 at 380,000 b/d. Although the country has seen its oil output decline since 2005 onward, it intends to increase its oil recovery by drilling 12 blocks of its offshore oil fields. The target set for oil production is 500,000 b/d in three years.

Geographic Diversity

OPEC membership of Gabon and Congo can help diversify oil resources of this organization as well as its geographic extent. Meantime, under conditions where oil prices have been heavily fluctuating in recent years, forcing OPEC to resort to cooperation with non-OPEC producers to boost energy prices, the membership of new countries will definitely empower OPEC.

In fact, OPEC will become more influential with a higher number of member states. However, that would have an impact on global markets and secure the interests of member states when OPEC makes decisions apart from any politicization and only in favor of collective interests.

Cooperation with Foreign Research Institutes

More than a century has passed since the first petroleum seep in Iran’s Masjid Soleiman, the first in the Middle East, and ensuing oil production. Initially people used crude oil for lighting purposes. But today one can see the impact of crude oil and petroleum products in almost every industry. Over this time, researchers have conducted studies on the applications of crude oil.

Research has brought about widespread technological progress in the oil, gas and petrochemical sectors.

Technology is the instrumental factor in oil production in coming decades. The emergence of technology and its application will determine oil output levels in the future. As a powerful lever in power balance, the petroleum industry enjoys a special standing at the regional and global levels. Therefore, upgrading this fundamental industry is a national requirement in Iran.

Within the general framework of oil development plan, when we take a deeper look at the contents and strategies of Vision 2025 national development plan, as well as the 5th Five-Year Economic Development Plan, it is concluded that development of this industry depends chiefly on upgrading technology and using modern industrial tools and, on a larger scale, political and strategic issues.

A major research center involved in the petroleum industry in Iran is the Institute for International Energy Studies (IIES). Within the structure of the Petroleum Ministry and National Iranian Oil Company (NIOC), IIEs is serving as an intermediary scientific body linking science and industry at strategic levels. IIES monitors for instance market developments, as well as the latest technological achievements and the situation of financial and capital markets.

Ali Mobini Dehkordi, director of IIES, says due to significant changes at the global level the issue of energy has engaged economic, technical and technological, environmental, security, import and export elements.

Noting that the world would be gradually running short of hydrocarbon resources, he said: “A host of issues like integrity of big multinational companies controlling the energy, oil and gas structure in the world, formation of regional bonds and rivalries among regional oil producers for the purpose of oil market gains have given rise to specifically complicated and dynamic conditions.”

“Therefore,” he said, “the issue of energy could not be looked at from a single aspect under the current circumstances.”

He underlined the need for linkage between different aspects of the energy sector, saying: “In the energy sector, pollution, international treaties and membership of nations, the economic growth of different countries and their independence on energy, imports and exports with a view to energy security, level of application of knowledge in the energy sector and its cost price have entirely given rise to dynamism and complexity.”

Energy Efficiency Scheme

Dehkordi said implementation of an energy efficiency plan, drawn up by a German company, would help Iran save $17 billion on energy by 2025.

Highlighting Iranian Minister of Petroleum Bijan Zangeneh’s call for cooperation with some international institutes, he said: “To that effect, an agreement has been signed between IIES and German Energy Agency (Dena) for drawing up an energy efficiency executive plan in Iran over a period of five to ten years.”

“This agreement is nearing finalization and new opportunities will be created in energy saving,” said Dehkordi.

“If within the framework of this agreement, we bring the output of power plants in the country to the average output of power plants in Europe, we will be saving more than $17 billion by 2025,” he added.

“In the packages of cooperation with the Europeans, we are ready for investment and they can provide their necessary energy via our networks,” he said. “Furthermore, in light of cooperation with the leading consumers of oil we can increase production capacity of our oil and gas fields by new marketing.”

Dehkordi said energy efficiency was the first element under study by international agencies and consultants in the five continents in order to achieve maximum efficiency from their resources.

He said that diversification was the second element considered by the agencies and consultants with the focus being on energy resources, diversity in production and consumption, transfer and concentration or non-concentration on an energy mix.

Dehkordi also touched on carbon management as another issue under study by energy planners. “It means that every sector which would produce less carbon will be prioritized and on the same basis they will turn to conversion technology, investment and processing.”

“Big nations like China and Southeast Asian nations are making efforts to introduce integrity in their market through investment in all sectors of upstream oil, transmission and distribution,” said Dehkordi.

He said carbon management and non-concentration would create new conditions for market studies and cooperation among nations.

“Currently, the competition between machine energy and human energy is under management,” he added.

Dehkordi also referred to the issue of big data and data mining of reservoir management, saying: “In the past, oil and gas reservoirs were managed traditionally by drilling and measurement. But currently, they are estimated based on online and digital data, behavior of reservoirs and oil and gas wells, and the diversity in data mining and operation of oil and gas fields has created unique opportunities.”

Cooperation with Non-Colonial Institutes

Dehkordi went on to say that a connection bridge between science and industry was the solution to cost reduction and research quality improvement.

“Materialization of this issue requires an innovative perception, new structure and communications that are being developed at IIES. For instance, we are currently cooperating with the German Energy Agency (Dena) on energy efficiency. It means that we intend to cooperate with scientific and research institutes which are not colonialist,” he added.

Dehkordi also named some of projects IIES has currently under way as follows:

Geopolitical developments study; hydrocarbon balance; national energy outlook; NIOC strategic plans; financial relations between NIOC and government; future gas market studies; studying gas pricing models in domestic and foreign markets; studying petrochemical industry hard currency generation; studying Iran’s financial transactions with Russia, India and China; studying energy producers and consumers and Iran’s neighbors; studying human resources structure in Iran’s petroleum industry; petroleum industry technology roadmap.

Gov’t View toward Research

Dehkordi said Iran’s 12th administration has been looking at the issue of research and science differently.

“However, there is a long way ahead because this new view has failed to stabilize itself,” he added.

Dehkordi said science and technology committees and knowledge-based companies have been established in the country, which are required to catch up with the pace of scientific progress.

“For instance, McKinsey Global Institute is an international research firm offering revolutionary research proposals to the five continents, but the company has not seen any revolution per se over the past 150 years,” he said.

NIOC Assigns 14 Research Projects to Universities

Iran’s petroleum industry has made great achievements in terms of research and technology, research and development, transfer of technology, and domestic manufacturing. However, it is still looking for more effective and more efficient solutions in the technological sector. Since two years ago, a greater role was envisaged for universities and research centers to conduct studies at oil fields and exploration zones.

To further learn about research projects in the petroleum industry, "Iran Petroleum" has interviewed Ebrahim Alavai Taleqani, the acting head of National Iranian Oil Company (NIOC) Directorate of Research and Technology.

Where does research stand at NIOC?

One of the main missions assigned to NIOC has been upgrading technology and transferring it from proprietors to the upstream sector, in which case requirements are enshrined in governing documents and numerous laws including national scientific roadmap, resilient economy, 6th five-year economic development plan as well as the annual budget bill. Over the past year, we have managed to fulfill these obligations to a large extent. Of course I believe that the main players in the development of technology in the upstream oil sector are NIOC, Ministry of Petroleum, universities, knowledge-based companies, Office of Vice-President for Science and Technology, Ministry of Science, Research and Technology, Academic Center for Education, Culture and Research, scientific associations, oil equipment manufacturing companies, consulting engineering companies, E&P companies, innovation funds, and parks of science and technology among others. Together they constitute Iran’s petroleum industry. Therefore, coordination and integration among the pillars of this industry is a must which have focused upon because we believe that otherwise we will not succeed. This machine will not keep running as long as all components and parts are not mounted.

To what extent have NIOC directors envisaged research as a priority?

We believe that research is a priority for NIOC management. But the point is that priorities are determined based on financial issues and national conditions like selling oil and securing payments. Therefore, we cannot say that research is more prioritized than the foregoing issues. Research is important, but not urgent. Fortunately, the new CEO of NIOC highlights the significance of research and technology and believes that cooperation with universities, and developments of technology are among priorities and what has already started should continue.   

What are NIOC research priorities?

In a bid to define a mission for research and technology at NIOC and in the petroleum industry, we need to classify related affairs under the categories of infrastructure, projects, sponsoring student projects, knowledge-based companies, scientific associations and commercialization of achievements. One of these domains is infrastructure and we need to create the necessary infrastructure in compliance with law in order to facilitate ongoing affairs and the move would go ahead transparently. Therefore, infrastructure mainly pertains to instructions, rules and regulations as well as arrangements. To that effect, the Directorate of Research and Technology revised the Research Council at NIOC and we held a number of meetings. At the Research Council, we defined and approved instructions for the signature of contracts and won the approval of the Board of Directors. NIOC operational challenges which should be studied have been clarified and announced on the website. Furthermore, regulations for monitoring and arbitration and rules on how to engage arbiters, monitors and ad hoc committees have been outlined within the framework of infrastructure. We have also defined technological projects for the 6th Development Plan as well as projects that should be implemented under the national plan.

How many projects have been defined and how many have got under way now?

We have currently 14 megaprojects with universities for a ten-year period. They include nine field-oriented contracts and five exploration projects. In addition to these 14 megaprojects, we have envisaged a large number of projects with universities in 11 technology related sectors including environment, IT, earth sciences, reservoirs, reservoir management, drilling, etc. These projects have been approved by NIOC Board of Directors to help upgrade the level of technology at the company.

Which universities have field-oriented projects been assigned to?

There are currently nine field-oriented contracts under way. The arrangements for their implementation were made last year. In each of these projects, a university focuses on a specific field. The nine megaprojects are as follows: Kupal field to Sharif University of Technology, Soroush field to Sahand University of Technology, Azadegan field to the Petroleum Institute of the University of Tehran, Mansouri field to the University of Shirazi, Darquain field to Amir Kabir University of Technology, Kananj field to Islamic Azad University, Ahvaz field to Research Institute of Petroleum Industry, Gachsaran field to Petroleum University of Technology and Bibi Hakimieh field to EOR Research Center.

What companies are the other parties in the contracts with universities?

The other parties to the contracts in the nine megaprojects include subsidiaries of National Iranian South Oil Company (NISOC) with six contracts, Iranian Offshore Oil Company (IOOC) with one contract, Arvandan Oil and Gas Production Company with one contract and Petroleum Engineering and Development Company (PEDEC) with one contract.

Would you please tell us about the procedures for the implementation of the nine megaprojects?

These projects are divided into five packages. The first package is practically over or is under way. For instance, the Sahand University of Technology has finished its second package and we are following up on the third package. The University of Tehran is finishing its second package.

How have these megaprojects contributed to job creation?

The interesting point in these contracts is that for each contract four persons from technical and operational divisions of subsidiary companies, outside research, are engaged in the specialized working committees. In other words, in field-oriented contracts, 36 petroleum engineers and production engineers are involved, while in exploration technology contracts, 20 persons have been engaged so that the research projects would not be limited by boundaries and become applicable. Also, some of our colleagues from the corporate planning unit are present in the steering committee. Therefore, all directorates, ranging from technical affairs to corporate planning have rushed to help research so that more practical research projects would be accomplished. Similar conditions are prevailing at universities. From each university, at least 10 are present in the projects. Totally, 140 (exploration technology development contracts included) faculty members of universities are actively present in the projects, working on separate fields.

You first spoke of 14 projects. Would you please tell us about the remaining five projects?

Alongside the nine projects are five projects on the development of exploration technologies. With the Ferdowsi University of Mashhad, an agreement has been signed for improving underground image mapping in the sedimentary Kappeh Dagh area, with Shahid Beheshti University an agreement has been signed on geochemical exploration and hydrocarbon modeling in the North Dezful area, with Shahroud University an agreement has been signed on geomechanical technology, with Khawrazmi University the agreement is about fractured carbonated rocks in Abadan Plain and with Shahid Chamran University of Ahvaz, the agreement is about geochemical exploration in Abadan Plain.

How have these five projects got under way?

In addition to the nine aforesaid universities, five exploration agreements comprising four packages were signed with five universities. We are in the stage of the first package so that a roadmap for the development of technology would be drawn up. These contracts will have been accomplished by early 2019. For each case, a separate roadmap would be drawn up before deciding next steps for technological projects in coming years. Each of these universities can provide technological services.

What are the unique features and achievements of these projects?

Accomplishment of resilient economy with a view to making executive operations knowledge-based and the universities’ concentration on a specific subject and upgrading the talents of that university, creating a scientific and technological network in these megaprojects, formation of a group of petroleum industry specialists and universities, communication between research and executive operations and adaptation of this chain with NIOC plans at the Directorate of Corporate Planning are unique features which make progress irreversible.

Another achievement in this sector has been commercialization and equipment manufacturing. We have also provided instructions for creating scientific and innovative networks between universities so that all universities involved in the field-oriented contracts would have an innovation network.  Meantime, creating a student-dominated atmosphere and holding student competitions and directing these competitions also constitute a very valuable achievement for us.

Within the portfolio of the Directorate of Research and Technology we are looking for satisfactory implementation and acquiring new technologies so that all levels and sectors would be complete and finally the development objectives of the company would be accomplished. It is important to note that in the Directorate of Research and Technology we are not merely looking for the implementation of the projects. Rather, we intend to make sure that this project has been defined within its right status in the oil plans. For that purpose, a specialized committee comprising 56 technical staff from subsidiary companies in the steering committee is cooperating so that there would be coordination between Petroleum Ministry, NIOC, Directorate of Research and Technology and Directorate of Corporate Planning. In other words, we don’t want the plans to be like isolated islands.

What are the main objectives of NIOC Directorate of Research and Technology?

The concentration at NIOC is on developing technologies in the exploration and production sectors. We have signed five contracts in the exploration sector and 9 others in the production sector. These 14 contracts represent our megaprojects. Moreover, we have about 63 other projects, four of which were accomplished this year. In total, within NIOC and its subsidiaries, a total of 470 student projects are under way. Through our interaction with the Directorate of Human Resources, we support conscripts who have been confirmed as exemplary. We have also signed two agreements with the Planning and Budgeting Organization. One of them is about upgrading science and technology at NIOC. Under the 5th Development Plan, 30 projects were implemented under that agreement, and eight others are to be finished by next March.

What are research and technology priorities in the 6th plan?

Our priorities are exploration, production and overcoming challenges to these two sectors. Improved oil recovery, enhanced oil recovery, reservoir management projects as well as production installations, desalting facilities and anti-corrosion projects are envisaged. Other programs include efficient energy use, protection of the environment, zero flaring, containing pollutants, adopting physical assets management instructions and commercialization of all these achievements, which would be implemented under the 6th development plan.

Could you tell us about the necessity of communication with international research centers?

Maintaining communications with scientific and research centers in the world and attending international forums are of high significance because oil has always been an international commodity. Therefore, every education is required to be international. Most of work we do and the technologies we need are similar to each other, but we need to be aware of the latest technical and technological achievements and use them. We need to improve our communications within NIOC. Development must be high on our agenda. However, due to international restrictions, our international communications have been restricted, but we hope that they would be revived soon. Of course, in exploration and field-oriented contracts, we will follow up on using international experience through universities and will continue our international cooperation in the projects via consultants.  Our presence at international fora is a must because we can learn about cutting edge technologies through reading articles. Then we can make ourselves known at international fora by presenting papers. In many conferences, participants are surprised when they hear about what we have done in the country without having spoken about it. Therefore, we need to increase our presence at international fora in order to realize where the world is headed to. That would help us learn about the trends in addition to being able to present our scientific potential in the oil sector.

Iran E&P Companies Reevaluation Envisaged

The director general of Technical, Executive and Project Assessment Council of Petroleum Ministry has announced a plan to reevaluate the qualifications of 17 Iranian E&P companies.

“So far, 17 Iranian companies have been cleared as E&P. The certificate issued expires by June 2019 and they will naturally be reevaluated,” Omid Shakeri said.

“Therefore, in the second half of next [calendar] year we will be reevaluating the qualifications of Iranian E&P companies and this list (17 companies) is likely to be modified,” he added.

Shakeri added: “When this assessment was being done for the issuance of certificates we had practically no real E&P companies. Therefore, we assessed companies that could potentially become E&P.”

“They were required to meet some obligations over the past two years and they are expected to have undertaken certain empowering measures to let us renew their certificates after re-assessment. Now we have to establish whether or not they have taken any measures to that end,” he said.

Drilling Firms Assessed

Referring to the assessment of qualifications of drilling companies, Shakeri said: “Ever since last year when the issue of tender bids for production enhancement at National Iranian Oil Company (NIOC) – EPC and EPD projects – came up a long list of qualified companies was drawn up to bid for these projects.”

“Drilling firms had a big share in the long list. At that time, specifically for these projects, 13 drilling companies were cleared to be added to the long list drawn up by the Department of Engineering,” said Shakeri. “But for this list to be general for drilling projects we plan to re-assess drilling companies again in the last quarter of the [current calendar] year in order to reach the Petroleum Ministry-approved list and publish it.”

“Therefore, there is a chance for companies that had not been assessed last time to try their chance this time,” he said.

32 Foreign Firms

Shakeri went on to say that 32 foreign firms had been qualified to conduct reservoir studies in Iran.

“The qualifications of 32 foreign companies which are supposed to provide services to Iranian companies in reservoir studies have been confirmed by the Department of Engineering, Research and Technology,” he said.

“That would help us upgrade the potential of Iranian consulting companies in the upstream sector in cooperation with foreign consultants and be able to transfer technology in upstream studies,” he added.

22 Rotary Machine Contractors Cleared

Shakeri also touched on the assessment of consultants and contractors involved in the overhaul of rotary machinery.

He said: “In the petroleum industry, there is a large number of rotary machinery like turbines and compressors whose overhaul is up to the Department of Engineering.”

“To that effect, four rounds of assessment have been made over the past year and so far 22 contractors have been confirmed and issued certificates to repair specific models of rotary machinery,” he added.

Shakeri said the case of some other companies is to be studied during the 5th round of assessment that would be held soon.

Petroleum Ministry subsidiaries are required to choose from the list of qualified companies for overhaul.

Assessments Under Way

Shakeri said the Technical, Executive and Project Assessment Council of Petroleum Ministry has received more files for review this year.

The outcome of the council’s assessments, he said, has been the confirmation of qualifications of 22 rotary machinery contractors, adoption of bylaw on standardization in the petroleum industry, assessing qualifications of drilling companies and clearing 32 foreign firms to study reservoirs among others.

He said the Council was established at the Petroleum Ministry long time ago, adding that it used to operate under the title of Engineering Affairs Directorate-General.

The directorate general was renamed last year and its new tasks were defined in the last organizational chart.

The most significant tasks assigned to the council within the framework of the new chart include outlining project services, drawing up agreements for contracts, assessing the qualifications of consultants and contractors, preparing a specific price list for the petroleum industry, setting technical regulations and standards for the Ministry of Petroleum.

“Regarding directives and regulations pertaining to the financial estimates of plans and projects, we conduct certain measures in coordination with the Planning and Budgeting Organization,” said Shakeri.

“Furthermore, some tasks which the Petroleum Minister assigns to the Department of Engineering and Research and Technology regarding tender bid laws are followed up on at this council. Some of them are: drawing up and releasing the list of consultants and contractors, studying requests for the issuance of permit for consulting activities,” he added.

How to Counter Oil Sanctions

Shamseddin Mousavi, CEO of Payandan Oil Co.

We view sanctions as the conditions or the scope of project, i.e. assessing every factor, which is likely to affect the project processes and the triangle of time-quality-cost for a project.

To know when and at what cost projects are implemented, is of paramount significance from the viewpoint of management methodology. When such analysis and assessment materialize about projects it would become clear that procrastination in the implementation of the projects and their extra costs do not result merely from sanctions; rather, untimely decision-making or even no decision-making, mismanagement, empathy and integration within an organization and such factors are instrumental in the timing and the costs of implementation of a project.

It is noteworthy that international sanctions do not imply a new crisis for our country although their degree of toughness has varied during different periods following the 1979 Islamic Revolution.

The imposition and the toughening unilateral US sanctions against the Islamic Republic of Iran, particularly so-called D’Amato and the recent ones, necessitate development of new solutions to counter such restrictions.

Since these recent sanctions are mainly aimed at affecting Iran’s oil and gas industry and banking network non-application of methods to counter them, they could inflict serious harms on the country’s economy by targeting its generative sector.

Construction of oil refineries (particularly small-scale ones),building petrochemical plants to  produce and export petrochemical products, improving the quality of gasoline, gasoil and other petroleum products through sweetening and desulfurization, strengthening tie with strategic partners for the purpose of exporting crude oil and petroleum products, boosting gas trading through expanding gas transmission networks particularly pipeline construction, diversification of crude oil sales methods (swap, oil blending, sales on the oil stock exchange, boosting the capacity of shipping industry, etc.), relying on domestic potentialities in the implementation of oil and gas projects, not waiting for the presence of foreign companies, maximizing the value-added chain and preventing the waste of hydrocarbon resources (preventing the flaring of associated petroleum gas), improving productivity and reducing the energy consumption index through boosting the output of equipment and industries, are among methods which could be utilized under the aegis of  Iran's present potentialities to minimize impact of the sanctions.

Iran’s oil export is under embargo. Construction of small-scale refineries would require $20 million to $40 million in investment, which is nothing compared to the investment needed for big refineries. The necessary technical license for small refineries may be obtained from East Asian companies. An advantage with such refineries is that they would be built in a quite short period and on strategic spots located on the route of crude oil and fuel transit, which would be fed by crude oil, which Iran cannot export due to the sanctions.

The world gas reserves total 187 tcm, 18% of which belongs to Iran. Based on the current gas price, Iran’s gas reserves are valued at €7,000 billion. In addition to these God-given resources, Iran is geographically and geologically located in a golden and strategic spot - known as the regional energy intersection – vital for gas trade.

Iran’s gas transmission grid, which has 36,000 km of high-pressure pipeline, can handle 800 mcm/d of gas. This figure is planned to reach 1,100 mcm/d by 2025 once 9,000 km of extra pipeline would have been constructed. Meantime, the number of production centers will rise to 74 from the current 40, and gas compressor stations will number 130, up from the current 79.

Meantime, there are currently about 3,000 km of offshore gas pipeline only in the South Pars gas field and 310,000 km of urban gas transmission line. Gas makes up 70% of Iran’s energy mix. Gas is fed into 120 power plants generating 50 GW of electricity.

The above-mentioned figures make it clear that Iran’s economic development depends on gas. Therefore, as long as Iran remains under sanctions, gas is a relative advantage for national economy.

Petroleum Industry Dependence

In Iran, there is technical potential as well as specialized manpower and capacity for the manufacturing of petroleum industry equipment. In case necessary management legal mechanisms are worked out for the implementation of agreements and legal obstacles are removed, major objectives of petroleum industry would be achieved.

Iraq and Saudi Arabia, both major producers of oil, may never want or even be able to reach such objectives, but Iran’s petroleum industry is able to manage itself completely owing to the previously mentioned technical, scientific and engineering potentialities.

Iran’s progress is highly tied to national consensus and organized relationship between the public and private sectors. Considering the private sector as enemy will not help run the industry. Is it possible to resolve the problems of this industry (from financing to the purchase of commodities, equipment and service) by relying only on traditionally state-run clients? The government must only serve as the policymaker, supplier of infrastructure and supervisor of projects.

The monetary, financial and banking system must serve as a tool for facilitating development projects of petroleum industry. The banks are able and required to assist the petroleum industry in expanding its activities instead of making profits by converting public assets and savings into hard currency to become a paralyzing arm of the economy.

Petroleum industry is a major and strategic industry whose windows must be open so that Iranian companies and the private sector could get involved in it.

Once necessary resources have been provided, good events will occur technically, economically and commercially.

A major competitive factor in global investment markets is oil and its related services and utilities. Iran’s oil and gas reserves have naturally high rates of return on investment (RRI). For instance, the South Pars gas field has an RRI of 70-80%, which means that if we sell gas and condensate at global prices, we will recoup 50-70% of the money spent in the project in one year. Therefore, the necessary ground is prepared to raise RRI for Iranian companies under the aegis of national consensus so that banks would be interested in funding such projects. Cooperation between banks and companies for the development of petroleum industry projects requires the parties to contracts to respect their obligations. In other words, in addition to appropriate investment, development projects are required to be acceptable while companies are required to have an effective project management structure. When a project is agreed to come online in five years, it should not be delayed for a decade because delaying the startup of a project will harm both the client and the contractor. Another issue that could result in the growth and excellence of these companies is their increased international interactions. Definitely, without communicating with their foreign counterparts, which are highly capable and without partnership with financers, these companies will not be able to grow satisfactorily. Furthermore, they can seek the advice of foreign experts and senior advisors in other sectors. In fact, Iranian companies are able to operate projects beyond borders while increasing their interactions at different levels. According to a veteran petroleum industry official, “We do a project alongside experienced foreigners once, but next time we will do it on our own at a better quality and in a more complete form.”

Strategy is the tool for realizing objectives. We have to work out our strategies such that they would attach great significance to the strategic approach vis-à-vis society, system, management and organization.

Primarily, national and international conditions, facilities, potentialities and resources should be studied. Then we need to make plans and move ahead. Whatever we do in practice is required to be in conformity with our capacities, objectives, capabilities and resources or we need to develop plans for capacity building, financing and provision of facilities.

Strategic View of Projects

The main crisis striking the petroleum industry, as well as public and private organizations is the absence of strategic view of organization and management. Strategic view of a project is as vital as strategic view of business and organization. Such an attitude should be reinforced in the approaches of senior managers. Meanwhile, convergence between this issue and organizational empowerment, motivation and health result in a better performance and competitive advantage. Capabilities, potentialities, resources, capacities, motivational system, transparency system and organizational health are required to be viewed from a high level. Then they should be prioritized before authorizing projects.

Lack of a strategic view would lead to the squandering of national resources due to ignorance of restrictions of resources and capacities and lack of attention to priorities.

A strategic and important result, which is needed to come out of a strategic attitude, is synergy.

In light of Iran’s special conditions in the oil, gas and petrochemical industry, numerous companies have been established. Assessing the strengths and weaknesses of project management among engineering and contracting organizations involved in Iran’s oil, gas, petrochemical and refining industries and building capacity for the development of the petroleum industry is a must. Management, control and supervision on the performance of projects and application of project management software tools, as well as developing a standard methodology for project management could facilitate access to the objectives of the golden project triangle, i.e. time, cost and quality, in the best quality and according to timeframe.

Should the client meddle with the least significant aspects of the project it would be useless to name a contractor. The reason for a client to assign a project to a contractor is that the client lacks sufficient potentiality, specialty and human resources for doing it and it has only necessary resources to spend. Therefore, it chooses a competent contracting group.

Iran is now familiar with EPC-style execution of projects. Under such framework, the general roadmap is given to the contractor as the basic plan and then the contractor provides a detailed plan to be executed step by step. A monitoring committee is also engaged to exercise control over the implementation of the project.

Now, the paradigm of project has changed. In light of conditions prevailing over our country and many others, the client is just a regulatory body. In other words, the client specified what products or services are needed, but it does not have even the necessary money for the project.

Today most projects are EPCF or EPC+F, where for instance in the development of a gas field a consultant is hired, but the implementation of the project and necessary financing are assigned to a competent company involved in such sectors. Project management brings together management of discipline and methods. If project management is implemented properly, the possibility of an acceptable output will increase. It is noteworthy that project management is the only way to convince us about the successful implementation of the project.

Project management is an effective method in management for dealing with the unique phases of new projects and striking a balance to the processes and activities related to the project, expenditure and quality within the framework of time and in an environment fraught with diverse risks.

Decision-makers and project managers have yet to find a new analysis of knowledge management, foresight and competence and meritocracy. When it comes to the implementation of projects in the country, most choices in project management have a traditional basis while this branch of science is progressing rapidly.

The most significant issue, which the client has to take into consideration, is to learn lessons from what he has learnt. It is necessary to prepare a team to transfer the experience of each project to the next project to prevent the repetition of the past mistakes and in a way that the procedure of implementation of the project would improve.

Project management is an indicator in assessing the capabilities of a company. The ability to manage a project makes clear whether or not a company would be able to handle a project.

Last but not least, while it is believed that the organization cycle is like a human being, I have to say that an organization is born and then is developed to reach maturity. Every industrial, manufacturing or service organization will experience the same process. When an organization reaches the stage of maturity if no fundamental development is made for its survival that organization is doomed to fail. In other words, if at this turning point, the strategy of the organization is not coordinated with environmental changes the relevant organization will definitely fail. Based on the Greener Model’s seven phases, after each stage of growth, a crisis will happen. Therefore, managers are required to identify the crisis before its emergence and find a proper solution to counter it with a view to proceeding with their own survival and growth. If not, they will be down on the path towards failure and destruction.

 

Age of Oil in Iran

Under the infamous D’Arcy Concession of 1901, William D’Arcy obtained a 60-year concession over more than one million square kilometers of Persia in exchange for £20,000. Two years after the concession took effect, D'Arcy established a company, which was his first. Before that, D'Arcy had run no company and had no knowledge of oil. He didn't know the land he had chosen to make exploration either.

In a bid to arrange affairs and start his work in Iran's soil, he hired George Reynolds, who had graduated in engineering from the Indian Imperial College. Reynolds had earlier worked in Sumatra in drilling operations. D'Arcy tasked Reynolds with setting up a working committee and listing necessary tools and equipment to be supplied. The arrangements were made. During his stay in Iran, Reynolds chose mountainous areas in western Iran as the first place for drilling. 

The Red well, drilled in an inaccessible area surrounded by mountains, was near the area which later marked Iran-Iraq border. The idea behind this choice was earlier reports by French geologist Jacques de Morgan. Although the area was likely to contain oil, it was very difficult to carry necessary equipment there. Another issue was security. Local tribes and nomads had no commitment vis-à-vis the central government. Therefore, they did not recognize the oil concession awarded by the government.

The chosen area was about 500 kilometers away from the Persian Gulf and Reynolds thought it was better to carry his equipment to the closest point near the envisioned location for drilling on boat.  For that purpose, the drilling equipment as well as the steam boiler and the drilling rig were shipped from Britain to Basra Port. Then, the equipment was loaded on smaller ferries to be carried along the Tigris river towards the north. After it became impossible to move on vessels, workers and freight animals were used to carry the equipment through treacherous mountains to the drilling location.

The arrival of the equipment was alas the beginning of all problems. Reynolds and his workers, who were from different nationalities including Poland, Canada and Azerbaijan, had to assemble the machinery and equipment to start their operation. What added to anxieties was the insignificant recovery of oil from the Red wells. Everyone was frustrated due to the unsuccessful drilling results. For two years, D'Arcy had financed exploration operations which had got under way by Reynolds. But finally he wrote to Reynolds that he was running out of money.   

Reynolds Surprised

As expenses increased D'Arcy found that he could not afford the project by himself. Therefore, he was looking for a partner to invest in the project. That infuriated the British government.

Until April 1904, all investment made by D'Arcy in Iran was close to collapse. Britain was anxious that D'Arcy may sell the Concession.

In addition to traditional sensitivity to Russia, British government officials were also worried that France was likely to win the concessions. That is why the British ministry of navigation reacted to this issue.

The director of fuel committee at the British ministry of navigation said before any foreign institute intervened the ministry needed some time to make arrangements for the British government's participation in the France project.

Shortly after this correspondence, an agreement was signed between D'Arcy and the British ministry of navigation; a nationalist union was established and teamed up with Burma Oil Company, which was operating in Asia, to help D'Arcy keep the project. Exploration operations were still under way in Iran. After failure in the Red wells, the Reynolds team moved towards southwest Iran and continued work in what we today know as Ramhormoz in Khuzestan Province. The results were not acceptable either. Nearly seven years of unfruitful exploration had disappointed D'Arcy and his partner. The working team was no longer willing to continue the project and it was presenting every pretext to forego the operations. However, the only one who remained tough and determined was Reynolds.  Reynolds had a strong feeling in oil exploration and that is why he was determined oil existed there.

Reynolds took into consideration all signs and indicators in a region to conclude that was possibility of oil. He did even listen to legends, superstitions and unreasonable beliefs of local people. That is why as soon as he heard people saying a mosque was near there and that an ever-burning fire was still on he immediately moved to the Shoushtar area and found an ancient monument which could be the remnants of a fire temple.

Reynolds felt surprised specifically when he found petroleum seeps in that area and he saw bitumen coming out of the heart of the earth. All these signs encouraged him to try the drilling for the last time in that area although the investor and his team were totally disappointed.

D'Arcy and his union were trying to sell the concession. Seven years of tough work had cost him too much money and no concrete results had been achieved. It was mid-May 1908 when Reynolds had moved to a new region. He received a telegram from the union that no more money was available and that he had to stop the operations and bring back every useful equipment to Britain.

Wilson, a close associate of Reynolds, was tasked with protecting British oil drillers and interests. Influenced by Reynolds' determination and self-confidence, he sent a telegram back to the British consul in Bushehr that the union had made an unreasonable decision. He said in the message that exploration will sooner or later come to fruition and that if that golden opportunity and the D'Arcy concession were lost the Germans or other foreign companies would come to take advantage of this region in the future.

According to the telegram message, Wilson expressed surprise why no negotiations had been held with the foreign ministry. He noted that senior politicians and experts were well aware of security in that region.

First Oil Seep

Reynolds started new drilling operations near petroleum seeps he had seen in Masjid Soleiman (MIS) area. It was the last opportunity for him to survive. Drilling went on days after days and whatever was under way showed Reynolds was right. And finally on May 26, 1908 early in the morning while Reynolds and Wilson were sleeping outside their tents woke up to a strange sound. Moments later they saw oil coming out of the earth. The drillers and oil service workers were basking in joy. They surrounded the drilling rig to celebrate the achievement of seven years of tough work. Despite their disappointment, they were tasting the sweetness of this big achievement after seven years.

Reynolds immediately cabled a message to the British consulate in Bushehr, saying oil had been found at the depth of 1,180 feet at Well No. 1 of MIS. He promised to announce the details later.  

The oil age started in Iran. As oil gushed out, the petroleum industry was born in Iran and in the Middle East. Black gold may have been black scourge for Iran due to numerous problems created for the country due to the discovery of oil; however, the oil age started in Iran. Oil has been definitely an endowment and any related problems should be blamed on not using the opportunity in an appropriate manner.

The discovery of oil in Iran gave rise to important industrial events. This valuable fluid is seen in all aspects of life. The discovery of oil was the beginning of industrialization and the industrial civilization of nation where people still stock with traditions. The country was industrialized, but its people not.

Petroleum Industry Teams at Iran Pro League

Iran’s petroleum industry is represented by three football teams-"Pars Jonoubi Jam", headed by Mehdi tartar, "Sanat-e Naft Abadan", headed by Portuguese head coach Paulo Sergio, and "Naft Masjed Soleiman" headed by Ali Reza Marzban- in the current season of the Iranian premier league matches. Their performance has been relatively good given their financial conditions and facilities.

These three teams are expected to record better results than the half season.

The final week of Iranian football clubs’ pro league in the first half season saw brilliant performance by "Sanat-e Naft Abadan"; however, the result was not good for "Pars Jonoubi Jam" and they ended in failure. And "Naft Masjed Soleiman" finished its presence in the pro league with a draw. Since these results were achieved outside home, it can be argued that they ended an acceptable week.

"Pars Jonoubi Jam" was the best among petroleum industry representatives. It gained 19 scores to finish 6th in the league table. "Pars Jonoubi Jam" had recorded heavy fluctuations throughout the season, but it finally managed to achieve a suitable rank by the end of the half season.

"Sanat-e Naft Abadan", which is better known as the sultan of draw, recorded its second victory in the last match of the season. After a 10th draw, the Sergio-led team overpowered Saipa. Owing to this victory, they notched up in the league ranking table and now stand in the 11th position with 16 scores.

"Pars Jonoubi Jam" and "Sanat-e Naft Abadan" had stable management and technical staff, but the third representative of Iran’s petroleum industry, which was marking its second berth in the pro league, has had numerous problems in both sectors. The manager and board members were replaced several times while the head coach was replaced. Due to such changes, "Naft Masjed Soleiman" did not have a good start and remained at the bottom of the table. However, after it was taken over by Ali Reza Marzban as the new head coach and due to stability in the board line-up, the team's position improved in the league table and stood in the 12th position.

"Pars Jonoubi Jam" Head Coach:

We’re Seeking Honorable Pro League Ranking

Mehdi Tartar, the head coach of "Pars Jonoubi Jam", said the team was in good conditions, adding that necessary planning had already started for the second half season.

“We are holding training in Kish Island in order to reach desirable conditions for starting the second round of matches of pro league games,” he added.

Tartar said his team was seeking to hire qualified footballers.

“Of course we are facing a serious problem, that is the shortage of players in this half season,” he added.

“Since most good players have signed contracts with other teams, the clubs will not easily discharge them; therefore, we are facing problems with regard to engaging new players,” said Tartar.

“We are currently ahead of our goals, but we are making efforts to have a powerful team in the second half season,” he added.

“Definitely, berthing an honorable standing will bring joy to the fans to "Pars Jonoubi Jam" by the end of the 18th league,” Tartar said.

"Naft Masjed Soleiman" Head Coach:

We’re Eyeing Single-Digit Ranking

Ali Reza Marzban, the head coach of "Naft Masjed Soleiman", expressed happiness with the final matches of the half season. He said: “We have to make efforts to continue this trend in order to maintain our standing in the pro league.”

He said no coach could promise survival or championship in football matches.

“Along with players, I will do my best for "Naft Masjed Soleiman" to have a good standing in the table, because the team is representing the Bakhtiari tribe and it has to stay in the league,” he added.

Marzban acknowledged that his team did not have enough substitute players.

“My hands are empty for changing. Our substitute players are not qualified enough and we are likely to add some new players to our list in the half season.”

He said the team’s current line-up is a legacy of its previous coach. “The team was left to me after it had started the season with another coach. Therefore, two different attitudes have been involved in the team line-up,” he added.

Marzban said five to six players need to be replaced with more qualified ones in the half season and “I hope that the club would prepare the necessary conditions for that purpose”.

He reiterated that his team was much more qualified, saying: “Since our performance is excellent it was painful to end in failure.”

“We have to be proud of ourselves as we are showing off modern football. We were a bit unlucky and I hope that this bad luck would leave us alone,” said Marzban.

“In case the club manages to engage several new players in the second half season to fix our weaknesses, I am sure we will be among top ten,” he said.

Marzban said "Naft Masjed Soleiman" merited a much better standing.

"Sanat-e Naft Abadan" Manager:

We Will Be Among Top 6

Ali Issazadeh, manager of "Sanat Naft Abadan", said the football team would see major changes in its lineup this year. “But we recorded acceptable results given our possibilities,” he said.

“Paulo Sergio is a good coach and he has a good international record in football. We picked him up based on our knowledge of him,” he said.

Issazadeh added: “Given the results we have achieved I think that his performance is acceptable. Of course, I have to say that some arbitration mistakes did not let him achieve his desirable results. However, generally speaking he has had an acceptable performance in Abadan.”

He said that his team would fully support Sergio in the second half season.

“He’s a good coach and he can be helpful for "Sanat-e Naft Abadan". This coach places trust in young players and such trust brought him a good result,” said Issazadeh.

“We are doing our best to engage competent foreign players, but due to hard currency impediments imposed on the club we are likely to hire Iranian players,” he added.

Issazadeh said his team was determined to be placed among the top six.

“Meantime, we are eyeing the top four in order to win a quota in Asian championship. It’s a bit hard, but we will do our best to reach our objectives,” he added.

Neyshabour, Symbol of Persian History & Culture

Neyshabour is the second largest city in Khorasan Razavi Province and is considered the symbol of Persian culture and history. In addition to precious turquoise, Neyshabour has gained fame for rheum.

In our previous issue we had introduced some of tourist attractions in Neyshabour. In continuation, some more sites are introduced in the current issue.

Shadyakh City

The ancient city of Shadyakh was inhabited by people up to early 3rd century AH. It was a significant place up to 669 AH when a devastating earthquake nearly flattened the city. The renowned poet Sheikh Attar Neyshabouri, hailed from Neyshabour, used to live in Shadyakh. Today, the tomb of Attar as well as the tomb of Khayyam, another famous Iranian poet, is located in Shadyakh.

Archeological excavations in 2000 unearthed some houses, a hall, a blacksmith's, pottery and glassware. Archeologists also found skeletons of people who had died in the earthquake.

Shadyakh City

The ancient city of Shadyakh was inhabited by people up to early 3rd century AH. It was a significant place up to 669 AH when a devastating earthquake nearly flattened the city. The renowned poet Sheikh Attar Neyshabouri, hailed from Neyshabour, used to live in Shadyakh. Today, the tomb of Attar as well as the tomb of Khayyam, another famous Iranian poet, is located in Shadyakh.

Archeological excavations in 2000 unearthed some houses, a hall, a blacksmith's, pottery and glassware. Archeologists also found skeletons of people who had died in the earthquake.

Attar's Tomb

Attar Neyshabouri's tomb which is located in the middle of a beautiful garden dates from the Timurid Empire. Attar is a famous poet and mystic who lived in Neyshabour more than seven centuries ago. Attar, who was laid to rest in Shadyakh, enjoys a high standing in the Persian culture and literature.

Lak Lak Ashyan Castle

Some five kilometers southeast of Neyshabour stands Lak Lak Ashyan Castle. There is evidence showing the castle dates back to the Qajar dynasty. The reason for the appellation of this castle is the nestling (Ashyan) of a stork (whose Persian equivalent is Lak Lak) in that castle. Like ancient castles, Lak Lak Ashyan incorporates watchtowers, an interior area as well as fences.

Visitors may enter from the eastern side. The materials used in the construction of the castle are diverse. Instauration work has been done in the castle throughout years. 

Shahmir Domes

Shahmir domes are made from brick. They are of different structure and size, but located adjacent to each other. The larger dome has a hexagonal exterior and a quadrilateral interior. It dates from the Seljukide era. Fifteen meters farther is located the smaller dome which is similar to the larger one in shape. The smaller dome dates back to the Ilkhanid era.

Neyshabour Caravanserai 

The Neyshabour Caravanserai used to be located outside the city, but it is now located in the city due to the expansion of Neyshabour throughout years.

The caravanserai is said to have been built during the reign of Shah Abbas Safavid. The former caravanserai is today a museum.