Five Turning Points in Iran Oil Industry

The discovery of oil in Masjid Soleyman in 1908 was the starting point for civilizational metamorphosis in the traditional Middle East and the entry of Eastern Civilization into industrial age. Carbonated rocks in Zagros and the big treasure hidden there provided sufficient reason for the flow of capital and technology to this point from across the globe. All eyes turned to the Persian Gulf and Middle East as the richest source of fossil energy.

Various events have since transpired this part of the world mainly due to the concurrence of forces making every effort to take over oil supply and demand.

To study more deeply oil-related events in Iran since 1908, we can divide them into three periods of time. Then we can predict prospects for Iran’s petroleum industry.

 

Phase I

 

Oil was discovered in Iran thanks to investment by William Knox D’Arcy and Burma Oil Co. in 1908. In those days, percussion drilling was used for extracting oil. A steam boiler, fueled by wood and animal oil, powered drilling. Tribal people living in those areas used to provide the necessary animal oil. Wood was supplied by felling trees. Such equipment only allowed for oil in low depths. The first well spudded in MIS was only 360 meters deep. A pipeline would be soon laid out stretching from MIS to Abadan, and a giant refinery, which was then the largest of its kind in the world, was built in Abadan. In 1913, just one year before World War I broke out; D’Arcy’s shares were bought by the British government. That was a policy adopted by Winston Churchill, First Lord of the Admiralty, for switching from solid to liquid fuel. In fact, the British government was making arrangements to colonize Iran’s petroleum under the cover of political and military power.

Phase II

The discovery of new oil fields and concomitant increased production, along with discrimination against Iranian workers, non-transparency and refusing to pay the share of the Persian Government through deception coincided with the downfall of the Qajar dynasty and the arrival of Reza Shah Pahlavi.

Reza Shah set fire to the D’Arcy Concession in 1933, but the agreement negotiated between Finance Minister Abbas Qoli Golshaian and Sir Neville Archibald Gass was not much better than the D’Arcy concession. Under the new agreement, Iran’s oil was again under foreign yolk. Iranians were simple workers or foremen. Few Iranians were authorized to work in the administrative section. Therefore, the technical knowhow for exploration, drilling, operation and production was not transferred to Iran. Reza Shah sought in vain to realize this objective by establishing vocational schools.

World War II and the victory of Allied forces had no better result than occupation and Shah Mohammad Reza ascending to power. Britain was weakened in the aftermath of the war and it largely depended on Iran’s petrodollars. Iran's crude oil production stood at more than 600,000 b/d.

Lack of transparency in paying royalties to Iran and humiliation of the Iranian nation drew ire in Abadan and other oil-rich areas against Britons. News of nationalization of the petroleum industry and bloody strikes resulted in the emergence of a movement spearheaded by then Prime Minister Mohammad Mossadeq.

Iran’s oil was nationalized in 1950, when new scuffles broke out between the Mossadeq government and the Western governments. The result was a CIA-led coup in 1953. Mossadeq had managed to bring an end to over four decades of plundering of Iran’s oil by Britain.

Phase III

Seven Sisters replaced Britain, strengthening the foundation of the Shah regime. Not later after, in 1960, upon a proposal from Venezuela, the Organization of the Petroleum Exporting Countries (OPEC) was born out of Mossadeq’s efforts. OPEC brought together major oil producers. OPEC could not change the situation for a decade because it would never imagine being able to manage oil supply and market stability.

The second decade coincided with the 1973 oil embargo and the first oil shock. OPEC starting believing itself after the US and its allies stepped back. The growing oil prices and high respect shown for oil producers had emboldened the Shah of Iran.

The country was making its way towards technological breakthroughs. Windfall oil prices drove Iran towards the Dutch disease.

Phase IV

Iran’s Islamic Revolution in 1979 was the start of a new chapter in the oil history both in Iran and abroad. Oil prices reached $40 a barrel for the first time, causing a second shock. Foreign "service companies" as well as Seven Sisters left Iran. Using the equipment left behind by foreign firms required efforts and self-belief.

There was no company to provide drilling services. In response, National Iranian Drilling Company (NIDC) was established to keep drilling running. Iranian offshore and onshore oil companies were tasked with operating developed fields. Imposed war started in 1980 and the war would last 8 years. The infrastructure in both oil-rich nations was damaged. Saudi Arabia took advantage of the situation and jumped to the top position in OPEC. In those days, Saudi Arabia was far distant from Iran and Iraq.

After the end of the imposed war, Iran felt the urgent need to develop new fields and invest in the gas sector. That was when buyback deals were developed for cooperation with international companies. The deals signed by that time led to the development of eight phases of the giant South Pars gas field and the Darquain oil field.

Phase V

Iran has been under US sanctions since the 1979 Islamic Revolution. However, the sanctions imposed on Iran in 2007 were among the toughest ever. By that time, Iran’s infrastructure oil and gas industry was not sophisticated and owing to buyback deals foreign companies had opened training workshops in Iran. However, the sanctions caused foreign companies to leave Iran. The knowhow provided to Iranian engineers led to the establishment of petroleum-related industries. The technology was not sophisticated, but it was much more advanced than in many neighboring countries.

Iranian E&P companies are now able to develop oil and gas fields in other countries, as they have already done similar jobs in Iran.

As far as the current circumstances are concerned, due to the entry of Iran’s old oil fields to the second cycle of production, there is a need for enhanced oil recovery and lifting in these fields.

In case this savvy and technology is combined with attractive contracts Iran’s oil production capacity will grow.

Oil Production Continues as Planned

Iran’s petroleum industry has just turned 111. Oil was explored in Iran after the drilling of the first well in Masjed Soleiman (MIS) struck oil.

National Iranian South Oil Company (NIOSC), which accounts for 80% of Iran’s oil production, is the beating heart of this giant industry in Iran.

Ahmad Mohammadi, CEO of NISOC, tells "Iran Petroleum" that despite US sanctions targeting the country’s oil sector, oil production is going on as planned.

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

Now that 111 years has passed since oil was discovered in Iran, given US sanctions where does the country’s petroleum industry stand?

Iran’s petroleum industry has seen ups and downs over the past 111 years. Under sensitive periods of time, the life conditions of Iranians as well as people in regional countries have been affected by petroleum industry developments, mainly resulting from nationalization of the petroleum industry in Iran. In the run-up to the 1979 Islamic Revolution and during the 1980-1988 imposed war, the industry was instrumental in Iran’s economy. After the end of the war, this industry was faced with US sanctions in various periods. However, the sanctions failed to call a halt to Iran’s oil production and exports.

Now that Iran’s petroleum industry has turned 111, I can say that activities and decision-makings in the petroleum industry are all handled by Iranian manpower. Even if we cooperate with foreign companies, the steering of projects, plans and programs are fully handled by Iranians.

The petroleum industry is an international industry. It is technically sophisticated. Iran’s petroleum industry is making headway, while it has been at the receiving end of US embargo since the Islamic Revolution. The US has tried its best in recent years to hinder the transfer of technology to Iran for this sector. This industry is not entirely national; it is international and we need to import technology from international markets. We have received technology as much as we have been able to do. We have also manufactured commodities, equipment and other necessary materials in partnership with Iranian industrialists and manufacturers.

What’s the difference between this and the previous round of sanctions?

This time, the sanctions are tougher and tighter than before. In the new round of sanctions, the US has been exhausting its efforts to zero Iran’s oil exports, but as you can see it has failed and, God willing, will  also fail to do so in the future. Despite the all-out economic war initiated against Iran, up to now oil production has continued at NIOSC-run areas. During the previous round of sanctions, we made planning and built capacity. Having done so, when the sanctions were lifted we managed to maximize our production. Today, we are learning from that period and keep in mind that we should be always ready to return to maximum production. Therefore, we are building capacity and conducting necessary overhaul to be able to reach maximum production in a short period of time if need be.

Is NISOC production likely to decline as Iran’s oil exports rate fall?

Production plans in every country comply with the prevailing circumstances. But based on our plans and also refinery feedstock and export levels, we will not see any problems in our production. At NISOC-run areas we are producing as planned. Future production levels depend on Petroleum Ministry policymaking. We can maximize our production in a reasonable period of time.

For capacity building, are you cooperating with foreign companies or are your activities limited to domestic firms?

As you know NISOC’s equipment is old and decrepit, while many fields are currently in their second half lifecycle. Therefore, renovation of equipment and implementation of projects to increase output and preventing output loss at fields is naturally necessary. Over recent years, we have envisaged many field-oriented projects whose development will follow the new model of oil contract. We also plan to develop 28 reservoirs, for which we need new drilling. In these projects, we have no restrictions with regard to cooperation with domestic and foreign companies. But in the implementation of the 28 development projects, we prioritize domestic companies that could benefit from foreign consultants’ cooperation.

Do you think that investment in this industry will attract Iran’s private sector despite many fluctuations in Iran’s economy under the current circumstances?

We welcome any domestic and foreign investment in NISOC projects. I promise that potential investors will get higher gains from investment in petroleum industry than in every other sector. The margins are high in this industry. We also support domestic industrialists and investors by striking long-term and sustainable contracts because their investment will boost domestic manufacturing, stimulate the economy, create jobs and enhance production.

Do you have any estimation of investment attraction?

We have three priorities for attracting investment in NISOC projects. The first one is management of reservoirs in 28 reservoirs in upstream contracts. The second one pertains to gathering associated gas and preventing flare gas burning and the third one is renovation and retrofitting of surface pipes and equipment. Given the decrepitude of our equipment we would need multi-billion-dollar investment in surface equipment and we may need much more for developing the fields. We don’t mean that we should attract so much investment all at once, rather, we plan to attract investment for developing NISOC-run fields over a reasonable period of time like a two-year, five-year and maybe ten-year period. We believe that the investors and manufacturers interested in cooperating with us can remain with us for years. That is a win-win deal.

You mentioned domestic investors are prioritized in the development of 28 reservoirs. Can any company step in to develop these reservoirs?

One of our most important objectives in implementing these packages is to stimulate domestic manufacturers in addition to reaching production objectives. Therefore, in order for them to step into this sector we decided to consider projects worth at most $300 million with the share of equity given to each contract at 20%. Remuneration will be done in proportion with the pace of work. However, if foreign companies are to get involved in this sector they would be required to finance the project fully. We are currently in talks with several foreign companies and we have made good progress in this sector.

Will the projects be implemented through tender bids?

Sure! But if Iranian companies can account for the full financing of the project we can get permit for tender waiver. That would be an advantage for Iranian companies in order to carry the project through as soon as possible. Otherwise, tender bids will be held before implementing projects. The time envisioned for implementing the projects would be between two years and two years and a half.

How will the projects be financed?

We have several methods for this purpose. One option would be to issue fixed-rate bonds. In phase 1 of our plan, we have issued the bonds and provided sufficient credit. The necessary financing has also been provided for the implementation of these projects in the first year. There are also other methods for financing. We can also attract undecided capital. We invite investors to invest in the petroleum industry because return will be certain and we believe that the petroleum industry is one of the most attractive markets for investors.

How many packages have been finalized?

So far, the six packages of Mansouri Asmari, Ramshir, Gachsaran Khami, Nargesi, Lali Asmari and Kaboud have been finalized and successful bidders have started their work. Tender bids have been also launched for eight packages and we are finalizing the tender bids to announce successful bidders. The fate of 12 more packages is to be decided before the end of the first half of the current calendar year. We hope to start work for all the 28 packages before the end of the current calendar year.

How much will be added to Iran’s total output by implementing these projects?

With the implementation of the 28 reservoir development projects (after about two years and a half), we expect to see production increase 600,000 b/d in NISOC-run areas. Of course, it is noteworthy that we are facing a 10% natural decline a year in output from NISOC-run areas. If for example we are producing 3 mb/d of oil, we will have a 300,000 b/d natural decline in our production annually. To compensate for that loss, well workover, well drilling and desalting projects are needed. Therefore, by implementing the 28 development projects we will make up for the 10% natural decline and furthermore record a 300,000 b/d increase in output.

Is any specific technology needed for reaching such output?

Under the current circumstances, we can increase the output by 600,000 b/d throughout the development of 28 reservoirs in NISOC-run areas. But if we intend to increase output by applying EOR and IOR methods we will need larger investment and more updated technology. We will need foreign consultant and investment in this sector. In field-oriented contracts where increasing the rate or recovery counts this job would be time-consuming and require more costs and specific technologies.

What stage are contract talks in for the development of NISOC-run areas within the framework developed by the company?

After the implementation of the JCPOA (Iran’s nuclear deal with world powers), 18 memorandums were signed for the development of NISOC-selected fields (8 domestic and foreign companies) and we are following up on talks seriously, but some companies pulled out due to the US’s unilateral withdrawal from the JCPOA and the ensuing problems. We are currently in talks with three companies and I hope we would be able to sign at least two contracts in the first half of the calendar year. In any case, the pace of talks may have slowed down, but the talks have continued.

The tightening of sanctions has made any transfer of technology into the country more and more difficult. Will it have any impact on the standards of implementing projects in NISOC-run areas?

The sanctions will not force us to back down from our standards because the petroleum industry is sensitive and any first mistake will be also the last one. Of course we have some considerations with regard to financing and costs, but with regard to compliance with oil standards we should by no means ignore theseprinciples. The standards must be honored.

 

MIS Oil Keeps Flowing

After oil was discovered from the first well drilled in Masjed Soleiman (MIS), this area located in southern Iran turned into a city. MIS owed its future to oil. It became a very important area soon. The discovery of oil in MIS was the start of formation of a new identity in southern Iran. Iran became an oil-rich nation.

Iran currently sits atop the world’s largest hydrocarbon reserves.

Qobad Nasseri, CEO of Masjed Soleiman Oil and Gas Production Company (MISOGPC), told "Iran Petroleum" the company was established in 2008 in order to handle more advanced drilling for the purpose of further recovery from MIS.

MISOGPC covers fields in the three provinces of Ilam, Khuzestan and Chahar Mahal & Bakhtiari. It runs 11 production units, four gas compressor and injector stations and four desalting plants.

No Environmental Pollution

Due to the age of MISOGPC wells, environmental concerns are prioritized. Nasseri said: “While production is highly significant for us, we have made every effort to conduct this job without causing any environmental pollution.”

He said MISOGPC was named as the top company in terms of production and compliance with HSE in 2017 and 2018. That is a big success for us.

Desalting Unit Close to Operation

Nasseri referred to measures taken by MISOGPC to stop production fall, saying: “Whereas most installations and pipelines of this company are old, citing redefinition of needs by National Iranian South Oil Company (NISOC), we moved to establish new installations, lay pipes and drill new wells.”

He said that desalting projects were also implemented in order to improve the quality of oil produced in MISOGPC-run areas.

Nasseri said that the Qale Naar desalting unit was about to come online, adding that the Haft Shahidan, Lab Sefid and Haftkal desalting units had come onstream in the past seven years. Implementation of these projects has helped enhance recovery in this area and subsequently led to production hike.

He said that despite tough US sanctions against Iran, MISOGPC’s production capacity had increased thanks to the establishment of new desalting units and new drillings.

“Our production at this company has reached its ceiling. We have also managed to sustain production,” he added.

Nasseri said MISOGPC went beyond its commitments, set by National Iranian Oil Company (NIOC), by 3% in 2018. That was due to new drillings and desalting units.

He said that gas injection projects were being implemented in MIS, adding: “The Haftkal and Qale Nar projects have had over 90% progress. We hope to bring these projects into operation in the second half of the current calendar year.”

Overhaul

Nasseri touched on overhaul being done in Lab Sefid since last March, adding that the overhaul would be over in July.

“After that, operations will start for the overhaul of the Haft Shahidan operation and desalting unit,” he said.

He referred to MISOGPC output fall due to the start of overhaul, saying: “As soon as overhaul was over, oil production level at MISOGPC will be back to normal.”

He said that oil production was continuing at MIS.

Oil Recovery Possible for 5 Decades

Nasseri said fall in the wells’ production was natural “but in recent years we have managed to strike a balance between the wells whose production has fallen and the newly operational wells by drilling new wells.”

He added: “Therefore, the number of new wells entering into operation is higher than the number of wells stopping production.”

Oil was discovered in MIS 111 years ago. Nasseri said oil could be still recovered for over 50 years “given numerous unknown reservoirs”.

He added: “Over the past three years, a new reservoir was discovered in the Haft Shahidan area through 3D seismic testing. That is highly potential.”

Nasseri said in addition to new drilling in recent years, implementation of gas injection projects has been instrumental in enhanced recovery from MISOGPC-run fields.

Output Capacity Up 20%

Nasseri said five MISOGPC-run reservoirs – Lali Asmari, Lali Bangestan, Kaboud, Balaroud and Zilaei – are listed among the 28 NISOC-administered reservoirs ready for development.

He added:  “Contractors have been chosen for two reservoirs and they are equipping the yard. They are to develop the Kaboud and Lali Asmari reservoirs. They are about to start their activities. We expect MISOGPC oil production capacity to increase 20% within two and a half years.”

Nasseri touched on the tough sanctions imposed on Iran’s petroleum industry, saying: “Hopefully with capacity building in the past years in the petroleum industry, more than 70% of commodities needed by the petroleum industry are manufactured domestically.”

He said that “we can carry out oil exploration and production without any need for foreign companies.”

Nasseri acknowledged that US sanctions had made it difficult for Iran’s petroleum industry to import technology and attract investment. But he referred to widespread plans formulated for preventing crude oil sales and increasing production of petroleum and petrochemical products.

He said: “Despite all restrictions we still welcome foreign investment in the petroleum industry. We are ready to cooperate with foreign companies for establishing production and desalting plants and carry out enhanced recovery projects.”

He said that foreign companies could invest in Iran’s petroleum industry “in full security”.

Nasseri made it clear that the return of investment would be certain owing to Iran’s advantages in specialized manpower, access to high seas and qualified domestic manufacturing.  

Fuel Oil Treatment Agreement Signed

An agreement has been signed between the Isfahan refinery and the Iranian company Nargan for the construction of a fuel oil treatment unit at the refining facility.

Ali-Reza Sadeq-Abadi, CEO of National Iranian Oil Refining and Distribution Company (NIORDC), said at the inaugural ceremony that an NIORDC priority was to treat and reduce fuel oil rate and convert it to products of higher value.

“We hope that the Isfahan refinery agreement would clear the way for implementing this project in other refineries in the country,” he said.

Sadeq-Abadi said fuel oil production was under way in the phases 2 and 4 of the Abadan refinery, adding: “We hope that Tehran, Tabriz and Bandar Abbas refineries, which produce large amounts of fuel oil, would be able to pursue such projects.”

He said: “We hope that downstream units would start this year at the Isfahan refinery.”

MortezaAmini, CEO of the Isfahan refinery, said the main three products of the facility were fuel oil, gasoline and gasoil incompliance with Euro-4 standards.

“Earlier an agreement had been signed with a foreign company for the fuel oil treatment unit, but as soon as the sanctions were re-imposed on Iran, the foreign company pulled out. A tender bid was then launched and the Iranian company Nargan emerged winner,” he said.

Amini said the project was worth €600 million, adding: “We are making every effort to bring this project into conclusion by using Iranian companies and relying on domestic resources.”

FereydounKayhani, CEO of Nargan Co., expressed happiness with the project which he said would last 36 months.

“We hope to be able to implement the project against the backdrop of tough sanctions,” he said.

NIORDC would be managing and supervising the project.

2-Tang Bijar Phase 2 Development on the Cards

Shahryar Aqaei, director of corporate planning at the Iranian Central Oil Fields Company (ICOFC), said phase 2 of the Tang Bijar gas field was planned to be developed.

To that end, he said, emphasis would be laid on domestic knowhow and technology, as well as supply of equipment needed by domestic companies for the project.

Tang Bijar’s development is to get under way after five wells have been drilled. One well has already been drilled, two are being drilled while two others are set to be drilled.

Tang Bijar is administered by ICOFC affiliated to West Oil and Gas Production Company. It is located 70 kilometers southwest of Ilam and 10 kilometers from Iran-Iraq border. Discovered in 1966, the field started production in 2007.

3-Ilam Gas Refinery Phase 2 Planned

Arrangements have been made for the construction of phase 2 of the Ilam gas refinery in the near future.

The project has been assigned by National Iranian Gas Company (NIGC) to the Gas Engineering and Development Company.

Shahryar Daripour, CEO of the Ilam gas refinery, said: “With the establishment and commissioning of phase 2 of the Ilam gas refinery, feedstock supply to the refinery will go from 6.8 mcm/d to 10.2 mcm/d, which would in turn increase output by 50%.”

He said ethane, unprocessed liquefied gas, gas condensate and sulfur are produced by the refinery.

“The three products: ethane, unprocessed liquefied gas and gas condensate are used to feed the Ilam petrochemical plant. Until the company is fully operational, they will be sent to other points of entry,” he added.

Daripour said in the last calendar year, more than 1.5 bcm of refined gas was fed into national gas trunkline. He added that the processed gas was used at households and industries in the province and neighboring provinces.

He said more than 1.5 million barrels of gas condensate was processed at this company and 40,000 tons of liquefied petroleum gas (LPG) was sent to South Pars last calendar year.

Daripour said the revenue from sulfur exports by this refinery was over $3 million in the same year, adding that 60,000 tonnes of sulfur was produced at the refinery, half of which was consumed domestically.

 

4-SP4, SP5 Sweet Gas Output Up

Mohammad Shafi’eMoazzeni, director of the third refinery of the South Pars Gas Complex (SPGC), has announced increased gas production at Phases 4 and 5 of the South Pars gas field.

He said that the output hike was due to the delivery of sour gas from the fourth refinery as well as timely overhaul.

“With the end of overhaul, phases 4 and 5 of the third refinery of the South Pars gas field have been running at full capacity. This refinery is in good operational conditions and no accident has been reported during overhaul,” he added.

Moazzeni said the timely overhaul of the refinery led to increased production and revenue for the complex.

Referring to increased production from the third refinery, he said: “Last [calendar] year, by linking the sour gas pipeline stretching from SP6, SP7 and SP8 to this refinery we saw gas output rise ofabout 5% in SP4 and SP5.”

With the delivery of sour gas from the 4th refinery to the 3rd refinery and quick overhaul, ethane production from SP4 and SP5 has increased about 6%.

5-Petchem Feedstock up 15mt

The head of National Petrochemical Company (NPC) has said that feedstock supply to this sector would increase by 15 million tonnes after the startup of six new projects.

BehzadMohammadi said: “There are currently six feedstock supply projects under way in Iran. Three of them are NGL projects: NGL 3100 in Dehloran that would receive feedstock from upstream oil fields in that area; NGL 3200 in West Karoun; and NGL Kharg that is fed by offshore fields.”

He said that the three other projects including the Kangan petro-refinery project is located in Phase 12 of the South Pars gas field. That is the largest feedstock supply facility. It is followed by the Bid Boland refinery in the Persian Gulf region, covering numerous oil fields in the West Karoun area and feeding the Gachsaran olefin and other projects, and ParsianSepehr refining project that is fed by the Parsian refinery.

Mohammadi said $8.3 billion had been invested in the six feedstock supply projects. “After the commissioning of these projects, something like 15 million tons would be added to the petrochemical industry feedstock capacity. The Kangan petro-refinery’s share would be 3.5 million tonnes,” he said.

Mohammadi said the operation of these six feedstock supply projects would facilitate new downstream projects.

He also enumerated the advantages of the Kangan petro-refinery project, saying: “This valuable giant gas project separates the gas produced by SP12 to provide 3.5 million tons of products to feed the petrochemical industry.”

He expressed hope that the petro-refinery project would become operational by next March. Mohammadi said pre-commissioning should come five or six months before the inauguration of the project.

6-OPEC’s Big Data Launch

The issue of Big Data is not anything new per se as everything in modern world is based on statistics, data and digitalization. But the point is that OPEC, as a key body in the global oil supply and demand, was not seriously engaged in this sector.

Phase 1 of the Big Data project was launched in 2017. Phase 2 which pertained to oil had also become operational. And following meetings with OPEC experts we won agreement for the third phase.The third phase of OPEC’s Big Data Project was launched in Tehran as OPEC Secretary General Mohammad SanusiBarkindo was visiting the 24th oil, gas, refining and petrochemical held from 1st to 4th May 2019.

Hossein Hassani, head of the Statistics section of the Data Services Department, on the sidelines of the 24th oil, gas, refining and petrochemical addressed a gathering of petroleum industry professionals, on this riveting topic. He started by saying  that the 21st century has witnessed an explosion of energy-related data and that 90% of all the data in the world has been generated over the last two years. Interest in Big Data has increased over time, particularly since 2011, he added. Data production will be 44 times greater in 2020 than it was in 2009.

Over the past 15 years, data has extensively been digitalized. Earlier, it was possible to analyze the oil market, particularly supply and demand, only with the help of an Excel file. But today, there are many parameters contributing to oil market analysis. For instance, OPEC data has been digitalized since 15 years ago. Therefore, OPEC has decided to gather various data on various variables based on all effective oil supply and demand factors and provide users with.

 “Big data and data analytics are changing the game for nearly every industry, and oil and gas is no different. Digitalization fuels growth in the oil and gas business. Big data and analytics will keep the shale boom rolling. Using Big Data, Royal Dutch Shell could decrease drilling costs.

“Companies like BP equip their wells with cloud-connected sensors, each ‘dumping’ roughly 500,000 data point every 15 seconds into a software programme. By reducing high impact non-productive time, P&P companies can save on average between $500,000 and $1 million per day.”

OPEC aims to develop a sophisticated, modern, comprehensive, easy-to-use and multidimensional Big Data programme. Phase 1 (general idea) and Phase 2 (oil data) have already been completed. Phase 3 intends to see natural gas data added and advanced key analytics. Phase 4 will include forecasts and other related variables; Phase 5 is on data of various frequencies; and Phase 6 is on text and web mining.

Hassani stated that OPEC Big Data is another successful close collaboration between the Secretariat and Member Countries, allowing them to enter into a new frontier and to place OPEC ahead of other peer organizations in the area of Big Data.

 He expressed hope that the outcome of the Big Data project would contribute to successful fulfillment of the Organization's objectives and missions.

7-Talks Continue for Foreign Investment in Petchem Sector

The director of investment at National Petrochemical Company (NPC) has said that talks were continuing with foreign investors for potential investment in Iran’s petrochemical sector.

“Attracting foreign investment is subject to international conditions, as well as cooperation between Iran and other companies and nations,” Hossein Ali-Morad said.

He added: “Iran’s relations with various European and Asian nations based on win-win policy are in a new phase. The negative strategy of one nation will not directly and swiftly affect the strategy of other countries.”

Ali-Morad said: “Foreign companies, in particularly Asian companies, are still willing to cooperate with Iran due to the advantages of Iran’s petrochemical industry and regardless of all negative propaganda following the US withdrawal from the Joint Comprehensive Plan of Action (JCPOA).”

He said that talks were under way with a consortium for investment in Iran’s petrochemical industry. He added: “This investment group gave us assurances that it was after implementing projects in the petrochemical industry and it even asked us to help accelerate the process of implementation of projects.”

Ali-Morad said the Iranian government favored the materialization of this investment as soon as possible.

“This consortium has its own mechanisms to overcome obstacles,” he said.

8-Assaluyeh Petchem Value Chain Completed

The director of projects at National Petrochemical Company (NPC) has said the company would focus on the completion of value chain and development of downstream and midstream projects in Assaluyeh as a main strategy.

Ali-Mohammad Bosaqzadeh said completion of projects in the Pars Special Economic Energy Zone (PSEEZ) were being pursued seriously.

“In light of some restrictions at PSEEZ, we tried to use the land stretching from the airport to SP15 and SP16 for the further activation of downstream industries or completion of the methanol value chain,” he added.

Bosaqzadeh said Iran would see its methanol output jump by 2021 to meet domestic needs and serve exports.

“We are making efforts to convert methanol to petrochemical chain as soon as possible. The best and the closest area for this chain would be the area between the airport and SP15 and SP16,” he added.

He said the advantages of PSEEZ included access to feedstock and utility, adding that environmental concerns had to be taken into consideration.

Bosaqzadeh highlighted the significance of the petrochemical industry in the country’s economic growth, saying the sector was instrumental in national development.

He said NPC would be working to complete the production chain, diversify products and enhance the value of petrochemical mix in cooperation with holdings and companies.

“We have to benefit from all potentialities available in a bid to accelerate the operation of petrochemical projects through attracting new investment and the contribution of the banking system and the private sector,” he said.

9-Hormuz Strait Export Risks Down

The manager of the Jask-Goureh crude oil pipeline project has said early commissioning of the project is expected next calendar year.

Rashid Seyedian said the pipeline would be carrying 1 mb/d of light and heavy crude oil from Goureh near Bushehr Province to Jask in Hormuzgan Province.

He said the project was aimed to reduce risks to exports via the strategic Strait of Hormuz.Seyedian said the 1,000-km-long pipeline would use 42-inch diameter pipes. Apart from that, he added, building storage tanks to hold 10 million barrels first and 20 million barrels next, offshore installations including single-point moorings for crude oil exports, as well as utilities would be part of the project.

He said the project was estimated to cost $2 billion.

He added that the pipeline project would also require 200 kilometers of power supply.

Seyedian said tender bids for five pumping stations, two pigging stations and terminal have been launched and contractors have already been chosen.

The main client in this project is Iran’s Petroleum Engineering and Development Company (PEDEC) while basic design has been handled by National Iranian Oil Engineering and Construction Company (NIOEC).

10-Iran Skirts around Sanctions in Oil Exports

Iran’s President Hassan Rouhani has said that Iran would be circumventing US sanctions in selling crude oil.

“We are currently skirting around the sanctions in selling oil,” Rouhani said, noting that Petroleum Ministry, Foreign Affairs Ministry, as well as Central Bank of Iran were on the frontline of getting around US sanctions.

“What the US is doing today is not just war and sanctions; it is crime against humanity. It’s not like normal sanction and war. What the US is doing today is different from a war and sanctions because a country is blocking our purchase of medications and food, and does not let patients travel abroad for treatment. That’s crime against humanity,” said the president.

Rouhani said the option to fight US sanctions would be to upgrade production and exports.

“Should the country remain dependent on oil and petroleum products? Not at all. The way is clear. The tourism industry can give rise to the largest development in the country, as our tourism figuresshow a 50% hike in the past year,” he said.

Rouhani said free trade zones were suitable for circumventing the sanctions. “Of course we are honorably getting around the sanctions as we are doing with oil sales now.”

He said: “We will overcome the sanctions.”

North Azadegan Output Continues Undisrupted

Three years have passed since the North Azadegan oil field started production. The field, which Iran shares with neighboring Iraq, has had no decline in output. Esmaeil Gholampour Ahangar, director of the North Azadegan development project, says Iran is outperforming Iraq in recovery from this field. Oil Industries Commissioning and Operation Company (OICO) is operating the project under the supervision of China’s CNPCI.

Ahangar has talked to "Iran Petroleum" in details about North Azadegan and OICO-CNPC cooperation.

North Azadegan started oil production in 2016. Could you update us on the output level now?

Oil production has since been under way in this field. The field’s output is planned to stand at 75,000 b/d and we have fully met our target.

What are the modalities of your cooperation with CNPC?

CNPC is the contractor tasked with developing the first phase of this field. Based on the preliminary agreement, it was also supposed to handle the second phase of the development project. It was its suggestion to National Iranian Oil Company (NIOC) that it would operate the first phase and following finishing that, it would go ahead with the second phase development. NIOC accepted the proposal. The Chinese are currently going ahead with the project with minimum staff under the supervision of Petroleum Engineering and Development Company (PEDEC). CNPC is also accounting partially for operation costs and spare parts supply.

Of course, one reason for NIOC to award the project to CNPC was that the company was the first contractor for the development project, and it could eliminate any possible problems which may emerge during work in the minimum period of time possible.

NIOC had announced that it was willing to engage Iranian companies in the operation of oil fields. Does CNPC have an Iranian partner in the North Azadegan development?

Yes, sure! OICO is CNPC’s contractor in this project. It is among competent Iranian companies with good experience in this sector. It is noteworthy that there is potential in Iran for activities related to operation of this field. Therefore, it can be argued with certainty that Iranian contractors would handle the job in the best possible manner.   

How long has OICO been cooperating with CNPC?

It has been one year now. Of course, based on NIOC’s policy of engaging Iranian companies in the development of oil fields, in case for whatsoever reason CNPC is unwiring to continue such cooperation for the operation of this field, we will have no problem with continuing such cooperation with Iranian contractors. Meantime, OICO has displayed good performance in the past one year. The awarding of North Azadegan’s operation to an Iranian contractor was the first experience of NIOC in this field, which I think has so far been successful. Of course, Iranian companies have so far been sporadically present in the development of oil and gas fields, but it is the first time that a field development is being awarded to an Iranian company in full. Should CNPC refuse to handle the project, OICO will go ahead and NIOC will supervise the project.

However, the presence of CNPC as the operator of this field would have two advantages for us. First, this company is a contractor and it is convinced that it would be compensated if it pushes ahead with production. Second, North Azadegan is the first successful experience of CNPC in Iran, which would boost its reputation in Iran. That is why it has saved on spendings on this project. A technically qualified team appointed by CNPC is monitoring OICO’s activities and whenever needed, they would take manufacturers in. For us as the client, it is also important that the rate of recovery would be preserved and the installations be safeguarded. These factors are also instrumental for CNPC to reach its financial objectives.

Given the escalation of unilateral US sanctions against Iran, how likely is CNPC to stop working in North Azadegan?

Our cooperation with CNPC has so far been under way in operating North Azadegan. Of course, we have agreed that after one year of working, CNPC would stay on if it expresses willingness at the discretion of NIOC. We have already agreed for CNPC’s involvement into 2019 in the North Azadegan development.

How much should CNPC recoup for costs pertaining to the first phase of North Azadegan?

Under the agreement, reimbursement will be over in four years, two years of which still remain. So far, money has been wired without any problem.

The North Azadegan is located in the Hoor al-Azim Lagoon. Have any safety measures been adopted under the current circumstances?

As you mentioned, North Azadegan’s location is special. We are exactly in the middle of Hoor al-Azim. That is why from the very beginning we were highly sensitive to the HSE issue. We asked CNPC as the contractor of the development project to comply with standards with regard to the installations and workplace. Both NIOC and Khuzestan’s Department of the Environment were strictly monitoring the job. International standards have been respected.

You said that oil production has continued in North Azadegan for three years now. This field is jointly owned by Iran and Iraq. Do you still envision maximum efficient recovery from this field?

North Azadegan’s oil is ultra-heavy. Therefore, its installations have been designed such that we would have maximum efficient recovery from this field. The drilling of oil wells in North Azadegan is such that we would have maximum efficient output. We have even envisaged downhole lifting in order to maximize recovery from the field. After three years of production in a row, our wells did not face any pressure fall-off, indicating that our reservoirs are in good conditions.

The current rate of recovery from North Azadegan is about 7%, which is predicted to reach 11% if we manage the reservoirs properly. To reach that figure, we must have enough capacity. We may need specific pumps, but we are facing restrictions now. However, since there are leading pump manufacturing companies in Iran, we can handle the case through reliance on domestic manufacturing mechanism.

Do you worry about lagging behind Iraq in terms of recovery from North Azadegan as the United States tightens sanctions against Iran?

We don’t worry about oil recovery from North Azadegan. Over the past three years, production has continued and we have outdone the Iraqi side. Even a single barrel has not been cut off our output. North Azadegan is among the first oil fields whose master development plan was formulated by NIOC experts. The contractor is now convinced that the proven reserves of the oil field would potentially increase by 20%.

When will you start the overhaul of the field?

Whereas three years have passed since the field started production, we are planning to start overhaul in some installations of North Azadegan. Fortunately, sanctions will not affect our overhaul, because we started purchasing our spare parts two years ago and for the sectors which we think may cause problems; we are now in talks with some domestic manufacturers to supply us with necessary parts. However, we don’t think we would face a halt in production. In general, I would like to say that oil production in North Azadegan will continue without any risk even under toughest conditions.

How satisfied are you with CNPC performance in the North Azadegan development?

I think that the Chinese had good performance in North Azadegan. Of course, we have to accept that the Chinese companies are different from European and American ones; however, they are doing their best in order to accomplish the job in the best possible manner. Our technical installations have been up and running over the past three years without any glitch, and our production is nearly 100%. We have not had any production decline so far and our reservoir management has been such to guarantee maximum efficient recovery. In North Azadegan, all our performances have been based on maximum efficient recovery and we have achieved good results.

How will Azadegan’s output be affected, should CNPC quit its activity?

Nothing, at all. Until recently NIOC was in charge of operation of oil fields, but under NIOC’s new policy, Iranian contractors would handle recovery from these fields under NIOC supervision. In this specific project, since under the previous buyback agreement, CNPC would be allowed to develop the second phase at NIOC’s discretion, the operation was assigned to the Chinese. Now if for whatsoever reason they decide to quit work in Iran, we will have replacement plans. Iranian contractors are certainly able to operate the field, as we had already operated similar projects.

The North Azadegan oil field, covering 460 square kilometers of the greater Azadegan field, is located about 120 kilometers west of the city of Ahvaz. It is jointly owned by Iran and Iraq. It is estimated to hold about 6.5 billion barrels of oil in place.

 

 

Investment Potential in Ahvaz Field

Iran sits atop 10% of oil reserves in the world, thereby becoming the fourth largest holder of crude oil deposits in the world. Due to a variety of reasons, Iran has so far tapped not more than 20% of its reserves with the rest remaining intact.

Meantime, Iran has recovered oil from its reservoirs over the past four decades by applying natural pressure. Today, it has had to resort to downhole pumps for such recovery.

One of the largest oil reservoirs in Iran in such conditions is Ahvaz-Bangestan. Currently, 26 downhole pumps are extracting oil from this field.

Known by some experts as the world’s 9th largest reservoir, Ahvaz-Bangestan is currently producing at a low recovery rate. So far, only 1.2 billion barrels of oil has been recovered from this field which still contains 37 billion barrels of recoverable oil.

Petrorian Development Company (PEDCO) was awarded the development of the Ahvaz-Bangestan field in early 2005, but one year later the company announced it could not handle the project. Talks then got under way with Pars Tat, held jointly by "Mostazafan Foundation" and a Russian company. The talks failed though. Finally, the project was assigned by National Iranian South Oil Company (NISOC). Now with the conclusion of comprehensive studies of this field, the most significant measure would be to enhance recovery from this field to bring its production from the current 180,000 b/d to 231,000 b/d.

The Ahvaz field’s Bangestan reservoir was among projects offered for development by international firms under the newly developed IPC model of oil contract.

Due to its location beneath the city of Ahvaz and drilling challenges, this reservoir must be developed by horizontal drilling. Enhancing the recovery rate will not necessarily lead to output hike. Enhanced production may even lead to a decline in the recovery rate. Therefore, the priority in this project would be to boost the rate of recovery from this reservoir.

This reservoir has currently three production units with a rated capacity of 275,000 b/d, three desalting units with a rated capacity of 220,000 b/d and three compressors with a nominal capacity of 177 mcf/d.

NISOC officials say enhanced output would not be the only objective sought in the Ahvaz-Bangestan development project, because it would be significant to apply new technologies to enhance the current recovery rate of 10%. The outstanding features of this reservoir include its carbonated nature and the expansion of rock and fluid and as the mechanism of production. Everywhere in the world such reservoirs are of low recovery rate.

Enhanced oil recovery (EOR) has become a key issue for Iran’s petroleum industry.  Being mostly more than five decades old, Iranian oil and gas fields’ recovery rate need to increase. That requires highly expensive cutting edge technologies.

IPC contracts envision remuneration for oil companies offering EOR technology. The long-term nature of contracts also would automatically motivate investors to brace for such projects.

The issue of transfer of technical knowhow and upgrading petroleum industry management are key issues requiring joint cooperation.

Iranian petroleum industry practitioners, despite al problems and obstacles, have fulfilled their obligations with regard to foreign companies to prepare the ground for cooperation. However, political concerns resulting from the US’s withdrawal from the 2015 Iran nuclear deal and the concomitant re-imposition of sanctions prevent foreign oil companies from taking the next step forward. Add to this domestic politically-motivated pressure and lack of national cohesion on national interests and the survival of the nuclear deal, dubbed the Joint Comprehensive Plan of Action (JCPOA).

It seems that the best way to get out of such stalemate would be to embark on a charm offensive in a bid to neutralize anti-JCPOA actions both inside and outside Iran.

Iran’s oil and gas industry is now in the middle of its lifecycle. Many Iranian oil fields have become mature or are facing sharp production decline due to the lack of modern technology. Consequently, Iran’s oil and gas output has declined, thereby undermining Iran’s position in the highly competitive global oil market.

 

Bushehr, Intact Shores

Millennia-old Bushehr lies off Persian Gulf waters. Bushehr is a port area with beautiful shores. Towering palm trees is the outstanding features of this highly visited area. The remnants of ancient military bases alongside the intact and unique nature of Bushehr attract visitors.

The present issue of "Iran Petroleum" aims at further introduction of some other tourist attractions of Bushehr.

General Tomb

The General Tomb refers to where a British general is laid to rest in Bushehr Port. A British Army commander who was killed in 1856 during Britain’s invasion of Iran was buried there. The surrounding area of this tomb used to be a garden, but the local municipality transformed it into a park. In addition to the general, 35 British soldiers are buried there.

Raees Ali Delvari Museum

The domicile of Raees Ali Delvari dates from the final years of the Qajar rule. His survivors turned it into a museum.

Delvari, a constitutionalist, led an uprising in southern Iran in Tangestan against British troops during World War I and later on against the Portuguese. Delvari’s belongings and military hardware are on display in this museum.

Siraf Water Pools

Siraf Port is among old ports in Bushehr Province. Rainfall pools have been created in the foothills of northern Siraf. They used to gather rainwater. For areas located in lower altitudes, numerous wells had been drilled. The wells were initially for gathering water; however, a killer quake in 367 AH fully buried the port. Dead bodies were buried in the wells.

Wildlife

Bushehr Province is home to more than 400 species with birds accounting for 310. There are 40 reptile species, 33 mammal species, 17 fresh water species and 3 amphibian species. Currently several protected zones including a national park are used to safeguard Bushehr’s animal species.

Bushehr Coasts

An attractive feature of Bushehr is its intact coasts. Provincial officials say there is about 1,000 kilometers of coasts. The best season to visit Bushehr is spring.

Threat to Iran Would Jeopardize Energy Security

The world oil market is highly dynamic. Over recent months, this dynamism has picked up speed due to ongoing geopolitical events in the oil sector. The Trump administration has imposed sanctions on Iran’s petroleum sector in a bid to zero the country’s oil exports and drive Iran and even the Organization of the Petroleum Exporting Countries (OPEC) out of the oil market. The dependence of nations on oil carries one single message: Threatening Iran, which sits atop the world’s largest oil and gas reserves, will jeopardize the energy security.

Fereydoun Barkeshli, President of Vienna Energy Research Group, says even though Iran’s oil exports have declined, it does not mean that Iran has been marginalized in OPEC. He said in an interview with "Iran Petroleum", Iran would continue to remain as an influential OPEC member state.

The oil market is faced with special conditions due to US President Donald Trump’s tough sanctions against two major oil producers – Iran and Venezuela – and Washington’s attempts to prevent oil price hike. On one side, the Trump administration is making efforts to keep oil prices in the world markets and gasoline prices in the US from rising, while on the other side, it threatens OPEC member states on Twitter, asking them to produce more oil.

Imposing sanctions on Iran and Venezuela would mean lower global supply. The US is not content with this and is regularly calling on top consumers to stop their oil purchase from these countries. But is it possible? China and India are today the leading consumers of oil in the world and are therefore the main driving force behind demand for the black gold. Both are traditional buyers of Iran’s oil and are now under US pressure to quit buying oil from Iran.

Barkeshli said: “Over the past decade these nations tried their best to approach the Middle East nations, particularly oil producers in the Persian Gulf. From such perspective, the US sanctions policy against Iran or every other major producer would expose these countries directly to the threat of secure energy supply.”

Noting that Asia is the future destination of oil production and consumption, he referred to the idea of establishment of an OPEC-style body of oil consumers in which India and China would be member. 

“According to the idea, after these countries, Japan, South Korea, Pakistan and other Southeast Asian nations whose development depends on oil and gas could join such a body,” he said.

 

Oil Geopolitics in Mideast

The global oil supply currently stands at 100 mb/d, 30 mb/d of which is offered by OPEC.

The US has sought over recent years to undermine OPEC’s role in the global oil market significantly; however, what is highlighted these days is the impact of OPEC on the global oil market.

Barkeshli said: “The oil geopolitics is back to the Middle East and the global oil market. It has changed in essence and players and their composition have changed.”

He added: “With the turn of time, the conditions and sensitivities of pricing would factor in future markets and paper transactions, decisions of oil stock exchanges and the emergence of Internet and electronic intelligence. Since two decades ago, regional and geopolitical transactions have become the focus of attention.”

Increased storage by consumers constitutes a key factor that has caused changes in geopolitics and in the rank of oil market players. In other words, it has turned consumers into rivals for producers.

Touching on the significance of this issue, Barkeshli said: “The volume of storage has grown into a key factor in OPEC and oil ministers’ decisions.”

“Currently, OPEC’s argument for not raising the production ceiling is based on the supply glut. In light of big oil supply, incidents like what happened at Fujairah Port and the oil tankers berthed in Saudi ports did not affect the market too much,” he added.

Oil market analysts believe that despite all events transpiring the oil market, it would continue to make the best decisions possible. The oil market is volatile and is affected by economic and non-economic factors.

Overstated Spare Capacity

Never has the oil market been as fragile as it is today. Top OPEC producers - Iran and Venezuela- are not strongly present in the market due to US sanctions. Libya, Algeria and Sudan are faced with unclear conditions due to their political unrest. Saudi Arabia has not been immune to oil market ambiguities. It claimed to have a spare capacity of 11.5 mb/d, but in practice it did not offer such figures up to February 2018.

This issue was underlined by Iran’s Minister of Petroleum Bijan Zangeneh. Addressing the inauguration of Tehran’s annual show, he said: “The spare capacity announced by some countries is overstated and exaggerated.”

Citing oil market analysts, Barkeshli said Saudi Arabia’s actual production capacity could not go beyond 10.5 mb/d.

“However, if speculation about Saudi Arabia’s production capacity is true, the country must have been doped,” he quipped.

Noting that the oil market is currently engaged in a dangerous political process, Barkeshli said: “It seems that the US’s shale oil is rivaling the Middle East’s conventional crude oil.”

Anachronism at White House

Oil market analysts are faced mainly with the following question: Is it possible to remove Iran from the oil market? Are oil producers able to compensate for Iran’s possible vacuum?

In response to this question, it would be good to review the output of Saudi Arabia, Russia and the US. These three nations account for one-third of total global supply. Iraq is likely to join them in the coming decade. In OPEC and the global oil market, the nations’ strength depends on the number of barrels, but regarding the US, the point is that although crude oil exports have been authorized after 60 years, it is yet to become a net exporter. Meantime, shale oil has not yet gained a foothold in the global market and international exchanges.

Barkeshli said the oil market was at a decisive point as it had been taken hostage by US policies.

“By imposing oil sanctions, the US is taking control of the global oil supply management. The US’s policies today, particularly by President Trump, are reminiscent of the hegemonic policies of the past decades,” he said.

“It’s true that the US alone accounts for more than one-third of the world gross product and runs the most powerful army in the world. However, international conditions have changed significantly and President Trump has failed in all of its international actions,” he added.

Barkeshli said even the Senate did not understand what Trump meant by referring to Venezuela, Nicaragua and Cuba as the Triangle of Evil. “The White House is currently suffering from anachronism.”

Costly Oil Switch

Redesigning oil refineries has frustrated refiners. Is it possible to switch to a new category of oil fed into refineries? The answer is clear: It’s possible, but would cost too much.

To that effect, Barkeshli referred to the quality of crude oil, saying: “In the Middle East and some other oil producing countries, the first barrels of extracted oil contained light oil. The refineries were designed mainly to process light oil. But gradually, light oil production from oil fields declined the refineries were redesigned to process heavy and ultra-heavy crude oil, using sophisticated technologies.”  

He added: “The refineries that have been running on a special category of crude oil will have to spend a lot in order to switch from one grade to another grade of crude oil. In certain cases, they have to blend some grades of crude oil, which would again increase the refining costs.”

Iran is among producers of heavy crude oil whose specifications differ from those of Saudi Arabia’s oil. The refineries buying Iran’s crude oil would have to be redesigned in case they intend to stop buying oil from Iran and instead turn to Saudi Arabia or other countries.

This issue has already indicated its impact in the market. Due to the decline in heavy crude oil supply under US pressure against Iran and Venezuela, as well as the fall in Canada’s and OPEC’s output, fuel oil prices have increased. That poses a serious challenge to US oil refineries in the summer.

OPEC to Decide Under Tough Conditions

All factors have been combined to increase pressure on OPEC. The US has so far taken legal action against OPEC for its alleged cartel-style work. Even the establishment of the International Energy Agency (IEA) was aimed at pressuring OPEC.

As it is seen in President Trump’s tweets and statements, the US would keep increasing pressure on oil producers.  

Regarding the impact of US pressure on OPEC, Barkeshli said: “OPEC has been under pressure mainly by the US, but we have seen it make better decisions when it is under pressure.”

He added: “Some of the most important decisions of OPEC have been made under circumstances where part of a territory was occupied by another one and OPEC has proceeded with its activity. In fact, OPEC often makes decisions between its own member states regardless of political considerations.”

Barkeshli said OPEC owes its survival to Iran. “Many OPEC member states have in recent decades lost their output capacity totally or in part due to various reasons including US sanctions. Once, four OPEC member states were under sanctions: Iraq, Libya, Venezuela, Ecuador and now Iran.”

He said that natural disasters like flood, quake, volcano eruption and national unrest have caused a halt in oil production in some nations, but Iran has maintained its presence within OPEC.

“If Iran’s oil exports have declined due to sanctions, it would not mean that Iran has been marginalized within OPEC,” said Barkeshli.

Iran to Go Through Crisis

Iran’s petroleum industry is not unfamiliar with sanctions. Iran experienced such conditions during the nationalization of petroleum industry in the 1950s and also following the 1979 Islamic Revolution.

From 1951 to 1953, Iran could not sell oil, but it finally made its way into world markets.

During the 1980-1988 imposed war, Iran’s oil revenue fell to below $7 billion. Iran was selling oil at $7 a barrel. In the wake of OPEC’s ministerial meeting in Jakarta, Asian markets tumbled and oil prices started falling at an unprecedented rate.

Barkeshli said: “It would be very difficult to compare the present market conditions with those periods. We are under difficult circumstances, but Iran will definitely leave these conditions behind with strength. There must be plans for transforming challenges to opportunities because the issue is not limited to oil. Monetary and financial policies, as well as regional and international relations and active diplomacy are among the necessary principles of this sector.”

Iran has been under pressure in the oil sector in recent decades. The country has made efforts to make this sector resilient; however, oil is an international industry. Oil trading is naturally international and the most important factor of resilience would be its internationalization.

Iran is absent from global oil lobbies, making it difficult for Iran’s petroleum industry. However, what counts for the Islamic Republic is capacity building because barrels speak.

Russia-Korea-Oil Triangle to Defeat US

North Korean leader Kim Jong-un’s visit to Russia was significant on several fronts. Some had laid emphasis on the political aspects of this visit and its impact on future talks between North Korea and the United States. Some others mainly focused on Russia-North Korea ties and looked into their political and economic aspects.

In the meantime, a highly significant issue in such bilateral ties as well as ongoing developments in the Korean Peninsula is Russia’s oil sales to North Korea. Due to restrictions on oil supply to Pyongyang, Russia’s action is faced with many questions.

The present article briefly reviews Russia-North Korea ties, and highlights the significance of Moscow’s oil sales to Pyongyang.

Russia and North Korea have long had ties. During the Cold War, the then Soviet Union was a big supporter of North Korea. During the Korean War (1950-1953), the Union of Soviet Socialist Republics (USSR) along with China came out in support of North Korea, laying the groundwork for ideological division in the Korean Peninsula.

In the 1950s, Moscow trained North Korean nuclear scientists to develop nuclear arsenals. Russia regularly supplied weapons and military hardware to North Korea. In this way, Russia became a key partner for North Korea and a key element of security in the peninsula.

However, the relationship ran into trouble after the collapse of the USSR. Internal unrest in Russia and economic problems undermined Moscow’s support for Pyongyang. Such conditions continued until Vladimir Putin came to power. Since taking office, Putin has sought to revive historical ties between Russia and North Korea.

From 2003 to 2009, Russia was a member of the Group of Six talks with North Korea and undertook huge efforts to preserve Pyongyang’s status. Russia wrote off North Korea’s $10 billion debt and donated 50,000 tonnes of wheat to the reclusive state.

Now Kim’s visit to Russia and his meeting with Putin once again pushed to bold relief the various aspects of relations between the two countries. Kim described Pyongyang-Moscow ties as strategic and traditional.

North Korea is seeking to win Russia’s economic support in a bid to alleviate US pressure. It also needs Moscow’s political support throughout denuclearization talks with the US. Russia also hopes to have a prominent role in the future talks on denuclearization.

Circumventing Oil Sanctions

After North Korea test-fired a long-range missile in 2017, the UN Security Council adopted Resolution 2397 limiting the North Korean import of refined petroleum to 500,000 barrels for each 12-month period, starting on January 1, 2018. Furthermore, the resolution requires UN member states to report any supply of petroleum products to North Korea to the international body.

Despite restrictions, North Korea is skirting around UN sanctions by buying oil via marine routes. This oil transfer is under way while the US has made every effort to stop it. For instance, the US warships and warplanes have forced Pyongyang to take oil from farther areas. The US Pacific Command has also reported that North Korea receives its oil via high seas and other nations. North Korea is also using smaller vessels in order to go unrecognized when transferring oil.

Despite all such restrictions, oil exports to North Korea have never come to a halt.

In July 2018, the Trump administration shot back at North Korea, sending evidence to a UN committee showing that North Korea "breached" UN sanctions by surpassing the annual cap for refined petroleum products.

The report sent to the sanctions committee included a chart of North Korea tanker deliveries of refined petroleum products delivered to Kim's government between Jan. 1 – May 20, 2018 and gave estimates that could have been up to 1.4 million barrels if the vessels were 90 percent laden, illustrating the breach of the 500,000 barrel cap established by UN sanctions.

The US report to the UN also said that North Korea "tankers have called in port in the DPRK (North Korea’s official name) at least 89 times likely to deliver refined petroleum products illicitly procured."

Russia North Oil Supply

There is no precise information available on Russia’s oil exports to North Korea; however, it is clear that the bulk of North Korea’s economy heavily depends on Russia’s oil. North Korea has a single oil refinery which was designed by the Russians, producing products to power factories, cars, trains and buses, warming houses and military barracks, and keeping tanks, jets and personnel armored carriers running. The refinery has no option but to receive oil from Russia to be able to process it.

A recent internal report by an expert panel under the UN Security Council's North Korea sanctions committee said North Korea probably received far more petroleum in 2018 than allowed under United Nations sanctions, with Russia and China appearing to look the other way on illicit transfers of oil at sea.

The UN report cited 148 instances of ship-to-ship oil transfers involving North Korea from January to August. Even if the ships carried just one-third of their capacity, the report said, Pyongyang would have obtained the equivalent of 830,000 barrels of oil from those activities alone. The import cap was imposed in December 2017 in response to the North's testing of intercontinental ballistic missiles.

Russia told the UN sanctions committee that it supplied North Korea with about 7,000 tons of oil in December alone. Its reported supply volume combined with China's makes for over 48,000 tons sent during 2018 as a whole - about 80% of the annual import limit when converted into barrels.

Russia seems to be supplying oil to North Korea via three routes:

The first method is Russia’s direct oil sales to North Korea. Russia supplies oil to North Korea through ship-to-ship transfer. Tracking such oil transfer is very difficult. In 2017, the US blacklisted some Russian oil companies that had sold oil to North Korea.

The second method is the transfer of oil on Russian tankers from Nakhodka and Vladivostok ports via Singaporean intermediaries.

The third method is Russia’s oil sales via Chinese buyers. The Chinese buyers purchase Russia’s oil before delivering it to North Korea via various channels.

Conclusion

The Americans say halting oil and petroleum product exports to North Korea coupled with international pressure would subdue Pyongyang. However, Russia ignores US policies and sanctions imposed to isolate North Korea and freeze its nuclear and missile programs by continuing to sell oil to North Korea.

Russia’s support of North Korea and its continued oil supply to the Communist state shows that the US’s maximum pressure on this country in the energy sector will fail to deeply affect Pyongyang. Therefore, Russia’s oil exports to North Korea represent an equation which would herald the failure of the US policy.

In other words, Russia’s actions will not only neutralize US sanctions policy on North Korea, but also it would affect future talks between Washington and Pyongyang.

Shell Takes Up North Sea Gas License Option

Shell U.K. has exercised an option agreement to farm into 50% of UK southern North Sea license P2437, containing the potential 291-bcf Selene gas prospect.

The company will pay license holder Cluff Natural Resources $600,000 under the arrangement, conditional on a joint operating agreement and consent from Britain’s Oil & Gas Authority.

On completion of the farm-in, Shell has indicated its intention to drill an exploration well on Selene at the earliest opportunity and will fund 75% of the cost, including testing, subject to a cap of $25 million.

Cluff secured the license under the UK’s 30th Licensing Round: the first term runs for six years.

Selene, which has been imaged by 3D seismic data, is a four-way dip closed structure in the Leman Sandstone said to bear analogies with various nearby gas fields, including the Shell-operated Barque.

Cluff considers the prospect as low risk with an estimated chance of success of 39%. It is 20 km (12.4 mi) from infrastructure associated with the Barque field which supplies gas to the Bacton processing plant on the Norfolk coast.

2----ExxonMobil, Qatar Petroleum Net Blocks in Argentina Bid Round

ExxonMobil Argentina Offshore Investments B.V. and an affiliate of Qatar Petroleum won three exploration blocks during Argentina’s first offshore bid round.

The blocks are in the Malvinas basin, approximately 200 mi (322 km) offshore Tierra del Fuego and include MLO-113, MLO-117, and MLO-118.

ExxonMobil will operate the blocks with 70% working interest. A Qatar Petroleum affiliate will hold the remaining 30%. The initial work program will include 3D seismic data acquisition. A resolution will be issued by Argentina’s Secretariat of Energy confirming the public tender results.

In addition, Qatar Petroleum also won the exploration rights for blocks CAN-107 and CAN-109 in the North Argentina basin as part of a consortium comprising an affiliate of Shell (operator with 60% interest) and an affiliate of Qatar Petroleum (with 40% interest).

3------- Offshore Gambia Partners Consider Next Steps

FAR and partner Petronas will take a decision later this month on whether to enter the next license phase for blocks A2 and A5 offshore The Gambia.

Following the unsuccessful exploration well late last year on the deepwater Samo prospect, FAR has undertaken further evaluation, data integration and interpretation studies.

Results have confirmed that the blocks have access to an active hydrocarbon charge system, with high quality reservoir and seal facies.

Recent subsurface work has identified various promising potential drilling targets.

Offshore Western Australia, FAR has a 100% in the WA-458-P in the oil-producing Dampier sub-basin.

The company’s geotechnical assessment has revealed various structural and structural-stratigraphic leads and prospects characterizing four independent play types that have proven successful in nearby discoveries.

FAR expects to receive final processed data from a new seismic survey over the permit later this year, and after completing its evaluation, intends to farm down its interest in the permit.

4----- Chinese Groups to Explore Two Beibu Gulf Blocks

CNOOC China Ltd. has signed a petroleum contract with PetroChina Co. for two blocks in the South China Sea.

Beibu Gulf 23/29 block and Beibu Gulf 24/11 block are in the Fushan sag and Leidong sag regions.

Block 23/29 covers an area of 980 sq km (378 sq mi) in water depths of 0-85 m (0-279 ft). Block 24/11 extends more than 464 sq km (179 sq mi) in 20-40 m (65-131 ft) of water.

PetroChina will serve as operator during the exploration period and carry 70% of the direct exploration expenditures, the remainder handled by CNOOC China.

On entering the development and production phase, the two parties, each with a 50% share of the contract area, will form a joint operation organization.

5------Extension Granted for NZ Gas-Prospective Permit

New Zealand’s Energy and Resources Minister has agreed to extend work obligations for the Clipper offshore permit by three years.

Clipper contains the multi-tcfBarque gas prospect, 60 km (37 mi) east of Oamaru.

OperatorNew Zealand Oil & Gas now has until April 11, 2022 to decide whether to drill a commitment well.

The company’s CEO Andrew Jefferies said the partners have been monitoring activities elsewhere in the offshore Canterbury-Great South basin, where various wells may be drilled ahead of Barque.

“The extended work program in Clipper will allow a re-set of the marketing campaign to attract partners to the joint venture,” he added.

A regional economic impact study published in 2017 found that development of Barque could result in up to $15 billion in GDP and generate $32 billion in royalties and taxes over the life of the field.

US LNG Company Needs More Time

US energy company Sempra Energy asked US energy regulators for more time to complete its $10 billion Cameron liquefied natural gas (LNG) export terminal in Louisiana.

The US Federal Energy Regulatory Commission (FERC) approved construction of three liquefaction trains at Cameron on June 19, 2014. That order required the project be completed within five years.

Sempra said the first train at Cameron started producing LNG earlier in May and is expected to export its first cargo in coming weeks.

The company has said Cameron Trains 2 and 3 will enter service in the first and second quarters of 2020.

Sempra asked FERC for a 15-month extension to put the full plant into service until Sept. 19, 2020.

Separately, Saudi Aramco signed a 20-year agreement to buy LNG from Sempra’s proposed Port Arthur LNG export plant in Texas.

The first three trains at Cameron will produce about 12 million tonnes per annum (MTPA) of LNG, or roughly 1.7 billion cubic feet per day (bcfd) of natural gas. One billion cubic feet of gas is enough to fuel about 5 million US homes for a day.

Cameron is jointly owned by affiliates of Sempra, Total SA, Mitsui & Co Ltd, and Japan LNG Investment LLC, a company jointly owned by Mitsubishi Corp and Nippon Yusen Kabushiki Kaisha (NYK). Sempra indirectly owns 50.2% of Cameron.

McDermott International Inc and Chiyoda Corp are the lead contractors at Cameron.

Sempra has a long-term goal of exporting 45 MTPA of North American LNG and is developing a second two-train phase at Cameron, the Port Arthur LNG export terminal in Texas and plans to add export facilities in two phases at its existing Costa Azul LNG import terminal in Baja California in Mexico.

2----Saudi Aramco Inks Deal to Supply LNG to US

Saudi Aramco signed a 20-year agreement to buy liquefied natural gas (LNG) from a forthcoming export terminal in Texas that US-based Sempra Energy is developing, the two companies said.

The Saudi state oil giant plans to become a major global gas player, and this deal will provide it with access to some of the world’s cheapest and most abundant natural gas via the US shale boom.

Aramco has been developing its own gas resources and eyeing gas assets in the United States, Russia, Australia and Africa. Demand for supercooled LNG hit a record in 2018 at 42.1 billion cubic feet per day (bcfd), according to the International Gas Union, and growth is expected to keep rising as countries wean themselves off dirtier coal. One billion cubic feet of gas is enough to supply about 5 million US homes for a day.

The sale-and-purchase agreement is for 5 million tonnes per annum (MTPA) of LNG, equivalent to about 0.7 bcfd of natural gas. This is Saudi Arabia’s first known nonbinding agreement to buy LNG, and the largest such LNG deal since 2013, according to energy consultancy Wood Mackenzie.

Aramco will also buy a 25% equity stake in the first phase of the multibillion-dollar project, to be constructed in Port Arthur, Texas, about 90 miles (145 km) from Houston, the companies said.

“Port Arthur LNG could be one of the largest LNG export projects in North America, with potential expansion capabilities of up to eight liquefaction trains or approximately 45 MTPA of capacity,” the companies said.

Global LNG demand is expected to grow by about 5 percent a year through the mid-2020s, according to US Energy Information Administration (EIA) projections. Since February 2016, when the United States started exporting the fuel from the Lower 48 states, it has become the world’s fourth biggest LNG exporter.

Aramco said it plans to boost its gas production to 23 billion standard cubic feet (scf) a day from about 14 billion scf now.

“Saudi Aramco has clearly been looking at both an LNG investment and long-term LNG purchase for some time. The market expectation was for Aramco to make a big move,” said Gary Regan, a consultant with consultancy Gas Strategies. “The Sempra deal would certainly be a bold move and one that shows long-term ambition.”

3--- Pemex Aims for 1mb/d Oil Output Hike

Mexican state oil company Pemex is striving to increase oil production by 1 million barrels per day (bpd) by the end of 2024 by developing existing oilfields and others yet to be discovered, the company’s chief executive said.

If the target is met, the heavily indebted company will surpass President Andres Manuel Lopez Obrador’s goal of ending his term with oil production of 2.4 million bpd, well above the current level of 1.7 million bpd.

Pemex Chief Executive Octavio Romero said the company is developing 20 new fields, including Ixachi, in the southeastern state of Veracruz, which could yield 1.3 billion barrels of potential reserves, according to updated figures.

“Ixachi and the rest of the fields under development will achieve production of around 320,000 bpd of oil and 900 million cubic feet (daily) of gas by the end of 2021,” Romero said at an event.

He added that further production will result from sites already in exploration.

“With this, we estimate reaching production of more than 1 million bpd of oil and 2,700 million cubic feet of gas at the end of this administration,” said Romero. “We are working intensely on all possible plans with authorized investment.”

With an estimated $106 billion in financial debt, Pemex is under intense scrutiny from credit ratings agencies.

Analysts and experts have said the company needs to increase its spending on exploration and production to discover reserves and develop them, halting the firm’s long-running decline in output.

The administration of Lopez Obrador, who took office in December, has taken several measures to shore up the company’s finances. Lopez Obrador has said Pemex was in ruins when he took office due to corruption and the neoliberal policies of previous administrations.

US Shale Producer Cuts 25% of Workforce

Pioneer Natural Resources Co, one of the largest producers in the Permian Basin of West Texas and New Mexico, announced that it had cut about a quarter of its workforce to save costs and boost shareholder value.

Irving, Texas-based Pioneer laid off 230 employees this week at its headquarters and in its Permian Basin offices, and cut another 300 workers in April, the company said in statement.

It expects $100 million in cost reductions “in order to remain competitive with our peers,” Pioneer said in a statement.

“Decisions like these are never easy. In this case they were necessary to both align our cost structure with our business strategy and to create value for our shareholders over the long term,” the company said in a statement.

Earlier this month, Pioneer said it was selling its Eagle Ford Shale position in South Texas to Ensign Natural Resources, a portfolio company of Warburg Pincus.

The company is now a “pure play” Permian Basin producer.

Shale firms have pushed US oil output to record levels. But years of heavy spending led to investor pressure to reduce spending and use the cash to provide payouts, rather than produce more oil.

Employees whose jobs were cut were to receive financial packages and job placement services, Pioneer said.

5----Angola Awards Fuel Tender to Total, Trafigura

Angolan state oil company Sonangol said it had awarded its refined products buy tender for the next 12 months to Total and Trafigura .

Total will supply Angola with gasoline while Trafigura will supply diesel and marine diesel.

The results come on the back of some of the worst fuel shortages Angola has seen in years, which led to the sacking of Sonangol chair Carlos Saturnino earlier this month.

Sonangol, Angola’s largest and most influential company, blamed the shortage on difficulties accessing hard currency as well as unpaid debts owed to the energy company by industrial clients.

Heavily reliant on oil sales for government income, Angola was hit hard by the 2014 oil price crash, which pushed its economy into recession and created foreign currency shortages that crippled business.

In the statement, Sonangol said it had issued the tender in February with nine companies bidding for the supply contracts.

The tender result marks a return to Angola for Trafigura which for many years enjoyed an effective monopoly on lucrative fuel supply deals with OPEC member Angola.

Despite being Africa’s second-largest crude producer, Angola only has the refining capacity to supply about 20 percent of its fuel needs.

Links between Trafigura and Angola stretch beyond fuel imports, with Sonangol and Angolan company Cochan Holdings having the significant stakes in the trader’s global midstream and downstream business Puma Energy.

The choice to drop Trafigura last year was seen as a major statement at the time, as President João Lourenço vowed to reform Angola’s oil sector.

----China Not Signing Deals to Buy US Crude Oil

Chinese companies looking to sign long-term agreements to buy crude oil from US oil exporters have virtually disappeared, the chief executive of Enterprise Products Partners LP said.

The United States and China have been embroiled in an increasingly bitter trade dispute for nearly a year, and it escalated recently with the US imposition of 25% tariffs on $200 billion of Chinese goods.

The trade war has all but shut down shipments of US crude to China, and it is unlikely Chinese buyers will sign long-term offtake agreements with US crude exporters right now, Enterprise CEO Jim Teague said on the sidelines of a Houston energy industry conference.

“When I was in China, I heard two words at every meeting: ‘Trump’ and ‘tariffs,’” Teague said.

The Obama administration ended a 40-year ban on US crude exports in 2015 and they have risen sharply ever since. The country now routinely exports more than 3 million barrels per day (bpd) of crude.

In the first half of 2018, China was the biggest importer of US crude, averaging 377,000 bpd. In the six months ended February, the most recent data available, it has dropped to 41,600 bpd, according to the US Energy Information Administration.

Enterprise, an oil pipeline and terminal operator, filed for permits in January to build a deep-water crude export terminal capable of handling supertankers some 35 miles (56 km) off the coast of Houston, joining at least seven other firms racing to build such facilities as US exports climb.

Teague said demand for US crude will shift to other countries as US producers pump additional volumes.

“Demand will be what it is regardless of the trade war because trade patterns will just change,” he said. “The big (US oil producers) will be the ones who will make it work.”

7---- Engie, EDP to Be 2nd Offshore Wind Developer

French utility Engie and Portugal’s EDP said they will invest 15 billion euros ($16.7 billion) with the aim of becoming the world’s number two offshore wind developer after Denmark’s Orsted.

The two utilities, which have no operational offshore wind parks so far, said they will combine their offshore wind assets and project pipelines, starting with a total of 1.5 gigawatts (GW) under construction and 4 GW under development.

“From day one, the JV will be among the top five players in this market,” Engie CEO Isabelle Kocher said at a press briefing on the new joint venture in London.

The joint venture, which for EDP will be through its EDP Renovaveis (EDPR) renewables business, aims to reach 5-7 GW of projects in operation or construction and 5-10 GW under advanced development by 2025.

Orsted had cumulative installed offshore capacity of about 3 GW at the end of 2018, giving it a market share of about 16 percent, WindEurope data shows, with Germany’s E.ON, Sweden’s Vattenfall and Germany’s Innogy in second, third and fourth, each with more than 1.0 GW installed.

The offshore wind sector is forecast to grow significantly by 2030 as demand for low-carbon energy increases and the new Engie-EDP venture will initially target countries such as France, the United States, South Korea and Japan.

EDP’s chief executive Antonio Mexia said the offshore wind sector is different from other renewables as the scale of projects is large and the technology challenges are huge.

“In this (sector), size really matters,” he said.

The two firms have been partners in the long-delayed French offshore projects of Treport and Noirmoutier and are also bidding for a new project in Dunkirk together.

Engie renewables chief Gwenaelle Avice-Huet said on a call the JV wants to be the number two offshore developer by 2025, adding that projects under construction or under development in France, Britain, Portugal, Poland, Belgium and in the United States add up to 5.5 GW.

Engie operations chief Paulo Almirante said the JV’s pipeline in Europe, the US and Asia adds up to about 14 GW, of which 5 to 7 GW can be in construction or operation in 2025.

Almirante said offshore wind capital costs are 2 to 3 million euros per megawatt, which would add up to about 15 billion euros for a 5 to 7 GW portfolio. He specified that part of that will be financed and that the JV will bring in partners at project level, typically keeping a 50 percent ownership.

8----Russia Antipinsky Refinery Files for Bankruptcy

Russia’s Antipinsky oil refinery said it had filed for bankruptcy, weeks after a London court ordered its assets be frozen in response to a lawsuit from a trading house.

The refinery, which has a capacity of 9 million tonnes per year, had halted operations on several occasions in recent months because of a lack of funds to pay for crude oil deliveries, according to industry sources.

Last month, a London court issued a worldwide order to freeze 225 million euros ($251 million) in assets belonging to the refinery in response to a lawsuit by Russia’s VTB Commodities Trading.

The court order applied to the refinery’s equipment and property in Russia’s Siberian region of Tyumen, as well as petroleum products stored there and at one of its tankers in the northern port of Murmansk, among other assets.

The order also forbade the refinery from selling vacuum gas oil (VGO) to other companies without the consent of VTB Commodities Trading.

Court data showed there were 346.5 billion roubles ($5.37 billion) of claims against the refinery.

The refinery, which last month announced plans to file for bankruptcy, alleged its insolvency was in part tied to the fact that some traders had stopped making advance payments for oil products.

 “Unfortunately, in 2019 a string of traders, including VTB Commodities Trading, in violation of agreements that had been previously reached, stopped providing advances for the purchase of petroleum products,” the refinery said in a statement.

 “This led to a decrease in the volume of purchased oil and to the plant stopping its processing on April 26.”

VTB had to apply to the court and discontinue financial support of the Antipinsky refinery as it did not fulfil contractual obligations to VTB for several months, the bank said in reply to a Reuters query.

Sberbank, the refinery’s main creditor, said in a statement it would protect its interests by “using all debt collection instruments.”

9----Brazil Corn Ethanol Industry Booms

The news back in 2014 of a group of investors launching a project to build Brazil’s first ethanol plant based 100% on corn raised eyebrows in a country that had invented a national ethanol program entirely based on sugarcane.

Analysts thought the plan carried risks associated with an unstable market for the fuel and uncertainty regarding corn supplies and prices, beyond the fact that there was a general assumption that it was more expensive to produce ethanol from corn than from sugarcane.

Five years on, the group has doubled capacity in the initial plant, built a second unit and announced plans for three more, as Brazilian farmers ramp up corn production.

Two other companies are building 100% corn-based ethanol plants in Brazil, and others are revamping existing mills to run on corn as well in the cane’s between-harvests periods, the so-called flex ethanol plants.

“We are pleased with the outlook, our first plant has been delivering excellent results,” said Rafael Abud, chief executive of FS Bioenergia, the pioneering company backed by Brazil’s Tapajós Participações SA and the United States’ Summit Agricultural Group.

All five FS plants will be located in Mato Grosso, Brazil’s top grain state, where corn production has increased by 275% in the last ten years, mostly due to the growing practice by farmers to plant a second crop, normally corn, after the harvest of the main summer crop, usually soybeans.

Mato Grosso is leading Brazil’s growth in corn production, expected to reach a record near 100 million tonnes this crop.

“The second crop with corn is consolidated. That opens room for several projects in Brazil,” said Ricardo Tomczyk, head of UNEM, a recently created group to represent the corn ethanol industry in Brazil.

He says strong ethanol demand lately, partly due to high gasoline prices, has helped.

That demand may increase next year when Brazil begins the RenovaBio program, with targets for fuel distributors to cut carbon emissions by gradually increasing use of biofuels.

Impasa, a company operating two corn ethanol plants in Paraguay, will open its first unit in Brazil in July.

Luís Pomata, Inpasa’s commercial manager, says that besides ethanol, byproducts such as dried distillers grains (DDGs) and corn oil are also in demand.

Mato Grosso is Brazil’s leading cattle producer, with 14 percent of the country’s 220 million herd. The livestock industry in the state is seeking to boost feedlots, reducing the vast pastures, and DDGs are seen as a valuable feed ingredient.

10--- CNPC Breaks Into Myanmar Fuel Retailing

China National Petroleum Corp is planning to open dozens of petrol stations in Myanmar, the first major foreign investor to enter the fast-growing Southeast Asian fuel market, as the state giant expands its retail oil business, company officials said.

The investment, which could eventually reach tens of millions of dollars, follows a new strategy to tap overseas retail margins as China's domestic fuel market is saturated. The move follows a similar but larger investment in Brazil, where CNPC's global trading and refining unit bought 30% of a leading Brazilian fuel dealer last year.

CNPC's external retailing push came after Tian Jinghui, a veteran fuel marketing executive took the helm at the global unit, PetroChina International, which is also handling the Myanmar investment.

CNPC sees Myanmar as a prime frontier market for fuel retailing, where foreign participation is minimal but demand is growing at about 10% annually on a fast-expanding vehicle fleet and barely existent local refining industry.

“Myanmar is one of the few markets in this region that’s open to outside investment and where demand is growing fast,” said a Beijing-based PetroChina executive with direct knowledge of the investment. Officials declined to be named because they are not authorized to speak to press.

Myanmar is the fastest-growing economy in Southeast Asia, with the Asian Development Bank (ADB) forecasting growth of 6.8% next year.

Myanmar’s removal of fuel subsidies in 2007 and opening of the market to private investors has seen the number of petrol stations increase 10-fold over the past decade to more than 2,000, said PetroChina officials and a Yangon-based analyst.

Already the largest investor in Myanmar’s energy sector, operating pipelines that transport oil and gas from a delivery point on Myanmar’s western coast to China’s southwest, CNPC has outrivaled its global peers for a foothold in the market.

Jeremy Mullins, country director at Vriens and Partners, a Southeast Asia-focused advisory firm, said challenges like obtaining land and establishing a secure distribution system to deliver fuel that hasn’t been tampered with have limited foreign investment in Myanmar’s retail oil sector.

CNPC’s “investment can be seen as a vote of confidence in the market’s potential (in Myanmar),” said Mullins.

 

Ecuador Oil Industry Review

Ecuador is an OPEC member state with an average output of 550,000 b/d of crude oil. It is the fifth largest South American crude oil producer. Furthermore, with 8.3 billion barrels of crude oil in place, it is ranked the third in terms of oil reserves in South America, behind Venezuela and Brazil.

The bulk of Ecuador’s oil lies in Oriente in the Amazon area. The (Ishpingo-Tambococha-Tiputini (ITT) oil field, better than as Block 43, holds about 4 billion barrels of crude oil with an output of 300,000 b/d. It is now the most important oil field in Ecuador.

The oil produced in ITT is carried to Esmeraldes Port through pipeline and after crossing the Andes.

Ecuador’s economic dependence on crude oil is such that petrodollars make up more than 50% of the country’s exports and 25% of national revenue. Meanwhile, crude oil accounts for 76% of Ecuador’s energy needs. That means oil revenue is the backbone of Ecuador’s economy.

Petroamazonas EP and Rio Napo SA, both state-run oil firms, account for about 75% of Ecuador’s oil production.

Ecuador produces two variations of crude oil; namely, Oriente with API=24 and Napo with API=19. Oriente makes up two-thirds of Ecuador’s crude oil exports and constitutes the main feedstock powering refineries in this country.

Senior Ecuadorian officials say economic growth in this country entirely depends on development of the petroleum industry and discovery of new oil reserves. In their view, if no new oil discovery is made by 2020, the country would see its economic growth fall sharply. To counter this problem, they plan to identify oil and gas in partnership with Canada through satellite operation during a 6-month period on 17 blocks in southeastern Ecuador.

Since conditions presented by the Ecuadorian government for investment in the oil sector as well as insufficient data on oil blocks have dissuaded private companies from investing in this country’s petroleum industry.

Ecuador’s petroleum industry runs three refineries. It processes 175,000b/d of crude oil. But that is not sufficient to meet domestic needs, and the country has to import such oil products as gasoline, gasoil and liquefied petroleum gas (LPG). Ecuador exports oil products of higher density like fuel oil due to low domestic consumption. Official data show oil products consumption in this country stands at 274,000 b/d, of which 122,000 b/d is supplied via imports. The three refineries are administered by Petroindustrial which is an offshoot of Petroecuador.

In light of unbalanced supply and demand in petroleum products, Ecuador has had to keep refineries at the state of maximum rated capacity in a bid to meet the country’s growing consumption.

Due to such conditions and financial problems, a 300,000-b/d refinery in the Pacific Ocean, whose construction started in 2007, is unlikely to be finished on schedule.

Ecuador Refineries

Refining Capacity (1,000b/d)  Refinery110Esmeraldas 45  La Libertad 20 Shushufindi

Analysts say the year 2004 was a turning point in the petroleum industry of Ecuador. In that year, this country managed to launch the oil pipeline OCP (Oleoducto de Crudos Pesados) and overcome a major challenge in crude oil exports.

Ecuador currently runs two big crude oil pipeline systems working in parallel. The older one is the 310-mile-long SOTE (Oleducto Trans-Ecuatoriano) carrying light to medium crude oil. The second one, the 300-mile-long OCP handles the transmission of Napo crude. SOTE handles 70% of Ecuador’s crude oil exports and OCP accounts for 30%.

Meanwhile, agreements have been reached between Ecuador and Colombia on using OCP to transfer crude oil from southern Colombia to Ecuador’s Esmeraldes Port.  This pipeline started carrying medium/light crude oil in June 2017, 14 years after carrying heavy crude oil.

In addition to SOTE and OCP, Ecuador also owns the 190-mile Oleoducto Transandino (OTA) pipeline carrying 20,000 b/d of crude oil to Colombia’s Tumaco Port.

Ecuador Crude Oil Transfer

Transfer Capacity (1,000b/d)

Route

Commissioning Year Pipeline  360  Esmeraldes - Lago Agrio 

1972SOTE 450 Esmeraldes - Lago Agrio 2003

OCP 20 Lago Agrio (Ecuador) – Tumaco (Columbia)

1970 OTA

Ecuador exports 70% of its crude oil. After Saudi Arabia and Canada, Ecuador is the third largest exporter of crude oil to the US’s western gulf. Chile, Peru and China are among buyers of Ecuador’s crude oil.

Oil analysts believe that Ecuador is exploring and developing new oil fields in order to increase its crude oil production capacity and serve its economic growth. That would help the country improve its economic conditions and finance its petroleum product imports with petrodollars.

In the short-term, the country is unlikely to experience any significant change in oil production or refining capacity.

Licenses Renewed for Iran E&P Firms

The qualification licenses issued for a group of 17 Iranian E&P companies by the Petroleum Ministry are set to expire in June. The Office of Deputy Minister of Petroleum for Engineering Affairs, which is the regulatory agency for Iranian E&P firms, is making arrangements to have licenses for these companies renewed.

That comes against the backdrop of tough US sanctions against Iran’s petroleum sector since Washington pulled out of Iran’s historic nuclear deal with six world powers. The sanctions have significantly affected the Iranian companies’ activity.

Iran Petroleum has conducted a joint interview with Amir Faraji, director of technical regulations in the upstream sector, and Mahboubeh Soleimani, director of technical regulations in the downstream sector, at the Office of Deputy Minister of Petroleum for Engineering Affairs, about the verification of Iranian E&P qualifications.

Three years have passed since 17 Iranian E&P companies were cleared. Are you still receiving requests from Iranian contractors to be listed as E&P by the Petroleum Ministry?

Soleimani: Sure! We’re still receiving requests from Iranian companies to be listed as E&P. Some candidates imagined that they could file for E&P status just because they had rigs and equipment. The assets of companies are instrumental in their qualifications; however, it does not mean that any company equipped with rigs would be qualified to be listed as E&P company. As you know since Iranian contractors were not experienced to work as E&P companies, we decided from the very beginning to verify potential companies for minimum compliance with the requirements. Therefore, the companies that were first cleared were mainly EPC or drilling company. Even then, these companies were expected to move in the direction of becoming E&P company. The first requirement was their switching from EPC/OSC to E&P status.

Do you think they have been able to change their status?

Soleimani: In any case, we have to take into consideration the current international atmosphere in these companies’ shift in status. Over the past one year, as international conditions have changed, it has become very hard to work under such circumstances. Based on reports we have received from E&P companies and the documents we have at our disposal, some of them have taken good steps over this period of time. Of course, as I said we keep in mind that Iranian companies have not been engaged in exploration and production and that the international conditions have not been in their favor.

For this reason, the number of Iranian E&P companies is likely to rise, isn’t it?

Soleimani: So far, no decision has been made at the Office of Deputy Minister of Petroleum for Engineering Affairs to increase the number of qualified companies unless Petroleum Ministry macro policies oblige us to have periodical assessments or receive new requests. We are currently verifying the compliance of 17 companies with necessary qualifications.

Faraji: Just adding to Ms. Soleimani’s remarks, qualitative agility and richness of this list is envisaged by the Ministry of Petroleum. The quality, potential and capacity of these companies must be developed.

What do you think of the assessment of the activity of these companies over the past three years?

Faraji: In assessing the activities of Iranian E&P firms to know about their track record in the past three years, a few companies have been able to be engaged in the value chain in the upstream sector. When the companies were being assessed for qualifications, the definition envisaged for E&P companies covered those that met minimum requirements and enjoyed the possibility of development. However, their track record has to be monitored in future assessments again.

What are the requirements for the assessment of companies?

Faraji: Seventeen Iranian E&P companies were evaluated at three levels, but since we are in the process of evaluation I can’t reveal anything about the details. The companies categorized as first class have met two requirements: adapting their business environment to E&P activity and getting engaged in some projects over this time, signing heads of agreement or being in the phase of agreement. I would like to reiterate that under the present circumstances, all assessments will be done based on special considerations.

Soleimani: In light of changes that have occurred over the past one year, we have been forced to modify the criteria and update the requirements for the assessment of companies. Of course, the certificates issued for E&P companies are long-term. From the very beginning we insisted on the point that Iranian companies are potentially able to become E&P company, but they should not be expected to change status very shortly. Therefore, based on some planning, some of these companies now enjoy potential to step into this business. After the deadline set for them, we will reassess them to see which one of them has moved in the required direction. Nonetheless, the international circumstances changed in-between.

In the reassessment of companies, will the project management criterion be viewed less strictly due to the changes in the international atmosphere?

Soleimani: The most significant difference between E&P companies and EPC firms is their good knowledge of project management, reservoir management and financing. They were expected to upgrade themselves in these three sectors. They have reconsidered their expectations from the Ministry of Petroleum for financial support and they have devised new financing methods.

To what extent the E&P companies’ failures are justified?

Faraji: We have to admit that we are slow in decision-making. Consequently we lose the market. In any case the Iranian companies have lost the market due to the current illegal sanctions and naturally E&P firms have to change their calculations.

Were we not under sanctions would all the cleared companies be competent for exploration and production operations?

Faraji: It’s a bit difficult to answer this question. Under normal conditions, the 17 qualified companies should have changed their macro-strategies and their policies for presence in regional markets. But realistically speaking, some of these companies would be at the bottom of the list.

Aren’t you worried that the number of these companies would decline in reassessment?

Faraji: Not at all. As long as the regulatory tasks of the Petroleum Ministry are concerned, the number of companies involved in this sector has to be competitive. The companies have to change their business circumstances and not limit themselves to the domestic market.

Soleimani: We thought from the very beginning that we have to give time to these companies before stepping into international activities. That is why we announced that we had given them room for maneuvering because even if we were not under the present circumstances the Iranian companies had to rival companies like Total and Shell in the region. We know quite well that it is still premature for them to be willing to compete with such companies on the international scene. That is why we wanted these companies to work alongside international companies on IPC contracts and learn from them. The Ministry of Petroleum even insisted on the transfer of technology so that necessary capacity building would be arranged in this sector.

Faraji: We had done so in the past, too. For instance, in the 1990s, we focused on massive capacity building for contractors and consultants in the petroleum industry. Today I can assure you that Iran is unique among regional countries in these three sectors. Iran’s contractual capacity is outstanding in the region. For instance, in the EPC contracts, we have more than 200 qualified contractors. We have been active in contractual work for years. Even companies like Total chose Iranian companies as subcontractor. I want to say that we have qualified Iranian companies in these two sectors. We don’t need foreign help in the EPC sector. Thanks to capacity building in the 1990s, we have the position we are in today. Currently, a big number of Iranian companies are conducing reservoir studies in Iran. They are not dependent on the government. Iranian companies are qualified enough to work in the upstream sector, but they do their job individually. We expect E&P companies to integrate all such potentialities.

The licenses of these companies will expire in June. Is it possible for you to take easy with them due to changes in Iran’s conditions?

Faraji: Our standards are unchangeable. If we want to move on the right track we have to apply stricter standards. We cannot take it easy. However, we have told E&P companies to use their capacities in the EPC sector for the moment. However, E&P sector has its own requirements which cannot change. Based on the Petroleum Ministry policies, the licenses of these companies would be renewed for one year.

Soleimani: The list approved by the Petroleum Ministry contains many companies. It means that the companies listed there are potentially able to enter into exploration and production. But when it comes to the implementation of projects and signature of contracts, National Iranian Oil Company (NIOC) would reassess the capabilities of these companies. Coincidentally this process will be stricter and the companies have to prove their policymaking capabilities.

In fact, we as regulators examine the regulations for the qualification of companies and NIOC will examine the technical details of the qualifications of companies during signature of contracts to see if they have sufficient knowledge to operate the projects.

Iran E&P Companies Thriving

After the adoption of the new model of oil contracts – Iran Petroleum Contract (IPC) – the process of verifying the qualifications of domestic companies for cooperation with international oil companies for the development of Iranian oil and gas fields started. These companies had been selected from among the most competent domestic firms and in compliance with international criteria and regulations. They handled a variety of activities throughout the Exploration & Production (E&P) chain and held a significant share of the market in this sector.

The previous round of sanctions had led to creation of a high level of capabilities and potentialities in Iranian companies in the geological, geophysical, seismic, drilling, service, supply, manufacturing as well as production and operation sectors. The progress was such that these companies were able to manage Iran's oil and gas industry without relying upon international firms. It was time that they unlocked the remaining potentialities of the upstream sector and experience a new level of enterprise administration as an international oil company or independent oil company.

Under the aegis of the PetroleumMinistry, the Iranian E&P Companies Forum was set up, comprising qualified companies. The mission assigned to this forum was sharing thoughts, exchanging knowledge and developing the potentialities of members in addition to advising officials on how to improve the E&P ecosystem design in Iran.

Today, it can be argued that necessary potentialities for the development of E&P ecosystem are provided for Iranian companies involved in this sector. Developments in Iran's upstream oil and gas sector have reached a point of no-return and a transformation is in the process.

Iranian companies have found a clearer image of the E&P concept and business models in this industry. Such concepts as risk & reward, management of assets, management of portfolio, financing knowledge and partnership during competition have become more tangible. Furthermore, skills of negotiations, financial and banking interactions as well as the language of law are more understandable than before. Many Iranian companies have made necessary arrangements for evaluation by international rating agencies. Most of them have already had their financial statements translated based on international standards in a bid to offer more transparency in the sectors of ownership and management. It may be said that the level of HSE standards and such concepts as sustainable development, compliance, resiliency, security and digitalization are now a new norm in Iranian companies.

Based on the qualifications required by the E&P industry, Iranian companies must be well aware of their capabilities and know exactly how to approach various sectors.

The capabilities of Iranian E&P companies may be classified as follows:

Partnership with foreign companies and presence in international markets in the operation sector and limited investment
Capable human resources in risk-based management and decision-making
Specialized and technical capability of human resources
Good knowledge of the structure and specifications of reservoirs, geology and Iranian hydrocarbon formations
Reservoir modeling and seismic data analysis
Master development plan drafting
Design, manufacturing and operating operation facilities
Technical and operational knowledge of drilling
Knowledge of supplying activities
Abandonment/Disposal of subsurface and surface assets and infrastructure
 Capital planning and project approval
Fixed asset project, joint venture, land and lease assets accounting
International financing and using domestic capital market potentialities
 Maintenance potential in upstream installations
 Risk remediation management potential in Iran's upstream industry
 Knowledge of business resiliency management
 Business change management procedures
 Clear business model
 Deliver solution software and potential
 Advanced laboratories
 International distribution, sales and marketing network

Iranian E&P companies have potential and practical advantages achieved throughout years of efforts in knowing Iran's business environment, domestic and foreign communications as well as technical abilities.

Such capabilities have been achieved due to the companies' access to educated, young and low-cost manpower. Expansion of infrastructure for production and operation in recent years has also given rise to unique features in these companies that are currently able to carry out the bulk of their activities for the management of an E&P company at a competitive price and with acceptable quality in compliance with international standards.

Over the past ten years, gas has had a dominant share in development, mostly in the offshore sector. However, 67% of the fields undergoing development now are onshore. That is very important for the drilling sector and coincidentally the strength of Iranian companies lies in this sector.  Given the diversity of qualified Iranian companies they are expected to pursue various strategies in complementing one another. Connecting some of these companies to monetary and executive organ would promise the existence of necessary determination for mobilizing financial and industrial capacities in this direction.

Furthermore, in addition to the signature of several IPC contracts for the development of fields, operational and contractual risks for foreign companies willing to step into this sector have been reduced.

Iran's upstream oil and gas industry is largely expected to shine at the international level.

 

 

NIOC to Award 14 Blocks to Iran E&P Firms

National Iranian Oil Company (NIOC) is planning for the first time to award 14 exploration blocks to Iranian E&P companies.

The blocks were introduced to a meeting of managers and representatives of qualified E&P companies by senior NIOC officials. The event was organized by Iranian E&P Forum in Tehran.

Saleh Hendi, NIOC director of exploration, said: “In coming months, the process of awarding of several exploration blocks via negotiations will start. We are planning to conclude talks with the signature of contract as soon as possible.”

Until recently, Iran had awarded its exploration blocks to foreign companies for development.

Saleh Hendi said: “Earlier, we held three licensing rounds for awarding these 14 exploration blocks to foreign companies. So far, $1.2 billion has been attracted and some blocks have proven to contain oil and gas deposits.”

Iran Firms in Upstream Oil Sector

Iran’s private sector has been engaged in the upstream oil industry for more than two decades now. That started after the establishment of some companies carrying out feasibility studies. A number of such companies have now been authorized to conduct studies.

Hendi says the Iranian companies that have been doing so may be few in number, but “doing so in such time was great.”

He said that Ministry of Petroleum was willing to engage the private sector in oil exploration projects.

NIOC Directorate of Exploration and TENCO had signed an MOU in March 2019 to study the Toudaj exploration block.

Now the Directorate of Exploration has introduced all of the 14 blocks to Iranian E&P firms and has asked them to prepare themselves for exploration. Exploration may be less costly than development, but it is fraught with more risks, which poses a serious challenge.

Exploration Operation Consortium

Hendi touched on the high risk of exploration blocks and the diversity of E&P companies, suggesting that Iranian E&P firms work within the framework of consortium. He said that would complete their capabilities and distribute risks.    

“Iranian E&P companies are authorized to have a foreign partner, but our contracting partners are Iranian companies,” he said.

As for countering existing risks, he said: “In the first place, it would be better to start work in lower-risk blocks. Some of these blocks are very low-risk.”

What Are the 14 Blocks?

The Kavir block in central Iran, the Moghan block in the Mohgan area, the Mahan, Parsa and Bamdad blocks in the Persian Gulf, the Sarakhs, Dousti and Raz blocks in the Kappeh Dagh area, the Sistan and Taibad blocks in eastern Iran, and the Abadan, Timab, Zehab and Toudaj blocks in the Zagros area constitute the 14 exploration blocks.

Ali-Asghar Joulapour, deputy head of NIOC Exploration Directorate for exploration blocks and foreign partnership, said: “Three blocks are offshore, located in the Persian Gulf, and the remaining 11 are onshore.”

“In addition to contractual obligations, in the event of positive primary results, the contractor can undertake to carry out other necessary operations,” he said.

Asked about the process of awarding the blocks prior to signing agreements, Joulapour said: “NIOC Directorate of Exploration will in the first step provide Iranian E&P companies with necessary documents including brochures introducing the blocks, the type of contract and the general  terms and conditions of contracts.”

“In the next step, E&P companies will name their desired blocks. Then comes room data meetings where packages of data will be given to applicants to learn further about the blocks,” he said.

He added that negotiations would start with a view to striking deals after applicants announce their technical and financial proposals.

“After getting final approvals, the contracts become effective and exploration will be done,” said Joulaei.

He said that the minimum financial obligation required for the blocks is between €8 million and €70 million.

Exploration, Development and Production

Talin Mansourian, director of NIOC investment and business, said at the meeting: “In case through exploration and appraisal processes it comes out that the field is not commercial, nothing will be paid back to Iranian companies involved. That is customary in the world. But in case the field is proven to be commercial, the contracting party will have to present its own development plan within the deadline set to that effect.”

She said that the next stage would focus on negotiations for signing contracts for upstream operations.

“In case an agreement is reached within the deadline, exploration costs along with development costs will be recouped from the field’s revenue,” she said, adding: “If no agreement is reached, the costs and exploration fees will be paid back from NIOC’s internal resources.”

Each company is authorized to study two blocks at the same time.

 

NIDC Completes Drilling in Azar

Drilling operations for seven wells in the Azar oil field, which is jointly owned by Iran and Iraq, have been completed. The project is now ready to be delivered to the client, Sarvak Co.

Hossein Rahimi, director of the Azar drilling project at National Iranian Drilling Company (NIDC), said: “The drilling of seven wells in the Azar field has been concluded. Based on available data, there are three oil fields similar to the Azar field.”

Azar, which is known as Badrai in Iraq, is the main oil field along Iran’s western borders. It is situated in Ilam Province, more specifically between the cities of Mehran and Dehloran.

Early production from Azar started in March 2017 at the rate of 15,000 b/d.

The Anaran oil block in Ilam Province comprises the Changouleh and Azar oil fields. Azar is estimated to hold 2.5 billion barrels of oil in place. The oil supplied by Azar is light with an API gravity of 32-33. The rate of recovery from this field is estimated at 16%.

Rahimi said: “The Azar field is one of three oil fields with hard drilling. Drilling in this field was very difficult due to low-pressure and high-pressure layers, as well as the thickness of layers, requiring drilling bits and special tools.”

He described the Azar field as one of the most challenging oil fields in the world, saying: “After the foreign firm in charge of drilling abandoned this field half-way, a tender bid was launched for domestic companies. NIDC and two other Iranian companies agreed to carry out drilling in this field. NIDC’s share was seven wells. We started drilling there in October 2012.”

Rahimi said two wells had been spudded by the foreign company, adding: “We didn’t have sufficient information about the Azar oil field. One of the wells was exploration-development. We managed to drill a third well. The two other successful bidders also started work in parallel with us.”

He said NIDC finished the drilling of the third well in 620 says, adding after some time it took only 318 days to drill a well owing to experience.

“In the drilling of the Azar field’s seven wells, two heavy drilling rigs – Fath 35, Fath 37 – and one super-heavy drilling rig – Fath 60 – were used,” said Rahimi.

He said that the developing company in charge of the project had absorbed some consultants “who told us not to take over the project because you can’t do it.”

“But, in light of such capability, we didn’t abandon the well and we brought it to conclusion. Therefore, they used our experience in similar drilling projects,” said Rahimi. “It was done mainly by young manpower and we managed to finish the job. That was while they were not optimistic about the conclusion of the project.”

Experience and Expertise

Rahimi highlighted NIDC’s manpower and equipment in the Azar drilling project, saying: “If any company manages to prove its efficacy in this field, which is one of the most sophisticated ones, it will definitely shoot to prominence in the drilling industry.”

“The technical and operational results of this project are the result of efforts by specialized and experienced manpower in this company and a winning card for the Petroleum Ministry,” he added.

Rahimi also said that recent flash floods in Ilam Province did not affect the drilling operations of the Azar field.

Azar whose development has been awarded to an Iranian company, is administered by Petroleum Engineering and Development Company (PEDEC).

Tight Field

The Azar field is one of the toughest oil reserves in the world in terms of geological specifications and the number of formations.

Due to the depth of Azar’s hydrocarbon reservoir, there is a need for drilling in various oil formations. Due to the intermittence of low-pressure and high-pressure layers, drilling has become very complicated there.

Another important issue with this field is that Iranian experts managed for the first time to apply acid fracturing for enhanced recovery from this field.

The numerous low-pressure and high-pressure layers in the various formations of this field require a redefinition of casing and separation of non-homogenous layers. The pressure variation in these formations is unique to the Azar field. The fluid in the Azar field is extremely corrosive. Therefore, a big challenge would be to manufacture installations and pipes from corrosion resistant alloys.

Due to the formations and reservoir rock of the Azar field, it is not normally possible to extract necessary data after drilling. That requires acid stimulation operations via acid fracturing or acid injection in big volumes.

It means that throughout acid fracturing, higher pressure has to be applied to push oil from farther distances towards the production hole and increase recovery from each well. In case such operations are carried out successfully in the Azar field, it would become easier to do the same in other oil fields in the future.       

 

Iran Petchem Sector Developing Despite Sanctions

Senior petrochemical officials say Iran’s petrochemical industry has already formulated up to 80% of its plan and is currently looking for potential investors for the rest of its projects.

Iran hopes that unilateral US sanctions would be lifted and the European Union’s non-dollar trading mechanism Instex would become operational in order to be able to receive more foreign financing in the development of this industry, particularly completing incomplete projects.

According to plans formulated for the petroleum industry, more than $50 billion has to be invested in this sector.

Once the remaining phases of South Pars have been completed and de-ethanization projects have come on-stream in coming years, 650,000 b/d of gas condensate, 6.7 million tons a year of liquefied petroleum gas (propane and butane) as well as 4 million tons a year of ethane would be recoverable.

Iran’s Petroleum Ministry intends to fully use ethane and other materials based on needs for the petrochemical industry. Therefore, the projects designed for the petrochemical sector would become operational with more confidence placed in them by stakeholders and manufacturers.

The significance of petrochemical projects in Phase 2 of Assaluyeh comes to the limelight when it is known that of a total 60 million tons of petrochemical products Iran hopes to add to its output by the end of the 6th Five-Year Economic Development Plan, 40 million tons is located in Assaluyeh.

A large number of incomplete petrochemical projects are under construction in Phase 2 of Assaluyeh, next to the city of Kangan. Most of them need financing and foreign loans in order to go ahead.

Once these projects have become operational in partnership with domestic investors, Iran would see its petrochemical production capacity increase 40 million tons a year.

The Bushehr, Morvarid, Kavian, Persian Gulf, Ettehad, Mehr, Marjan, Kimia Gostar, Jam Armeh, Veniran, Samand Tarah, Lavan, Hangam and Damavand petrochemical plants are among projects located in Phase 2 of Assaluyeh. They include a utility supplying plant, seven methanol production plants, three urea/ammonia production plants, two ethylene production plants, one ammonia production plant and one ethane recovery plant.

Kaveh, World Largest Methanol Plant

The Kaveh methanol plant is almost coming online. It has had 99% progress. It started its trial-run production early this year. It has since been lifting its output.

The Kaveh methanol project is a pre-commissioned petrochemical project with a significant share in output hike next year. With an output of 7,000 tons a day, it is one of the largest methanol units in the world. Due to proximity to sea and having its own jetties, it enjoys a good position for exports.

Bushehr Petchem Plant Nearing End

The first phase of the Bushehr petrochemical plant has had 96% progress. Iran’s National Petrochemical Company (NPC) has said three sections of this phase would come on-stream this year.

The sweetening and ethane recovery of this plant recently came online on a trial basis. The methanol unit is also in the pre-commissioning phase. The gas recovered from phases 6, 7 and 8 of South Pars is sweetened at this plant and the rich gas is delivered to the ethane recovery unit. Methane is both fuel and feedstock for the methanol unit. In the current calendar year, the methanol unit of the Bushehr petrochemical plant would come online. Phase 1 of the Bushehr methanol plant comprises methanol unit, ethane recovery and gas sweetening section. It has an annual production capacity of 1.65 million tons of methanol, 1 million tons of olefin, 550,000 tons of ethylene glycol, 300,000 tons of high-density and low-density polymers, as well as 300,000 tons of acetic acid.

The Bushehr petrochemical plant covers 62ha of land.

Lordegan Close to Commissioning

The Lordegan petrochemical plant is one of projects expected to be inaugurated this year. It has had over 96% progress. Being located in Chahar Mahal Bakhtiari Province, it has an annual production capacity of 1.775 million tons. The products supplied by this petrochemical plant include urea and ammonia.

BB Gas Refinery

The Bid Boland gas refinery project has had over 92% progress. It is currently owned by the Persian Gulf Petrochemical Industries Development Company (PGPIDC). So far $3.2 billion has been invested in this project which is likely to yield $700 million in revenue annually. Its 1.5 million tons of ethane would be delivered to the Gachsaran petrochemical plant via a 95km pipeline. With the production of ethylene at this plant, the feedstock would be supplied to the Dena branch of West Ethylene Pipeline (WEP).

Bid Boland is a major project in Iran’s oil and gas industry. In the upstream sector, it will receive feedstock from four NGL facilities. That is the point that distinguishes this refinery from South Pars refineries.

Bid Boland has a processing capacity of 2 bcf/d of gas. That is vital for Iran’s southern provinces, including Khuzestan Province.

Ilam Petchem Plant

The second phase of the Ilam petrochemical plant comprises desulfurization and olefin units. The desulfurization is now 97% complete. In the second phase, such products as ethylene, pyrolysis, and gasoline, propylene in chemical and polymer grades, as well as liquid fuel would be added to the mix of petrochemicals.

The Ilam petrochemical plant is the largest petrochemical facility in western Iran in terms of area, production capacity and number of processing units. The Ilam petrochemical plant is able to inject 150,000 tons of its surplus ethylene to WEP annually. It is expected to become operational in the second half of the current calendar year.

Miandoab & Damavand petrochemical plants

Another petrochemical project in the current calendar year is the Miandoab petrochemical plant known as high-density polyethylene plant with an output capacity of 175,000 tons a year.

The plant was initially designed to produce 300,000 tons of PVC, but following economic studies the product was changed to polyethylene. This petrochemical plant is in the final stages of construction. Iran’s petroleum minister, Bijan Zangeneh, has said it would come online this calendar year.

Ali-Mohammad Bosaqzadeh, director of NPC projects, has said that another section of the Damavand petrochemical plant would come on-stream as the utility supplier of petrochemical plants in Phase 2 of Assaluyeh.

He said recently that after completion of Phase 1 of Damavand, in addition to the industrial waste treatment plant, new units would become operational.

 

 

Iran Complying with Paris Agreement

With the implementation of output quality improvement projects in Iran’s refineries and the production of Euro-4 gasoline, Iran has taken effective measures in compliance with the Paris Agreement which came into effect in December 2015.

Iran’s Euro-4 and Euro-5 gasoline production has increased to 76 ml/d. That means environmental pollution has declined and environmental quality has improved. However, National Iranian Oil Refining and Distribution Company (NIORDC) is proceeding with its projects to increase the refineries’ production capacity and upgrade the quality of refined products.

An agreement within the United Nations Framework Convention on Climate Change (UNFCCC), dealing with greenhouse-gas-emissions mitigation, adaptation, and finance, signed in 2016. The agreement's language was negotiated by representatives of 196 state parties at the 21st Conference of the Parties of the UNFCCC in Le Bourget, near Paris, France, and adopted by consensus on 12 December 2015. As of March 2019, 195 UNFCCC members have signed the agreement, and 186 have become party to it. The Paris Agreement's long-term goal is to keep the increase in global average temperature to well below 2 °C above pre-industrial levels; and to limit the increase to 1.5 °C, since this would substantially reduce the risks and impacts of climate change.

Under the Paris Agreement, each country must determine, plan, and regularly report on the contribution that it undertakes to mitigate global warming. No mechanism forces a country to set a specific target by a specific date, but each target should go beyond previously set targets.

This strategy involved energy and climate policy including the so called 20/20/20 targets, namely reduction of greenhouse gas emissions (by 20%), the increase of RES (renewables) share (to 20% on the basis of consumption) and the increase of energy efficiency, thus, saving up to 20% in the energy consumption.

Countries furthermore aim to reach "global peaking of greenhouse gas emissions as soon as possible". The agreement has been described as incentive for and driver of fossil fuel divestment.

The Paris deal is the world's first comprehensive climate agreement.

One of the significant measures upon which Iran can focus would be to reduce the emission of pollutants caused by flare gas. Iran has already formulated a plan to reduce greenhouse gas emissions, particularly in its 6th Five-Year Economic Development Plan.

Iran, home to over 80 million and covering a large area in Asia, is instrumental in reducing greenhouse gas. The transportation sector, which mainly depends on fossil fuel, is a major air pollution factor. Therefore, in case the quality of fuel delivered to this sector improves, Iran will in the long-term see its air pollution decline.

Iran’s daily increasing need for fuel in the transportation sector necessitates self-sufficiency in fuel production. Ownership of huge oil and gas reserves and the refining sector’s urgent need to upgrade the quantity and quality of products have made Iran’s oil refining and distribution industry crucial.

In the previous round of sanctions before Iran signed thee 2015 nuclear deal with world powers, Iran’s refining industry tried its best to neutralize the impact of unlawful sanctions which had mainly targeted Iran’s petroleum sector. Owing to resistance, Iran’s refining industry launched advanced refining facilities and developed catalysts used in this sector.

As Iran has launched new plans to improve the quality of petroleum products, Euro-4 gasoline is being distributed in all cities. Meantime, completion of refining projects at the Bandar Abbas Gas Condensate Refinery, Bandar Abbas Oil Refinery and Tabriz Oil Refinery has brought Iran’s quality gasoline production capacity to 76 ml/d. That is while Iran’s basic gasoline consumption capacity stood at 59 ml/d in 2012, which has now reached 101 ml/d. Iran is now able to export such products, but as Minister of Petroleum Bijan Zangeneh has said, the country has no plan to export gasoline now in order to enhance national storage.

3rd Phase of Condensate Refinery Operational

In late February, two key refining projects became operational in Iran: phase 3 of the Bandar Abbas gas condensate refinery (better known as the Persian Gulf Star refinery), and quantity/quality improvement project at the Bandar Abbas oil refinery. The condensate refinery can now produce 45 ml/d of Euro-5 gasoline, enough for half the country’s needs.

Operations have also started for the fourth phase of the condensate refinery which plays a strategic role in Iran’s energy balance. This facility changed Iran’s status from an importer to a potential exporter of gasoline. The achievements of the third phase of the refinery are 12ml/d of gasoil and kerosene, as well as 3 ml/d of LPG. The commissioning of this project has made Iran an influential country in the refining industry in the region.

Compared with other refineries in the country, the Persian Gulf Star refinery supplies more environmentally friendly products. The aromatic contents including benzene are at an acceptable level.

Isa Kalantari, head of the Department of the Environment, said the Persian Gulf Star refinery is fitted with clean technology that can help remove environmental pollution. The refinery’s products, including octane-91 gasoline and 1-percent benzene, are environmentally friendly.

The supply of such products at this refinery would encourage Iran’s automotive industry to import vehicles with better engines.

Three Projects at Abadan Refinery

The Abadan oil refinery saw three industrial projects come online last calendar year. They included a desalter in Distillation Unit 80, replacing barometric condensers with plain condensers in the same unit, and building two storage tanks.

The desalter was installed to upgrade the quality of products and improve the process of operation.

The condenser replacement project involved purchasing plain transducers based on the processing specifications and in partnership with the United Nations Industrial Development Organization (UNIDCO), mechanical engineering design, civil engineering design, electrical engineering design, instrumentation, supervising contractors, full removal of pollutants and the return of investment.

For the storage tanks, a site was prepared and bund walls were installed. Finally two storage tanks were built with a capacity of 135,000 b/d at the Abadan refinery in order to increase the storage capacity of petroleum products.

Kermanshah; Polisher Installed

The Kermanshah oil refinery installed and launched its polisher section in February.

Using returned gas condensate to feed boilers for steam production is a high-risk operation in all refineries. Therefore, it would be very important to build DM and polisher units to process the returned gas condensate at these refineries. A polisher package was purchased from a British company about 13 years ago. Despite all restrictions, refinery experts located, installed and launched this section.

Due to insufficient technical data and relevant instructions, experts at the techno-engineering services section in cooperation with the operational units (operation, overhaul and laboratory) moved to launch the polisher and remove its problems. First, they started up the unit with water, but in the final phase of operation where acid and base had to be injected, they modified the first phase and started the second phase.

Thanks to round-the-clock efforts by the engineering section and the good cooperation of operational units, the polisher unit was launched after 1.5 years of continued work. The polisher was then handed over to the operation section which remove salt.

Tabriz, Converting Old Section

The Tabriz oil refinery converted an old gasoline catalytic conversion section into a light naphtha isomerization unit with a view to increasing euro-grade gasoline production from 40% to 100%, upgrade the quality of its gasoline to Euro-5 grade, boost the profitability of the facility, enhance the quality of products, reduce environmental pollution and decelerate gasoline burning in vehicles.

Over the past five years, 15 environmental projects have got under way at this refinery, 10 of which have so far come on-stream. The new gasoline production section, designed to produce clean gasoline, is among the projects aimed at upgrading the environmental standards.

Other environmental projects include the recovery of flare gas in order to reduce greenhouse gas emission and atmospheric pollution and gasoil processing to produce Euro-5 diesel fuel.

The refiner also plans to reduce fuel oil production and increase valuable products and base oil in compliance with environmental standards.

Bandar Abbas; Fuel Quality Upgrade

After the startup of gasoil and gasoline quality improvement project at the Bandar Abbas refinery, the quality of 12 ml/d of gasoline was improved to Euro-5 grade and the quality of 15 ml/d of gasoil to Euro-4 grade. The startup of this project has created 650 direct jobs. A key objective sought in this project was to protect the environment.

Improving economic performance, upgrading the energy consumption, supplying quality products based on international standards, carrying 60 million persons/hours of accident-free work, handling of every part of the operation by Iranian experts, contractors and consultants and acquisition of experience are among the outstanding features of this project.

The Bandar Abbas oil refinery has managed to put an end to its dependence on foreign countries in the production of chloric acid for the refining industry. This product is widely used at refineries and petrochemical plants. This achievement would end Iran’s dependence on foreign companies for the chloric acid supply, save on spendings and accelerate refining procedures.

Other achievements at this refinery include the recovery of 250 tonnes a day of sulfur at the sulfur recovery unit, hydro-treating of gasoil and water desalination.

After the operation of the new hydro-treating section at the refinery, the annual emission of 7 million tonnes of sulfur oxide will be avoided. Compared with the older generation of gasoil hydro-treating units, application of new technologies in the new facility would significantly reduce the level of pollutants; reduce costs for steam generation, as well as total costs.

The desalination facility was aimed at removing salt from seawater. It became operational with a capacity of 250,000 liters. In the run-up to the startup of the project, 2,500 persons/day of jobs were created. This refinery also moved to process sour water. At this section, the acid gases solved in water, as well as the sour water circulating in the treatment facilities are recovered.

Lavan; Lower Air Pollution

The Lavan oil refinery started its hydrotreating and light naphtha isomerization project in 2007 and finished it in 2018. This project was in line with Iran’s macro-policy of protecting the environment, producing clean fuel and optimizing petroleum products.

After the launch and commissioning of this unit, the gasoline produced at this refinery has been upgraded to the Euro-4 grade. All necessary work and arrangements for operating this facility were based on domestic capabilities and talents in order to raise the gasoline production rate and meet domestic needs, break dependence on foreign companies and create sustainable jobs.

Isfahan; 80% Equipment Manufacturing

The Isfahan oil refinery has supplied its needs domestically in a bid to move towards self-sufficiency and support domestically-manufactured products. Now, domestic manufacturers account for about 80% of the refinery’s equipment supply.

Furthermore, designing, manufacturing and installing key parts, as well as performing overhaul have been handled with reliance on the knowhow of domestic companies.

Improving the quality of products at the Isfahan refinery is the most significant objective of optimization projects at this refinery. The Isfahan refinery’s 11 ml/d output has been upgraded to Euro-5 grade. Research work for producing catalysts for the isomerization unit of the refinery has been funded domestically, leading to catalyst production. Earlier, it was done under US and French license.

Separating oil from water and supplying power to the refinery so as to save on water consumption are other projects under way at the Isfahan refinery. All environmental and refinery optimization projects at the Isfahan refinery are handled by Iranian engineers and domestic manufacturing companies.

The refinery has also launched a pumping station to supply water to 18,000 persons and save 150 cubic meters per hour of water. Other objectives sought in this project include supply of water to industrial facilities, adopting urban sewerage usage policy for industrial consumption and tapping much less provincial water resources.

1933 Agreement Revision

In the wake of the political and economic developments which transpired the world throughout World War II, reconsidering terms and conditions of oil contracts changed. Iran’s National Assembly adopted a law in 1947 to that effect and the Iranian government decided to demand that the Anglo-Iranian Oil Company (AIOC) reconsider the terms of the 1933 contract in order to serve Iran’s national interests. Following the rescission of the D’Arcy concession signed between Iran and Britain, the 1933 contract was signed, but it was flawed as it violated the 50-50 profit division principle. At the same time, oil contracts in some oil-rich nations like Venezuela, Kuwait and Saudi Arabia were based on the 50-50 principle.

The Iranian assembly annulled the Qavam-Sadchikov agreement. Therefore, Prime Minister Qavam tasked the finance minister with finding a new solution to regain Iran’s rights from AIOC.

The main clause in legislation adopted by the parliament was as follows: “The government is required in all cases wherein the rights of the nation of Iran to national wealth, including underground resources and other, are violated, particularly southern oil deposits, to carry out negotiations and take necessary measures in order to restore national rights and inform National Consultative Assembly of results.”

This clause along with action prepared by the Iranian government posed an evident threat to AIOC. The company managers first did not take the threat seriously and imagined they would continue to dominate Iran’s political circumstances. For them, this piece of legislation was merely a legal tool for defeating the Soviet Union’s attempt for concession.

Talks in Tehran

Laurence Paul Elwell-Sutton, in  his book "Persian Oil: A Study in Power Politics", writes  that official bodies in Britain interpreted the events as just a failure for Russia, little knowing that Britain’s interests were more than ever in danger. It was so late, but had the Britons woke up then they would be able to bring some changes into AIOC’s treatment of Iran in order to leave some room for compromise, writes the author.

After instructing the finance minister, Qavam called on AIOC to send a representative to Tehran for negotiations about the legislation. Sir Neville Archibald Gass was named as representative to take part in the talks. That came against the backdrop of sensitive political conditions in Iran. The Shah survived an assassination attempt and the government declared martial law in Tehran. The opposition "Tudeh Party" was suspected of orchestrating the assassination bid and was then outlawed. Newspapers were banned and Ayatollah Abol Qasem Kashani was sent to exile in Lebanon.

The Qavam government was dissolved just as talks had started in December 1947. The talks were held in abeyance until a new government took shape. The new prime minister was elected at a time political tensions were running high between various factions in the parliament. Fifty-four MPs had voted in favor of Ebrahim Hakimi for prime minister.

Government Division

Mohammad Mossadeq was ranked the second with 53 votes. The Hakimi administration acted very hastily. The only action it took was to hire Iranian staff for AIOC.

Political tensions, as well as division within the government due to US-UK rivalry accelerated the collapse of the Hakimi administration.

Hakimi was succeeded by Abdol-Hossein Hajir, a confidant of the Shah. He felt obliged to fully implement the legislation. He proceeded with talks with AIOC and concentrated on national demands.

Under Hajir, two-week talks were held between AIOC and the Iranian government, resulting in a joint statement in October 1948.

The statement said the talks were held in Tehran in a friendly atmosphere, adding that they had discussed issues of mutual interest.   

According to the statement, the representatives of AIOC would travel back to London to submit necessary reports about the exchange of views in Tehran. The preliminary stage is now over and the company would have not more than three months to inform the Iranian government of the affairs so that arrangements would be made for the resumption of talks in Tehran, it said.

This joint statement failed to help the Hajir administration survive. During his term in office, he was only thinking of increasing Iran’s revenue. Hajir was in favor of revising the Constitution to restrict freedoms and increase the Shah’s authority.

Hajir stepped down in November 1948. Mohammad Saed Maraghei succeeded him.

Three months after the first round of talks, Gass was back in Tehran. He opposed any revision of the 1933 D’Arcy agreement, but sat at the negotiating table with the new government in Iran.

The Iranian government found it ineffective to continue talks with the AIOC representative. In order to calm the tense political atmosphere and reach conclusion as soon as possible, Maraghei demanded that AIOC’s chairman attend the talks.

Gass-Golshaian Agreement

The talks resumed after AIOC’s chairman joined the negotiations. An additional agreement to the 1933 Agreement, known as the Gass-Golshaian Agreement was made. The 11-article agreement was an initiative of then finance minister Abbas Qoli Golshaian. The agreement was submitted urgently to the National Assembly for enactment.

The issue was debated in the parliament while the Assembly had only ten days before its term expired. The law was presented so late so that deliberations would not last long. However, the case was referred to the next assembly.

The Gass-Golshaian Agreement was a small but essential step in favor of Iran’s national rights.

An increase in the taxes paid to the Iranian government for each tonne of oil, an increase in the minimum annual payment of margins, the Iranian government’s exemption from paying added value tax to the British government and some criteria for pricing were among major points in the Agreement.

The Gass-Golshaian Agreement had; however, its numerous disadvantages. Among them was endorsement of the 1933 D’Arcy Concession.

Article 1 of the Gass-Golshaian Agreement was only an addition agreement to the 1933 Agreement. Article 10 also noted that the terms stipulated in the 1933 Agreement would continue to remain in full force and effect.

 

Petroleum Industry Soccer Teams Review

The long drawn-out premier league matches between Iranian football clubs have come to an end after year-long tough competitions.

The representatives of Iran’s petroleum industry managed to gain scores in a bid to have the chance to run again in such competitions in the upcoming season.

The teams affiliated with the petroleum sector, from Naft Tehran to Pars Jonoubi Jam, have all been engaged in the matches. Pars Jonoubi Jam was established just four years ago, but it has managed to make remarkable progress.

In the 2018-2019 season, the three teams of Naft Abadan, Pars Jonoubi Jam and Naft Masjed Soleiman were competing in the soccer matches. That marked a record for the petroleum sector in a football season as they were represented at best with two teams in the pro league.

In the past season, Naft Abadan fared better than the other two. Of course, the results of the three teams were not brilliant and significant; however, given their economic conditions they showed a better performance than other teams.

Naft Abadan

Naft Abadan started the 18th league after significant changes in its coaching team and players. Unlike previous seasons, Naft Abadan hired a veteran Portuguese head coach who had a positive record in leading European teams. Their start was on good and their performance was not strong in the first half-season. They often drew in their matches. That is why they were referred to as tie team.

However, in the second season, the team underwent major changes. Top players like Jasem Karrar and Akbar Imani bowed out. The new head coach moved to hire new players among local youth.

Naft Abadan gradually made progress towards better conditions. In the final weeks, they recorded four wins to rise to the middle of the table. They ended the season with a good score.

Naft Abadan finally ranked the 9th with score 37. It was the best result among fellow teams present in the pro league.

The Portuguese head coach quit the team by the end of the season. Naft Abadan is now looking for a new head coach.

Pars Jonoubi Jam

Pars Jonoubi Jam, now four-year-old, was experiencing its second presence in the pro league. It went on a significant decline in the season, failing to meet expectations.

Pars Jonoubi Jam relied on its previous season’s head coach Mehdi Tartar. The good results of the previous season, as well as financial problems pushed qualified players of this team to join other teams at the start of the season. Therefore, the head coach had a hard start.

Despite all challenges, the Pars Jonoubi Jam started a good season and it remained among top teams up to the end of the first half-season.

But as the second half-season started and financial problems emerged, the team suffered a serious decline. It had a falling trend in terms of ranking. On the final day, it suffered a defeat in the face of the champion of the season’s league by getting the score 30 and finished 12th in the table.

Pars Jonoubi Jam dropped 6 ranks in the table season-on-season.

Naft Masjed Soleiman

Naft Masjed Soleiman returned to Iran's premium league after a four-year break in order to experience anew a high position in Iran’s football competitions. In the last season, Naft Masjed Soleiman did its best for championship. It changed three coaches. Their seasons started out with Abddollah Veisi. But he was sacked after five weeks due to his failure to gain proper results. He was succeeded by Ali-Reza Marzban who had a good start and brought the team up. However, in the second half-season, financial problems made this team meet the same fate as Pars Jonoubi. The team dropped in rankings in the table. Marzban was fired and replaced by Firouz Karimi. Even Karimi could do nothing for Naft Masjed Soleiman. He could only help the team  survive in the pro league in the 11th hour by two ties. Naft Masjed Soleiman managed to remain in the pro league after getting score 22 to experience its third presence at the top level of Iran’s football.

What Do Club Managers Say?

Isazadeh: We Fared Well but Must Do Better

CEO of Naft Abadan club Ali Isazadeh gave a positive assessment of his team, saying given the present economic conditions in the country they did a good job.

He came out in support of his team’s performance in the past season, saying: “We started the new season with major changes, from the technical staff to players.”

He added: “The Portuguese head coach managed to arrange the affairs in an effective way and get accustomed to the dominant mood in Abadan. He was not only a coach, but also a good psychologist. When we assess his performance we would say that he did well.”

Isazadeh touched on the plans for the next season, saying: “We have not yet made any specific decision. First and foremost, we have to decide about the Board of Directors whose term is over and we have to see whether they are being reinstated or new members are to be named.”

“After that, we can decide about a new head coach. Iranian and foreign coaches have equal chances of leading Naft Abadan. We are counting on our qualified young players in this season of Iran’s football to get better results in the next season and rank among the top six,” he added.

Rezaeian: We Failed to Meet Expectations

CEO of Pars Jonoubi club Bahram Rezaeian said despite good performance of the players, public expectations were not met.

“In the past season we failed to meet the expectations, but in general I’m happy with the players and the technical staff, because of their tolerance of tough conditions,” he said.

Rezaeian said he had left behind one of his toughest years in football, citing financial shortages, changes in the team as well as referees' mistakes.

“Therefore, we did not get good results,” he added.

He said he was happy with his team’s presence in the pro league, but said: “Expectations from Pars Jonoubi were high because of our good results in the previous season. Mehdi Tartar did a good job. It was very difficult to keep the team despite all financial problems. The players tried their best.”

For the next season, he said: “The job will be much more difficult. We will be losing many players and most probably the head coach. Therefore, we will be facing widespread changes; however, we will try to reshuffle the team in order to get better results and represent Iran’s petroleum industry in the football pro league.”

Nasirian-Doust: Survival as Sweet as Championship

Mehran Nasirian-Doust, CEO of Naft Masjed Soleiman club, said survival in the league would be as pleasant as championship.

He said: “They left behind a tough season and survival in the final day is as sweet as championship.”

Nasirian-Doust, whose resignation was not accepted by the Board, still complains about the problems of the club. He said: “We had a very tough season. Financial problems harmed the team, driving us to decline, but finally thanks to the foresight of the technical staff and efforts made by the players and support on the part of Masjed Soleiman Oil and Gas Company we survived in the pro league.”

He added that marginal issues had harmed the team more than technical issues.

Regarding the next season, he said: “All Board members and I have been reinstated and we will continue. We are supposed to hire a good head coach and provide financing to have a strong team in order to achieve good results because Masjed Soleiman’s people deserve much more.”

Bushehr, Intact Shores

Millennia-old Bushehr lies off Persian Gulf waters. Bushehr is a port area with beautiful shores. Towering palm trees is the outstanding features of this highly visited area. The remnants of ancient military bases alongside the intact and unique nature of Bushehr attract visitors.

The present issue of "Iran Petroleum" aims at further introduction of some other tourist attractions of Bushehr.

General Tomb

The General Tomb refers to where a British general is laid to rest in Bushehr Port. A British Army commander who was killed in 1856 during Britain’s invasion of Iran was buried there. The surrounding area of this tomb used to be a garden, but the local municipality transformed it into a park. In addition to the general, 35 British soldiers are buried there.

Raees Ali Delvari Museum

Raees Ali Delvari Museum

The domicile of Raees Ali Delvari dates from the final years of the Qajar rule. His survivors turned it into a museum.

Delvari, a constitutionalist, led an uprising in southern Iran in Tangestan against British troops during World War I and later on against the Portuguese. Delvari’s belongings and military hardware are on display in this museum.

Siraf Water Pools

Siraf Port is among old ports in Bushehr Province. Rainfall pools have been created in the foothills of northern Siraf. They used to gather rainwater. For areas located in lower altitudes, numerous wells had been drilled. The wells were initially for gathering water; however, a killer quake in 367 AH fully buried the port. Dead bodies were buried in the wells.

 

Wildlife

Bushehr Province is home to more than 400 species with birds accounting for 310. There are 40 reptile species, 33 mammal species, 17 fresh water species and 3 amphibian species. Currently several protected zones including a national park are used to safeguard Bushehr’s animal species.

Bushehr Coasts

An attractive feature of Bushehr is its intact coasts. Provincial officials say there is about 1,000 kilometers of coasts. The best season to visit Bushehr is spring.