Iran’s Zangeneh: Statements Can’t Run Oil Market

Iran’s 24th annual Oil Show was held May 1-4 against the backdrop of tough US sanctions on the country’s petroleum sector. The Tehran International Permanent Fairgrounds welcomed 1,047 Iranian and 106 foreign companies.

Iran’s Petroleum Minister Bijan Zangeneh, addressing the inauguration, said the country had never used the oil market as a political tool

“Anyone using oil as a political tool will have to account for its consequences as well,” he said.

The US pulled out of Iran’s 2015 nuclear deal with six world powers last May and reimposed sanctions on Tehran. Washington also ended sanctions waivers granted to several buyers of Iranian oil in a bid to maximize its pressure on Iran and bring Iran’s oil exports to zero.

Zeroing Iran Oil Exports ‘Illusion’

Zangeneh said the US wished to “zero” Iran’s oil exports, adding it was just an “illusion”.

“Any independent analyst in the market knows quite well that the spare capacities announced by some [oil producing] nations are overstatement and exaggeration,” he added.

“We have no hostility with anyone in the region, but two neighboring countries regularly release statements and make remarks about their overstated spare capacity in a bid to assure the market that Iran’s exit from the oil market would cause no problem to supply,” said Zangeneh, alluding to Saudi Arabia and the United Arab Emirates.

“These [two] countries are not only exaggerating about their [spare] capacity but also about their reserves. They have so far failed to win approval of any independent international body for their alleged astronomically high reserves because they lack any sufficient evidence and documents,” he added.

Zangeneh said: “I have already said that the global affairs are not as easy as the way the US and some of its supporters and instigators think. The oil market could not be run by statements. What is determining is the actual production of oil supplied on the market.”

OPEC Risking ‘Collapse’

Zangeneh said the current oil market fragility could not be managed by mere statements and speech, claims about sufficient oil supply, showmanship and positive psychological atmosphere.

“The oil market is fragile due to the tensions transpiring other nations like Libya or everywhere else as well as unpredictable but possible tumults,” he added.

He also highlighted the anxiety of some members of the Organization of the Petroleum Exporting Countries (OPEC) with regard to the US Congressional bill known as No Oil Producing and Exporting Cartels Act (NOPEC), saying: “They are seeking for cooperation between OPEC and non-OPEC as well as encouraging small producers to join as new members. That’s good. But the same countries, due to their policy of using oil as a weapon against two founding members of OPEC (Iran and Venezuela), are transforming the unity of this organization into division and spell the demise and collapse of OPEC. They should be held responsible.”

 

South Pars Recovery Growing

The measures undertaken by the Petroleum Ministry for prosperity in production were outlined by Zangeneh.

He touched on the rich gas production capacity of 1,000 mcm/d, adding: “With the continuation of investment in the South Pars gas field projects in the current calendar year, production from this field will increase by about 60 mcm/d.”

Petchem Output Up

Zangeneh said 18 petrochemical projects would be finalized in the current and next calendar years to bring Iran’s petrochemical production from the current 27 million tonnes to 50 million tonnes in 2021. He said that would require more engineering and commodity services for domestic producers.

Private Investment

The minister said there was an offer for using the money stock in the capital market as well as private money, expressing hope that petroleum industry projects would receive necessary financing.

Referring to EPC and EPD projects, he said: “We have already received permission for investing $6 billion in recovery enhancement. Furthermore, 10 contracts worth IRR 65,000 billion have been signed to that effect and 23 more contracts, forecast to be valued at IRR 340,000 billion, were under way.

He said that Sepehr, Jofair, West Paydar, East Paydar and Cheshmeh Khosh were among fields whose development would be accomplished under IPC contracts.

Domestic Manufacturing

Zangeneh said his ministry would proceed with supporting domestic manufacturing with a focus on basic commodities needed by the petroleum industry.

“EPC and EPD contracts have been drafted so as to be awarded to Iranian contractors. Therefore, the bulk of equipment and commodities [classified under the 10 groups of basic commodities] would be purchased domestically. To that effect, we have resolved prepayment problems,” he added.

Zangeneh said the Ministry of Petroleum would prioritize any idea and offer which would provide financing.

“Expecting the government to provide any financing would create restrictions,” he added.

Touring Oil Show

After his inauguration speech, Zangeneh visited the 24th International Oil, Gas, Refining and Petrochemical Exhibition.

He said that Iranian companies had found the right path to go ahead, adding: “I saw no strategic problem in their methods.”

“In the previous years, we had many rounds of talks with these companies. But after five to six years I think they are going the right way, which would make them successful internationally. What we are currently doing is in such direction,” he added.

He gave a positive assessment of domestic manufacturing of petroleum industry equipment, saying: “Domestic companies have fortunately implemented projects to a good level and they were happy with that. I also saw a bright future for domestic producers and manufacturers in terms of extent of work.”

Zangeneh also touched on his ministry’s support for startups and knowledge-based companies, saying: “During my visits, a number of companies raised problems like modifications in their contracts due to price jumps and non-consideration of such modifications. This issue would be followed up on.”

“The most important thing that should be done for the survival of domestic producers and manufacturers is that we would define projects for them so that investment would continue,” he said.

Zangeneh said: “What I’ve already said is that the potential available in this sector is more than the market demand. Therefore, we need to cooperate with regional countries in order to supply the regional market needs.”

He said the Ministry of Petroleum would ban foreign purchase of commodities and equipment which would be manufactured domestically.

“We will tell our subsidiaries that they would not be allowed to purchase foreign-made commodities which are being supplied sufficiently in the country,” he added.

Zangeneh said the non-dollar trading mechanism- INSTEX- had yet to serve oil exports “but it will be helpful for domestic purchase of equipment”.

Iran Oil Recovery Continues

Masoud Karbasian, CEO of National Iranian Oil Company (NIOC), told reporters on the sidelines of his visit to the oil show that Iran would push ahead with its oil production despite US sanctions.

“Except during critical conditions caused by recent flooding that forced us to close some wells, we have had no reduction in oil production,” he said.

Karbasian said: “We should not view oil as a political weapon. Iran’s oil exports will continue. Of course, no one can dictate us how to behave, and we never sit down and watch. Iran will pursue its own policy.”

He also dismissed speculation that Iran would pull out of OPEC.

Karbasian said efforts were under way for sustainable oil exports, supply of more petroleum products, and generation of value-added from production and exports.

He said necessary mechanisms had been worked out to provide insurance cover for all oil tankers.

He noted that selling crude oil on the Iran Energy Exchange would continue, adding: “The persistence of such trend assures potential buyers of trading in this market.”

Karbasian said talks were under way with China, India and Azerbaijan Republic within the framework of Iran’s policies.

He expressed hope that Iran-China ties would not be “affected by US threats”, citing “positive and progressive trade ties” between Tehran and Beijing.

He said: “I am optimistic about the continuation of Iran-China trading ties.”

Karbasian said the petroleum industry remained dependent on foreign manufacturers of equipment for long years, adding: “But now you can see that we have too much to show off in the manufacturing and supply of equipment and items for the petroleum industry.”

He said enhanced recovery from oil fields would continue by reliance on domestic capabilities.

Iran’s 24th annual Oil Show was held May 1-4 against the backdrop of tough US sanctions on the country’s petroleum

sector. The Tehran International Permanent Fairgrounds welcomed 1,047 Iranian and 106foreign companies. Iran’s Petroleum Minister BijanZangeneh, addressing the inauguration, said thecountry had never used the oil market as a politicaltool. “Anyone using oil as a political tool will have toaccount for its consequences as well,” he saidThe US pulled out of Iran’s 2015 nuclear deal withsix world powers last May and reimposed sanctionson Tehran. Washington also ended sanctions waiversgranted to several buyers of Iranian oil in a bid tomaximize its pressure on Iran and bring Iran’s oilexports to zero.
Oil showexclusiveIran’s 24 THApril 2019 Issue No. 82oil show

EPC and EPD contractshave been drafted so as to be awarded to Iranian contractors. Therefore,
the bulk of equipment and commodities [classified under the 10 groups of basic commodities] would be
purchased domestically. To that effect, we have resolved prepayment problems,” he added.
Zangeneh said the Ministry of Petroleum would prioritize any idea and offer which would provide financing.
Expecting the government to provide any financing would create restrictions,” he added.
Touring Oil Show After his inauguration speechZangeneh visited the 24thInternational Oil, Gas, Refining
and Petrochemical ExhibitionHe said that Iraniancompanies had found the rightpath to go ahead, adding: “Isaw no strategic problem intheir methods“In the previous years, wehad many rounds of talks withthese companies. But afterfive to six years I think theyare going the right way, which
would make them successfulinternationally. What we arecurrently doing is in such
direction,” he addedHe gave a positive assessmentof domestic manufacturing
of petroleum industryequipment, saying: “Domesticcompanies have fortunately
implemented projects to agood level and they werehappy with that. I also sawa bright future for domesticproducers and manufacturersin terms of extent of workZangeneh also touched on mhis ministry’s support forstartups and knowledgebased companies, saying:  “During my visits, a numberof companies raised problemslike modifications in theircontracts due to price jumpsand non-consideration ofsuch modifications. This issue

OPEC SGImpossibleto RemoveIran from OilMarket

OPEC Secretary GeneralMohammad SanusiBarkindo visited Tehranexactly when Iran’s 24thannual Oil Show was underway. He visited the exhibitiontalked to journalists and thenheld a meeting with Iran’sMinister of Petroleum BijanZangeneh. During the meetingZangeneh told Barkindo: “Iranis an OPEC member just for itsinterests and if certain fellow
members intend to ask OPECto threaten and jeopardizeIran’s interests, Iran willdefinitely react.” The Iranianminister warned that due to“unilateralism” by certainOPEC member states, theOrganization of the PetroleumExporting Countries was likelyto collapse. Zangeneh said hediscussed the problems andfragility of oil market with theOPEC secretary generalHe said they “exchanged viewsrather than making decisionsIn the meeting, Barkindo laidemphasis on the fact that OPECmember states would takedecisions collectively. He saidthat unilateral moves by OPECmember states have alreadyproven to be futileEarlier, Barkindo toldreporters that Iran could notbe driven out of the oil marketsating individualism had noplace within OPECReferring to threats posedto Iran’s oil supply, he saiddiscussions were under way atthe ministerial level and withinthe OPEC Secretariat to studyvarious approaches.

He said it was not thefirst time Iran was facingsuch challenges, adding he
was optimistic Iran wouldovercome challenges this timetoo. Barkindo said OPEC hadbeen faced with challengesregularly ever since itsestablishment six decades agoHe said these challenges hadalways been removed underthe aegis of unity among OPECmember statesCollective WisdomIran sits atop the world’slargest hydrocarbon reservesThe US has imposed verytough sanctions against Iran’spetroleum industry, but it hasfailed to push Iran out of theglobal oil market. Immediatelyafter the US ended sanctionswaivers for the main buyers ofIran’s crude oil, Saudi Arabiaand the United Arab Emirates– both OPEC member states– said they had enough sparecapacity to replace Iran’s oilin the market. Barkindo saidOPEC would take decisionscollectively”, adding thatunilateralism had no placein the OPEC decision-makingprocessHe said OPEC would make
decisions based on “collectivewisdom” after consultation
with experts at the Secretariatand member states.
Barkindo said “industry

OPEC SG: Impossible to Remove Iran from Oil Market

 

OPEC Secretary General Mohammad Sanusi Barkindo visited Tehran exactly when Iran’s 24th annual Oil Show was under way.

He visited the exhibition, talked to journalists and then held a meeting with Iran’s Minister of Petroleum Bijan Zangeneh.

During the meeting, Zangeneh told Barkindo: “Iran is an OPEC member just for its interests and if certain fellow members intend to ask OPEC to threaten and jeopardize Iran’s interests, Iran will definitely react.”

The Iranian minister warned that due to “unilateralism” by certain OPEC member states, the Organization of the Petroleum Exporting Countries was likely to collapse.

Zangeneh said he discussed the problems and fragility of oil market with the OPEC secretary general.

He said they “exchanged views rather than making decisions”.

In the meeting, Barkindo laid emphasis on the fact that OPEC member states would take decisions collectively. He said that unilateral moves by OPEC member states have already proven to be futile.  

Earlier, Barkindo told reporters that Iran could not be driven out of the oil market; sating individualism had no place within OPEC.

Referring to threats posed to Iran’s oil supply, he said discussions were under way at the ministerial level and within the OPEC Secretariat to study various approaches.

He said it was not the first time Iran was facing such challenges, adding he was optimistic Iran would overcome challenges this time, too.

Barkindo said OPEC had been faced with challenges regularly ever since its establishment six decades ago. He said these challenges had always been removed under the aegis of unity among OPEC member states.

Collective Wisdom

Iran sits atop the world’s largest hydrocarbon reserves. The US has imposed very tough sanctions against Iran’s petroleum industry, but it has failed to push Iran out of the global oil market.

Immediately after the US ended sanctions waivers for the main buyers of Iran’s crude oil, Saudi Arabia and the United Arab Emirates – both OPEC member states – said they had enough spare capacity to replace Iran’s oil in the market.

Barkindo said OPEC would take decisions “collectively”, adding that unilateralism had no place in the OPEC decision-making process.

He said OPEC would make decisions based on “collective wisdom” after consultation with experts at the Secretariat and member states.

Barkindo said “industry practitioners have said without number” that Iran’s oil could not be removed from the market.

The OPEC Secretary General said the organization’s data as well as data provided by secondary sources would be reviewed during the June Conference before any decision would be made.

He said OPEC would not focus on the interests of any specific country, adding OPEC would take into consideration the collective interests of all member states in order to serve the interests of every single member state and guarantee oil supply. 

Barkindo said every OPEC member state can have its own plans and decisions, but when they come together countries are not considered individually. He said OPEC would also take into account the interests of consumers.

Barkindo said OPEC decisions need to be based on the present circumstances.

He also heaped praise on Zangeneh because of his “experience and wisdom”, saying all member states of OPEC consider his advice.

Barkindo said challenges faced by Iran would affect the entire OPEC, adding that what is also happening currently in Venezuela and Libya would impact the whole oil market and the petroleum industry.

GECF in Regular Talkswith OPECon MarketBalance

demand fornatural gaswould haveincreased by“almost 50%by 2040
describingthe gasdemandincrease as“seriousOPEC comprises 14 members: Algeria,
Angola, Ecuador, Equatorial GuineaGabon, Iran, Iraq, Kuwait, Libya, Nigeria
Republic of the Congo, Saudi Arabia, the UnitedArab Emirates and Venezuela.
GECF is an international governmentalorganization comprised of 12 major natural gas
producers: Algeria, Bolivia, Egypt, EquatorialGuinea, Iran, Libya, Nigeria, Qatar, Russia,
Trinidad and Tobago, UAE and Venezuela. The7 observer members are: Angola, Azerbaijan,
Iraq, Kazakhstan, Norway, Oman and PeruWith the current number of Members the GECF
has a strong position on the world gas marketand among international energy organizations.
Its potential rests on the enormous natural gasreserves of the Member Countries all together
accumulating over 70% of the world provennatural gas reserves. GECF members control
38%of the pipeline trade and 85% of theliquefied natural gas (LNG) production.
The three largest reserve-holders in the GECF– Russia, Iran and Qatar – together hold about
57%of global gas reservesSokolov referred to the growing demand for

natural gas, saying natural gas was playing a“key role in the energy transition period “.
He said natural gas was in a “special” positionas it can “cover all sectors of modern economy”.
Sokolov said the demand for natural gas wasincreasing in all sectors in the world, noting
that GECF member states had now potential toincrease their gas supply level.
He said demand for natural gas would haveincreased by “almost 50%” by 2040, describing
the gas demand increase as “seriousSokolov said demand for natural gas would
keep rising to reach 5.3 tcm in 2040, from the3.6 tcm registered last year.
He said “GECF producers will be key tosupplying gas needs across the globe.
Sokolov also said GECF member states allagreed on the “stability” of gas market.
He said he was “optimistic about the roleof natural gas” in the “energy balance” as
the demand for natural gas would increase“dramatically” in the coming decades.
Sokolov said: “The role of natural gas in energybalance will increase.”
He said by 2040, gas will be supplying 26% ofenergy needs in the world.
Asked if gas was about to replace oil as themain source of fossil fuel in the world, he said
some “Asian nations” had already the potentialto replace oil with natural gas.
He also said that during the 2025-2040, oiltransport will be facing “limitations”, and that
would shift the global focus onto gas from oilFurthermore, Sokolov said, the world
population is growing rapidly, whichnecessitates paying more attention to the issue
of gas supply to consumersHe said gas producers would also “contribute
to sustainable development and climate
change”.
He noted that “despite too much focus onrenewables”, natural gas continued to remain
nstrumental” in the energy mix.
Sokolov said GECF planned to send delegates
to the G20 summit in June in order to discuss
the modalities of future gas supply from GECF
member states to G20 nations.
He also touched on the challenges posed to
gas production, saying: “Challenges are beyond
economic [aspects]. Some of them are policy
challenges.”
Sokolov specifically referred to the issueof US sanctions imposed against Iran’s oil
sector, adding that restrictions did not allowdevelopment of natural gas” in IranMost foreign companies have left Iran sinceUS President Donald Trump pulled out of  Iran’s historic 2015 nuclear deal with six worldpowers in May last year and snapped sanctionsback in place in August and November that yearA main gas producer in Iran is the giantoffshore South Pars gas field which is sharedwith Qatar. Most phases of South Pars havealready become operational, but SP11 wasexpected to be developed by a consortium ledby France’s Total. The French company pulledout of the project, fearing US penaltiesSokolov rejected US sanctions against Iran,
saying: “The position of the GECF is very clearly

Iran Petroleum Sector Remains Attractive

Italy to Continue Iran Business
Italian trade commissioner in Iran Augusto Di Giacinto said the Italian Trade Agency (ITA) would
stay active in Iran. He said ITA was a state-run agency for supporting Italian companies making
investment everywhere in the world. He added that ITA was already present in 80 nations. Di
Giacinto said ITA was facilitating trade and investment between Iranian and Italian sides. He
said every month a group of Iranian businesspeople were sent to Italy to make arrangements
for presence in exhibitions. He expressed happiness that despite existing challenges Italian
companies were still willing to remain in Iran. Di Giacinto said Italian companies were familiar
enough with the potentialities of Iran, adding that Italian firms were seeking involvement in Iran’s
market. Twelve Italian companies were present at the annual oil show. Di Giacinto said the Italian
firms present at the Tehran oil show were mainly involved in the downstream sector, adding that
they knew the Iran market pretty well due to their long presence in the country

German Firms Send Message
The representative of a German manufacturer of equipment for upstream and
downstream industries said the company’s relations with Iran had been very good,
saying their continuation was important.
He said that Iran’s market offered great potential to German companies
particularly suppliers of equipment and pipes for the oil and gas industry. He
added that his company would not like to halt cooperation under the influence of
other government.
He said the presence of German companies at the Oil Show sent a clear message that
German firms were determined to expand ties more than ever

Despite the US’s unilateral withdrawal from the Joint Comprehensive Plan
of Action (JCPOA) and the concomitant re-imposition of sanctions on Iran’s
petroleum sector to dissuade foreign companies from working in Iran,
Tehran hosted the 24th International Oil, Gas, Refining &Petrochemical
Exhibition where companies from 21 nations were present. Big companies preferred to
stay out, fearing US penalties; however, some small-sized companies with no business
with the United States would continue to work in Iran

Iran-Azerbaijan Energy Ties
Rasim Valiev of Azerbaijan’s national oil company SOCAR said the Azeri state-run oil
firm was taking part at the Tehran oil show in order to introduce opportunities for
cooperation between the two countries in the energy sector. He said the participation
was also aimed at showcasing Azerbaijan’s capabilities to host the 24th World Petroleum
Congress (WPC). “Presence in such important events as the ongoing show is of high
significance for Azerbaijan, as a World Petroleum Council member, which is vying with
Canada, Argentina, Kazakhstan and the United Arab Emirates to host the Congress,” he
said.Valiev said Iran and Azerbaijan could cooperate in the energy and transportation
sectors. He added that Naftiran Intertrade Company (NICO) was involved in the
development of Shah Deniz gas field alongside Russia’s Lukoil, Turkey’s national oil
company and Malaysia’s Petronas

Maintenance of Ties, a Priority
Klaus Friedrich, economic advisor at Germany’s Mechanical Engineering Industry
Association (VDMA), said the association was mainly involved in providing information
to German investors and industrialists to work everywhere across the globe.
He said the priority was to maintain the current level of ties, adding that German
companies could independently adopt special policies and approaches to broaden
cooperation with Iran’s energy sector. He expressed hope that INSTEX would become
operational soon to allow for the development of relations. VDMA represents more than
3,200 member companies in the SME-dominated mechanical and systems engineering
industry in Germany and Europe. VDMA was founded in November 1892 and is the
most important voice for the mechanical engineering industry today.....

South Africa Prefers Pavilions
Jason De Araujo, director of mining and operations at South Africa’s JDA diamondtooling, said the company had been involved in exploration, drilling, mining, as wellas oil and gas activities for 25 years. He said JDA’s potential in manufacturing drillingequipment for the oil and gas industries had created numerous opportunities in theIran market. Araujo said although JDA came to Iran two and a half years ago it hadmanaged to supply equipment on Iran’s market and start cooperation with an Iraniandrilling firm.
He said JDA was supplying equipment to many nations in Europe, as well as the UnitedStates and Australia. He expressed hope for a larger presence in Iran’s market, sayingJDA had held meetings with NIOC to introduce its capabilities and services. Araujosaid despite US sanctions, JDA faced no restrictions in direct cooperation with Iraniancompanies. He said JDA’s products were environmentally friendly, adding that hiscompany was ready to provide European technologies at affordable pricesIran Market Key for EuropeAlex Lopez, sales manager at Spain’s Tope, said his company was a manufacturer ofheating and electric solutions mainly for the oil, gas and petrochemical sectorsHe said the annual oil show in Tehran would be playing a constructive and positiverole in the development of relations between the two countries. He added that despiterestrictions, Tope was determined to attend the show every year and expand itscommunications. Lopez said Tope had good cooperation with Iranian companies, sayingthe Spanish firm was already involved in some oil and gas projects in Iran. He said hiscompany was to hold talks with the Commercial Section of the Spanish Embassy inTehran to find solutions for facilitating economic ties between the two countriesLopez said Iran’s market incorporated great potential for European companies both inthe upstream and downstream sectorsRussia Companies Focused on IranAnna Zhiratkova, CEO of ProTok, said the Russian firm was involved in supplyingelectrical panels, energy distribution panels, electric current monitors as well asventilation and lighting facilities for upstream and downstream industries. ProTok wasestablished 10 years ago in Siberia. Referring to Iran-Russia cooperation, she said shefavored presence in Iran’s market. She said ProTok was mainly focused on AzerbaijanUzbekistan and Kazakhstan. She added that she was interested in benefiting fromthe potentialities of the Iranian market without fearing US sanctions. Zhiratkova alsoreferred to upcoming meetings between Russia’s Energy Minister Alexander Novakand Iranian officials, expressing hope for broader energy cooperation between thetwo countries.She said ProTok experienced a large number of visitors despite being afirst-time participant at the Iranian oil show. She added that ProTok had the possibilityof holding talks with many Iranian industrialists. Zhiratkova said ProTok had plans tomanufacture products in Iran and train the staff of future clientsChina Seeks Stronger PresenceA deputy CEO of China’s Hunan Shengli Xianggang Steel Pipe Co. said the company wasdetermined to expand its activities in Iran. She said Hunan Shengli Xianggang Steel PipeCo. was a producer of steel pipes, mainly welded pipes, for the upstream, downstreamand petrochemical industries. She said the company was experiencing its first-everpresence at the annual showShe said despite lack of any background, the positive experience of China’s CNPCSinopec and CNOOC would empower Hunan Shengli Xianggang Steel Pipe Co. to becomesuccessful in Iran’s oil and gas market. She said Hunan Shengli Xianggang Steel Pipe Cohad managed to establish good contacts for extensive partnership. She also said thatcertain solutions could be developed for facilitating financial transactions regardless ofexisting political and economic problems...

Petchem Export Revenue to Grow 46%

Iran's petrochemical exports significantly
contribute to non-oil economy.
Statistics show that after crude oil, the
petrochemical sector remains a key source of
income in Iran. The share of petrochemical
exports from Iran's non-oil products has
reached 33%. The figure is expected to
reach 35% soon. The CEO of Iran's National
Petrochemical Company (NPC), Behzad
Mohammadi, told at the Iran Oil Show that
after the inauguration of 18 petrochemical
projects by 2021, Iran's revenue from
petrochemical exports will grow 46% to $25
billion. He said the petrochemical industry
was a key economic sector, adding that
revenues from this sector were very important
for Iran. Mohammadi said that oil and gas
refineries and LNG projects were supplying
about 25.3 million tonnes of feedstock, twothirds
of which was gas feedstock and onethird
liquid feedstock. He said a total of 55
petrochemical plants were operational in Iran,
receiving 25.3 million tonnes of feedstock.
He added that there were two petrochemical
hubs in Iran, one in Mahshahr and one in
Assaluyeh. Mohammadi said Assaluyeh was
home to 16 petrochemical plants, Mahshahr
had 20 while 19 petrochemical plants were
located in other parts of the country

18 Petchem Groups
Mohammadi said: "We are producing 18
groups of polymer products. There are about
300 grades of polymer products and 44 tonnes
of chemicals in this industry."
He said Iran had 31 million tonnes of
petrochemicals on sale adding: "Of this 31
million tonnes of petrochemicals, 22.5 million
tonnes are exported to various countries and
8.5 million tonnes supplied domestically, and
4.7 million tonnes traded on the exchange."
"We earn $17.1 billion from selling 31 million
tonnes of petrochemicals, $12.1 billion of
which is from exports and $5 billion from the
products traded on the exchange," he said.
30 Destinations
The NPC chief said Iran's petrochemical
products were destined to 30 nations
in Europe and Asia. "There are several
hundred customers from across the globe,"
he added. Mohammadi said a low-density
polyethylene production plant would come
online in Lorestan Province in the current
calendar year, adding that Iran would be
producing 12 methanol brands by 2025.
He said that in addition to the technical
knowhow for catalyst production, Iran had to
look for technical savvy of special process.
"The NPC will be preset in the MTP plant
to hedge investment risks because the
polypropylene produced from methanol
would be instrumental in job creation in the
petrochemical industry," he added

Iran Gas SectorInternationalized

Iran will extend its high-pressure gas
transmission pipelines from the current
37,000 km to over 64,000 km by the end of
the 7th Five-Year Economic Development Plan.
The number of gas compressor stations is also
set to rise sharply to 140 from the current 80.
That would place Iran among the owners of the
most extended gas transmission networks in the
world. With over 37,000 km of high-pressure
gas pipeline, Iran plans to launch new projects
in coming years to remain the fourth largest
owner of gas supply grid in the world. Hassan
Torbati, CEO of National Iranian Gas Company
(NIGC) told a press conference at the Tehran
Oil Show that in the coming years, "in addition
to supplying domestic demands, entering
international fields by finding new markets for
gas exports, liquefied petroleum gas (LPG) and
delivery of technical services to other countries
would be on the agenda of NIGC." "Relying on our
skilful consultants in designing, good contracts
and capable operators, we hope to be able to
win a toehold in the markets of neighboring
countries that are either owner or consumer of
gas for exporting technical services and building
pipelines with a view to boosting national
output," he said. Torbati also played down the
impact of US sanctions on Iran's petroleum
sector, saying: "The US is making every effort
to exert pressure on Iran and we are making
efforts to counter their attempts. Experience has
shown that Iranians are more successful under
tough conditions and we will have no problem."
Asked about gas exports to Pakistan, he said:
"Pakistan's section of the gas pipeline to receive
Iran's gas is not complete yet; however, Pakistan
does not seem to have dismissed the main idea
of receiving Iran's gas, and we think that recent
meetings between officials from the two parties
would pave the way for serious talks." Regarding
cooperation with Turkmenistan, Torbati
said: "The discrepancies between Iran and
Turkmenistan pertain to debts. Our debts will be
examined shortly. Anyway, we want to sustain
cooperation between our private sectors."
Gas Pipeline Still Attractive
Torbati said National Iranian Oil Company
(NIOC) was in charge of exporting liquefied
natural gas (LNG). "Iran's neighboring countries
have still good potential to receive natural gas
via pipeline, but LNG exports are preferred for
farther distances." He said despite the impact of
international sanctions on Iran's gas exports, "a
good atmosphere is awaiting us in the long-term
because the Europeans are now assured of the
sustainability of Iran's gas exports. For instance,
Iran's gas exports to Turkey have not been halted
despite pressure throughout years."
Joint Investment for Gas Delivery to
Europe
Torbati said the volume of Iran-Azerbaijan
Republic gas transactions was not high, adding
that the two countries were initially to cooperate
in the construction of natural gas storage tanks...

West KarounDevelopment on Schedule

Touraj Dehqani, CEO of Petroleum
Engineering and Development Company
(PEDEC), has said development of oil
fields located in the West Karoun area in western
Iran are going on as planned. “West Karoun is
a highly potential and newly discovered area
with over 70 billion barrels of oil reserves,” he
told reporters on the sidelines of the Tehran Oil
Show. He said: “So far, budget allocation to the
development of West Karoun has been good,
leading to significant results.” “We may say that
we are not lagging behind our partner and rival
in this sector of the jointly owned fields and we
have managed to safeguard national interests
under the current critical circumstances,” he
added. Dehqani expressed hope for the signature
of new oil contracts within the framework of
the Iran Petroleum Contract (IPC) this calendar
year. “The contracts signed for the development
of the Sepehr, Jofair, West Paydar, Aban,
Dalpari and Cheshmeh Khosh fields have been
communicated to PEDEC. We are coordinating
the team for the steering of the project,” he said.
Dehqani referred to oil production hike in the
West Karoun fields, saying the output there
currently stood at 350,000 b/d as planned.
Output to Grow 80,000 b/d
Dehqani said oil production from PEDEC-run
fields would increase this year too.
He said the Azar field’s output would increase
30,000 b/d, while West Karoun’s fields would
see their output increase 40,000 to 50,000
b/d. “This year, oil production from the Azar
field would reach 65,000 b/d. The production
capacity of West Karoun fields would increase
40,000 to 50,000 b/d,” he added. Asked if US
sanctions had affected oil recovery from West
Karoun, Dehqan said: “Due to the prioritized
development of joint oil and gas fields, we
have not yet received any plans on cutting
production from the West Karoun fields.”
Talks with China under Way
Dehqani said negotiations were still continuing
with China for the second phase development
of West Karoun. “First of all, I have to say that
PEDEC is in charge of development of these
fields, and National Iranian Oil Company (NIOC)
is holding contractual talks to develop these
fields. As far as I know, talks are under way
between NIOC and Chinese firms,” he said. He
added: “We are waiting for NIOC instructions
to start the second phase development of West
Karoun fields.”
EOR Needed in Yaran
Dehqani said Yaran oil field was being
developed jointly with Persia Oil and Gas
Industry Development Company. “Following
Iran's Petroleum Ministry policy, Yaran
(northern and southern parts) is to be
developed wholly. Given the significance
of enhanced oil recovery from this field,
technology-based IOR methods would be
necessary,” he said

NIOC Awarding 8 FieldDevelopment Projects

A deputy CEO of National Iranian Oil
Company (NIOC) has said that the
development of eight fields was to be
awarded to mainly Iranian companies.
Reza Dehqan, deputy CEO for development
and engineering, named the fields as
Changouleh, Dehloran, Sohrab, Parsi, Paranj,
Karanj, Yaran and Ab Teimour.
“Development talks for most of these fields
are under way with Iranian companies,” he
said on the sidelines of Tehran Oil Show.
He said that the pace of development would
inevitably slow down under sanctions,
“but we have concentrated on sparing the
development of joint fields any impact so that
they would go on smoothly.”
Dehqan said four contracts had so far been
signed based on Iran Petroleum Contract
(IPC).
“The development contract for the Aban and
West Paydar fields is effective and making
good progress. We have placed orders for
commodities,” he said, adding that the
contract for the Sepehr and Jofair fields would
soon be implemented while the development
of Dalpari, East Paydar and Cheshmeh Khosh
would become effective soon.
Referring to Phase 11 of the giant offshore
South Pars gas field, he said talks were under
way with China’s CNPC after France’s Total
quit due to US sanctions.
“Talks are under way with this Chinese
company to overcome the existing problems
and continue the agreement, but if the
talks fail to pay off we will make other
arrangements. Petropars, as a member of
SP11 consortium, is ready to develop stage 1
of SP11.
Dehqan said there was no “serious
talks” under way with Khatam al-Anbia
Headquarters, the engineering arm of the
Islamic Revolution Guards Corps (IRGC).
He, however, said the headquarters was
“qualified”.
He separately said that production
from South Pars, which Iran shares with
neighboring Qatar, would increase 60 mcm/d
in the current calendar year.
Dehqan said talks were under way with
India’s ONGC for the development of Farzad-B
field.
He said feasibility studies on four exploration
blocks are to be assigned in the current
calendar year.

 

Petchem Export Revenue to Grow 46%

Iran's petrochemical exports significantly contribute to non-oil economy. Statistics show that after crude oil, the petrochemical sector remains a key source of income in Iran.

The share of petrochemical exports from Iran's non-oil products has reached 33%. The figure is expected to reach 35% soon. The CEO of Iran's National Petrochemical Company (NPC), Behzad Mohammadi, told at the Iran Oil Show that after the inauguration of 18 petrochemical projects by 2021, Iran's revenue from petrochemical exports will grow 46% to $25 billion. 

He said the petrochemical industry was a key economic sector, adding that revenues from this sector were very important for Iran.

Mohammadi said that oil and gas refineries and LNG projects were supplying about 25.3 million tonnes of feedstock, two-thirds of which was gas feedstock and one-third liquid feedstock.

He said a total of 55 petrochemical plants were operational in Iran, receiving 25.3 million tonnes of feedstock.

He added that there were two petrochemical hubs in Iran, one in Mahshahr and one in Assaluyeh.

Mohammadi said Assaluyeh was home to 16 petrochemical plants, Mahshahr had 20 while 19 petrochemical plants were located in other parts of the country.

18 Petchem Groups

Mohammadi said: "We are producing 18 groups of polymer products. There are about 300 grades of polymer products and 44 tonnes of chemicals in this industry."

He said Iran had 31 million tonnes of petrochemicals on sale adding: "Of this 31 million tonnes of petrochemicals, 22.5 million tonnes are exported to various countries and 8.5 million tonnes supplied domestically, and 4.7 million tonnes traded on the exchange."

"We earn $17.1 billion from selling 31 million tonnes of petrochemicals, $12.1 billion of which is from exports and $5 billion from the products traded on the exchange," he said.

30 Destinations

The NPC chief said Iran's petrochemical products were destined to 30 nations in Europe and Asia. "There are several hundred customers from across the globe," he added.

Mohammadi said a low-density polyethylene production plant would come online in Lorestan Province in the current calendar year, adding that Iran would be producing 12 methanol brands by 2025.

He said that in addition to the technical knowhow for catalyst production, Iran had to look for technical savvy of special process.

"The NPC will be preset in the MTP plant to hedge investment risks because the polypropylene produced from methanol would be instrumental in job creation in the petrochemical industry," he added.

 

20 MOUs Signed at 24th Oil Show

Iran's 24th annual oil show was held against the backdrop of tough US sanctions. It might be premature to make a precise assessment of the event. However, due to prosperity in business and the clients' confidence in Iranian companies and manufacturers, more than 20 memorandums were signed. The Research Institute of Petroleum Industry (RIPI) was very active in the MOUs.

RIPI-IDRO MOU

RIPI and the Industrial Development and Renovation Organization (IDRO) signed an MOU for developing Iran's oil, gas and petrochemical industries using RIPI technologies and IDRO engineering and industrial infrastructure. They also agreed to expand international cooperation.
Jafar Towfiqi, director of RIPI, said: "IDRO is a deep-seated organization and has been instrumental in various industries.  
RIPI also signed an MOU with Exir Novin Farayand Asia with a view to updating the technical savvy for the process of isomerization. In addition to updating this process, cooperation in the market development and sale of technical savvy for the process were included in the memorandum.

Acetylene Hydrogenation Catalyst Nationalized

The Morvarid Petrochemical Company signed an MOU with the Sarv Oil and Gas Company for the industrial-scale production of hydrogenation catalyst of acetylene.
The Sarv company has, over four years of research and efforts, managed to cooperate with the Morvarid company in the domestic production of another important catalyst.
The acetylene hydrogenation catalyst is used for producing olefin. Given the development of olefin production plants, nationalization of this catalyst is highly significant.

Catalyst for Methanol  

The first agreement for the supply of catalyst needed in the production of methanol was signed between the Petrochemical Research and Technology Company (PRTC) and the Sabalan Petrochemical Company.
The signing ceremony was overseen by Behzad Mohammadi, deputy minister of petroleum for petrochemical affairs, and Ali Pajouhan, deputy minister for engineering, research and technology.
Pajouhan said: "PRTC has been studying on the methanol process and catalyst for about ten years now."
He promised a high amount of methanol production in Iran in the near future, saying: "From 2025 onwards, this catalyst will be consumed at about 1,200 tonnes a year. Each 1.6-million-tonne plant consumes between 280 and 300 tonnes of catalyst worth about $5 million."
Pajouhan said all strategic and widely consumed catalysts used in the petrochemical industry would have been totally nationalized by March 2021.

Gasoil Desulfurization Catalyst

RIPI and Nitel Pars Co. signed an agreement to develop technical savvy for desulfurization catalysts used in gasoil.
Towfiqi said a costly issue for the downstream petroleum industry is the purchase of catalysts and the sophisticated technical knowhow used in them.
"Given the high consumption of catalysts throughout year, one of our projects is to develop technical savvy for the catalysts needed in the refining, petrochemical and gas industries."
Farshid Nourbakhsh, CEO of Nitel Pars Co., said the agreement would be worth IRR 2,500 million in the first stage.
He said development of a formula for the desulfurization of naphtha, kerosene and gasoline would start next year in cooperation with RIPI.

Polymer Gel Injection into Oil Wells

An agreement was signed between RIPI and the Iran Offshore Oil Company (IOOC) to control water through injecting polymer gel into oil wells. That would be the first time such a technology is to be used in Iran's petroleum industry.
Towfiqi said a major challenge in production from oil wells was excessive water production. "By reducing water production at wells it would be possible to apply a more optimal management of production in the petroleum industry," he added.
Hamid Bovard, CEO of IOOC, said injection of polymer gels into oil wells to control their water production would be used for the first time in Iran.

Iran to Commercialize ANG

Another agreement signed during the Oil Show was between RIPI and the National Iranian Oil Refining and Distribution Company (NIORDC) for the production and industrialization of nanocarbon absorbents of CNG tanks with a view to upgrading their safety and reducing the costs of fuel tank of gas-fuelled cars.
Towfiqi said utilization of ANG technology has such advantages as the attraction of natural gas and reduction of fuel tank pressure.
Adsorbed natural gas (ANG) technology is the use of a highly porous adsorbent material to densely store natural gas molecules at low pressures (900 psi and below). Under controlled depressurization, these molecules release and exit the storage system in response to the demand of the vehicle's engine.

RIPI, NIOC Exploration Directorate Sign 2 Deals

RIPI signed two deals with National Iranian Oil Company Exploration Directorate to use nanotechnology for reducing friction and lubrication of drilling strings and also to use drilling fluids to spare formation of any harm.
Towfiqi said RIPI had a long history of cooperation with various petroleum industry companies in drilling, fluids and drilling tools.
"NIOC Exploration Directorate, relying on RIPI, has assigned the research institute for the first time to conduct such projects," he said.
Saleh Hendi, NIOC exploration director, said drilling accounts for 70% of development and production costs in the upstream sector.
"The quality and timeframe of implementing project could be very important in this sector," he added.

NISOC Fields to Undergo Study

National Iranian South Oil Company (NISOC) signed agreements with four Iranian consulting companies for conducting comprehensive studies on six reservoirs of NISOC.
Under these agreements, Tehran Energy Consulting Group will study the Asmari reservoir of the Haftkal field, as well as the Bangestan reservoir of the Binak field.
Meantime, Magma Energy will study the Asmari reservoir of the Mansourabad field and the Asmari/Jahrom reservoir of the Nargesi field.

Startups Emerge in Iran Oil Sector

Startups are mushrooming all across the globe, creating lucrative businesses. There are many who have ideas in their minds, but have not had the chance to develop them mainly due to economic restrictions.

Iran has been no exception. In recent years, Snapp, the e-hailing service modelled on Uber, has grown popular and profitable.

Now that the US has imposed the toughest ever sanctions on Iran’s petroleum industry, startups may be a good idea for the prosperity of this sector. Many may sound pessimistic as the United States is restricting Iran’s oil sales, but a startup does not cost too much and is less affected by economic conditions. Most Iranian startups have been set up in the past ten years during which Iran has twice been under tough sanctions.

The energy sector depends more than others on startups and accelerators. This is currently transpiring the world.

Mohsen Ebrahimi, director of planning at the Office of Deputy Minister of Petroleum for Research and Technology, told Iran Petroleum that I.TECH is the first Iranian accelerator in the energy sector.

“The high level of energy consumption in the country necessitates the presence of startups and accelerators in this sector we need to benefit from this ecosystem. A startup success story in Iran is Snapp which was implemented by a foreign company in Iran. But unfortunately, startups have not been much active in the petroleum industry in Iran mainly because the petroleum industry and the energy sector are in the hands of state,” he said.

Ebrahimi said the establishment of oil and gas startups in Iran was due to efforts made by Iran’s Petroleum Minister Bijan Zangeneh.

He added that Iranian startups showcased their achievements at Tehran’s 24th annual Oil Show, which was a turning point in the history of this exhibition. 

He said that the complex nature of processes in the oil and gas industry does not allow for more diversity in the startups.

I.TECH is currently cooperating with Iran’s Petroleum Ministry. I.TECH examined a caseload of more than 50 startups and finally chose 15 to put their achievements on exhibit at the Oil Show.

The most significant function of startups is training, empowering and advising companies. Their agenda also includes providing basic capital, preparing a venue for joint work with other companies and linkage to the market.

The products of startups are analysis-based and may not involve hardware. They accomplish their mission just by processing the recovered data. TECH has concentrated on IT in the petroleum industry.

Ebrahimi said there are currently about 500 startups in the world, 90% of which involved in IT either directly or indirectly.

Another startup which Iran hopes to be able to implement is Enercoin, a blockchain-based digital asset and currency designed for management and optimization of energy consumption. The startup is permissible in line with Article 12 of Law on Removal of Obstacles to Production. The Petroleum Ministry is in talks with 120 scientific forums at universities across Iran in a bid to implement Enercoin in the best possible manner in the energy sector.

Enercoin is currently effective in some districts in Tehran in order to help save on gas consumption. Iran is home to 80 million people, but its energy consumption equals entire Europe’s.

 

Decision on Startups

 

Parviz Sangin, general director of technology commercialization and procurement at the Petroleum Ministry, said the mission for following up on startup work had been assigned to the Office of Deputy Minister of Petroleum for Engineering, Research and Technology. The office would examine and evaluate the activity of developers of ideas.

He said that startup activities in Iran are of high significance because they are supposed to equip the petroleum industry with necessary technologies.

“We are seeking to make maximum benefit from the past and current experience of the Office of Vice-President for Science and Technology that specifically followed up on the issue of startups in order to integrate these experiences for the Department of Procurement and Commercialization,” said Sangin. “We are doing our best to clear the way for cooperation between us and startups as soon as possible, because under the present critical conditions the country is faced with the role of startups as well as solutions they offer would undoubtedly help overcome challenges.”

He said under a short-term plan envisaged for this purpose, startups will be chosen so that they would be presented with needs.

“We also plan to receive permission from the Petroleum Minister within three months and finalize the case of startups in the first half of the current [calendar] year,” he added.

 

Readiness for Cooperation with Startups

 

Ebrahim Taleqani, director of research and technology at National Iranian Oil Company (NIOC), said startups and knowledge-based companies had not been clearly defined in Iran.

“The main challenge and problem is to know why we have not been adequately successful in assigning work to knowledge-based companies. There is sufficient capacity, but our success has been meager,” he said.

Taleqani said the main reason was that the support offered for the activity of such companies had not been well organized.

“With regard to technological cooperation with universities, there are many mechanisms for knowledge-based companies and startups, but enough work has not been done,” he said.

He said “executive and not idealistic proposals” had to be given for overcoming challenges.

“Therefore, in order to benefit from the potentialities available, we need to list challenges and plan for their removal. We have to make optimal and effective use of idea-developing companies,” said Taleqani.

He expressed NIOC’s readiness to support knowledge-based companies and startups.

 

Facility of Knowledge-Based Activity

 

Saeed Pakseresht, director of research and technology at National Iranian Gas Company (NIGC), said: “New businesses are taking shape and undoubtedly any entry of new players will face resistance. The government have to help facilitate the affairs of these companies that have done too much in the formation of ecosystem to bring together various components and elements.”

He went on to highlight some problems faced by knowledge-based companies, saying: “We need to reconsider rules and regulations and we have to facilitate the process of work by easing regulations.”

“We expect self-declared knowledge-based companies to realistically develop science and offer a product with technological aspects,” said Pakseresht.

Investment in startups started growing in 2005. North America is the main contributor to this ecosystem, followed by the Asian nations of China and India.

 

Iran E&P Firms Close Ranks to Develop Fields

Ever since Iran and six world powers struck a historic nuclear deal in 2015, 100 memorandums were signed for conducting feasibility studies on Iranian oil and gas fields. But only four of these memorandums became agreements to allow for the signature of IPC deals for eight oil and gas fields.

Over recent years, in a bid to make maximum use of national potentialities and capacities, Iran has moved to establish E&P companies to develop projects. However, these companies have so far failed to meet their targets in the petroleum industry. Iranian and foreign experts say a major reason for the empowerment of these companies has been to create strategic alliances and establish cooperation between them. The value chain of upstream petroleum industry is not quick-impact but is highly efficient. E&P companies can now concentrate on exploration. The major cause of concern for these companies is financing. Even the most technically competent teams would not be able to take any step ahead without financing.

Meantime, oil and gas fields are no longer as accessible as they were all across the globe. However, due to a natural decline in production, there is a need for managing these fields, so as to maximize their current net value. Such an objective will be made possible only by applying modern enhanced recovery methods. On the other hand, most new fields are located in deep waters, deep layers with high temperature and pressure and dome-shaped locations. That will in turn highlight the necessity of applying modern technologies more than ever.

Under such circumstances, E&P companies whose life depends on the development of cutting edge technologies can turn out to be effective and instrumental in the management of reservoirs whose output has declined and also in the recovery of deposits from tight locations. Iranian E&P firms can establish joint ventures with foreign companies as outlined in the Iran Petroleum Contract provisions and benefit from mechanisms of technology transfer to acquire modern technologies in the petroleum industry.

Thanks to efforts made by the Iranian government, a legal framework is now ready in the petroleum industry for leading Iranian companies to get involved in exploration and development activities.

Regardless of all advantages and disadvantages noted by proponents and opponents, the new oil contracts have been instrumental, even though hardliners have not let them fully take effect. The outcome has been nothing but efforts for the establishment of E&P companies.

Iran’s Petroleum Minister Bijan Zangeneh had underscored the need for the establishment of E&P companies and noted a vacuum in the activities of these companies in the petroleum industry; IPC is a major step in the foundation of E&P companies. Brazil, Argentina, Spain, Malaysia, Vietnam, Africa, Kuwait and Angola have long invested in E&P companies which have been neglected in Iran.

The experience of most nations shows the companies that joined E&P business were mostly oil contractors that gradually established a new realm for their activities like general contracting or investment holding.

Brazil authorized private E&P companies in 1997. There are currently 17 E&P firms operating in Brazil which has also an association or independent E&P firms. But E&P companies have to reconsider their statute to conform to exploration and production activities. Or if they are willing to continue their servicing activities they have to establish another company to work as E&P firm.

The technical capability of companies, manpower, and management of upstream projects, risk management and financial capacity are among criteria which have to be taken into consideration.

As far as the formation of E&P companies is concerned the important point is that these activities are high-risk and if a company is not able to manage risks, will be facing numerous obstacles. Therefore, business management is the main issue in the activity of E&P companies.

E&P companies are required to have a powerful structure in attracting and developing technology. Exploration and development technologies are instrumental in helping them achieve their profitability objective. The companies that are willing to step into this sector have to develop their technological development capability. Any investment in this field may not necessarily end in quick and short-term profitability. Furthermore, although high-risk exploration, development and production activities in the upstream oil sector need huge financial resources, such skills as attraction of investment, management of physical assets and effective participation are key to these companies’ success. Undoubtedly, development of well-structured companies for the development of the petroleum industry is a must in every country. Furthermore, since such entities have yet to take shape in Iran, assessment of the qualifications of these companies in the country is not separate from empowering them through drawing a roadmap for them towards excellence. Of course necessary legal support for the companies willing to operate in this sector would be of great help to the improvement of processes.

To further know Iranian E&P companies, we talked to some of them at the 24th Iran Oil Show.

 

Financing a Must

 

Saeed Shad, deputy CEO of the Iranian Offshore Engineering and Construction Company (IOEC), said IOEC was working in compliance with the global standards honored by other E&P companies.

“One of the most important MOUs for oil field development with National Iranian Oil Company (NIOC) was for the jointly-owned Sohrab field. Our MDP has already been proposed to the client, pending finalization,” he said.

Shad said IOEC was in talks with NIOC Directorate of Exploration for operating new exploration projects.

“Studying green fields is on our agenda,” he added.

Shad said cooperation with other E&P companies was another objective sought by this company, adding: “One of major factors in the materialization of objectives in these projects is good investment. So far, numerous measures have been made for employing domestic and foreign financers.”

Referring to changes in the structure and approach of IOEC over the past two years to become an E&P firm, Shad said: “For instance, the drilling section of this company managed to drill 22 wells for Phase 13 of the South Pars gas field in less than 700 days, which was a record.”

IOEC has undergone major structural changes in the past years like establishing new sections for operation and studying oil and gas reservoirs, he said.

Shad added: “In my view, transforming general contractor companies into E&P would require a process of transition in the operation system.”

He said IOEC had offered to develop three onshore oil and gas fields, saying the company was in the process of signing an agreement with an Iranian consulting group to develop the three fields.

“Besides, we are in talks with three foreign companies to engage them in the development of these fields,” he added.

“Based on the new model of oil contracts, foreign companies are required to develop oil and gas fields alongside Iranian partners. We are now financially ready for such cooperation. We have so far signed financial memorandums worth $500 million with foreign financers,” Shad said.

 

DCI to Drill in Siri

 

Fazel Jamalzadeh, CEO of Drilling Company International (DCI), affiliated with Petroiran Development Company (PEDCO), said DCI owned two offshore drilling rigs which would soon start work in the Siri oil field.

He said Siri is one of 28 oil and gas fields National Iranian Oil Company (NIOC) is offering for development.

He added that necessary commodities had been purchased for the EPDF project.

Jamalzadeh said NIOC planned to assign the development of 28 oil and gas fields to Iranian E&P firms.

“So far, PEDCO has bid for the Mansouri, Sousangerd, Mansourabad, Maroun (1-4) and Zilai fields,” he said, adding that successful bidders would be announced in July.

“Based on planning, NIOC Directorate of Exploration will soon tender out its exploration projects. Since foreign companies would not run due to sanctions, Iranian E&P companies can establish joint ventures to operate the projects,” he added.

Jamalzadeh said: “PEDCO has offered to develop the Siri, Mansouri, Sousangerd, Danan and the second phase of the South Pars Oil Layer.”

He said PEDCO had gained sufficient experience in the past two decades due to working alongside such giants as France’s total, Italy’s Eni, Royal Dutch Shell and Norway’s Statoil.

He added that PEDCO had already operated the Salman, Siri, Abouzar and the South Pars Oil Layer projects.

Jamalzadeh said the establishment of DCI prepared the ground for the formation of an E&P firm.

“Petroleum industry policymakers are required to give domestic companies the same privileges given to foreign companies under oil contracts so that the former would be able to work with foreign financing under new oil contracts,” he added.

He said PEDCO was in talks with several Asian companies to attract financing for EPDF projects, adding that the talks had led to the signature of MOUs.

He said PEDCO had found foreign partners to operate oil and gas projects in Iran. “We are waiting for NIOC to assign the project. Furthermore, an MOU has been signed between us and NIOC to study the Sousangerd and Danan fields. Therefore, we are focused on these fields,” he added.

 

IDRO-Oil Offer Awarded

 

Mehdi Davoud-Abadi, CEO of Gostaresh Iranian Oil and Gas Industries Development Company (IDRO-Oil), said his company’s master development plan for the development of the Sousangerd oil field had been chosen as the best one.

IDRO-Oil is a subsidiary of the Industrial Development and Renovation Organization (IDRO). IDRO-Oil is currently involved in the upstream oil and gas sector mainly in the projects offered for development under the IPC framework.

He said IDRO-Oil had signed an MOU with NIOC to make arrangements for studying the Sousangerd oil field.

Davoud-Abadi said IDRO-Oil had started activities to step into international markets in cooperation with its foreign partners. He added it would be a major step in the development of activities of Iranian oil companies in foreign markets under the current circumstances.

He said that IDRO-Oil had already bid for projects offered by National Iranian South Oil Company (NISOC) and the Iranian Central Oil Fields Company (ICOFC).

He added: “We have always faced the challenge of sanctions. The job might be difficult, but we will find ways to cooperate with our partners.”

Davoud-Abadi highlighted the role of Iranian companies operating oil and gas projects in increasing hard currency revenue, saying: “Undoubtedly, development of Iranian E&P firms would help upgrade the upstream oil sector.”

 

E&P Firms Unity a Must

 

Global Petro Tech Kish Company is among qualified E&P companies. Like some other E&P firms, Global Petro Tech is also faced with financing problems.

Some managers of this company told Iran Petroleum that buyback and EPC contracts would be suitable methods for the development of oil fields. They also said that partial sale of company assets could be also a good method for the financing of projects.

Global Petro Tech recently signed agreements to develop the onshore Sarvestan and Saadatabad oil fields.

Along with its Russian and Chinese partners, Global Petro Tech has also run for several new oil field projects in southern Iran. It is currently in two-year deferment talks with foreign partners. Talks are also close to finalization with a European investor for the development of the Sumar field.

Global Petro Tech is separately in talks with NIOC to develop the Sumar, Esfandyar and Changouleh fields.

 

Insurance Fund for E&P Firms

 

Mehdi Mir-Moezzi, head of Iranian E&P Firms Forum, criticized the existing administrative red tape as obstacles to the implementation of contracts. He said some obstacles were outside the Petroleum Ministry.

He said the non-existence of financing mechanisms to match contracts was another challenge in this sector.

He noted that Iranian banks refused to grant facilities due to high-risk upstream contracts, adding: “Setting up an insurance fund for Iranian E&P companies could hedge risks and encourage banks and financial institutes [to offer facilities].”

“We demand that NIOC assign the development of small and medium-sized fields whose development does not require big capital and advanced technology to E&P companies which would in turn team up to develop oil and gas fields,” Mir-Moezzi said.

 

Ab Teimour Development Eyed

 

Bahram Masoud, director of marketing at Iran Ofogh Industrial Development Company (IOID), said this company was dependent on foreign sources for the financing of projects.

“We have signed an agreement with a British consulting company for financing,” he said.

Masoud touched on IOID’s first-ever presence in exploration projects in the Caspian Sea in partnership with Shell and two other firms, saying: “IOID has 30 years of experience in offshore and onshore fields like those located in West Karoun.”

He added that IOID had signed more than 17 contracts with Italy’s Eni for engineering and logistics services to the Darquain oil field.

“After Eni left eight years ago, IOID has been in charge of maintenance of installations at the Darquain oil field,” he said.

Masoud said IOID was providing technical and engineering services to China’s Sinopec and CNPC in the West Karoun oil fields.

“After IOID was qualified as an E&P firm, it registered Ofogh Energy Company,” he added.

He said that IOID had already submitted its proposals for the development of two oil fields in West Karoun to NIOC.

 

Future Presence in Iraq

 

Mohsen Mousavi, a senior manager at the Oil Industries Engineering and Construction Company (OIEC), said efforts were under way to find Iranian and foreign partners to finance projects.

“New financing proposals have been submitted to NIOC,” he said.

Mousavi said the best option for financing and implementing petroleum industry projects was partnership between Iranian E&P firms. “In that case, they can negotiate with foreign parties rather than negotiating with the government.”

He said OIEC had positive background in its cooperation with international firms, mainly Russian Gazprom Neft and Zarubezhneft.

He said that OIEC had fully developed Phase 1 of the Azar oil field, adding: “Currently talks are under way with NIOC for the second phase development of this field. Meantime, we have presented NIOC with an MDP for the Changouleh field and we are waiting for the company’s response.”

Mousavi said OIEC had started developing the Mansouri oil field in cooperation with NISOC, following an agreement signed last February.

He said that 14 exploration blocks would be tendered out this year, adding that OIEC hoped to run for five of them.

“We recently entered into talks with a Chinese company for presence in the Iraqi oil fields. I hope the talks would come to fruition,” said Mousavi.

He referred to OIEC’s 30 years of experience in operating technical projects and providing services, saying: “OIEC is among Iranian companies that had already worked alongside Shell and BP in Azerbaijan’s Shah Deniz field.”

He added that OIEC was eying projects in Iraq, Oman and Qatar.

Mousavi said: “We are very hopeful to reach conclusion in the talks for the implementation of a refining and a drilling project. According to our planning, we will soon start work in an oil refinery in one of neighboring countries.”

 

TENCO Submits 6 MDPs

 

Negin Afagh Kish Energy Development Co (TENCO) has signed five memorandums with NIOC to conduct feasibility studies on six Iranian oil and gas fields in the past two years, CEO of TENCO Omid Asakareh said.

Asakareh said the fields included Azadegan, Ab Teimour, Mansouri, Shadegan, Farzad A and Farzad B.

“Meantime, we embarked on talks with NIOC Exploration Directorate for work in the new exploration blocks,” he said.

Asakareh said talks had been held with 34 foreign companies listed by NIOC in the past one year for the establishment of joint ventures.

He said that E&P companies are required to get seriously involved in operating oil and gas fields. “To that effect we managed to sign an MOU for the preservation of recovery from the Reshadat and Ahvaz fields. After approval by the NIOC Board of Directors, we will start work.”

He also said that an MOU had been signed for working on the Toudaj exploration block in Fars Province in southern Iran. He said an agreement would be soon finalized for that purpose.

 

Jask Oil Storage Site Design Complete

Touraj Dehqani, CEO of Petroleum Engineering and Development Company (PEDEC), has said the primary design for crude oil storage in Jask Port was almost over.

He said that contractors would start building storage tanks there within two months.

Dehqani said development of Makran would get under way 65 kilometers off Jask Port. “Building crude oil storage tanks and an export terminal are part of the project that would carry oil from Goureh to this terminal with a 42-inch diameter pipe,” he said.

Dehqani said this giant national project would be fitted with five oil pumping stations in the southern provinces of Bushehr, Fars and Hormuzgan.

“This oil terminal would come on-stream on schedule,” he added.

Dehqani said plans were under way to build twenty 500,000-barrel storage tanks in Jask Port, adding: “This terminal would have three single-point moorings that would facilitate loading and unloading of oil from various oil vessels.” He added that a stilling basin and necessary jetties would be built for logistic vessels. This terminal would fully comply with international standards.

The contract for the oil storage tanks facilities was signed in October 2018 between PEDEC, Petro Omid Asia and Omid Investment Management Group.

2-Second Phase of Abadan Refinery Capacity Building

Saeed Sattari Naeini, manager of the second phase development of the Abadan oil refinery, has announced a 33% progress in the project.

He said: “By providing the necessary financing, the construction of this project is moving ahead and we predict to see a 65% progress in this project by the end of the [current calendar] year.”

Sattari Naeini said: “The project has had 70% progress in engineering, 37% in commodity and equipment supply, and 20% in construction.”

He added that 8 million Yuan had been provided for the first part of the project by the financer.

Sattari Naeini said the second development phase of the Abadan oil refinery would be a separate treatment facility with a capacity to process 210,000 b/d of crude oil.

“Among advantages of the second phase development of the Abadan oil refinery is the renovation of the refinery by replacing the first phase, reducing maintenance costs and supplying euro-4 and euro-5 products,” he added.

Sattari Naeini also referred to the environmental advantages of this project, saying: “This project has fully complied with environmental obligations. After its completion, the quality of gasoline produced at the Abadan refinery would be upgraded to euro-4 grade and the quality of gasoil to euro-5 grade.”

He said the second phase of the project would need $3.2 billion (22 million yuan), adding that in the first phase, 50% of manufacturers are Iranian.

3-PGPIDC to Operate 7 Projects

The Persian Gulf Petrochemical Industries Development Company (PGPIDC) plans to launch seven projects within two years, the company’s chief said.

Jaafar Rabiei named the projects as Bidboland gas refinery, Lordegan and Ilam Olefin for the current calendar year and Hangam Amonia, Gachsaran, flare gas gathering and NGL 3022 as projects to become operational next calendar year.

He said urea, ammonia and methanol would be added to PGPIDC mix after the completion of Hangam and Apadana projects.

“The ammonia section of Hangam will come online in 2020, the Hangam and Apadana project in 2021,” he added.

Rabiei also referred to a flare gas gathering in the areas run by National Iranian South Oil Company (NISOC), saying: “This project is designed for three years. It started this year and will continue into 2021. Throughout the operation of this project, the flares will be turned off throughout years.”

He said about 600 mcf of gas would be gathered in the flaring project.

“The equipment and facilities for the gathering and transfer of associated petroleum gas would be built by PGPIDC and the flare gas would be treated by the Bidboland gas refinery. Then, it will be used as feedstock for petrochemical projects like Gachsaran and Bandar Imam,” he added.

Rabiei said construction of the Sonqor petrochemical project would start in the near future, adding it would be among downstream petrochemical projects.

“This is among projects with no environmental pollution. Compared with upstream and mid-stream petrochemical projects, its water consumption is nothing,” he said.

Rabiei said the Sonqor project would create jobs during both construction and operation.

“PGPIDC plans to operate this downstream project in partnership with a qualified private entity,” he added.

Asked about possible international restrictions for petrochemical projects, Rabiei said: “This issue is being handled by PGPIDC and companies would continue production, exports and hard currency generation.”

Hormuz Strait Exports Risk Decline

Rashid Seyedian, director of the Goureh-Jask crude oil pipeline project, has announced plans for the early startup of the project in 2020.

“This project is expected to carry 1 mb/d of light and heavy crude oil from the Goureh area in Bushehr Province to Jask in Hormuzgan Province in order to reduce export risks via the strategic Strait of Hormuz,” he said.

He added that the project involves a 1,000-km-long 42-inch diameter pipeline. In addition to that, he said, the Jask storage project with a capacity of 10 million barrels in phase 1 and 20 million barrels in phase 2, single point moorings for crude oil exports as well as utilities would be also involved.

Referring to investment in this project, Seyedian said: “About $2 billion in capital is estimated for the Goureh-Jask crude oil pipeline, which we hope the required credit would not go beyond."

He said tender bids for the project were under way, adding: “In addition to the pipeline project, we have about 200 km of power supply to this project. Three contractors will be handling it. The contractors are to be chosen via a tender bid.”

Seyedian said the 1,000-km project would have six extensions, each 150 to 220km long.

“The tender bid for five pumping stations, two pigging stations and a terminal have been held and the contractors have been chosen. They have received the National Iranian Oil Company (NIOC) certification,” he said.

5-Tabriz Refinery to Upgrade Products

Gholam-Reza Baqeri Dizaj, CEO of Tabriz Oil Refining Company, said the Tabriz refinery would boost the quality of its products in a bid to complete its value chain and attain sustainable development.

“In light of the significance of the issue of reducing fuel oil output, this company had earlier conducted feasibility studies with two foreign companies in 2017 for building related units. But due to sanctions imposed on Iran, it was impossible to benefit from financing to run the project,” he said.

Baqeri Dizaj said the project was updated in 2018 following a field assessment by well-known technological companies and feasibility studies.

“Later on, with the objective of acquiring technical knowhow, basic design of constructing processing units was done under a contract with four companies,” he said, adding that the project is in the stage of acquisition of technical knowhow.

Baqeri Dizaj said the contractor for front-end engineering design (FEED) would be selected by next September.

He said since its privatization, the company has spent over €369 million plus IRR 406 billion for environmental projects as part of its sustainable development projects.

“These projects included euro-5 gasoline production (3.3 ml/d) and 7 ml/d of euro-5 gasoil,” he said.

“Sulfur granulation, flare gas recovery for capping greenhouse gas emissions, separation of oil, biological and lime sludge, and installation of real-time detection systems are among other environmental activities of the company,” said Baqeri Dizaj.

He said the refinery had received environmental award from Petroleum Ministry for two consecutive years.

6-South Pars Output Capacity to Grow 60mcm/d

Mohammad Meshkinfam, CEO of Pars Oil and Gas Company (POGC), announced the planned installation and operation of five gas platforms at the South Pars gas field in the current calendar year.

“By the end of the current Iranian calendar year (March 2020), the gas production capacity of the jointly-owned South Pars gas field will increase by 60mcm/d,” he said.

Meshkinfam said two offshore platforms in SP14 became operational and 1 bcf/d of sour gas was recovered from these two phases last calendar year.

“SP14 is in desirable conditions. According to plans, the remaining two platforms of this project each with a capacity of 500 mcf/d would become operational by the end of the current Iranian calendar year. The refined gas from these two platforms would be delivered to a South Pars refinery for treatment,” he added.

Meshkinfam expressed hope about upgrading the qualities of the project contractor with a view to accelerating the construction of the refining section of SP14.

“Some changes have been made at the managerial levels of the client. Certain changes are also expected in the contractor group,” he said.

He added that the first sweetening train of SP14 refinery would become operational by the end of the current calendar year or early next year.

SP13 Output up 500mcf/d

Meshkinfam referred to the official commisioning of SP13 last March and the start of operation from two offshore platforms of this project, saying: “This year, another platform of this phase with a recovery capacity of 500mcf/d of gas would become operational.”

SP22-24 Recovery to Rise 1bcf/d

Meshkinfam went on to speak about plans for the recovery of 1bcf/d of sour gas from SP22-24, saying: “Two other offshore locations of this project would become operational in the first half of the current Iranian calendar year and sour gas recovery from SP22-24 would reach full capacity.”

He said the completion of the refining section of this project and its official commisioning in 2018, the gas recovered from the two new locations would be sent to the refinery of SP22-24 for processing.

Therefore, gas recovery from South Pars would increase by 78mcm/d this year. Petroleum minister Bijan Zangeneh had earlier hinted at 60mcm/d increase in the output from this giant offshore field which Iran shares with neighboring Qatar.

7-Ten Wells to Be Drilled in South Azadegan

Hamid-Reza Khoshayand, deputy CEO of National Iranian Drilling Company (NIDC), has announced the start of operations for drilling 10 new wells in the South Azadegan oil field ahead of schedule.

He said that Fath-92 drilling rig was being transferred to the location of the project.

Khoshayand said two more drilling rigs would be used for new drilling, adding that 20 wells were being completed in location  No. three of the project.

“The drilling project in the South Azadegan oil field is under way on a turnkey basis. The design, management, supply of commodity and materials as well as provision of services are all upon this company,” he said.

Khoshayand said the projects which had been carried out in South Azadegan were among NIDC projects implemented in West Karoun under supervision of Petroleum Engineering and Development Company (PEDEC).

He referred to the completion of operations for drilling seven wells in the Azar oil field, saying: “The depth of hydrocarbon reservoirs and the need for drilling in various oil formations are among the outstanding features of this field, which make drilling operations very complicated and long.”

Khoshayadn also touched on the continuation of drilling in SP14 whose client is Pars Oil and Gas Company (POGC).

“In this phase, NIDC was expected to drill 22 wells. Fourteen wells have had 85% progress. Seven wells on Platform A and seven on Platform C have already been delivered to the client,” he said.

Khoshayand said the remaining eight fields would be soon given to the client. 

8-Industrial Actuators Made in Iran

The CEO of Iran Oil Terminals Company (IOTC) has announced that industrial actuators may now be manufactured in Iran.

“The components of valves were monopolized by European and US companies. But now thanks to domestic manufacturers, we build them completely,” said Abbas Assadrouz.

“The philosophy of establishment of knowledge-based companies in the oil sector was to help development of oil companies and manufacturing of new equipment and parts by using the knowledge and experience of academics,” he added.

“Under the current circumstances, development units are under increased pressure. That is the best time for the effective presence of knowledge-based companies to help overcome challenges in decrepit units and supply new products,” Assadrouz said.

He said that the formation and development of startups would be in two stages known as weekend and demo.

“Weekend startups are in the stage of introduction of project and demo startups in the stage of industrialization,” he added.

Assadrouz said signing MOUs with knowledge-based companies was a way to get around new sanctions, adding: “The first actuator built by domestic manufacturers is used widely. It was installed at the Kharg oil terminal. The manufacturing of this equipment costs 60% lower than that of imported ones.”

IOTC is engaged in storage, measurement, providing laboratory services, handling crude oil, petroleum products and gas condensates imports and exports, as well as offshore services. The main mission assigned to IOTC is to contribute to the sustainable production of oil and gas, loading and offloading of oil and storage.

9-Energy Saving to Serve Exports

Ahmad Khan-Beigi, director-general of research at the Petroleum Ministry, said positive measures undertaken to save energy waste would help boost exports.

He said that cutting energy waste “would increase our production from oil fields for delivery to the end of the value chain, i.e. exports or end users.”

“When we talk about saving, one of indexes striking mind is the energy intensity which comprises energy consumption and gross domestic product (GDP),” said Ahmad Khan-Beigi.

“In both cases, effective parameters, effectiveness of processes, generation of value in the supply of products or services and saving energy in the oil value chain from upstream to downstream sectors must be taken into consideration,” he added.

Beige said inexpensive measures like installation of energy standards like ISO 50001 and conducting technical inspections in the energy consumption sector would help save enough energy in the industrial sector.

“Energy service companies in the world offer advice in energy auditing and present appropriate approaches in order to save more energy in the industries. The Petroleum Ministry should continue to support such companies more firmly,” he said. “Making efforts to save on energy along with increasing the GDP share, would reduce energy intensity, cut industrial pollution and result in the formation of new businesses.”

10-Sohrab Field Awarded to Iran Firm

Jahangir Pourhang, CEO of Arvandan Oil and Gas Company (AOGC), said an Iranian company would be tasked with developing the Sohrab oil field.

Pourhang also referred to the Jofair and Sepehr fields administered by AOGC, saying: “According to the decision made by National Iranian Oil Company (NIOC) , Pasargad Energy Development Company is to develop the Sepehr and Jofair oil fields. The company is waiting for the final permission to start work,” he said.

AOGC started out in 2004 and was immediately involved in the development of the Darquain field.

AOGC is charged with operating oil fields located in West Karoun in western Iran. “Of a total 13 fields we have in West Karoun, 6 are jointly owned with Iraq,” said Pourhang.

He added that AOGC could now produce 450,000 b/d of oil, adding: “We are pursuing our plan to increase our production capacity by the end of the [calendar] year. NIOC plans to reach the target output of 1mb/d in West Karoun b 2025.”

Pourhang touched on gas gathering in West Karoun and said: “Some of associated gas would be gathered through NGL 3200 and about 50mcf/d by the successful bidder. The new contractor is expected to install its facilities within 18 months.”

Referring to domestic manufacturing in Iran, he said: “In the past, we had bottlenecks with regard to the supply of some equipment. But we are currently using domestically manufactured equipment installed 4,000 meters deep in the wells and under 100-degree centigrade temperature. Domestic manufacturers have made us independent of foreign equipment purchase.”

11-4,100km Gas Pipe Envisaged by 2025

Bahram Salavati, acting manager of the Iranian Gas Engineering and Development Company (IGEDCO), said 4,100 kilometers of gas pipeline would have been constructed by 2025.

He said that 580 kilometers would be laid in the current calendar year to March 2020.

Salavati said IGEDCO had implemented the ethane gas transmission project, the Kahnouj-Jiroft pipeline and Kashmar gas pipeline, partly inaugurated Iran Gas Trunkline 9 (IGAT-9) and the Sarbisheh-Nehbandan gas transmission line, which total 737 kilometers in length.

He said that IGEDCO had operated 20 units of the Ahvaz facility in IGAT-6, 10 units in Khourmowj and 10 water distribution installations in IGAT-5. Other activities included the inauguration of a refinery producing gas odorants, a gas measurement station as well as a support power distribution post.

Salavati referred to natural gas storage projects, saying: “Drawing up technical and contractual documents for the second phase of gas storage in the Shourijeh field using BOT, completing the feasibility of gas storage in the Qezel Tappeh field, signing a treaty for appraisal well drilling and concluding pre-feasibility studies in the Baba Qir and Bankoul fields were among IGEDCO projects in natural gas storage last calendar year.

“Chief among important achievements of IGEDCO in the last calendar year are: Iran joining the producers of mercaptan, inauguration of an ethane gas pipeline from site 2 of South Pars to petrochemical plants, South Pars refinery gas measurement stations, inauguration of value chain projects in South Pars during commissioning SP13 and SP22-24, upgrading time-cost management in implementing the project with technical, quality and safety standards as well as development of other infrastructure projects along with the development of pipelines” said Salavati.

580km Pipeline Project under Way

Salavati also touched on IGEDCO main plans for the current calendar year, saying: “In the gas transmission lines, we have to complete 850km of pipeline, outsource 2,000km and supply 200km of slabs and pipes.”

Regarding natural gas storage projects, he said: “Outsourcing development of the Shourijeh and Sarajeh fields, drilling appraisal wells in the Qezel Tappeh fields and completing the MDP of the Nasrabad field, completing the metering station of Bazargan, outsourcing development of the Ilam refinery and building gas condensate storage tanks are among these projects.”

Iran Oil Sanctions & Russia; Propaganda & Realities

The US policy of exerting maximum pressure on Iran for the alleged goal of bringing the country’s oil exports to zero has sent shockwaves all across world markets. In the meantime, one may wonder which nations are benefiting from this policy by substituting Iran in the market.

A number of countries may be on the list, but Russia may be the most significant one to be examined. Apparently, Iran and Russia may have warm ties and Moscow is critical of US sanctions against Iran. However, some analysts say Russia would be a major beneficiary of US oil sanctions on Iran, and hopes to supply sufficient oil on the market to fill the void that would be left by Iran.

Given the significance of this issue in the global energy markets, as well as in Iran-Russia ties, this article reviews Moscow’s oil policy, particularly as far as Iran is concerned.

Propaganda and Realities

International media present the following reasons to explain why Russia would benefit from the latest oil sanctions imposed on Iran.

First, the Russians have long ruled out any decline in oil production, thereby raising speculation about a plan to supplant Iran in the oil market.

Second, Russia’s policy of oil output hike coincides with US President Donald Trump’s toughening of oil sanctions on Iran and Saudi Arabia’s promise to produce more oil. That is why speculation is rife about Russia-Saudi alliance in favor of the US against Iran.

However, a precise review of Russia’s oil policy and Russia’s position in the global markets cast doubt on such speculation. When Russia joined the Organization of the Petroleum Exporting Countries (OPEC) in reducing oil output, the idea was to help bring oil prices back to their realistic levels. Therefore, when oil prices increased in the global markets the Russians no longer saw any need to pursue this policy. Therefore, leading Russian oil companies started talking about the necessity of oil output hike.

And the coincidence of Trump’s call for Saudi Arabia to politicize the oil market with Russia’s planned oil production hike would not necessarily mean Moscow working in league with Washington and Riyadh.

In fact, the Russians are following the market logic in oil production and supply. That does not imply Russia being in line with Saudi Arabia and the US against Iran.

Furthermore, Russia thinks differently from the US and Saudi Arabia about Iran. Moscow has always favored Iran’s sustained oil exports.

Had Russia been willing to ratchet up pressure on Iran’s oil sector, it would not have come out in support of oil production freeze in the latest OPEC meeting. Therefore, Russia’s energy policy is not based on cooperation with Saudi Arabia or following the US. Rather, Russia is pursuing its own interests in the oil sector. A review of Russia’s oil industry conditions shows that this country has, over the past ten years, been following up on increased production due to the startup of new fields and use of modern technologies.

The speculation that the Russians are increasing their oil production in an attempt to take over Iran’s place in international markets does not sound correct for the following reasons:

First, destinations for the Iranian and Russian oil are different. The main buyers of Russia’s oil are European nations and China, while Iran is selling oil mainly to China, India, South Korea and Japan. Most customers of Iran’s oil do not buy oil from Russia; therefore, they cannot shift from Iran to Russia to supply their needs.

Second, history shows that during the previous round of sanctions when Saudi Arabia, the United Arab Emirates, Kuwait and Qatar supplanted Iran in the oil market they did not benefit from the void left by Iran in the global markets.

Perspective

US sanctions may partly disturb Iran’s oil exports and drive prices high. That may sound good for Russia in the beginning, but Moscow never supports any unbridled price hikes. If oil prices keep rising without being under control that would make shale oil production and exploration economical and the shale-rich US would grow into a major oil producer. Therefore, Russia’s oil policy relies on striking a balance into the oil market and setting balanced prices to serve the interests of producers while preventing shale producers from becoming powerful.

For this reason, the Russians have been critical in unilateral US sanctions against Tehran and referred to Iran’s oil as a major balancing factor in the global markets. Over recent years, Moscow has followed up on oil production hike in a bid to cover its domestic costs and serve its own economy. It shows that Russia’s policy of increased oil production would be in favor of national interests and a domestic issue rather than being against Iran or in the US and Saudi interests.

Studying the conditions prevailing Iran-Russia relations and Moscow’s energy policy indicate that despite all propaganda raised so far, the two countries have no discrepancies on the issue of oil. Linking Russia’s oil policy to Iran does not match realities on the ground and is mere propaganda campaign aimed at harming Tehran-Moscow ties. Amid US sanctions, Tehran and Moscow can make joint investments in oil projects and resume their oil barter trading system.

1-Ghana Urges Changes to Deepwater Project

Aker Energy has completed its appraisal drilling campaign on the Deepwater Tano Cape Three Points (DWT/CTP) block offshore Ghana.

The program, which started last November, comprised three wells and a side track, and was designed to improve the partners’ understanding of the area and to prove additional resources to support the Pecan field development.

Pecan-4A and Pecan South, the first and second wells, identified the deep oil/water contact and confirmed the partners’ geological model.

A side track then followed to Pecan South to test a deeper part of the structure. It encountered oil shows, but no recoverable resources due to a tight reservoir.

Initial analysis suggests Pecan South could add a further 5-15 MMboe to the Pecan field development.

The third appraisal well, on Pecan South East, found oil in a thin upper sand. The partners will assess data from the well to determine whether this accumulation too could be added to the development.

-Thai Offshore Support Vessels Ready for Service

Thai operator Unithai Offshore has taken delivery of two OSD-IMT-designed 80-metric ton (88-ton) bollard pull offshore utility vessels.

The Unithai Samui and Unithai Chumporn were built at Unithai Shipyard and Engineering in Leam Chabang, Thailand.

They will support operations around offshore oilfields and oil terminals, such as long-line towing and push-pull tasks, firefighting, SPM maintenance, floating hose and subsea hose string maintenance, anchor handling, inter-/intrafield supply operation, and pollution control.

Both vessels are 49.98 m (164 ft) long, with a beam of 15 m (49 ft), a height of 6.2 m (20.3 ft) and a molded draft of 5 m (16.4 ft). They can accommodate a crew of 22, are classed by Bureau Veritas and registered and flagged in Thailand, operating under the rules and regulations of Thailand Registry.

Features include twin Niigata ZP41 azimuth propulsion units, each coupled via a cardan shaft arrangement to a Niigata 8L28HX marine diesel engine. This arrangement provides the vessels with a free-running speed of around 13 knots.

-Maersk Wins Contract Off Australia

Maersk Drilling’s ultra-deepwater semisubmersible Mærsk Deliverer has received a three-year contract from Inpex Australia and joint venture participants for drilling at the Ichthys gas and condensate field in the Browse basin offshore Western Australia.

The estimated contract value is $300 million, including mobilization. The contract is expected to begin in 2Q 2020. It also includes two one-year options.

Delivered in 2010, the Mærsk Deliverer is currently operating offshore Timor-Leste.

Jørn Madsen, CEO of Maersk Drilling, said: “With this contract award we retain a well-balanced forward coverage in the floater market with long-term contracts while maintaining exposure to a market recovery.”

4Petrobras on Path to Debt Reduction

Petrobras’ strict focus on capital discipline and portfolio rationalization in recent years has improved its financial condition, and this should continue into the next decade, according to a report by IHS Markit.

The company started implementing measures to achieve greater financial stability in 2015, and its latest strategic business plan includes further asset sales and asset rationalization, and continued restraints on capital spending between 2019 and 2023.

Petrobras was forced to take action due to the fall-out of the oil price crash from the second half of 2014, and the huge debt the company had built up after years of overspending cashflows to fulfil corporate investment objectives in Brazil and elsewhere.

Another factor was a major corruption scandal which had a severe impact both on the company’s finances and investor trust.

The subsequent asset divestments have allowed the company to focus on key growth projects in the presalt, such as the Búzios field. IHS has identified other assets that could be candidates for divestment.

The latest strategic plans, announced last December, include a focus on portfolio rationalization, presalt volume growth, and debt reduction. In the upstream, the company will most likely offer producing shallow-water and onshore assets.

---Water Injection in North Sea Cook Field

A newly drilled water injector well on the Cook oil field in the UK central North Sea has reached TD of 13,045 ft (3,976 m) MD, according to partner Hibiscus Petroleum.

The Ithaca Energy-led joint venture sanctioned the well in order to increase reservoir pressure and maximize recovery from the field. Later this year a new subsea pipeline will be installed linking the well to the FPSO Anasuria. 

Cook P1, the field’s existing production well, has delivered more than 50 MMbbl of oil since start-up in 2000.

During drilling of the latest well, reservoir pressure at the injection location was in line with predictions and the well will now be completed to provide pressure support to Cook P1.

The oil-water contact is deeper than originally anticipated. Although the implications of this may be positive, further analysis is needed before the group can assess the field’s remaining reserves, Hibiscus said.

Cook is one of four producing fields in the Anasuria Cluster originally developed by Shell.

Ping Petroleum UK is the other partner in the current joint venture.

-Petrobras Executives Flag Production Boost

Oil and gas production at Petroleo Brasileiro SA is on the rise, executives said, telling analysts that the firm was on course to hit its annual production target despite lagging output in the first three months of the year.

In a call with analysts following the release of first-quarter results, Exploration and Production Director Carlos Alberto de Oliveira reaffirmed the firm’s production goal of 2.8 million barrels of oil equivalent per day (boepd) for 2019, adding that the company has been exceeding that figure in May. In the first quarter, the firm reported oil production of 2.538 million boepd, as output was hit by a number of stoppages.

Executives at Petrobras, as the firm is known, also pledged to keep forging ahead with an ambitious divestment program.

Chief Executive Officer Roberto Castello Branco said the company would look to sell its remaining 10-percent stakes in TAG and NTS, two natural gas pipeline units recently sold to investors, as soon as possible.

The firm will also publish a teaser in June with first details for investors on the sale of eight refineries in a process it has said could fetch some $15 billion, said Anelise Lara, the head of downstream operations.

Castello Branco said fuel distribution unit Petrobras Distribuidora SA, which is being privatized, would not be a potential purchaser of the refineries, contradicting comments by that unit’s CEO.

Petrobras recently posted a 42-percent drop in first quarter net profit, missing Refinitiv estimates.

Analysts at BTG Pactual led by Thiago Duarte called the results “uninspiring,” noting in particular a 38-percent increase in net debt due to the adoption of new accounting standards.

But investors seemed unfazed, and were pleased by increasing production. Brazil-listed preferred shares in Petrobras were up 4.1 percent in mid-day trade. Brazil’s benchmark Bovespa index was up 1.9 percent.

------ CNOOC May Bid On More Brazil Oil Blocks

Chinese oil company CNOOC Ltd wants to expand in Brazil and is considering bidding in an auction of offshore exploration blocks in the pre-salt area set for later this year, the head of the firm’s Brazilian unit said.

CNOOC, owned by Chinese state-owned firm China National Offshore Oil Corp, is also looking for a partner in Bloc 592 in the Espirito Santo basin which it was awarded in a previous auction, country head Sheng Jianbo said at an event in Rio de Janeiro. The company additionally owns a stake in the Libra field in the Santos basin.

Brazil is set to hold a round of pre-salt auctions on Nov. 7. It will also auction off rights to excess oil in the so-called transfer-of-rights area on Oct. 28 following the settlement of a long-running dispute with state-controlled firm Petroleo Brasileiro SA, known as Petrobras.

“We are looking at (pre-salt auctions) and it seems like a good opportunity,” Sheng said. “We want to expand production in Brazil...this will depend on the size of the discoveries.”

It was not clear whether Sheng was referring to the Nov. 7 or Oct. 28 auctions, or both.

CNOOC already owns a 10 percent stake in the Brazil’s Libra field in the Santos basin, jointly invested with Petrobras, Anglo-Dutch Royal Dutch Shell Plc and France’s Total SA .

Sheng said production in the Libra field’s long-term test is 58,000 barrels of oil equivalent per day.

 

Western Canadian Oil Inventories Hit Record High

Western Canadian crude oil storage inventories hit a record high of 37.1 million barrels in April, according to data from energy information provider Genscape, as Alberta government production cuts failed to reduce a glut of oil in the province.

Genscape said the build in inventories was due to lower pipeline flows out of Canada’s main crude-producing province, while crude-by-rail shipments remain below the high levels they hit late last year.

Alberta imposed temporary oil production curtailments effective Jan. 1 2019 after congestion of export pipelines last year led to a buildup of crude in storage tanks and record discounts on Canadian heavy crude versus U.S. oil.

Producers in Canada’s energy heartland were limited to producing 3.66 million barrels a day in April. That will rise by 25,000 bpd in May and a further 25,000 bpd in June.

The sharp inventory increase in April follows a smaller increase in March and raises questions over whether Alberta’s new United Conservative Party government, which was elected on April 16, will increase curtailments.

Stocks rose 2.5 million barrels between the weeks ending April 5 and April 26, an increase of nearly 117,000 barrels per day.

 “Record-high stocks in late April were a clear signal that the province’s efforts to control supply had so far been unsuccessful in alleviating the glut,” Genscape analysts said in a note.

Genscape said lower flows on TC Energy’s Keystone pipeline in the week ending April 26 contributed to the inventory build.

Canadian crude-by-rail loadings rose by 47,000 bpd in April from the previous month to total 197,000 bpd, Genscape data showed. That was well below the 350,000 bpd that Canada exported in December, according to data from the National Energy Board.

Crude-by-rail loadings dived at the start of this year after government curtailments boosted Canadian crude prices dramatically, which in turn made shipping barrels by rail uneconomic and contributed to stubbornly high inventories.

- Pioneer Natural Resources to Cut Executive Ranks

Pioneer Natural Resources said it has asked nearly a third of its executives to leave their jobs as the U.S. shale producer continues to trim costs and considers selling more assets.

The company expects to save $100 million annually with the job cuts and a new organizational structure, Chief Executive Scott Sheffield said during an earnings call. The Irving, Texas-based oil and gas producer expects to shed the employees on a voluntary and involuntary basis by June 1.

Shale firms have pushed U.S. oil output to record levels. But years of heavy spending led to investor pressure to reduce spending and use the cash to pay dividends and repurchase shares.

 “The big change is to treat capital just as important as production,” Sheffield said.

“I didn’t come back to sell the company,” said Sheffield the company’s founder, who returned as CEO after veteran executive Tim Dove abruptly retired in February. “I personally don’t think that there’s going to be a lot of (mergers and acquisitions) over the next one to two years.”

It plans to sell a share of its gas processing infrastructure and may sell its water infrastructure, Sheffield said. Pioneer disclosed it had sold its Eagle Ford Shale acreage and remaining assets in South Texas for up to $475 million to become a purely Permian Basin producer.

-Italy Opposes Poseidon Gas Pipeline Landfall

Italy will not allow the Poseidon gas pipeline being developed by Italy’s Edison and Greece’s DEPA to make landfall as planned in southern Italy, the Prime Minister said.

The Poseidon pipeline, which has permits to run from Greece to the southern town of Otranto, is the final section of the EastMed pipeline that aims to bring gas reserves from the east Mediterranean to Italy.

“The government is certainly not interested at present in building the final tract of Poseidon as originally planned,” Prime Minister Giuseppe Conte said at an event near Rome.

Two years ago DEPA and Edison signed a cooperation agreement with Russia’s Gazprom to set up joint efforts to create a southern route for gas into Europe.

The United States has been pressuring EU member states to find alternative natural gas supply sources not involving Russia.

But Conte said the pipeline could find a fit with the Trans Adriatic Pipeline (TAP) being built to carry Azeri gas into the south of Italy.

The TAP pipeline is seen by many as a way of weaning Europe off over reliance on Russian gas.

“It could have development potential, a link to Italy,” Conte said.

Italy’s populist 5-Star Movement, part of the ruling coalition with right-wing Lega, has said it wants to phase out fossil fuels by 2050 by ramping up renewable energy production.

-Iraq Close to $53bn Deal With Exxon, PetroChina

Iraq is close to signing a $53 billion, 30-year energy agreement with Exxon Mobil and PetroChina, Prime Minister Adel Abdul Mahdi said, denying any link between the mega-project and U.S. permission for Iraq to do business with Iran.

Iraq expects to make $400 billion over the 30 years the deal will be in effect, the prime minister said.

The southern mega-project involves the development of the Nahr Bin Umar and Artawi oilfields and raising production from the two fields to 500,000 barrels per day (bpd) from around 125,000 bpd now, Abdul Mahdi said.

The project is crucial to supplying water to oilfields in the south in order to boost pressure and keep production steady.

“Talks now between the oil ministry and Exxon Mobil and PetroChina are focused on how to split profits if oil prices rise or decline,” Abdul Mahdi said in response to a Reuters question on the obstacles holding up a final agreement.

“The deal lasts for 30 years and such financial details are sensitive and should be given more discussions,” he added.

Iraq is the second largest oil exporter in OPEC and has long-term aims to boost output curtailed by decades of war and sanctions. Such projects are among the most valuable prizes in the world for international oil companies. An initial agreement would be a big boost for Exxon Mobil’s plans to expand in Iraq.

It is also one of the only countries in the world to have friendly relations with both the United States and Iran. Tehran and Washington, arch enemies elsewhere, are Baghdad’s main allies and vye for influence there.

Exxon Mobil and PetroChina will build a water injection project to feed oil wells in the south, as well as rehabilitate and build new export pipelines, Abdul Mahdi said.

The project also aims to process 100 million standard cubic feet of natural gas per day from the Artawi and Nahr Bin Umar fields.

--Russia Sees Oil Quality Normalizing

The quality of Russian crude is gradually improving after a contamination scandal that rocked oil markets, buyers said, but Russia’s energy minister cautioned that it will take until the second half of May to fix the problem.

A long outage could force refineries in Eastern Europe and Germany to cut operations and prompt Moscow to reduce oil production. It could also trigger claims by Western oil buyers against Russian producers and pipeline monopoly Transneft for lost profits as they struggle to sell contaminated oil.

Russian oil production in early May dropped to 11.19 million barrels per day (bpd) from an average 11.23 million bpd in April, an industry source said, pushed down in part by the contamination debacle.

Another industry source said Russian oil producers reduced their supplies to the Transneft network by some 650,000 bpd on May 1-6 in comparison to April. Transneft handles around 85 percent of all Russian oil.

The tainted oil, detected late last month, has forced Russia to shut the Druzhba pipeline to Central Europe and Germany. The line had been closed for almost two weeks and it was unclear when normal operations would resume.

Energy Minister Alexander Novak told a televised government meeting that he expected clean oil to reach the Baltic Sea port of Ust-Luga, a delay of one day compared with previous plans.

He said the “situation” had not affected oil exports or production as flows had been redirected.

 “As far as normalisation of the situation is concerned, we expect that to happen in the second half of May. Work in this direction continues,” he said, adding that “normalisation” meant cleaning both legs of the Druzhba pipeline.

The Russian government had initially promised to fix the problem by May 7 after buyers discovered large volumes of Russian crude had been contaminated with organic chloride, a chemical compound used to boost oil extraction.

 “It is improving although it is still not up to normal standards,” one buyer said.

For a factbox on Russian oil flows to Europe, click on

The problem with oil quality in the Druzhba (Friendship) pipeline emerged when Belarus, through which the link is routed, complained about high levels of organic chloride.

--U.S. Natgas Output, Demand Hitting Record Highs

U.S. dry natural gas production will rise to an all-time high of 90.27 billion cubic feet per day (bcfd) in 2019 from a record high of 83.40 bcfd last year, the Energy Information Administration’s Short Term Energy Outlook (STEO) said.

The latest May output projection for 2019 was down from EIA’s 91.00 bcfd forecast in April.

EIA also projected U.S. gas consumption would rise to an all-time high of 84.07 bcfd in 2019 from a record high 82.08 bcfd a year ago.

The 2019 demand projection in the May STEO report was down from EIA’s 84.61 bcfd forecast for the year in April.

In 2020, EIA projected output would rise to 92.19 bcfd and demand would rise to 84.78 bcfd.

The agency forecast U.S. net gas exports would reach 5.3 bcfd in 2019 and 7.6 bcfd in 2020, up from 2.5 bcfd in 2018. The United States became a net exporter of gas for the first time in 60 years in 2017.

EIA projected gas would remain the primary U.S. power plant fuel for electrical generation in 2019 and 2020 after first supplanting coal in 2016.

EIA projected the share of gas generation would rise to 37 percent in 2019 and 38 percent in 2020 from 35 percent in 2018.

Coal’s share of generation, meanwhile, was forecast to slide to 24 percent in 2019 and 22 percent in 2020 from 27 percent in 2018.

EIA projected the electric power sector would burn 555.1 million short tons of coal in 2019, the lowest since 1979, and 512.6 million short tons in 2020, which would be the lowest since 1978. That compares with 636.5 million short tons in 2018, which was the lowest since 1983.

U.S. carbon emissions have mostly declined since peaking at 6,002 million tonnes in 2007 as the power sector burns less coal, falling to a 25-year low of 5,131 million tonnes in 2017.

But in 2018, U.S. energy-related carbon emissions rose for the first time in four years to 5,268 million tonnes due to a booming economy and higher gas consumption during a colder winter and warmer summer than in 2017.

EIA projected carbon emissions would slip to 5,156 million tonnes in 2019 and 5,116 million tonnes in 2020, the lowest since 1992, due to forecasts for near-normal weather.

--- Clean Russian Oil Starts Flowing From Belarus

Pipeline operator Ukrtransnafta said clean Russian oil had started flowing from Belarus towards Ukraine and it was ready to resume oil exports to the European Union following a transit hiatus over contaminated crude.

Flows through the Druzhba pipeline were suspended in late April because tainted crude had entered the system, sending shocks through global oil markets and damaging Russia’s image as a reliable supplier of energy.

The southern spur of the Druzhba pipeline passes from Belarus through Ukraine to Slovakia, Hungary and the Czech Republic. It was not immediately clear if clean supplies were also flowing on the northern spur, which runs directly between Belarus and Poland and Germany.

“The oil with the quality, which is in line with the standard, has started to flow...to the Druzhba pipelines system in the direction of Ukraine for further transportation to the EU countries,” Ukrtransnafta said.

It said that the deliveries of clean oil started at 1417 Kiev time (1117 GMT).

The Russian oil pipeline monopoly Transneft did not reply to a request for comment.

The Energy Ministry in Moscow said clean Russian oil had arrived at the Mozyr hub in southeast Belarus, where the Druzhba pipeline splits to the north and the south.

However, sources at Belarusian state oil firm Belneftekhim and in the trading sector said that Belarus had no idea when clean Russian oil flows would resume. The section of the pipeline inside Belarus is controlled by a local firm, Gomeltransneft Druzhba.

The clean oil is backed up behind millions of barrels of contaminated crude in the pipeline system and there is no clear plan yet on how to discharge the tainted supply, traders and industry sources have said.

The Soviet-built Druzhba (Friendship) pipeline normally transports around 1 million barrels per day of crude, which accounts for some 1 percent of global oil trade.

Transmission via the pipeline was halted due to high levels of organic chloride, a chemical compound used to boost oil extraction by cleaning wells and accelerating the flow of crude.

Options for disposing of the contaminated oil include selling it at a heavy discount or storing it in tanks. But customers are not keen and there is insufficient storage capacity, trading sources say.

Some crude that reaches Mozyr is fed into a refinery there. The Mozyr plant has yet to resume crude processing and is still cleaning tainted equipment, the Belneftekhim source said.

Separately, the Russian Baltic Sea port of Ust-Luga, which is linked to Druzhba, is still loading contaminated oil onto tankers, trading sources said. It was hard to find a buyer for this oil, they added.

The Russian Energy Ministry has said clean oil was expected to arrive at the port on May 7.

----US and EU Concerned by Turkey Drilling Plan

The United States and European Union have expressed deep concern over Turkey’s plans for offshore drilling operations in an area claimed by Cyprus as its exclusive economic zone, adding to tensions between Ankara and its Western allies.

The statements at the weekend came after Turkish Foreign Minister Mevlut Cavusoglu said “we are starting drilling” in the region.

Turkey and the internationally recognised Greek Cypriot government have overlapping claims of jurisdiction for offshore oil and gas research in the eastern Mediterranean, a region thought to be rich in natural gas.

 “The United States is deeply concerned by Turkey’s announced intentions to begin offshore drilling operations in an area claimed by the Republic of Cyprus as its Exclusive Economic Zone,” State Department spokesperson Morgan Ortagus said.

 “This step is highly provocative and risks raising tensions in the region. We urge Turkish authorities to halt these operations and encourage all parties to act with restraint.”

Cavusoglu said that Turkish seismic research vessel Barbaros Hayrettin Pasa was continuing work in the region.

 “We will conduct drilling in areas of Turkey’s continental shelf and we are starting our drilling work at points identified by Barbaros Hayrettin Pasa,” he said in northern Cyprus.

The Cyprus foreign ministry said it “strongly condemns” Turkey’s drilling operations within its exclusive economic zone.

 “This provocative action by Turkey constitutes a flagrant violation of the sovereign rights of the Republic of Cyprus,” it said.

Speaking at NATO’s North Atlantic Council Mediterranean Dialogue meeting in Ankara, President Tayyip Erdogan said he expected NATO to support Turkey’s rights in the Mediterranean.

 “The legitimate rights of Turkey and the Northern Cypriot Turks over energy resources in the eastern Mediterranean are not open for argument. Our country is determined to defend its rights and those of Cypriot Turks,” he said.

 “We expect NATO to respect Turkey’s rights in this process and support us in preventing tensions.”

 

Egypt Petroleum and Refining Industry

Egypt sits atop 4.4 billion barrels of crude oil in place, and produces 650,000 b/d of crude oil and liquids.

Egypt is the 6th largest owner of oil reserves in Africa and the largest non-OPEC oil producer in the continent. With a rated refining capacity of 720,000 b/d, Egypt is known as the largest African refiner. Furthermore, due to enjoying the Suez Canal and a 200-mile pipeline, the country remains the largest supplier of crude oil from the Persian Gulf to Europe and America.

Offshore oil reserves account for half of the Egypt oil reserves. Currently more than half of Egypt’s crude oil production is supplied from the Gulf of Suez. The Eastern Desert, Western Desert and Sinai Peninsula regions are among the major producers of oil in Egypt. Based on estimates, Safaga Quseir in Eastern Desert contains 4.5 million barrels of oil, while Abu Tartour in Western Desert holds 1.2 million barrels of shale oil.

Egypt was once a major player in oil supply in the world, but over recent years its production has declined significantly and the country has turned into a net- importer, i.e. an exporter has simply become an importer. Egypt’s state-run company Egyptian General Petroleum Corporation (EGPC) handles petroleum industry affairs in the Arab country. Britain’s BP, Royal Dutch Shell and Italy’s ENI are the leading foreign companies present in Egypt’s petroleum industry.

Egypt’s refining industry is a state-run industry. Of a total 10 refineries in Egypt, only one belongs to the private sector. Therefore, the refining industry is attracting less investment in the upstream sector. In 2015, investment in Egypt’s refining industry totaled $40 million, while investment in the upstream sector totaled $230 million.

However, Egypt imported oil products worth $ 6.2 billion in 2016 and oil products worth about $7 billion in the first three quarters of 2017. Petroleum products account for 38% of Egypt’s total imports.

Under a long-term five-year agreement, Saudi Arabia will be exporting 700,000 tonnes a month of oil products to Egypt. Kuwait will be also exporting 1.5 million tonnes a year of oil products and 2 million barrels per month of oil to Kuwait. Furthermore, Kuwait Energy has invested in Al Jahra field in Western Desert.      

Oil Refineries in EgyptCompanyLocationRefining Capacity (b/d)RefineryCairo Petroleum Refining

Cairo142.000MOSTORODAlexandria PetroleumAlexandria100.000AlexandriaNasr Petroleum

El Nasr143.000El NasrMiddle East Oil RefineryAlexandria100.000MIDORAmreyaPetroleum Refining

Alexandria75.000AmreyaSuez Petroleum ProcessingSuez68.000SuezAssiut Petroleum Refining

Assiut50.000AssiutCairo Petroleum RefiningTanta35.000TantaNasr PetroleumWadiFerain

8.500WadiFerainEgypt’s state-run Middle East Oil Refinery Co. (Midor) was established in 2007 to help meet domestic demand. It has been seeking to upgrade refineries in order to strike a balance between supply and demand in oil products consumption.

Egypt is currently able to meet only 65% of its domestic needs. The country depends on imports for the rest, which amounts to 300,000 b/d.

Given the growing consumption trend in Egypt and no significant increase in supply, imports are expected to go upward. According to statistics, crude oil consumption in Egypt has increased about 16% year-on-year from 2007 to 2017 to reach 802,000 b/d.

The important point in Egypt’s refining industry is that all refineries in Egypt are facing technical problems and have decrepit installations. Therefore, they are treating crude oil below their capacity and all products may not be exported.

Egypt is seeking to enhance its refining capacity, but optimization of refineries has been delayed. For instance Midor was expected to enhance its refining capacity in 2018, but it may reach the target next year. The Egyptian Refining Corporation (ERC) was also to finish the development of MOSTOROD refinery in 2017, but due to technical problems the project has been postponed to 2020.

In case the current circumstances remain unchanged in Egypt’s refining industry, the country is unlikely to see any significant jump in production and refining in the short and mid-term. It will only have to strike a balance to production and refining on one side and consumption, on the other. Oil analysts believe that these objectives are hard to be achieved due to numerous reasons including economic issues.

Band Karkheh Field Up for Investment

West Karoun is a quite vast area on the western bank of Karoun River, extending up to Iran-Iraq border.

West Karoun belongs to oil-rich Khuzestan Province, but during the imposed war in the 1980s and post-war calamities like mined areas, oil exploration and production could not materialize.

However, the valuable oil deposits in this part of Iran are now for certain, a significant part of which lies in the Band Karkheh field which holds heavy crude oil. West Karoun’s fields are mostly shared with neighboring Iraq. National Iranian Oil Company (NIOC) has given priority to the development of these fields for oil production with a view to adding 1 mb/d of oil with an investment of over $20 billion to national production.

Band Karkheh is an independent oil field, which was introduced by NIOC for investment a couple of years ago.

Measuring 50 kilometers long and 5 kilometers wide, this field is estimated to contain over $4.5 billion oil with an API gravity of 24 at Ilam and Sarvak geological formations.  

Band Karkheh is administered by the Arvand Oil and Gas Production Company, but its development is upon Petroleum Engineering and Development Company (PEDEC).

2D seismic testing was conducted in the 1960s to examine the existence of oil in Band Karkheh. Later on, the field’s structural plan was identified and a first well was drilled that showed the existence of oil in Asmari Formation. This field lacked any hydrocarbon at that time and therefore exploration operations halted.

In 2007, an appraisal well was drilled in the Ilam reservoir, which proved the possibility of recovering at least 1,000 b/d of crude oil from Ilam formation. Sarvak formation is estimated to hold 2.5 billion barrels of oil in place.

In 2012, an agreement was signed between PEDEC and Armed Forces Social Security Investment Company (AFSIC) for the development of Band Karkheh, but the agreement was terminated the following year. Recently a European company has resumed development operations in this field. An agreement is to

be signed soon on the model of the Iran Petroleum Contract (IPC) for the development of Band Karkheh.

A European firm had discovered oil in Band Karkheh under a deal with NIOC. The company had to leave Iran when international sanctions were imposed on Iran and the development project was halted. After this company left Iran, PEDEC and AFSIC had signed their memorandum for cooperation.

Drilling of two appraisal wells in the northern and central parts of the field to acquire information about the second phase of development of Band Karkheh in parallel with the drilling of development wells in the southern part are envisaged.

Early production is expected to increase more than 7,500 b/d from this field, but seismic data processing and interpretation will make it clearer.

Oil is expected to be transferred from Band Karkheh to West Karoun’s pumping station. Meantime, mobile processing facilities are available.

Iran Methanol Production Outlook

The four petrochemical plants of Zagros, Kharg, Fanavaran and Marjan have currently an annual petrochemical production capacity of more than 6.6 million tonnes of methanol. The figure is forecast to reach 25 million tonnes within five years. Many experts view this issue as a bargaining chip for Iran because by supplying 25 million tonnes of methanol on global markets, Iran will have a final say on the pricing of this much-desired substance.

During years of sanctions, four factors pushed the petrochemical industry, particularly the private sector, to switch to methanol production in Iran. These factors included shift to Chinese financing, allocation of land near sea, low-cost gas price and the purchase of natural gas-methanol technology before imposition of the sanctions. Therefore, over the coming five years Iran’s methanol production capacity will reach 25 million tonnes. That would serve Iran’s petrochemical industry enormously if strategic management applies. The petrochemical industry development used to be limited to ethylene because due to the abundance of ethane, most products became ethylene-oriented and the downstream industries could grow to a large extent. But for more growth in the petrochemical industry, arrangements have to be made for the production of propylene. Propylene creates and feeds an extensive chain of downstream industries. Therefore, Iran plans to convert methanol to propylene.

Twelve new methanol projects are under construction in Iran. Ten of them will definitely come on-stream by 2021, which would bring Iran’s methanol production capacity beyond 20 million tonnes a year. At least five new methanol projects are expected to become operational within two years. The Kaveh Petrochemical Plant with an annual production capacity of 2.310 million tonnes, Phase 1 of the Bushehr Petrochemical Plant, Middle East Kimiaye Pars Co. (MEKP), Sabalan and Dena with a combined production capacity of 1.650 million tonnes are complete between 61 and 100%. These projects will have come on-stream by 2021.

Furthermore, five other methanol projects including Apadana petrochemical, Aryan dipolymer, Siraf, second development phase of Kharg and Lavan are complete between 25% and 44%. They will have come online by 2022.

However, the construction of the Arman methanol project with a capacity of 1.650 million tonnes (22% complete) and Arg Shimi Parsa with a capacity of 990,000 tonnes (12% complete) has been halted. Once all the 12 under-construction methanol projects have come on-stream, the methanol production capacity in Iran will increase to about 25 million tonnes annually, making Iran the biggest producer of methanol in the world.

The latest data provided by Global Data Energy about methanol production in the world shows that Iran will see the highest methanol production increase in the coming years. From 2018 to 2022, Iran will be increasing its annual methanol output by 30 million tonnes. The US and China come second and third with forecasts of 12-million-tonne and 10-million-tonne increase. Current projections show that Iran will be accounting for 54% of global methanol output increase up to 2022. Iran is planning to build 12 methanol plants. The Dayyer methanol plant owned by the Kaveh Methanol Co. is projected to have the highest capacity (2.3 million tonnes). The US will account for 22% of global methanol production capacity growth by 2022, as it is expected to build six new methanol plants. By that time, China will account for about 18% of global methanol production capacity growth through 10 new methanol plants.

Methanol-to-Propylene Conversion

Today, methanol is among low-value petrochemical products in Iran. The private sector is seeking to develop their capacity. Iran is currently spending only 5% (232,000 tonnes) of its methanol production domestically with the rest destined for exports. Now, even no serious and effective action is undertaken to develop the methanol value chain, Iran’s private sector is following up on plans to significantly enhance production of this group of products.

Once the methanol plants under construction become operational, Iran’s current 6.6-million-tonne output will reach 25 million tonnes a year, which would definitely send shockwaves all across the global markets. That might explain why Iran’s National Petrochemical Company (NPC) is no longer issuing permits to domestic and foreign investors for building methanol plants.

Iranian petrochemical experts have over recent years managed to master the technical savvy for the conversion of methanol to propylene. They have even acquired the pilot for this technical knowhow. Although the government is banned from investing in the petrochemical sector, permit has been issued for the NPC’s investment in developing the technology.

The NPC recently announced the establishment of a 120,000-tonne propylene via methanol (PVM) plan under a joint venture between the NPC and a European bank.

Light olefins, ethylene, propylene and butylene are key elements in the petrochemical industry. They are largely used as raw material for producing polyolefin. Ethylene and polypropylene are key feedstock at petrochemical plants. They are widely used in manufacturing chemicals and plastics. According to forecasts, the average annual growth in demand for propylene will reach 4% between 2015 and 2020.The consumption of propylene in polypropylene and acrylic acid will be faster. The daily increasing difference in the propylene supply and demand will encourage moving towards new procedures that would fill the existing voids.

Since early 1990s, light olefin production has seen significant changes. In the meantime, customary procedures like steam cracking and catalytic cracking as well as new technologies like propane hydrogenation and conversion of methanol to light olefins top the agenda of commercial companies.

Given the feedstock used in propylene production, the PVM process is widely used due to the accessibility of methanol. Methanol is produced from coal or natural gas. Five petrochemical plants in Iran are currently supplying methanol with a rated capacity of 6.6 million tonnes a year.

In light of the fast growth of the petrochemical industry in the past ten years and the planned construction of numerous methanol production units in coming years, the production of this chemical is on the rise in Iran. Therefore, one economic option for using the surplus methanol would be converting it to high-value products like propylene.

Iran’s top position in terms of oil and gas resources keeps the country at the focal point. The growth and development of energy technologies, from exploration to refining and processing of oil and gas in Iran on one hand, and the civilizational identity and strategic geopolitical position of the country on the other, have helped Iran become the energy hub in the future.

The most important advantage for investment in and development of the petrochemical industry in Iran is undoubtedly access to feedstock like natural gas, ethane, and naphtha and gas condensate massively at a competitive price. Iran’s gas treatment and transmission capacity currently stands at 750 mcm/d, which will soon increase to 1,000 mcm/d. Furthermore, access to ethane as feedstock will be instrumental in solidifying Iran’s competitive status for manufacturing petrochemical products.

Once South Pars gas field development phases have been completed, it would enable us to recover 650,000 b/d of gas condensate and 6.7 mt/y of liquefied petroleum gas (LPG) including propane and butane as well as 4 mt/y of ethane. South Pars ethane will be wholly given to the petrochemical industry and the rest will be supplied upon request.

In addition to easy access to petrochemical feedstock, Iran enjoys other competitive advantages which could not be ignored easily. The growing domestic market of petrochemical products, the availability of skilled manpower, extensive communication infrastructure, sharing border with 15 countries particularly in Central Asia and South Caucasus, establishment of special economic petrochemical zones, political stability and pro-investor laws like tax exemptions are among such advantages which would be instrumental in the development of upstream and downstream sectors. Add to them the possibility of dipping into National Development Fund (NDF).

Third Time Lucky!

Palayesh Naft Abadan, Iran Basketball Champion

The Iranian clubs basketball premier league started in the second half of last Iranian calendar year to March 2019. Initially nine teams started competing. The playoff stage continued in the current calendar year and it just came to an end. Palayesh Naft Abadan was crowned champion.

Palayesh Naft Abadan’s basketball team has managed to win the championship title of Iran’s basketball pro league despite the fact that all of its players were Iranian.

The Palayesh Naft Abadan and Shahrdari Gorgan basketball teams played in the final after overcoming two giants, i.e. Petrochimi Bandar Imam and Chemidor. 

Four games were held in Gorgan and Abadan and finally Palayesh Naft Abadan defeated Shahrdari Gorgan 3-1 to record its first-ever championship title in the pro league.

The first two matches were held in Gorgan and each time had one victory and one loss. In the third match, Palayesh Naft defeated Shahrdari Gorgan to come one step closer to championship. Trained by Hamad Sameri, Palayesh Naft Abadan managed to win Hamid-Reza Kalasangiaini-trained Shahrdari Gorgan 99-74. That also pushed Palayesh Naft Abadan closer to victory.

The fourth encounter was marked by celebration of championship in Abadan. Sameri’s trainees were now in a better spirit.

On the day of final match, basketball fans from across Abadan were packed into the venue of the match which could only accommodate 2,000 spectators. Many others were staying outside under searing sun. Up until the end of the match, the result was unpredictable. Palayesh Naft Abadan defeated its rival 58-55 to celebrate its championship.

In the first half of this match, both teams showed off a tight match. The first quarter was over in favor of Gorgan 14-11, while the second quarter finished 13-10 in favor of Abadan. The first half finally ended 44-44.

The second half started amid excessive fatigue on both sides. As a result, the match saw a decline in quality. However, Abadani spectators boosted the morale of Sameri’s trainees. The match ended in the third and fourth quarters 17-13 and 17-16, respectively. And finally, the match ended 58-55 in favor of Palayesh Naft Abadan thanks to such players as Mike Rostampour, Mohammad Hassanzadeh, Saeed Davarpanah and Aren Davoodi.

Palayesh Naft Abadan had already forced its way into the final stage twice, but it had finished runner-up. But third time lucky.

As soon as the match ended, the city basked in joy. People were hugging each other. This hard-won championship had given them cause to congratulate each other.

It was one of occasions wherein the Abadanis removed their famous "Ray Ban" sunglasses to shout.

We Did a Great Job

The victory of basketball team of Palayesh Naft Abadan was a great achievement for Hamad Sameri, the head coach. He said his team beat all expectations and forecasts by winning the championship title. The following is a brief interview with him:

Palayesh Naft Abadan’s basketball team was crowned the pro league champion for the first time. How do you feel about this victory?

Let me start by saying that those who were looking at us from outside Naft Abadan and the basketball league considered no chance for our win. Nobody imagined that Naft Abadan would make its way into the final stage and become champion. But the objective sought by me and my trainees was to do a great job this year. We were determined from the very beginning to record an acceptable result. We did not want to leave the league without any title. Championship was one of our objectives and I feel so delighted that we did the greatest job possible in the basketball team of Palayesh Naft Abadan.

The final match was like the semi-final match in terms of the number of games. Was it your team’s strategy?

It might have been the chance for us to win the rival 3-1 at home. From the very beginning we had plans to win at least one of two matches in Gorgan so that we would win the matches that we hosted in order to finish the job. Fortunately, we went ahead as planned although it was not easy. We had to make significant efforts and be very careful in the matches to reach the desired conclusion.

You did much better in the third match compared with the fourth match. What was the reason? Were you happy with the performance of your team?

By concentration and analysis of the behavior of the rival we managed to achieve a brilliant result, but in the fourth match the players were excessively tired. We had two matches in rapid succession in Abadan. Naturally our players were tired. Had these matches been played with a longer interval we would have done much better in the fourth match. In general, they did a great job and I am very satisfied with their work.

After two unsuccessful presence in the finale, you finished champion. What was the cause of your brilliance in the 3rd and 4th matches?

Based on our assessments, we know well how the Gorganis would defend. We broke their defenses to have a chance to win scores. In all four matches, our efforts were focused upon giving our players a sense of self-confidence so that they would seize on such chances. This trick worked well and our players managed to reach the desired result by focusing on long shots.

In the final match, you were in a tight race with Shahrdari Gorgan. Weren’t you worried about losing the match?

The final moments of the match were filled with emotions and sensitivity. Shahrdari Gorgan has an influential technical team and players. Of course, in the third match their performance was not as usual. However, the final matches were on equal footing. Thanks to God, we won the championship title to make Abadanis happy.  

 

 

Palayesh Naft Abadan, Iran Basketball Champion
Third Time Lucky! The Iranian clubs basketball premier league started in the second half of lastIranian calendar year to March 2019. Initially nine teams started competingThe playoff stage continued in the current calendar year and it just came to anend. Palayesh Naft Abadan was crowned champion.
April 2019 Issue No. 82Palayesh Naft Abadan’s

basketball team hasmanaged to win thechampionship title of Iran’sbasketball pro league despite
the fact that all of its playerswere IranianThe Palayesh Naft Abadan andShahrdari Gorgan basketballteams played in the final afterovercoming two giants, i.ePetrochimi Bandar Imam and
ChemidorFour games were held inGorgan and Abadan and finallyPalayesh Naft Abadan defeated
Shahrdari Gorgan 3-1 to recordits first-ever championship titlein the pro league.
The first two matches were heldin Gorgan and each time had onevictory and one loss. In the thirdmatch, Palayesh Naft defeatedShahrdari Gorgan to come onestep closer to championship.
Trained by Hamad SameriPalayesh Naft Abadanmanaged to win Hamid-RezaKalasangiaini-trained ShahrdariGorgan 99-74. That also pushedPalayesh Naft Abadan closer tovictory.
The fourth encounter wasmarked by celebration ofchampionship in Abadan
Sameri’s trainees were now in abetter spiritOn the day of final match,
basketball fans from acrossAbadan were packed into thevenue of the match which
could only accommodate2,000 spectators. Many otherswere staying outside under
searing sun. Up until the endof the match, the result wasunpredictable. Palayesh Naft
Abadan defeated its rival 58-55to celebrate its championshipIn the first half of this match,
both teams showed off a tightmatch. The first quarter wasover in favor of Gorgan 14-
11while the second quarterfinished 13-10 in favor ofAbadan. The first half finally
ended 44-44Palayesh Naft Abadan, Iran Basketball ChampionThird Time Lucky! The Iranian clubs basketball premier league started in the second half of last
Iranian calendar year to March 2019. Initially nine teams started competing.
The playoff stage continued in the current calendar year and it just came to an
end. Palayesh Naft Abadan was crowned champion.
April 2019 Issue No. 82

Hamad SameriWe Did a Great Job

The victory of basketball team of Palayesh Naft Abadan was a
great achievement for Hamad Sameri, the head coach. He said
his team beat all expectations and forecasts by winning the
championship title. The following is a brief interview with him

The second half started amidexcessive fatigue on both sidesAs a result, the match saw a
decline in quality. HoweverAbadani spectators boostedthe morale of Sameri’s trainees.
The match ended in the thirdand fourth quarters 17-13 and17-16, respectively. And finally,
the match ended 58-55 infavor of Palayesh Naft Abadanthanks to such players as Mike
Rostampour, MohammadHassanzadeh, Saeed Davarpanahand Aren Davoodi.
Palayesh Naft Abadan hadalready forced its way into thefinal stage twice, but it had
finished runner-up. But thirdtime luckyAs soon as the match ended, the
city basked in joy. People werehugging each other. This hardwonchampionship had given
them cause to congratulate eachother. It was one of occasionswherein the Abadanis removed
their famous “Ray Bansunglasses to shoutPalayesh Naft Abadan’sbasketball team was crowned thepro league champion for the firsttime. How do you feel about thisvictory?
Let me start by saying that thosewho were looking at us from outside
Naft Abadan and the basketballleague considered no chance forour win. Nobody imagined that NaftAbadan would make its way into thefinal stage and become championBut the objective sought by me andmy trainees was to do a great jobthis year. We were determined from
the very beginning to record anacceptable result. We did not wantto leave the league without anytitle. Championship was one of ourobjectives and I feel so delighted thatwe did the greatest job possible inthe basketball team of Palayesh NaftAbadanThe final match was like the
semi-final match in terms of thenumber of games. Was it yourteam’s strategy?
It might have been the chance for usto win the rival 3-1 at home. Fromthe very beginning we had plans towin at least one of two matches inGorgan so that we would win the
matches that we hosted in order tofinish the job. Fortunately, we went
ahead as planned although it wasnot easy. We had to make significant
efforts and be very careful inthe matches to reach the desiredconclusion.
You did much better in the thirdmatch compared with the fourth
match. What was the reason? Wereyou happy with the performance of
your teamBy concentration and analysis of thebehavior of the rival we managed
to achieve a brilliant result, but inthe fourth match the players were
excessively tired. We had two matchesin rapid succession in Abadan.
Naturally our players were tired. Hadthese matches been played with a
longer interval we would have donemuch better in the fourth match. In
general, they did a great job and I amvery satisfied with their work.
After two unsuccessfulpresence in the finale, you finished
champion. What was the cause ofyour brilliance in the 3rd and 4th
matchesBased on our assessments, we knowwell how the Gorganis would defend.
We broke their defenses to havea chance to win scores. In all four
matches, our efforts were focusedupon giving our players a sense of
self-confidence so that they wouldseize on such chances. This trick
worked well and our players managedto reach the desired result by focusing
on long shotsIn the final match, you were ina tight race with Shahrdari Gorgan.
Weren’t you worried about losingthe match
The final moments of the match werefilled with emotions and sensitivity.
Shahrdari Gorgan has an influentialtechnical team and players. Of course,
in the third match their performancewas not as usual. However, the
final matches were on equalfooting. Thanks to God, we won the
championship title to make Abadanishappy.:

Bushehr, Sea and Dates

 

Bushehr, located in southern Iran, is ranked the 17th in terms of area. Owing to its location off the Persian Gulf and sitting atop oil and gas reserves, Bushehr enjoys a strategic and economic significance. It is known as Iran’s energy capital.

Bushehr dates from the Elamite era and the Mesopotamian civilization.

There are many monuments and tourist attractions in Bushehr. Some of them are as follows

Artaxerxes Kiosk

 

Artaxerxes Kiosk dates from the Sassanid period. It was built during the reign of Artaxerxes (226-240 AD). Located in the city of Dashtestan in Bushehr Province, it is made from stones stuck together.

The cross-shaped kiosk has cradle-shaped roofs.

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Bazar Bushehr

Bazar Bushehr is a traditional market, but it has long been a venue for transactions. After so many years, the beauty of the Qajar architecture may be still seen in the building.

The bazar has been built so as to prevent rainfall and snowfall in winter and direct sunshine in summer.

Goor-e Dokhtar
Goor-e Dokhtar is a little known
monument very similar to the Tomb of Cyrus.
This monument is located in Borazjan. It is
said to be where Cyrus’s mother Mandana
or his daughter Atoosa was laid to rest. Most
archeologists attribute this monument to the
Acheamenid Empire.

Palm Trees
Palm trees of Bushehr
are unique in the world. There
are 39,000 ha of land covered
with six million palm trees.
The palm trees have made the
province a tourist destination.