Zangeneh: Iran Has Own Tools to Foil Sanctions
Iran’s Minister of Petroleum Bijan Zangeneh told the opening ceremony of the 5th annual "Iran Petroleum and Energy Club" (IPEC) Congress that the country would use its own initiatives to overpower US sanctions.
He said: “Although sanctions deal the biggest blows at the petroleum industry and downgrade our global standing, we will resist and use our own initiatives under such tough conditions.”
Zangeneh said Iran’s oil sector was being dealt “deadly blows” from time to time.
“So far we have survived these blows and resolved the problem,” he added.
The minister said: “We have learnt to live and work under tough conditions and that is why we have survived. We have learnt to resist under tough conditions and not let a bunch [of nations] encroach upon the rights of the Iranian nation and exert pressure upon us.”
Zangeneh highlighted high revenue from oil sales, saying: “The price of the smallest oil cargo is $50 million and the Petroleum Ministry could not trust just any buyer. Therefore, we have to be careful with selling oil cargoes.”
He said that conditions were conducive to exporting refined petroleum products like gasoil, gasoline, fuel oil and even gas condensate.
Private Sector in Oil Contracts
Zangeneh, an advocate of the private sector, said private contractors would be instrumental in oil projects.
He said that EPC contractors were being granted dominant role in the petroleum industry. He added that the petroleum industry would not be interested in small-sized projects.
Zangeneh said oil preservation operations were mainly a job assigned to several contractors to work together.
“But now, a single contractor handles the entire job from beginning to end, and payments depend on production rate,” he said.
Zangeneh also said that the systems needed in the petroleum industry like skid-mounted production and desalination units or pressure compressors should be built in Iran.
Touching on direct investment in the petroleum industry, more precisely in the petrochemical, refining, gas liquefaction as well as the downstream oil, gas and petrochemical chain, he said: “There is sufficient group and valuable feedstock in which we can invest with a view to completing the value chain and avoiding raw materials sales as much as possible.”
Zangeneh also referred to Exploration and Production (E&P) companies, saying: “The Petroleum Ministry has named 15 to 16 companies as qualified ones for exploration and production work. These companies can play a decisive role in the prospective business of the petroleum industry. Even under the present conditions of sanctions, these companies can have good activity.”
Geopolitical Changes
Zangeneh went on to underscore changes in the oil geopolitics, saying: “Over the past ten years, nobody forecast the US to become the largest producer of oil in the world. The US was the largest importer of oil, but now it is the largest oil producer. Moreover, it has started exporting oil, gas and condensate.”
The minister said there was significant potential in the Persian Gulf states and traditional producers for development and dynamism. He added that oil could still be the driver of Iran’s economy.
Zangeneh also referred to the petroleum industry outlook, adopted in 2004, as well as the country’s 20-year Vision. He said: “The macro objectives of that vision were realistic and accessible. All aspects of oil had been envisaged in it. Now we can update it in order to make the objectives materialize.”
Large-Scale Financing
Zangeneh touched on the big dimensions of the petroleum industry, saying: “The presence of the private sector depends on the three factors of ‘capability and suitable management structure’, ‘technology and interaction potential’, and ‘sufficient capital and capability for providing financing through monetary and capital markets’.”
He said large-scale financing was a major requirement for the private sector to get involved in upstream oil projects, as well as in oil trading.
“So far, everyone has been after the National Development Fund of Iran (NDFI). It’s no longer possible. We have to find options for financing,” he said.
Zangeneh said he was aware of the challenges contractors are faced with. He added: “However, we cannot merely rely on the government for financing. The Petroleum Ministry would help contractors only if they also have their own equity.”
Iran, Gasoline Exporter
The minister touched on quantitative and qualitative achievements of the refining industry, saying: “For the first time this year, we have become an exporter of gasoline, thanks to increased gasoline production.”
He added: “Euro-4 gasoline and sulfur-free gasoil is being distributed in mega cities. Furthermore, the whole excess refined products are exported.”
Zangeneh said completing the Siraf condensate refineries with a capacity of treating 360,000 b/d of condensate was a priority.
He said: “This project is a chain of refineries and petrorefineries. Under the Siraf project, we must set up petrochemical units because the main product of the Siraf refineries is naphtha.”
Total, CNPCI Friendly Exit
Zangeneh referred to Phase 11 of development of the giant offshore South Pars gas field, saying: “We wanted to implement the project with the French company Total because of the need for using offshore pressure compression technology, but unfortunately, due to the re-imposition of sanctions, both Total and China’s CNPCI quit. All this was friendly. We had no dispute with each other. Due to the sanctions, they could not and they were not willing to stay with us. They said they could not work and they quit.”
The minister said: “The offshore sector of the 27 phases of South Pars would come on stream by March 2020 and the refinery of SP14 would be completed by 2021.”
Supporting Startups
Zangeneh said IPEC members, who initially came together to share their experience, were good consultants for accelerators, startups and knowledge-based companies.
“We need to put this issue on the agenda, and benefit from the capabilities of IPEC and its members,” he said.
Zangeneh has tasked the Office of Deputy Minister of Petroleum for Engineering Affairs with pursuing the issue of startups for oil activities.
The minister has even visited accelerators and startups in the past one month and has allotted land to such companies.
Addressing the IPEC Congress, he said the Petroleum Ministry would continue to support startups.
Other topics highlighted by Zangeneh in his opening speech were as follows: the 2nd and 3rd jumps in the petrochemical industry and an increase in the petrochemical production capacity to 150 million tonnes a year, negotiations with domestic and foreign companies for Iran Petroleum Contract (IPC)-based projects, signing agreements with Iranian contractors for enhancing oil and gas production, implementing associated gas gathering projects, finalizing the case of jointly owned oil and gas fields, signing agreement for the development of the Farzad-A field in coming months, development of West Karoun fields and expansion of national gas distribution network.