Future of Oil, Future of World

Oil ministers from OPEC and non-OPEC partners during their last meeting in Vienna agreed to cut an extra 503,000 b/d from their total production in a bid to help stabilize the oil market. The OPEC and non-OPEC producers would now remove a total of 1.703 mb/d of oil from their output.

Agreement between OPEC and non-OPEC allies would be a significant success for oil producers, indicating their coordination in safeguarding their national interests. However, it should be kept in mind that crude oil is not a mere commodity; rather it is a contributor to short-term and long-term interests.

Policymakers often see oil and energy like other issues without taking into consideration future effects. They only look for short-term interests. That would harm producers, consumers and oil companies in the long-term by disrupting the energy supply.

OPEC producers and their non-OPEC allies seem to have shifted to future issues in their policymaking and planning.

Over recent years, OPEC’s share of oil market has been constantly falling. Continuation of this trend could pose challenges to OPEC producers in the future. These obstacles would not be crossed easily if they are not overcome today.

One major challenge is OPEC and non-OPEC focus on oil prices. They no longer give priority to market share. Plans under way by the US and mainly shale oil production lay bare such challenges.

The US oil sanctions against OPEC members Iran and Venezuela, without any legal basis, may be explained by the US’s policy of market control in order to make shale oil production economical.

The US has brought its shale oil output to about 5mb/d in recent years while OPEC has been cutting its production ceiling and some OPEC members have been slapped with sanctions. Therefore, OPEC has lost a big portion of its market.

Using oil as a weapon against the economy of independent nations and depriving their people of oil benefits run contrary to human ethics and international law; however, in the long term everyone would be harmed. The result of such policies would be lower investment in production, which would in turn harm the balance between production and consumption and hinder the energy supply stability and security at the global level. This aspect has been neglected by some politicians while some governments mete out a biased treatment of this issue, sacrificing their short-term interests for long-term interests.

 

OPEC 177th Meeting; Effective and Non-Controversial

November 2019 Issue No.89Negar SadeqiThe 177th meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC) and the 7th OPEC and non-OPEC Ministerial Meeting were held in Vienna on December 5 and 6, respectively. OPEC and non-OPEC partners, known as OPEC+, agreed to remove 503,000 b/d from their output and no longer take gas condensate into crude oil export calculations. OPEC+ member states also agreed to consider secondary sources as reference prices. Iran, Venezuela and Libya are still exempt from any reduction in their production. Iran’s Minister of Petroleum Bijan Zangeneh told reporters in Vienna that his country would supply as much oil as it can, should US sanctions be lifted.Compared with the two previous conferences, the 177th meeting of the OPEC experienced more calm. There was no tweet from US President Donald Trump before or after the meeting. Meantime, the OPEC Secretariat had banned any interview with OPEC ministers in the conference hall or during ministerial meetings to avoid any controversy. However, the outcome of the OPEC+ meeting was not so neutrals 2019 began, OPEC and non-OPEC allies agreed to cut their output by 1.2 mb/d (800,000 b/d for OPEC and 400,000 b/d for non-OPEC). Now they have agreed to further remove an extra 503,000 b/d from their production. Therefore, the OPEC+ production will be cut by 1,703 mb/d by January 2020. OPEC producers will account for 1.372 mb/d output cut and non-OPEC states will account for the rest. Iran, Venezuela and Libya are not required to cut their production. The US-China trade war, shale production, unrest in Iraq, increased oil production by non-OPEC states like the US, Norway, Brazil and Guinea, coupled with the growing global demand for oil and weakened economic growth, has not allowed any bright perspective of the future of oil. That is why OPEC member states agreed to hold an extraordinary meeting on March 6, 2020 in Vienna, at the OPEC headquarter, to see if they should extend the production cut for another three quarters. In case the current production cut, envisaged for the first quarter of 2020, is approved during the upcoming extraordinary meeting, the OPEC+ production cut would continue into 2020. The OPEC+ agreement to rely on secondary sources as the reference price was another point in the Vienna meeting. But why does it matter? Since 2017, when the OPEC+ entity took shape, the reference for pricing and output cut have been the point of disagreement between OPEC and non-OPEC producers. The OPEC reference was secondary sources, while non-OPEC relied on their oil or energy ministries for oilo Unreasonable Output CutUS oil sanctions against Iran has drastically cut Iran’s oil exports. Iran’s minister of petroleum touched on this issue, saying: “Iran is under unlawful US pressure due to certain conditions and involuntary cuts. Of course, Iran is not alone. There are also other nations that are producing below their OPEC-set quota. That is why a number of countries are taking advantage of this opportunity for overproduction.” Zangeneh reiterated his previous positions, saying: “If sanctions are lifted, we will not accept any restrictions for Iran’s production and we will produce at our maximum capacity. In the future, the countries that have had overproduction should cut further their output. That is our nation’s right and I lay emphasis on it here.” “On behalf of the Iranian nation, I announce that I will not accept cutting even a single unreasonable barrel [of production cut]. Those who take advantage of Iran’s partial absence in the oil market and have oversupplied the market should further cut their output in the future in return for the current overproduction. They should not expect Iran to join the quota system as soon as sanctions have been lifted,” he said. Zangeneh said: “It is our sovereign right. We expect this issue to be taken into account in the future and we will definitely act in this way.”pricing. OPEC states believed that a unique source had to be determined for oil price setting as the ministries were not reliable enough for that purpose. After two years of deliberations, OPEC and non-OPEC states agreed that secondary sources set oil prices. That was a success for OPEC. Like OPEC, non-OPEC allies will also examine their statistical data based on crude oil production. Until recently, OPEC collected its data from crude oil production, while non-OPEC calculated crude oil and gas condensate. Non-OPEC leader Russia is producing 800,000 b/d of condensate and it insisted on the removal of condensate from OPEC+ production calculations. Russia had filed its demand prior to the 177th meeting of the OPEC Conference. Were gas condensate included in the Russian oil production cut, it would lose a big part of its oil revenue. This clause is a success for Russia and non-OPEC producers. Zangeneh said it was unfair to demand Russia do what OPEC does not have to comply with. The Declaration of Cooperation agreed earlier between OPEC and non-OPEC stipulates that the basis for oil production needs to be the same for all oil producers.The Algerian minister of energy will start serving as OPEC’s rotating president as of 1 January 2020. The Conference appointed Gabon’s Governor for OPEC, as Chairman of the Board of Governors for the year 2020, and Mr. Hossein Kazempour Ardebili, IR Iran’s Governor for OPEC, as Alternate Chairman for the same period.

Why Does Saudi Arabia Cut a Further 400,000 b/d?Aside from the OPEC+ production cut for the removal of 503,000 b/d from the total output, Saudi Arabia’s Energy Minister Abdul-Aziz bin Salman said his country would on its own cut another 400,000 b/d from its production, which would bring OPEC+ production cut to 2.1 mb/d. Saudi Arabia once favored a bigger market share, but now due to budget deficit and Saudi Aramco’s listing on the stock market, it is shifting towards pricing in a bid to prevent prices from falling any further. This issue is so important for Saudi Arabia that it has called on Iraq and Nigeria to comply with their production cuts. The Saudi government has insisted that in case of non-compliance by Iraq and Nigeria, it would not unilaterally lift its output and will wait for the next OPEC+ meeting next March. Saudi Arabia’s 400,000 b/d cut remains in full force and effect as long as Aramco has not been listed and the country’s budget deficit exists. In case Saudi Arabia reaches its objectives it is likely to start raising its production gradually. In either case, Saudi Arabia favors high prices and even the announcement of an extra 400,000 b/d production cut affected the market. On December 6, oil prices surged past $64 a barrel.

Why Namavaran Discovery Is a BreakthroughIran’s President Hassan Rouhani, during a provincial tour of Yazd in October, said the country’s second largest oil reservoir had been discovered. Iran’s Petroleum Minister Bijan Zangeneh said the reservoir, named Namavaran, held 22 billion barrels of oil in place, 2.2 billion barrels of which would be recoverable. Iran is currently under sanctions and consequently its oil production has faced with restrictions. But Minister Zangeneh said Iran’s known oil and gas reserves should not be ignored in the mid and long-termhy Does Namavaran Discovery Matter?There is each and every reason to believe that this discovery may not be ignored. However, first and foremost it is noteworthy that Iran stands fourth in terms of global oil reserves with about 159 billion barrels of recoverable oil. The country also comes second in gas reserves with about 34 tcm of recoverable gas. Considering combined oil and gas, Iran comes first in global hydrocarbon ranking. A simple review of the technical specifications of the Namavaran reservoir shows stratigraphic traps and the Ilam geological layer is located beneath the Mansouri, Ab Temiour, Sousangerd, Jofair, Sepehr and Darquain oil fields. Namavaran covers 2,400 square kilometers of land, located southwest of the oil-rich city of Ahvaz. It also straddles Karoun River. This reservoir layer is 80-310 meters thick.The first giant oil reservoir ever discovered in Iran is Gachsaran reservoir whose Asmari layer holds 54 billion barrels of oil in place. Ilam layer of Namavaran comes second with 53 billion barrels, followed by Maroun (Asmari layer) with 40.5 billion barrels and Azadegan (Sarvak layer) with 40 billion barrels.News of discovery of Namavaran was announced by Iranian officials at a time when many thought giant explorations were over in Iran. However, the Namavaran discovery through modern methods in Iran revives hopes it would not be the last one.The significant point is that Namavaran is located between the Mansouri, Ab Teimour, Susangerd, Jofair, Sepehr and Darquain fields. Therefore, 22 billion barrels would be added to the previously proven 31 billion barrels of oil in that area. With a recovery rate of 10%, Namavaran would hold 2.2 billion barrels of recoverable oil. Iran’s output capacity depends on using modern technologies for enhanced recovery. Zangeneh has highlighted this issue, saying: “With a 1% increase in the recovery rate, we would be able to extract 530 million barrels of crude oil from this 53-billion-barrel reservoir, which would generate $32 billion at oil price of $60 per barrel. Therefore, we must do our best in R&D in the upstream oil sector in order to enhance the recovery rate.”Is the time of structural trap exploration gone?Big oil discoveries started many years ago in Iran and officials say such fields would no longer be discovered, recommending that focus be on enhanced recovery methods. But a key point with the Namavaran exploration is the use of combined and stratigraphic traps. Saleh Hendi, National Iranian Oil Company (NIOC)’s exploration director, while stressing that the era of exploring structural and anticline traps is over, said the giant fields located under these anticlines must be forgotten. Hendi has said: “Since 2016 with changes in the exploration approaches and attention to exploration objectives we made this big recovery by using state-of-the-art technology.”Where did the initiative start for the Namavaran discovery? The extensive Sepehr seismic testing project in Abadan Plain showed the first sign of existence of a giant reservoir under oil fields in Khuzestan Province. That attracted the attention of NIOC Exploration Directorate’s experts. Then, three exploration wells were drilled and when the well data as well as seismic data were examined, the experts found out that a giant reservoir with big amount of oil was hidden there. In that way the Namavaran reservoir was discovered. Hendi said: “With the new approach that we have just adopted, this layer is likely to expand. I also promise to use combined oil traps comprising stratigraphic changes and old anticlines in the future.” Applying modern technologies in enhanced oil recovery and improved oil recovery has been focused upon by President Rouhani. Announcing the exploration, Rouhani said: “We have to use cutting edge technologies wherever it may be.” Iran’s Petroleum Ministry has also obligated Iranian E&P companies involved in oil projects to take into account enhancing the recovery rate and engage foreign companies or consultants. Also, in case foreign companies are to develop oil and gas fields in Iran, they have to take into account the issue of enhanced recovery and use the latest technologies. As soon as news of this discovery spread, speculation was rife about Iran’s oil ranking. Some have raised the possibility of improvement in Iran’s oil reserve ranking, while some others say it was not yet clear how much Iran could extract from its reserves. In any case, the fact is that due to the US’s tough sanctions Iran is currently faced with many bottlenecks for developing its oil fields. In this regard, Zangeneh has said: “Iran’s proven oil and gas reserves could not be ignored in the mid and long-term.”NIOC Exploration Directorate has managed over the past four decades to discover 36 oil fields and 37 gas fields, 26 of which shared with neighboring countries. Except for the years during which Iran was involved in imposed war, oil and gas exploration has been made every year. Hendi said NIOC claimed the top spot in global exploration from 2001 to 2005.Half of Iran’s oil fields are in the second cycle of their life and any extraction from them would require investment for enhanced recovery. But the issue of US sanctions against Iran is also instrumental. The sanctions have adversely affected attraction of investment in the petroleum industry, thereby harming recovery from oil and gas fields. However, new discoveries over the past four decades have compensated for any decline. Therefore, Iran’s ranking has not declined in oil recovery and continues to claim the top spot in oil and gas reserves together.However, the important thing is to use these reservoirs. It should be kept in mind that sanctions have imposed heavy costs upon Iran’s petroleum industry. This issue was highlighted by President Rouhani during his visit to Kerman Province. Rouhani said following Iran’s 2015 nuclear deal with six world powers and the subsequent lifting of the sanctions, Iran spent $800 million on the workover of wells to record the highest oil sale

The remaining platforms of phases 13, 14 and 22-24 of the giant offshore South Pars gas field are set to become operational by the end of the current calendar year in March 2020. That would bring gas recovery capacity in South Pars, which Iran shares with Qatar, to 680 mcm/d from the current 630 mcm/d.Ali Afarideh Qiasi, director of project planning and control at Pars Oil and Gas Company (POGC), said the platforms and offshore pipelines of all South Pars phases, except for SP11, would have become operational by the end of the current calendar year (20 March 2019). He added that Iranian contractors and manufacturers have achieved good capacity throughout the implementation of South Pars development phases, registering “brands” in some sectors. Afarideh said each conventional phase of South Pars would involve two 1bcf or five 500mcf platforms. He added: “Of a total twelve 500mcf platforms in SP13, SP14 and SP22-24, two platforms have been built by ISOCO in Bandar Abbas Yard and 10 others at SADRA yard in Bushehr.”together, and use the surplus capacity of refineries for the processing of gas supplied by other phases,” he said.SADRA Builds 10 PlatformsAlongside ISOICO, SADRA has been involved in the manufacturing, installation and startup of 10 platforms for SP13, SP14 and SP 22-24. Over recent years SADRA was faced with numerous challenges, but it has shown an acceptable performance over the past two years with regard to the implementation of projects. According to Afarideh, of total 10 platforms built in SADRA yard, 7 have already been launched or are in the process of being launched. He said: “Only three platforms remain at SADRA yard, which would be installed, launched and become operational by the end of the current calendar year.”SP22-24 PlatformsTouching on the platforms of SP 22-24, he said: “The construction and operation of all four platforms of SP22-24 had been assigned to SADRA. Two have reached production stage and two others have been installed and are about to be launched.”SP13 PlatformsAfarideh said two of SP13 platforms had been installed and launched and the remaining two would become operational by the end of the current calendar year in case of favorable climate conditions. Regarding Platform 13A, he said: “Due to an accident several years ago, the wells of this platform are unlikely to become operational this year.” He added: “Since platform 13A is linked with Platform 13C in the production chain, in order to make 13C operational, this platform has to be commissioned, too. Then, the gas production capacity in SP13 would increase around 14 mcm/d when the two aforesaid platforms come online, and the SP13 production capacity would exceed 42 mcm/d.”Output Decline PreventedAfarideh said in addition to the construction and startup of remaining platforms at South Pars, plans would be under way to prevent production fall at this field. He added: “The initial feasibility is under way for planning and building pressure compression platforms.” Afarideh said: “In parallel with that, drilling additional wells to offset the production cut at South Pars would be considered as a stopgap measure.” He said: “Generally speaking, this company is following up on the continuation of the current share of South Pars in total natural gas production as a long-term strategy.” Afarideh said: “Building pressure compression platforms would require new technology and big investment. It has not been common even in Qatar, and its technology is limited to several countries.” Afarideh referred to the weight of pressure compression platforms, weighing each 20,000 tonnes, saying: “To build a platform with such dimensions, we would need special equipment and a suitable yard.” “Of course, in case there is appropriate infrastructure; and international sanctions are lifted, building platforms would not be complicated. However, pressure compressors would need technological knowhow which we lack in the country,” he said. Afarideh said that is why the Petroleum Ministry had integrated building compression platforms in the deal signed with France’s Total before the French giant pulled out due to US sanctions.He also acknowledged that international sanctions had left negative impacts on the implementation of projects in recent years. “One of the most important impacts of sanctions may have been restrictions on the transfer of technical savvy, supply of special equipment and restrictions in banking transactions with other nations. However, the sanctions have contributed to the growth of domestic contractors and manufacturers and realization of self-sufficiency in the supply of necessary items and services,” said Afarideh. 2 Platforms to Start UpSo far, two platforms of SP14 have been installed and launched. The third platform (14B) was installed in June and will become operational in December. It would add more than 14 mcm/d to the South Pars output. Afarideh said Platform 14B is now ready to become operational. He added: “Since the SP14 refinery is not ready, we plan to use the surplus capacity of SP12 refinery for the treating gas of SP14 gas. Therefore, the second pipeline connecting the SP14 refinery to the SP12 refinery has been built and is about to be launched. As soon as this pipeline is completed, Platform 14B would become operational.” He said that Platform 14D was ready to be loaded-out and installed, adding that SP14 would see its output reach 56 mcm/d. “In order to upgrade the operational flexibility and make optimal use of platforms and offshore pipelines in South Pars phases, we are planning to launch a project to connect all South Pars refineries in Assaluyeh and Tonbak areas

ests Start in Sardar-e-JangalAhmad Shirzadi, exploration director at Khazar Exploration and Production Company (KEPCO), has announced the start of two major projects within areas run by this company. He said one project was development of Sardar-e-Jangal oil field and another one was the continuation of exploration operations in the prioritized structures in the He said that necessary arrangements would be made for long-term tests in Sardar-e-Jangal field in the near future.Shirzadi said a working group comprising experts from the divisions of drilling; petroleum engineering and construction had been set up to conduct technical studies and plans for this purpose.“Upon conclusion, the workstream for long-term testing at the Sardar-e-Jangal oil field would be drawn up and submitted to the Directorate of Corporate Planning of National Iranian Oil Company (NIOC) for credit allocation,” he said.Shirzadi said: “After the drilling of two wells in the Sardar-e-Jangal oil field, week-long tests were carried out. But based on deepwater standards, these two wells are required to be tested six to eight months in order to get further information from the reservoir and reduce risks to the final output of the field. To that end, we would need storage vessels as well as vessels for carrying oil onshore.”He said: “Given the necessity of using high-tech equipment for long-term tests and production in the Caspian Sea deepwaters, KEPCO experts are conducting feasibility studies for the supply of necessary equipment. We will enter operation and implementation phase after winning the approval of NIOC Board of Directors.”Shirzadi referred to the background of exploration in the Caspian Sea, dating from 60 years ago, saying: “With the objective of access to hydrocarbon reserves in northern areas that are not far from energy-rich areas in the south and in a bid to break dependence on Turkmenistan’s gas, we have tried to realize oil and gas exploration through drilling various wells.”He added: “To that end, 17 exploration wells have been drilled in Gorgan Plain. In light of acceptable specifications of reservoir rock, as well as light hydrocarbons, none of these wells have been assessed as an economical source of energy.”“Geophysical, geological and petroleum engineering studies in parallel with studies on reservoir risk analysis led to the discovery of 46 geophysical structures which are of significant offshore hydrocarbon potential,” he said. Shirzadi said in 2004, in order to draw a clearer and more precise picture of prioritized structures, 3D seismic testing was conducted in Blocks 6, 7, 8 and 29. He added that the seismic testing allowed for the identification of exploration drilling locations. He touched on the history of planning for building the semi-submersible Amir Kabir platform as well as the supporting platforms (Caspian 1, Caspian 2 and Caspian 3) in 2002 for drilling in the deep sections of the southern half, saying: “Following the conclusion of platform construction in February 2010, drilling started for Well No. 1 of Structure 6.2. This operation ended in May 2012 and Sardar-e-Jangal emerged as the first Caspian Sea structure,” he said. Shirzadi said: “After the conclusion of drilling operations for the first well, geophysical and geological studies located a spot for a second well, 1,400 meters far from the first well.” He added: “The reason for drilling the second well was first to assess the expansion of the discovered reservoir layer in the first well as well as drilling deeper layers for exploring the main reservoir zones in Chelkan Formation because based on the Caspian working group studies, six reservoir zones (specified with geophysical phenomena) could be evaluated. We have explored a reservoir zone in the first well, but we need deeper drilling to reach deeper zones.” Shirzadi said drilling operations for the second well were carried out in 2014. Deepwater Technology NationalizedShirzadi said in light of oil discovery in Sardar-e-Jangal field, drilling of the first and second deepwater wells resulted in a good event, jump and fundamental growth in Iran’s petroleum industry.He added: “The deepwater drilling knowhow that had been monopolized by a few international companies has been largely nationalized. However, it must be noted that deepwater technology and knowhow are growing fast in the world and such savvy and technologies are desperately needed.” Shirzadi said that two main routes had been drawn up for exploration and production activities in the Caspian Sea. He said the first one involved development of Sardar-e-Jangal, which requires appraisal and development wells, as well as supply of production equipment. The second option would be the continuation of exploration activities in the prioritized structures.He said: “By studying the process of development of deepwater fields’ development in the world and in light of development activities in other Caspian Sea littoral states we have to take into consideration certain important issues.”Shirzadi said: “First and foremost, due to the extremely high capital costs, in the drilling and development of deepwater fields, macro plans have to be taken into consideration.”He added: “Second, due to technical and economic risks in the development of deepwater fields, teaming up with international investment companies would be a must.”Shirzadi said the existence of 46 geophysical structures in the southern Caspian Sea, one of which being the Sardar-e-Jangal field, has to be taken seriously “because other Caspian Sea states would not sit idle and will make maximum use of their international potential for maximum recovery.”He said: “Apart from all that, it has to be taken into consideration that upgrading the deepwater technology through effective training and international transactions is an inevitable must and we hope that the huge hydrocarbon deposits in the southern Caspian Sea would be recovered for further economic benefits through coherent and stable planning in light of better international conditions. We hope that one day we would see progress in the northern oil zones on part with the southern oil zonmiddle section of the Caspian Sea

Gholam-Reza Mofidi, CEO of Karoun Oil and Gas Production Company (KOGPC), has announced that more than $1 billion has been invested in the removal of gas pollutants. He said that the company had gathered 95% of its pollutant gas. Mofidi underscored the need for oil companies to use mobile oil treatment (MOT), saying: “The manufacturing of this equipment in the country has progressed gradually and KOGPC has reduced its oil burning to zero.” He said that 80,000 b/d of waste was being released, which amounted to about 20 million barrels for the current calendar year. “Now, thanks to our initiative projects, we have managed to recycle waste,” he said. Mofidi touched on the knock rating of the flare, saying: “Although we have acquired technical knowledge for knock rating in south oil-rich regions, we have implemented this process in some units.” He said that about 29 mcm of gas was not flared in the operating units of Ahvaz, adding that the costs spent in gas flaring prevention would return within three months. Mofidi referred to the manufacturing of 500 items of commodities worth about IRR 54 billion, saying: “This amount of commodity has been manufactured by domestic suppliers and manufacturers and the domestically-manufactured commodities include mainly processing machinery, pumps and compressors, transducers and flares.” He said KOGPC had purchased about IRR 500 billion worth of domestically-sourced commodities since 2018, while more than IRR 500 billion had been orderedPetchem Jump Projects Under Way Iran’s National Petrochemical Company (NPC) regularly monitors and evaluates priority petrochemical projects. To that effect, the projects envisaged for the second and third jump in the petrochemical industry are sponsored by NPC. The company’s officials have been following up on the petrochemical projects over the past one year, regularly visited prioritized projects and been kept abreast of the projects in a bid to identity and overcome obstacles and challenges in their way. Under the second jump, a group of projects must come online by 2021, while under the third jump, the envisaged projects would become operational by 2025. The level of progress of various projects, as well as challenges faced by them was reviewed and assessed. Operation of the second and third jump projects would bring about a major development in the petrochemical industry

 

16newsnewsmonthly17monthly1716Gasoline Consumption to Fall 10ml/d“We Know How to Sell Our Oil without Sanctions”: ZangenehIranian Minister of Petroleum Bijan Zangeneh said Iran enjoyed the required means to sell its oil in the market if the sanctions were to be eased on the country’s oil exports. Speaking to reporters on the sidelines of the first innovative event of the Iranian Ministry of Petroleum, Zangeneh said, “I have no doubt that one of the reasons for the US to impose sanctions on Iran and Venezuela is to make room for its shale oil output at prices that justify investment in the sector.” He said the US had managed to increase its output by 1.5 mbd in 2018 and 2019 at oil prices above 60 dollars Isfahan Gasoline Production Plant OverhauledThe overhaul of the gasoline production plant at the Isfahan oil refinery has been finished sooner than expected. The operation had started last February.Ali-Reza Qazvinizadeh, director of preventive maintenance at the Isfahan oil refinery, said: “Since this plant was being overhauled for the first time it was likely to face challenges due to the conditions of installation, height and compact equipment. Therefore, any time estimation was difficult for the overhaul,” he said.Qazvinizadeh said operation was under way under subzero temperature, adding that due to the installation of some equipment at heights, more time was likely to be wasted. “The NHT unit whose overhaul was estimated at 22 days was over 9 days sooner, the CCR unit was ready 4.5 days earlier than the 24 days predicted, while the isomerization unit was ready 1.5 days sooner than the initially estimated 22 days,” he added.According to Qazvinizadeh, the most important operations related to overhaul included replacing gamma ray source, installing valve to avoid possible accidents on air coolers, modification of E-2 surfaces and replacing tube bundle.He added that the cooling tower and a flare of this company had been also overhauled. PRTC to Produce PP CatalystAli Pajoohan, CEO of Petrochemical Research and Technology Company (PRTC), said the polypropylene catalyst plant had been installed at the Arak branch of PRTC. He said: “Operations have started for launching this plant and this catalyst is forecast to be produced by the end of the current [calendar] year.”Noting that negotiations had been held with various bodies for the PP catalyst production, he said: “This plant has capacity to produce catalyst for an industrial-scale petrochemical plant.”Pajoohan referred to Kermanshah’s GTPP project as one of the most important plans under way by PRTC, saying: “This project incorporates a methanol-via-gas, a propylene-via-methanol and a polypropylene unit.”He said that the methanol catalyst plant for the Sabalan petrochemical plant was being implemented. He referred to the LL catalyst unit as the largest catalyst manufacturing unit in terms of capacity and investment. This unit is owned by the Bakhtiar petrochemical plant. Pajoohan said PRTC was receiving 85-90% of its required equipment from Iranian companiesGasoline Consumption to Fall 10ml/dAli-Reza Sadeq-Abadi, CEO of National Iranian Oil Refining and Distribution Company (NIORDC), said gasoline consumption would drop by 10 million liters a day after public transport fleet becomes gas-fired. “By converting nearly 1.5 million public transport vehicles to gas-burning, we forecast our gasoline consumption to drop by 10 ml/d,” he said. He added that the gasoline rationing scheme in the country has cut the gasoline consumption by 24 ml/d, expressing hope for another 10 ml/d reduction. Sadeq-Abadi said with gasoline valued at 50 cents per liter, gas engine vehicles would save the country about $1.8 billion. He said up to IRR 65,000 billion would be authorized to be invested in making vehicles gas-fired.“In light of using natural gas instead of gasoline and thereby exporting gasoline, the capital return would be quick with a high yield,” he added. Amin Valikzadeh, CEO of National Iranian Oil Products Distribution Company (NIOPDC), said the prominent measure for developing the CNG industry was taken in 2005. “Today, after years of close cooperation between the Ministry of Petroleum and the industry sector, we face no problem and shortages with regard to CNG supply to cars,” he said.Mideast Largest Gas Storage SiteNational Iranian Gas Company (NIGC) has announced that the Shourieh gas storage site would be operated under a build-operate-transfer (BOT) agreement. The company said in a statement that the first appraisal well for this storage site had been drilled in the Qezel Tappeh storage facility of Golestan. It added that seven natural gas storage projects were under study. In parallel with the development of the giant offshore South Pars gas field and concomitant increase in the natural gas production capacity of Iran, new natural gas storage facilities were put on the agenda.Starting up these storage facilities would increase the stability and resilience of Iran’s gas transmission network, particularly when gas consumption reaches its peak. NIGC is currently studying seven natural gas storage projects in various provinces. The second phase of the Sarajeh gas storage facility near Qom is put out to tender for a BOT agreement.Feasibility studies for natural gas storage in the Baba Qir and Bankoul storage sites would begin after drilling one appraisal well. A pre-feasibility study project is also under way for the Mokhtar gas storage facility.The natural gas storage feasibility project in Nasrabad (Kashan) is also in its final stagesasoline Consumption to Fall 10ml/d“We Know How to Sell Our Oil without Sanctions”: ZangenehIranian Minister of Petroleum Bijan Zangeneh said Iran enjoyed the required means to sell its oil in the market if the sanctions were to be eased on the country’s oil exports. Speaking to reporters on the sidelines of the first innovative event of the Iranian Ministry of Petroleum, Zangeneh said, “I have no doubt that one of the reasons for the US to impose sanctions on Iran and Venezuela is to make room for its shale oil output at prices that justify investment in the sector.” He said the US had managed to increase its output by 1.5 mbd in 2018 and 2019 at oil prices above 60 dollars Isfahan Gasoline Production Plant OverhauledThe overhaul of the gasoline production plant at the Isfahan oil refinery has been finished sooner than expected. The operation had started last February.Ali-Reza Qazvinizadeh, director of preventive maintenance at the Isfahan oil refinery, said: “Since this plant was being overhauled for the first time it was likely to face challenges due to the conditions of installation, height and compact equipment. Therefore, any time estimation was difficult for the overhaul,” he said.Qazvinizadeh said operation was under way under subzero temperature, adding that due to the installation of some equipment at heights, more time was likely to be wasted. “The NHT unit whose overhaul was estimated at 22 days was over 9 days sooner, the CCR unit was ready 4.5 days earlier than the 24 days predicted, while the isomerization unit was ready 1.5 days sooner than the initially estimated 22 days,” he added.According to Qazvinizadeh, the most important operations related to overhaul included replacing gamma ray source, installing valve to avoid possible accidents on air coolers, modification of E-2 surfaces and replacing tube bundle.He added that the cooling tower and a flare of this company had been also overhauled. PRTC to Produce PP CatalystAli Pajoohan, CEO of Petrochemical Research and Technology Company (PRTC), said the polypropylene catalyst plant had been installed at the Arak branch of PRTC. He said: “Operations have started for launching this plant and this catalyst is forecast to be produced by the end of the current [calendar] year.”Noting that negotiations had been held with various bodies for the PP catalyst production, he said: “This plant has capacity to produce catalyst for an industrial-scale petrochemical plant.”Pajoohan referred to Kermanshah’s GTPP project as one of the most important plans under way by PRTC, saying: “This project incorporates a methanol-via-gas, a propylene-via-methanol and a polypropylene unit.”He said that the methanol catalyst plant for the Sabalan petrochemical plant was being implemented. He referred to the LL catalyst unit as the largest catalyst manufacturing unit in terms of capacity and investment. This unit is owned by the Bakhtiar petrochemical plant. Pajoohan said PRTC was receiving 85-90% of its required equipment from Iranian companies.per barrels and could easily manipulate the market by pushing Iran and Venezuela out of the market. “Therefore, this is not merely a political matter, but an economic one, too, which was presented as a political issue and they enforced it by bullying.” Elsewhere, he said that the central bank of Iran (CBI) was to bankroll Siraf refining project by investing Rls. 200,000 billion in the plan. He added the project was under way and the central bank had agreed to fund it. He further described compressed natural gas (CNG) as the national fuel for Iran, adding the fuel needed to be supported as such, even though energy intensity of the country would not be improved by replacing petrol with CNG; however, this could be a major economic success for the country. The official further said that the issues concerning pollution of the fuels producers domestically needed to be addressed in the automotive industr

Musts and Mustn'ts in Petchem 3rd Jump

Iran’s petrochemical industry was born five decades ago. This industry has always moved in the direction of macro-objectives of national economic development plans. Over this period of time, Iran’s petrochemical sector has been through five phases: emergence, primary expansion, stagnation due to imposed war, revival and reconstruction, and finally the first jump through the third, fourth and fifth economic development plans. Iran’s petrochemical industry currently stands at a globally high level. The petrochemical industry has progressed in non-oil commodity exports, has seen its share grow in national economy, has registered significant success in research and technology and has upgraded Iran’s status in the region and the world.

Iran’s petrochemical production has a rated capacity of 66 million tonnes now. Thanks to the measures taken by Iran, the country’s status in this strategic industry has been promoted at the regional and global levels.

Petrochemical exports constituted about 34.7% of non-oil and 39% of industrial exports in terms of value in 2016, indicating the high value-added of this industry and its decisive role in the national economy.

After the implementation of Article 44 of the Constitution and defining a new mission for Iran’s National Petrochemical Company (NPC), the macro objectives are as follows:

Sustainable and balanced development of the petrochemical industry in favor of Vision 2025 for the petrochemical industry with a view to value chain completion;
Development of investment and creating new capacities for petrochemical products as well as increasing the value-added of hydrocarbon reserves by taking into consideration value chain completion;
Raising the petrochemical industry share in the national economy and effective presence in global markets; and
Development of technology and activity of domestic knowledge-based companies with a view to nationalizing modern technologies.

Relying on the growth and development of diverse petrochemical products market in recent years across the globe, Iranian policymakers have been striving to make optimal use of the existing economic resources in partnership with domestic and foreign investors and make optimal use of the strategic advantages of Iran’s geographical position based on the latest scientific and technological achievements.

Once the 6th development plan’s objectives are fulfilled, the second jump in the petrochemical industry development with a targeted output of 100 million tonnes would materialize. That would lay the groundwork for the subsequent phases of industrial growth and the third jump.

In the previous development plans, maximum use of gas resources and creating a more value-added from them, the possibility of applying new technologies for developing capacities and diversifying products were envisaged. Future development plans would be drawn up based on the country’s relative advantages, particularly access to rich hydrocarbon reserves and  putting emphasis on "no raw materials sales" and completion of production chains, supplying domestic market needs, access to new international consumer markets, benefiting from domestic manufacturing capabilities and paving the ground for downstream industrial development in harmony with petrochemical growth. In this regard, using available feedstock potential (natural gas, ethane, propane, butane, naphtha, etc.) and completing the chain of intermediate products would provide private investors with a new chance to help materialize the third jump in the development of the petrochemical industry.

Development of the petrochemical industry highly depends on feedstock, technology, capital and human resources. Homegrown technology would serve as effective leverage in the development of this industry. Therefore, arranging research plans with a realistic view in line with industrial development plans could facilitate the implementation of projects by reliance on domestic resources.

According to NPC plans, a timely implementation of these plans would bring the petrochemical production capacity to 100 million tonnes in 2021, and to over 130 million tonnes by 2025.

However, in order to reach these objectives, besides feedstock supply, NPC’s role has to be clearly defined with regard to the creation and development of infrastructure needed for assuring investors, and facilitating operation of petrochemical projects particularly in the new hubs. In parallel with the completion of projects, the feedstock needed by these areas as well as ports, jetties and connection routes would be completed and provided to investors. Meanwhile, any deal and lack of coordination in the use of hydrocarbon reserves and investment by the private sector would be avoided.

Another important point with regard to the objectives of the “third jump in the petrochemical industry development” is to clearly define the role of Ministry of Industry, Mine and Trade in the formulation of a roadmap for the development of downstream petrochemical industries.

Over recent years, these industries have been completing the value chain and increased value-added. However, it is noteworthy that as investors in the petrochemical industry need to clearly define development plans based on the country’s economic policies and propose laws in support of projects, downstream industrialists would need transparent laws to reduce spending, create chances for renovation, development and establishment of new industries. That would create jobs, remove impoverishment in various areas, develop the domestic market of petrochemicals (particularly polymer products) and break into international market for downstream industry products.

2025 Petchem Diversity Planned

Iran’s petrochemical production capacity currently stands at 66 million tonnes a year, earning the country more than $17 billion in revenue. By 2025, the output capacity is planned to reach 133 million tonnes per annum.

Ali-Mohammad Bosaqzadeh, director of National Petrochemical Company (NPC) projects, told "Iran Petroleum": “We plan to concentrate on the value-added chain of products up to 2025 so that the plants produce more value-added products.”

Noting that Iran’s petrochemical production capacity grew fast through 2013-2017, resulting in higher revenue, he said: “That is why we decided to set the year 2013 as the benchmark to compare production growth and hard currency revenue for petrochemicals. To that effect, we have considered three jumps for the petrochemical industry. By the end of each four-year period, Iran’s petrochemical production capacity and hard currency revenue would increase.”

He added that in the first jump (2013-2017), Iran’s petrochemical plants saw a 13% growth in output to reach 64 million tonnes of products a year, raising revenue 9% to $15.7 billion.

In the second jump (2017-2021), the country’s petrochemical production capacity would grow 56% from 64 million tonnes to 100 million tonnes a year with revenue set to jump 45% to $25 billion. In the run-up to the second jump, 27 projects would come online.

The second jump would materialize in two years. In other words, by early 2022, $17 billion worth of petrochemical projects would become operational to bring the number of operating projects to 83. These plants would be fed with 62 million tonnes a year of feedstock, which is equivalent to 1.4 mb/d of crude oil. Therefore, Iran’s petrochemical industry would achieve an annual production capacity of 100 million tonnes with a $70 billion investment, which would bring revenue to $25 billion per annum.

Bosaqzadeh also touched on the planned third jump, during which 25 petrochemical projects would come online.

He said that in the third jump (2021-2025), the production capacity of petrochemical projects would see a 33% growth to reach 133 million tonnes a year with revenue experiencing 50% jump to $37 billion.

By early 2026, Iran’s petrochemical projects are expected to reach 109 in number with a feedstock receipt of 74 million tonnes. That would require $23 billion in investment and production capacity of 130 million tonnes a year. Investment in Iran’s petrochemical industry would reach $93 billion by early 2026.

Bosaqzadeh said: “In the first jump, our objective was to meet domestic needs in widely consumed materials like chemical fertilizers or polymer products and export surplus production. The feedstock was mainly gas, condensate, rich gas and naphtha. In the second jump, efforts have been made to implement projects with mega tonnage in order to supply domestic needs, particularly in the downstream chain.”

He added: “In the third jump, we tried to focus on the value-added chain of products in light of abundant gas feedstock like ethane, propane and butane so that plants would have a higher output.”

“In other words, if we used to convert gas to methanol now we would convert methanol to propylene and then polypropylene for a 30% cut in feedstock receipt. In fact, we plan to reduce semi-raw feedstock exports and instead export products of higher diversity,” said Bosaqzadeh.

He said all these projects were being operated by the private sector and that necessary budget had been earmarked.

“Within two years, the second jump projects would be over and there is no problem with their financing. Although sanctions have slowed down work, so far we have not had any specific problems,” he added.

Bosaqzadeh said in the third jump, the primary focus would be on domestic supply of resources.

He said eight projects had been financed and the remaining ones were waiting for finance. He added that domestic financing and stock market would account for part of finances, while the rest should be foreign. “Ninety percent of private companies have announced they would be able to provide necessary financing,” he said.

1st PHD Unit

Bosaqzadeh said in the third jump, some projects would become operational for the first time.

“For instance, the Lavan development project with a capacity of 1.3 million tonnes would be for the first time producing ammonia and methanol. The Salman Farsi petrochemical plant, as the first PDH unit, would be producing propylene and polypropylene from propane with a capacity of 1 million tonnes,” he said.

He added that the Entekhab, Sahand and Petro San’at Pishtaz petrochemical projects would be producing propylene by applying a new method. He said the Arg petrochemical project would be producing acrylonitrile with a capacity of 140,000 tonnes for the first time in Iran.”

Bosaqzadeh went on to say: “The East Badr project with a capacity of 2.6 million tonnes and the Sina chemical industry project with a capacity of 2.9 million tonnes of GTPO would become operational in Chabahar.” He said these projects would be fresh and offer a new supply chain.

Incentives for Petro-refinery Projects

Asked if any petro-refinery project was envisaged in the third jump, he said: “Petro-refinery projects were implemented in the past too, but since they were financed by the government they were implemented sectorwise; one sector was charged with refining and distribution, the Petroleum Ministry was responsible for another section and petrochemical plants accounted for some other sectors, including the Abadan petrochemical plant and the Abadan refinery.”

Bosaqzadeh said the projects had no problem as long as their shares were owned by government.

“But as soon as privatization began, the shareholders of these units were separated, causing friction among them. Therefore, investment in petrochemical production was set on unifying the shareholders of petro-refinery units. Therefore, the Tabriz refinery and petrochemical plant and the Kermanshah refinery and Bistoun petrochemical plant were put in the hands of a single stakeholder,” he said.

Bosaqzadeh said: “In the third petrochemical jump we have stressed that the stakeholders must be identical in order to prevent any inconvenience in the production chain and feedstock supply.”

He added: “On the other hand, the government envisages some incentives for investors in petro-refinery projects and within a specific period of time, the investors would be granted a grace period for paying for feedstock up to a specific ceiling. In other words, investors would receive feedstock in proportionate with the investment ceiling and would pay nothing for feedstock throughout reimbursing their loans (depending on the project capacity) and after the end of this period, they would do their payments.”

70% of Catalysts Made in Iran

Bosaqzadeh also touched on the production of catalysts, saying; “During the first round of sanctions that started in 2010, we conducted good infrastructure measures in this regard and we managed to domestically manufacture catalysts that were subject to sanctions, like petro-refinery catalysts. Currently we consume catalysts in ammonia and methanol production, eight of which are being manufactured domestically.”

“The last domestically manufactured catalyst was synthesis whose agreement has been signed. This catalyst is expected to be used in the ammonia and methanol units by early next calendar year,” he said.

Bosaqzadeh said: “Currently, we are manufacturing many polymer and polyethylene catalysts domestically. Within two months, these catalysts will reach production and supply a large portion of domestic needs.”

He said: “Therefore, we have produced more than 70% of catalysts on our own and most catalysts would be manufactured domestically by the end of the second jump.”

Propylene, Missing Link in Downstream Industries

Over recent decades, petrochemical value chain has been developed at a slow pace.

The process of ethylene conversion in southern Iran has been under way at a high speed. All across the world, 60-70% of ethylene is converted into polyethylene and glycol and non-polyethylene polymer products. Iran is rich in polyethylene; therefore, related industries have grown in Iran; however, chemical industries dependent on propylene have not been developed sufficiently. That is while these products constitute raw materials for a big chain of downstream industries. Propylene and polypropylene are produced more massively than polyethylene and ethylene. That is why many local and foreign experts believe that insufficient propylene is to blame for the non-development of propylene-related downstream industries.

Propylene is the second widely used petrochemical substance in the world, just behind ethylene. More than 92 million tonnes of propylene is supplied on the market every year.

Propylene is a key petrochemical product used as feedstock for producing various polymers and intermediate products. The main derivatives of propylene are polypropylene, acrylonitrile, propylene oxide, phenol, oxo-alcohol, acrylic acid, isopropyl alcohol and oligomer. These derivatives are used in electronics, car manufacturing, construction and packaging among other sectors.

Among petrochemicals, olefin is one of the most valuable substances. Ethylene and propylene, with an extended value chain and diverse usages, are among the most valued petrochemical products. Iran has taken significant measures for producing ethylene and propylene, but due to a variety of reasons, ethylene has overtaken propylene in production and therefore demand for propylene is growing. Under the present circumstances, downstream industries fed on polypropylene have been faced with shortage of propylene in certain periods of time.

Over the past five years, 25 million tonnes would be added to Iran’s average methanol output. Kaveh methanol, Marjan methanol and Bushehr methanol projects are in their final stages with respectively 97%, 80% and 60% physical progress. Within two years, Iran’s methanol production would grow by 5.61 million tonnes to bring the total output to 10 million tonnes.

Iranian experts say for completing the petrochemical value chain, there would be no option but to move towards development of the chain of olefin and such products as polyurethane, polyol, ethoxylate, glycol ether and acrylate.

Methanol-to-Propylene

Iran’s petrochemical industry is expected to become propylene-based. That is why permissions are no longer issued for methanol plants unless France’s Total would launch new grades in Iran.

Iran can supply 25 million tonnes of methanol on the global market over five years, but up to 16 million tonnes would be absorbed in the market.

Concerns over the future market of methanol come while a high value-added may be generated by converting gas to methanol and then converting methanol to propylene and finally converting propylene to polypropylene.

It is currently possible to convert natural gas to methanol on a large scale. At Iran Petrochemical Research and Technology Company (PRTC), a pilot project for converting methanol to propylene in Mahshahr with an annual capacity of 120,000 tonnes has been implemented successfully.

The PRTC section of Arak is envisaging a project to convert propylene to polypropylene. PRTC experts and managers hope to launch a propylene unit with a capacity of 130,000 tonnes by March 2020. It is currently in the pre-commissioning phase and its commissioning would complete the petrochemical industry value chain.

PRTC has produced propylene with 99.6% purity in its Mahshahr research center. Propylene is the most valued and the most widely used grade in the petrochemical products chain.

China Strategy for Petchem Value Chain

A major difference between Iran and other nations in development policies is that Iran directly goes towards development of enterprises, while in other countries investment is made in bodies filling the needs of these enterprises, requiring all of them to establish such entities. Otherwise, they would lose any support. Turkey is a case in point. In Turkey, everyone has to deal with entities. In the Iraq market too, the associations are decision-makers and companies have no authority. In China, no agreement would be signed without approval from China’s commercial attaché in Iran, but in Iran, entities are forgotten.

Reviewing the experience of successful nations in the development and completion of value chain and interaction between upstream and downstream chains would offer options for Iran’s petrochemical industry in reaching its development objectives.

Iran’s 6th Five-Year Economic Development Plan targets exporting more than $112 billion worth of non-oil commodities and services (gas condensate not inclusive) in 2021. To reach this objective, Iran’s non-oil exports must grow more than 21% a year and the petrochemical industry, particularly downstream products, could play an effective role in the materialization of this objective.

China is the world’s top chemical power. Its petrochemical industry has successfully developed its value chain, defined a centralized state management, regulatory system and policymaking structure. In 2015, China sold about €1,408.8 billion of chemicals and petrochemicals.

China started developing its petrochemical industry from 1950 to 1977 through implementing self-sufficiency and industrial development. It also revised its model of petroleum and petrochemical industry equipment supply, which was controlled by the central government. The long-term objective set by China was not to export crude oil in large quantities; rather it had inclination for expanding its petrochemical industry. Therefore, the petrochemical industry turned into one of the most important industries in China in the 1980s.

China’s open doors policy of late 1970s was a turning point in the country’s economy. In order to finance its equipment, study its oil fields and renovate its petrochemical industry, China received more than $500 million in loan from the World Bank in addition to aids from UN, Japan and other nations.

Attracting foreign investment into the petrochemical sector motivated restructuring of industrial management in this country, leading to the establishment of giant and centralized national companies to compete with foreign rivals.

 

Opportunities for Investment in Doroud

Iran plans to develop its ageing oil and gas fields, as well as its decrepit petroleum industry infrastructure by relying on the state-of-the-art technology with a view to bringing its oil production capacity to 5 mb/d by the end of Vision 2025. Mature onshore and offshore oil fields are instrumental in this regard. Doroud oil field, located in Kharg Island and northwest of the Persian Gulf, is among developed oil fields that would be further developed by foreign investment and technology.

Two decades have now passed since an agreement was signed for the development of the Doroud field on 1 March 1999. Despite the completion of water injection and oil production in recent years and the continuation of gas injection operations, enhanced output from the field has not materialized and the project has faced delays.

According to department of "Economic and Financial Feasibility" at National Iranian Oil Company (NIOC), the investment needed for developing Doroud over four years has been determined. Finance, EPCF and EPDF agreements may be signed for this purpose, depending on the conditions of the project. Costs will be reimbursed from 50% of the enhanced crude oil production capacity over a six-year period.

Doroud is run by the Iranian Offshore Oil Company (IOOC). IOOC was the first Iranian company to implement water injection, ESP in wells and artificial gas lifting projects. Already known for enhanced oil recovery (EOR) projects, IOOC hopes to raise the rate of recovery from the oil fields under its administration.

Stretching on 5 square kilometers, Doroud field has already been developed twice. The third development phase in this field is also getting close to its end.

Doroud’s reservoir is estimated to contain about 7.6 billion barrels of oil. According to the 2000 appraisal, the field holds 2.5 billion barrels of recoverable oil.

Crude oil processing facilities in Kharg Island have been designed and implemented with capacities of 100,000 b/d and 110,000 b/d.

The first development phase in Doroud field dates from 10April 2002, which raised output from the field by 15,000 to 16,000 b/d. In the following years, new wells were drilled to raise the field output.

When an agreement was signed with France’s Total in 1999 for developing Doroud, every single barrel of oil cost $20. Total, which had acquired Elf, teamed up with Agip to develop Doroud field. It was a significant move in attracting foreign investment. Total failed to develop Doroud on schedule, and the project was abandoned half way. However, IOOC’s recovery from this field has proven to be profitable for Iran. The investment made in this field was returned in the first years of enhanced output.

Prior to commissioning the gas injection section of Doroud oil field, many Iranian petroleum industry experts said due to the high pressure from gas injection (6,000 psi) in this oil field and the existence of unknown phenomena in this system, the gas injection section was likely to be ready later than the water injection and oil production sections. On the other hand, the existence of a complex geological structure in Doroud field and the location of this oil field beneath Kharg Island slowed down drilling in the first years of development because doing onshore and offshore work was tough.

Doroud oil field has 12 water injection wells, two gas injection wells and 15 oil wells for development. The total number of wells in this field is 40, and 25% of them are offshore ones.

Reshadat Field Up for Investment

The project for the development of the Reshadat oil field is one of the most important projects for enhancing oil production in Iran. That would bring production from Reshadat to 80,000 b/d.  Reshadat is one of the oldest offshore fields in Iran, located 110 kilometers southwest of Lavan.

Discovered in 1965, the field became operational in 1969 following exploration drillings and installation of three platforms. Five decades on, it needs cutting edge technology for recovery enhancement.

The API gravity of oil extracted from Reshadat field stands at 36, which is highly demanded in the market. That can make Reshadat more attractive to foreign companies.

The Reshadat field’s platforms were damaged during the imposed war. Once imposed war ended, the Iranian Offshore Oil Company (IOOC) embarked on rebuilding it.

Currently, the new P4 and Q4 processing platforms are under construction in SADRA Yard for the Reshadat field. Furthermore, the wellhead W0 and W4 drilling rigs have been installed and most new wells have been spudded there. This development project needs more than ever foreign investment and technology.

Twenty-eight new wells have been drilled in Reshadat as part of new development plans. Eight of these wells have become operational.

Early production from Reshadat would bring output from this field to more than 20,000 b/d.

After the drilling of all wells and water injection, Reshadat’s output would experience a significant jump. However, production from this field would depend on the conditions of financing and determining the fate of domestic contractor.

Reshadat was discovered by Italy’s IMINICO. It has 33 wells in the three R-3, R-4 and R-7 platforms.

Oil recovery from Platform R-4 is under way and the other two platforms are still non-operational. Once new wells become operational, R-4 will be phased out. Development of Reshadat began in late 2000s for increasing its output to 75,000 b/d. Drilling thirty wells; constructing a storage tank with capacity of 500,000 barrels of oil and laying a 185-km pipeline were envisaged.

The field is set to see a 5,000-7,000 b/d output hike in the future.

Technicians and oil service workers have managed to mobilize all necessary resources to carry out pipe laying, installation and testing of separating equipment. The volume of produced water has declined significantly after the installation of a new separator.

Full development of Reshadat oil field would bring its output from 8,000 b/d to 75,000 b/d.

The new development project for Reshadat is being done for an output of 78,000 b/d. This project is being implemented in the five phases of drilling, jacket installation, platform installation, and pipeline and storage tank construction in Lavan Island.

As far as Reshadat’s development is concerned, the drilling phase is behind other phases. Once challenges have been removed, and as soon as two drilling rigs have been installed, the drilling and completion of wells would last two to two years and a half.

Joint Fields Review

350mcm/d Extra Gas, 280,000b/d Extra Oil

The 11th administration took office in 2013 at a time the gas production capacity at the South Pars gas field, the giant offshore reservoir operated jointly by Iran and Qatar, was about 280 mcm/d. In the meantime, the output from jointly-owned oil fields in West Karoun did not exceed 70,000 b/d.

Today, the South Pars gas production capacity has reached 630 mcm/d, while West Karoun’s oil output has increased to 350,000 b/d.

2014, Joint Fields Prioritized

According to the 2014 data provided by the Directorate of Corporate Planning of the National Iranian Oil Company (NIOC), more than 50% of oil investment went to exploration, development and maintenance of joint oil and gas fields. During the first half of the Iranian calendar year 1394 (March 2015-March 2016), over 50% of oil investment went to the South Pars.

By March 2015, a law was adopted on removing barriers to competitive production. Article 12 of this law authorized Petroleum Ministry to envisage investment up to $100 billion or its equivalent in Iranian currency in oil and gas projects. This project which needs equity or banking facility was started up after tapping the National Development Fund of Iran (NDFI) for financing South Pars and West Karoun projects.

In 2014, NIOC was following up on the development of the South Yaran and South Azadegan fields, both located in the West Karoun area. These two fields had been left to the 11th administration in September 2013 without any progress. In 2014, NIOC cancelled an agreement signed with a Chinese contractor for the development of South Azadegan due to its refusal to meet its obligations stipulated in the contract text. South Azadegan has since been under development by relying on domestic capacities.

By March 2015, Petroleum Ministry laid emphasis on the necessity of benefiting from domestic capacities. To that end, for the first time in the history of Iran’s petroleum industry, agreements were signed with several universities and research centers for technological studies on a group of oil fields. Azadegan field was assigned to the Petroleum Engineering Institute of the University of Tehran, Darquain field to Amir-Kabir University of Technology, Soroush field to Sahand University of Technology, Ahvaz field to the Research Institute of Petroleum Industry, Karanj field to Islamic Azad

University, Kupal field to Sharif University of Technology, Mansouri field to the University of Shiraz, Gachsaran field to Petroleum University of Technology and Bibi Hakimieh field to the Research Institute of Enhanced Recovery. By March 2015, phase 12 of South Pars came online amid unjust sanctions against Iran. SP12 is the largest phase of South Pars.

2015, South Pars Gas, Aban & Salman Oil Up

The process of development of joint fields continued into 2015. Gas recovery started from SP18 platform in June 2015, while Platform 17A was launched in November that year to allow gas production from SP17 at a rate of 10 mcm/d. Gas recovery started from SP19 in March 2016 at the rate of 500 mcf/d.  SP15 and SP16 also came online in January 2016.

Aban and Salman shared oil fields saw their output increase in 2015. In parallel with that, two wells at Aban field became operational to raise oil production form this field. Salman field, where three drilling rigs were operating, experienced more than 10,000 b/d output. Gas injection into the wells of this field was instrumental in boosting the rate of recovery and increasing oil production from Aban.

East Oil and Gas Production Company announced that the Gonbadli shared gas field had for the first time met its production target in 2014 and 2015.

The year 2015 was a turning point in building platforms at the Forouzan oil field by the Iranian Offshore Engineering and Construction Company (IOEC). In that year, construction of platforms had more than 34% progress.

The government also released a directive in November 2015, laying out general conditions as well as the structure and model of upstream oil and gas contracts. In December 2015, Tehran hosted a conference to present the most significant opportunities for investment in Iran’s upstream oil sector.

Following that, trial production from Yadavaran and North Azadegan oil fields started.

2016, 3 West Karoun Oil Projects Started Up

Thanks to the Joint Comprehensive Plan of Action (JCPOA), in 2016 Iran’s petroleum industry witnessed growth in the trend of international interactions. Iran’s oil exports kept rising in that year, while numerous memorandums of understanding were signed between NIOC and domestic and foreign firms to study oil and gas fields across Iran. Some of these memorandums pertained to the jointly-owned oil fields: Aban, West Paydar, Dehloran, Azadegan, Yaran and Naftshahr. Furthermore, based on plans, arrangements for the establishment of qualified and eligible Iranian E&P companies were made, leading to the release of the first list of Iranian E&P companies in 2016.

In 2016, West Paydar saw its output increase to 30,000 b/d from 20,000 b/d in 2012. Iranian engineers also managed for the first time to embark on hydraulic fracturing in Well No. 11 of the Azar oil field. The first phase of early production from this joint field began in March 2017 at a rate of 15,000 b/d.

The post-JCPOA release of equipment purchased for South Pars largely contributed to an accelerated development of this joint field. In June 2016, Platform 19C with a recovery capacity of 500 mcf/d came online. In November that year, the 500 mcf/d Platform 18B became operational. In December 2016, the platform of SP21 started producing 28 mcm/d while the 500mcf/d Platform 17B registered a new record in March 2017. Concurrently with the anniversary of nationalization of the Iran's petroleum industry, gas production started from SP20. Meanwhile, the trial-run commissioning of the oil layer of South Pars started, as well. In February 2017, the first Middle East processing vessel had entered Iran’s territorial waters for the development of the South Pars Oil Layer. However, the most significant oil event in 2016 was the official startup of three oil development projects in West Karoun: development Phase 1 of the Yadavaran oil field with a production capacity of 85,000 b/d, development Phase 1 of the North Azadegan field with a production capacity of 75,000 b/d and development of the North Yaran field with a production capacity of 30,000 b/d. These three projects along with South Azadegan brought total output from the West Karoun fields to 270,000 b/d in 2016, up from 70,000 in 2013.

2017, Joint Fields Lift Output

In March 2017, SP17, SP18, SP19, SP20 and SP21 came online, adding 150 mcm/d to South Pars’ output. Iran brought its recovery from South Pars to the same level of Qatar’s production. Meantime, the South Pars Oil Layer started production at the rate of 35,000 b/d. Petroleum Engineering and Development Company (PEDEC) announced that the South Azadegan output had surpassed 80,000 b/d. In spring 2017, the oil production capacity at the Azar field soared past 30,000 b/d. In autumn 2017, the South Yaran field reached production stage. Six wells in this field allowed the recovery of 10,000 b/d of oil. In November 2017, the jacket of Platform 18F at the Forouzan field was installed and the oil platform control system of this joint field was launched based on one of the most advanced systems currently used in the oil and gas industry. The Hengam gas processing complex also became operational with a processing capacity of 80 mcf/d of gas.

In 2017, many Iranian and foreign companies that had signed MOUs with NIOC to study oil and gas fields in Iran presented their reports. For instance, Royal Dutch Shell had conducted feasibility studies on Yadavaran and Azadegan fields. In July 2017, NIOC signed an agreement with a consortium of France’s Total, China’s CNPCI and Iran’s Petropars for the development of SP11. In the final days of the Iranian calendar year 1396( started in March 2017), an agreement was signed between NIOC and a consortium of Russia’s Zarubezhneft and Dana Energy for the development of Aban and West Paydar, and another one between NIOC and Pasargad Energy Development Company for the development of the Sepehr and Jofair fields. In the calendar year 1396 (started in March 2017), NIOC decided upon the case of SP11, Aban and West Paydar – all of them shared fields.

2018, 10 Oil Enhancement Deals Signed

Iran’s petroleum industry was under sanctions in 2018; however, development projects never came to a halt. In early 2018, Iran and Azerbaijan signed agreements for joint activities in the Caspian Sea exploration blocks.

NIOC also signed 10 agreements with Iranian companies as part of its plan to hire domestic firms in oil production projects. One of these agreements pertains to Naftshahr jointly-owned oil field.

In 2018, oil production rate in South Yaran grew. Plans were also developed to install downhole pumps in the North Yaran field with a view to raising output. Capacity building for production continued in South Azadegan.

Platform 14A came online in May 2018, and then sour gas production from the first platform of SP14 commenced. In November 2018, as the operation of the satellite platform 14C ended in the Persian Gulf, sour gas recovery from the second platform of SP14 began.

Two months later, the first platform for the SP 22-24 development projects was launched with a recovery capacity of 14.2 mcm/d.

The refineries of SP 13 and SP 22-24 came online for $11 billion in the final days of the calendar year 1397.

2019, Balal Development Awarded to Iran Firm

During the first three quarters of the Iranian calendar year 1398, despite all sanctions and restrictions, Iran’s petroleum industry focused on the development of South Pars and West Karoun fields.

So far in the new calendar year, the third production platform of SP14 and the two remaining platforms of SP 22-24 have been installed, the gas recovery rate in the SP4 platform has increased, production from the North Yaran oil field has grown after installing a downhole pump, a mobile separator has been installed in the South Yaran field, the first directional well has been drilled in the South Azadegan field, the safety coefficient of production from South Azadegan has been upgraded while an agreement has been signed with Petropars for the development of the Balal field.

 

Gasoline Price Reformation

Following the arrival of the first car in Iran by Mozaffar al-Din Shah in 1902, the tendency to use cars grew day by day. To that end, those who had imported cars and drove them needed gasoline. First, an English company distributed gasoline through various means: kerosene retailers, grocery stores, and garage caretakers. Oil products were sold in jars, which were even until recently used for storing lemon juice and verjuice. Afterwards gasoline was offered in 17- liter tin cans known as gasoline containers. On the other hand, Russia started selling oil by establishing a company called Press-Az-Oil in Tehran, located on Amir Kabir Street. And British Petroleum offered gasoline, kerosene, etc. on Imam Khomeini Street (formerly Sepah) on the corner of Estakhr Street.

Given the growing trend of gasoline demand, consumption and its relevant hazards, and whereas purchase of gasoline in containers was not economical; the first gas stations were gradually constructed to reduce the risks of gasoline storage and supply in the container. Although there is much to say about the date of the construction of first gas stations in Iran, it is clear that gasoline pumps have been used in Iran since more than a century ago. The proof for this claim is the petrol pumps on display at the Tabriz Measurement Museum dating back to almost hundred years ago.

The first gas station in Tehran was built and opened at Amiriyieh Avenue, Gomrok intersection. The philosophy behind choosing this location for the construction of a gas station was largely due to the fact that majority of car owners and wealthy people lived in that neighborhood. The second gas station was on Bouzerjomehri Street, at the Darkhoongah station, the third on Saadi Street, Darvazeh Dowlat, the fourth in Baharestan Square, opposite the Majlis, and the fifth in the Simetri Nezami street (current Kargar Avenue) near Lashkar intersection. In this way, by 1951, ten gas stations were in operation in Tehran, and the NIOC began to organize them.

Since 1976, the price of gasoline has gradually soared. Given the growing   number of cars and of course rising trend of gasoline consumption in Iran and in proportionate with inflation trend the price of all oil products, particularly gasoline in the global markets and domestic market has witnessed changes.

 For instance, in July 2007, in a bid to curb gasoline consumption, the government decided to rationalize gasoline and the plan was implemented until 24 May 2015.In that period of time rationalized gasoline was supplied through fuel smart cards provided by petroleum ministry, but when domestic gasoline production level improved , gasoline rationalization was quitted. However, due to high consumption of gasoline and necessity of controlling the unbridled trend of gasoline consumption in the country, once more the government recently decided to rationalize gasoline, i.e. supply gasoline at two rates: quota and quota -free.    

Therefore, in the last hours of Thursday, 14 November 2019, the government suddenly announced without prior notice that the quota gasoline is provided at IRR1500 and quota-free gasoline is supplied at IRR 30000.In addition quota-free premium gasoline is sold at IRR 35,000.

Although there are pros and cons on the decision made with regard to reforming gasoline price and gasoline rationing plan, there is almost consensus among economists on the necessity and appropriateness of making such a decision. However, observers argue that apart from pricing mechanism, improving public transportation fleet can contribute effectively to curbing gasoline consumption. That is to say, availability of effective public transportation system could be an incentive to encourage people not to drive, unless it is pretty essential.
On average, 100 million liters of gasoline is produced daily in the country. In case we manage to reduce fuel consumption by 10 million liters per day and sell this volume at a rate of equal IRR 50,000 in the Persian Gulf, taking into account the difference between the domestic price and export price,  we can make something like  IRR 40 billion per day. In this way, IRR 140,000 billion of income will be generated.
However, the point is that although the government's economic policy is to distribute fuel at a fairer rate, at present people cannot afford buying gasoline at IRR 50,000.Nevertheless, given the higher price of gasoline in the neighboring countries and in order to prevent smuggling gasoline, the long-term plan for raising gasoline price would be still on the agenda.
The price of gasoline in Saudi Arabia is equal IRR 62,000, in the UAE IRR64, 000, in Afghanistan IRR 70,000, Pakistan IRR 80,000, in Turkey IRR132, 000 and in some developed countries such as the Netherlands and Sweden is something equal IRR 20,000, and in Turkmenistan is equal IRR 50,000.
On average, gasoline cost accounts for 2.5 percent of Iranian households' expenditure basket averaged; therefore, gasoline price hike would only affect household's economy at 2.5 percent.
The increase in gasoline prices does not mean that other goods and services would become expensive in proportionate with that. If the gasoline rate rises 50 percent, it does not mean that the road freight rate will increase by 50 percent, rather than that we need to figure out the share of gasoline in road transportation."
In fact if you take it for granted that gasoline real price is IRR 50,000, when gasoline was recently supplied at rate of IRR10, 000, the gasoline subsidy paid per liter was IRR40, 000. Now the intention is to divide this difference in a fair way. Indeed, more subsidies are allocated to vulnerable members of the society. This is called "profit of redistribution of income".
Under this approach, those with higher incomes should pay more for fuel but those with lower income benefit from this. According to the government model, each 4-person household will receive a subsidy of IRR 1720,000 per month. Of course, they also receive a 60- liter gasoline quota for one vehicle.
When fuel price goes up, people are encouraged to buy more economical and efficient cars and automakers would be urged to upgrade their production line to produce more efficient cars, so less fuel is consumed and less pollution is witnessed.
"Under the targeted subsidies law, the government could take up to 20 percent of the gasoline price increase to offset its budget deficit, but that is not the case, so the government would not benefit from the current circumstances at all.

To wrap up, it can be argued that the whole logical decision made on gasoline price reformation is aimed at preventing gasoline smuggling, mitigating GHG emissions, reaching gasoline self-sufficiency and availability of surplus gasoline for export, fostering proper paradigm of gasoline consumption and fair distribution of subsidies on fuel, particularly gasoline among nation.

 

 

 

 

 

 

 

 

 

 

 

 

  

Iran; Becomes OPEC Largest Gasoline Producer?

ran’s refining industry has been through ups and downs over the past years. The government’s measures for a quantitative and qualitative upgrade of refined petroleum products came to fruition under the 11th and 12th administrations at a time the country was faced with the toughest ever economic sanctions. However, Iran’s refining industry continued its own way. Ali-Reza Sadeq-Abadi, CEO of National Iranian Oil Refining and Distribution Company (NIORDC), recently announced that Iran was the largest producer of gasoline in the region, as well as OPEC’s first gasoline and second gasoil producer. Iran’s gasoline production capacity currently stands at 112 ml/d. The country’s current output stands at 107 ml/d, up from 51 ml/d in 2012 when no euro-grade fuel was produced. In 2012, Iran had also to import 10 ml/d of gasoline in order to supply domestic demand, but today Iran has become self-sufficient in gasoline production and is able to export fuel at figures much higher than that of imports in the previous years. A review of activities in Iran’s refining industry in the past six years shows how Iran transformed from a gasoline importer into a gasoline exporter.91ml/d Gasoline OutputThe euro-grade oil and gas production in Iran and the increased quality of refined petroleum products happened for the first time under the 11th and 12th administrations. Clean gasoil and gasoline was for the first time distributed in 2012 and 2013 respectively, but national distribution of this grade of fuel in big cities reached its climax under the 11th and 12th administrations.The enhanced fuel quality in the country came at a time the sulfur content of gasoil supplied by Iranian refineries fell to its minimum level from about 10,000 ppm. A statistical review of figures and data about petroleum products in recent years shows that between 2013 and 2018, Iran’s euro-grade gasoline production increased from 3.3 ml/d to 25 ml/d. Sadeq-Abadi recently said as the euro-grade gasoil output at the Persian Gulf Star refinery and the Isfahan refinery would respectively reach 15 ml/d (4ppm sulfur content) and 20 ml/d (sulfur content less than 10 ppm), the total euro-grade

gasoil output (sulfur content below 10 ppm) would reach 73 ml/d by next March. Imam Khomeini refinery of Shazand with an 11ml/d output, Tehran refinery with a 7ml/d output and Lavan refinery with a 2.5ml/d output are instrumental in the country’s euro-grade gasoil production. In October, Sadeq-Abadi said Iran’s euro-grade gasoline production had reached 91 ml/d, contributed by the Persian Gulf Star refinery (45ml/d), Imam Khomeini refinery (17ml/d), Isfahan refinery (12ml/d), Bandar Abbas refinery (12ml/d), Tabriz refinery (3ml/d) and Lavan refinery (3ml/d).Persian Gulf Star RolePersian Gulf Star gas condensate refinery is the largest condensate treatment facility in the world. This facility whose equipment is mainly domestically-sourced is processing 450,000 b/d of condensate supplied from the giant South Pars gas field to be converted into light products. The construction of Persian Gulf Star refinery began by receiving a daily feedstock supply of 360,000 barrels from South Pars in three 120,000 b/d phases from 2006. The facility was built in order to guarantee sustained gas recovery from South Pars, reduce environmental pollutants and help Iran’s self-sufficiency in the supply of strategic energy products. The third phase of this refinery came online in January 2019 with an output of 45 ml/d of gasoline and 15 ml/d of gasoil. That raised Iran’s gasoline production to 105 ml/d. Iran ended gasoline imports then. The Persian Gulf Star refinery is currently supplying 47 ml/d of euro-5 gasoline.Shazand Refinery Development After Persian Gulf Star refinery, Imam Khomeini refinery of Shazand is supplying 17 ml/d of gasoline and 11 ml/d of gasoil. The objectives sought in the development of Imam Khomeini refinery include increasing the nominal capacity of the facility from 169,000 b/d to 250,000 b/d, increasing gasoline production capacity from 4.6 ml/d to 17 ml/d, reducing fuel oil output, desulfurizing products and supplying euro-5 products.Bandar Abbas Capacity EnhancementBandar Abbas refinery is among influential refineries in Iran with an output of 15 ml/d of gasoil and 12 ml/d of gasoline. The gasoline treatment unit of this refinery was launched early this year. The main philosophy behind improving the quality of Bandar Abbas refinery’s products was to improve the quality of products in line with environmental objectives and reduce the sulfur content of gasoil in compliance with euro-5 standards. 

That has materialized after installing the isomerization and diesel treatment units. Energy management, waste reduction and using heavy crude oil as feedstock are among the outstanding features of this project.Furthermore, the gasoline production at this refinery has increased by about 5 ml/d, while the quality of gasoil has been upgraded to euro-5 standards.Isfahan Refinery GasoilThe process development project, upgrading the quality of products and optimization of Isfahan refinery to increase gasoline output from 41,000 b/d to 120,000 b/d has been fulfilled. That has led to an increase in the quantity and quality of gasoline by 3 ml/d of euro-5 fuel, removal of octane boosting materials, possibility of premium gasoline production as well as euro-4 gasoil production. The gasoline production, as well as other related units in this project is over and other projects are being completed. The gasoil dehydration project at this refinery would bring the euro-grade gasoil output to 20 ml/d. Isfahan refinery is currently supplying 12 ml/d of high-quality gasoline, largely contributing to the supply of high-quality fuel.High-Quality Fuel Production NorthwestIn August 2019, Tabriz refinery development project became operational to allow the distribution of 3 ml/d of high-quality gasoline in north and northwest Iran. The gasoil desulfurization unit of Tabriz Oil Refining Company became operational tentatively in September 2018. The refinery is adding 6 ml/d of euro-5 gasoil to the country’s output. The project for upgrading the quality of Tabriz refinery’s products include designing and installing a CCR naphtha reforming unit and installing a gasoil refining unit to reduce the sulfur content of gasoil based on euro-5 standards.The development project is aimed at facilitating euro-5 high-octane gasoline production, removal of MTBE from gasoline and supply of 750,000 b/d of gasoline as well as euro-5 gasoil production.Tehran Refinery’s 12 ml/d GasoilThe production of high-quality gasoline and gasoline production at Tehran refinery officially started in August 2012 as gasoline production and optimization projects came on-stream. The refinery is currently producing 7 ml/d of euro-grade gasoline and 12 ml/d of euro-grade gasoil. The main objective behind improving the refinery’s products was to contribute to national environmental objectives and reduce the sulfur content of gasoil and kerosene based on euro-5 standards.Euro-Grade Gasoline at LavanLavan refinery’s first cargo of euro-5 gasoline (8,000 liters) was loaded last October to be delivered to Bandar Abbas for consumption. The first phase of process improvement at this refinery with the objective of increasing capacity from 30,000 b/d to 55,000 b/d came online in May 2011 while the dehydration and light naphtha isomerization units became operational in June 2013. The dehydrating unit for middle distillate products – kerosene and gasoil – came online in 2015 while the gasoil and kerosene desulfurization unit came online two years after, in order to supply euro-4 and euro-5 products.The capacity enhancement plan at Lavan refinery was launched in order to enhance capacity, reduce pollutants, upgrade the quality of products to euro-5 grade, increase light and valuable products (mainly gasoline), reduce low-quality and heavy products (fuel oil) and reduce energy consumption at the facility. The project was aimed at increasing the refining capacity to 50,000 b/d, increasing gasoline production based on euro standards, desulfurizing products and supplying euro-5 products.Abadan Refinery DevelopmentThe main objective behind the implementation of this project was to set up a new CAT cracking unit, maximize euro-5 gasoline production based on the possibility of feedstock supply, reduce fuel oil output and create value-added at the refinery. The gasoline production units as well as related units of this refinery are over and the second phase of this project is forecast to have progressed 65% by next March. After finalization of the Abadan refinery development project, a new refinery will be born out with a production capacity of 15 ml/d of high-quality gasoline.

GECF, a Chance for Convergence

Shuaib Bahman

The 5th summit of the Gas Exporting Countries Forum (GECF) was held on 29 November 2019 in Malabo, the capital of Equatorial Guinea. The heads of state of the 12 GECF member states – Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Qatar, Russia, Trinidad and Tobago, the United Arab Emirates and Venezuela – and the 7 observer states – Angola, Azerbaijan, Iraq, Kazakhstan, Norway, Oman and Peru – were in attendance.

Whereas gas is instrumental in sustainable development in terms of both energy security and clean energy supply, it would be important to review the GECF summit, as well as prospective opportunities and challenges.

GECF supplies 44% of global gas output, sits atop 67% of world gas reserves, accounts for 64% of gas pipeline and 66% of liquefied natural gas (LNG). These figures show how significant the GECF is in terms of gas production and exports.

The GECF summit is held every two years. The previous summits were held in Qatar’s Doha (2011), Russia’s Moscow (2013), Iran’s Tehran (2015) and Bolivia’s Santa Cruz (2017).

In its final statement, the fourth summit had laid emphasis on the significant status of natural gas in the world energy mix and condemned US sanctions against GECF member countries. Furthermore, GECF member states always make joint efforts to introduce gas as a clean fuel of choice.

The fifth summit had underscored the significance of protecting the member states’ sovereignty on their own gas resources, the contribution of member states to transition to clean energy and realization of objectives of sustainable development, attraction of investment in infrastructure gas projects, supporting cooperation among GECF member states and setting pricing mechanism.

Gas Market Conditions

Using gas as a fuel has such advantages as causing less pollution and contributing to sustainable development. Compared with renewable energies, gas is a low-cost source of energy, is accessible in large quantities and does not require too much financing for recovery. Despite the significance of using gas as fuel, world markets have largely experienced fluctuations. Over recent years, gas prices have seen a significant decline in the global markets. The price of gas per one million BTU reached around $20 in East Asia in 2014-2015, but the price is now down to $5- $ 6.

Meantime, there is a tight competition under way between gas exporting nations in winning more markets and increasing their exports. In case this competition is not controlled and managed, it would cause gas prices to fall further in the future. Another important point is the emergence of new producers like the United States, Australia, Canada and some small African states, which have drastically changed the gas market equations.

Expectations are also high that shale production particularly in the US where it has its record would leave important impacts on global markets in coming years.

To support its member states, the GECF has to take several major steps:

Setting terms and conditions for agreements between producers and consumers
Pricing based on oil indexation and in the interest of member states
Guaranteeing a reliable flow of income for producers
Sustainable exports to guarantee investment in long-term projects

GECF Challenges

The idea of establishment of organizations in various sectors of the economy is often brought and followed up on by leading producers. The main purpose of such organs would be to secure supply, stabilize the market and guarantee sustainable income. However, consumers may not find such entities to their advantage because it would increase prices and reduce their power vis-à-vis sellers. That is why the GECF has faced stiff opposition ever since its establishment. The formation of the GECF has drawn opposition on numerous occasions on the part of Western governments and bodies.

Some experts argue that the GECF could not influence the gas market. They also claim that even the Organization of the Petroleum Exporting Countries (OPEC) has not been successful in the oil market, due to strong resistance from the US and the European Union. Furthermore, establishing such entities with a large number of members would be difficult. Apart from that, gas contracts are long term ones and the gas price could not be increased spontaneously. Therefore, the GECF’s freedom of action is largely overshadowed.

For its part, the US has also been making efforts to render the GECF ineffective. Washington has imposed sanctions on some GECF member states and boosted its monopolistic attitude. One of the US objectives in imposing economic sanctions on various countries has been to influence global energy markets. For instance, the US imposed sanctions on Venezuela and Iran in a bid to drive up oil prices and therefore make shale oil production feasible and economical. That is applicable to gas too, as the US sanctions targeting Iran, Russia and Venezuela may block gas exports by these nations and instead pave the ground for the US and its allies.

The US sanctions against GECF member states would negatively affect the natural gas market development and endanger the global energy security. Under such circumstances, cooperation between GECF member states would effectively help combat US embargo.

Future Outlook

Ever since the formation of the GECF, it was viewed as an OPEC-style body aimed to regulate the gas market and strike a balance between gas supply and demand to serve the interests of both producers and consumers. There are similarities between OPEC and GECF; however, GECF member states have agreed not to set any quota for their output.

The International Energy Agency (IEA) along with Europe and the US described the formation of the GECF for controlling global gas production and regulating prices as a big mistake, the GECF does not seem to have harmed gas consumers; rather, it has helped stabilize the energy market.

Gas is trying to supplant oil as the primary source of energy. Therefore, gas producers would have to adopt coordinated policies. These nations will have to adopt cohesive and targeted actions should they want to win a better status in gas production, processing and transmission. That may initially face opposition from leading consumers; however, in the long-term, gas producers would be able to stabilize their position by making effective decisions. Then, consumers will have to reconsider their policies based on such decisions.

On a larger scale, aside from energy and economic aspects, the GECF will be able to bring about regional and international convergence and grow into an influential economic and political organ in the region and the world.

In fact, the continuation of GECF activity would link member states more deeply and more strongly, leading to increased cooperation and upgraded ties between them based on their mutual interests.

GECF member states are able to create a sustainable and stable gas market and benefit from such advantages as fair prices. Alongside enjoying huge gas reserves, GECF member states are endowed with effective manpower; however, they have so far failed to find the status they deserve. GECF member states are also after exchanging knowhow and technology, as well as attracting investment. The GECF as a body can facilitate such cooperation.

BP to Acquire Interest in Indonesia

KrisEnergy Ltd. has entered into a conditional sale and purchase agreement with BP Exploration Operating Co. Ltd.

BP will acquire KrisEnergy’s 30% non-operated working interest in the Andaman II production-sharing contract in the Malacca Strait, Indonesia.

The transaction subject to obtaining all necessary approvals including from the government of Indonesia for the assignment of the working interest.

The Andaman II PSC is a 7,400-sq km (2,857-sq mi) block over the North Sumatra basin. Operator Premier Oil has 40% interest, and Mubadala Petroleum holds 30%.

--Ecopetrol, Gato in Brazil Offshore Discovery

Ecopetrol S.A. subsidiary Ecopetrol Óleo e Gás do Brasil Ltda has entered into an agreement with Shell Brasil Petróleo Ltda. to acquire 30% of the interests, rights, and obligations in two areas corresponding to the BM-S-54 concession agreement and the Sul de Gato do Mato shared production agreement.

These areas are in the presalt Santos basin and includes the Gato do Mato discovery.

Under this agreement, Shell will reduce its stake from 80% to 50% and continue as operator, while Total will retain the remaining 20%. The Brazilian government also participates in the shared production agreement, through Pré-Sal Petróleo S.A.

The agreement is subject to the approvals from Brazil’s Ministry of Mines and Energy, the country’s National Agency of Petroleum, Natural Gas and Biofuels and other customary transaction conditions.

Three wells that have discovered light hydrocarbons have been drilled in these two blocks. The consortium will continue executing activities and operations in order to initiate production in coming years.

-Equinor Awarded Permit Offshore Western Australia

Equinor has secured a new exploration permit in the Northern Carnarvon basin offshore Western Australia.

The company will operate WA-542-P with a 100% interest. The concession covers 4,815 sq km (1,859 sq mi), 100 km (62 mi) offshore, in water depths ranging from 80-350 m (262-1,148 ft).

It is also west of the Santos-operated Dorado oil discovery.

Paul McCafferty, Equinor’s senior vice president for international offshore exploration, said: “An interesting new liquids play has emerged in this part of Australia’s northwest shelf and we are looking forward to assessing the potential in our new permit.”

The work program includes geological and geophysical studies, reprocessing of seismic data, and acquisition of new 3D seismic.

Equinor has also been seeking permission to start exploration on its acreage in the Ceduna basin offshore South Australia.

--Efficiency Measures Serving Norway Offshore Fields

Total remaining recoverable resources across the Norwegian continental shelf are around 8.3 bcmoe, according to the latest estimate by the Norwegian Petroleum Directorate (NPD).

Roughly half the total is thought to lie in proven fields and discoveries.

At the end of last year, there were 85 discoveries with no submitted plan for develop­ment and operation. These hold total reserves of 660 MMcmoe. The NPD estimates that NOK400 billion ($44 billion) would be needed for all these fields to be developed. By end-August 2019, 85 fields were in production on the NCS.

In 2018, wells accounted for half the investment on active fields, and in recent years, efficiency measures have cut average production well costs by more than 40%, the NPD’s report said.

At the same time, operating costs on most fields have been falling, and increased take-up of automation and remote operation, improved use of data and more efficient operation, could further reduce costs and help raise production further, the report claimed.

----- Total, Qatar Petroleum Extend Partnership to Namibia

Total has signed a further farm-out agreement with Qatar Petroleum (QP), this time for two deepwater blocks offshore Namibia.

Pending government approvals, Total will transfer to QP a 30% interest in block 2913B, while retaining a 40% interest; and 28.33% in block 2912, retaining 37.78%.

Both permits are in the Orange basin, in water depths ranging from 2,600-3,800 m (8,530-12,467 ft). Other partners are Impact Oil and Namcor.

The first exploration well is due to be drilled next year on block 2913B. It follows earlier agreements under which QP gains 40% of the company holding Total’s existing 25% interests in the Orinduik and Kanuku blocks offshore Guyana, with Total keeping the remaining 60% of this company.

Asian Refiners Strive to Finish Processing Unit

At SK Energy’s largest refinery in South Korea, engineers are rushing to complete a new processing unit ahead of schedule as the firm looks to boost sales of low-emission fuels before new marine fuel standards take effect in just one month.

In Japan, the country’s second-biggest refiner Idemitsu Kosan Co is taking a more cautious stance, increasing capacity for low sulphur fuel oil (LSFO), but also relying on blending to produce IMO2020 compliant bunker fuel.

The different approaches come as refiners across the world grapple with the shipping industry’s most drastic fuel transition since it moved from burning coal to oil early last century.

New International Maritime Organization (IMO) rules from Jan. 1, 2020 prohibit ships from using fuels containing more than 0.5% sulphur, compared with 3.5% now, unless they are equipped with exhaust-cleaning “scrubbers”.

The changes affect demand from 50,000 merchant ships consuming about 4 million barrels of marine fuel a day.

When completed in January, three months earlier than planned, SK Energy’s 40,000 barrels-per-day vacuum reside desulphurisation (VRDS) will be its first plant solely devoted to producing compliant LSFO.

“We conservatively expect (the new unit) to create 200 billion won ($170 million) worth of profits annually depending on market conditions,” Lee Duk-hwan, project leader of SK Energy’s optimization operation office, told reporters during a site visit.

“If market conditions are favourable we see 300 billion won worth of profits,” Lee said.

The unit will start commercial operations in March after making fuels on a trial-basis.

The refiner has so far relied on its trading arm to create useable blends from a mix of produced and purchased fuels and oil.

With shipping companies delaying fuel orders until the last minute, global refiners do not have clear indications of what fuels will be most in demand. Refiners also have not been able to guarantee the quality and compatibility of fuels they supply, the Chamber of Shipping of America said.

Idemitsu Kosan is planning to increase capacity at its 190,000-barrel-a-day Chiba refinery’s residue crude hydro-desulphurizing unit, to boost output of LSFO or other IMO-compliant fuels.

Japan’s second-biggest refiner is also upgrading its fluid catalytic cracking unit to produce other light products such as gasoline to offset declining HSFO demand, a refinery manager, Hiroshi Kondo, told reporters during a recent site visit.

However, the company is still assessing demand for alternative fuels and has been blending products to produce IMO2020 compliant marine fuel.

“We will only make selective and concentrated investments in the areas where we see growth or to meet new environmental regulations such as IMO2020,” Kondo said.

Idemitsu plans to spend up to 12 billion yen ($110 million) on the changes at Chiba from next June, a company spokesman said.

The moves are all aimed at boosting profitability amid volatile margins as the market gears up for the change.

2-----------------Vietnam Signs Oil Supply Deal with SOCAR

Vietnam’s state-run Binh Son Refining and Petrochemical Co (BSR) has inked an agreement with Azeri state energy company SOCAR to buy five million barrels of crude in 2020, BSR said.

SOCAR Trading will provide five million barrels of Azeri Light crude to BSR’s Dung Quat refinery during the first half of 2020, BSR said in a statement on its web site.

The company said Azeri crude would also become one of its strategic crude oil products from 2020, following Vietnam’s abolishment of an import tax on crude oil which took effect from November.

BSR said it would import 8 million to 10 million barrels of West Texas Intermediate and Bonny Light crude oil in 2020 for its Dung Quat refinery.

Vietnam has been relying more on imported crude due to a slowdown in domestic output as reserves at its existing fields decline, and as China’s increasingly assertive stance in the region hampers offshore exploration.

The country’s crude oil imports during the first 11 months of this year rose 66% from a year earlier to 7.44 million tonnes (54.54 million barrels), government data showed.

3---------------------Turkey and Azerbaijan to Take Gas to Europe

Turkey and Azerbaijan formally marked the completion of the Trans-Anatolian Natural Gas Pipeline (TANAP), a milestone in a major project to help reduce Europe’s dependence on Russian gas.

TANAP comprises the longest stretch of the $40 billion Southern Gas Corridor, a series of pipelines that will carry gas from Azerbaijan’s Shah Deniz II field to Europe.

The $6.5 billion TANAP crosses the breadth of Turkey, east to west, and could transport up to 16 billion cubic metres (bcm) of Azeri gas a year. Europe is allocated 10 bcm, with 6 bcm earmarked for the Turkish market. Capacity could be increased to 31 bcm with additional investment.

An inauguration ceremony was held in the Turkish town of Ipsala on the Greek border and attended by Turkey’s President Tayyip Erdogan and Azerbaijan’s President Ilham Aliyev.

It marked the completion of the transfer infrastructure to Greece as well as the whole TANAP pipeline. TANAP’s first section, ending at a Turkish discharge point in Eskisehir, was completed last year.

“Aside from insuring the energy needs of our country with TANAP, we aimed to contribute to Europe’s energy supply security,” Erdogan said.

The pipeline connects to the Trans-Adriatic Pipeline (TAP), which is still under construction and will then transfer up to 10 bcm gas to Greece, Albania and Italy.

“The real responsibility from now on lies with our neighbours on the other side of the border. The Trans-Adriatic Pipeline needs to be completed as soon as possible to start the transfer of gas to Europe,” said Erdogan, adding that it was expected to be completed in 2020.

TANAP’s shareholders are Azeri state energy company SOCAR (51%), Turkish pipeline operator BOTAS (30%), BP (12%) and SOCAR Turkey (7%).

Separately, Erdogan said Turkey and Russia would launch the Turkstream pipeline with a ceremony in Istanbul on Jan. 8. Russia is Turkey’s largest gas supplier.

The first part of the pipeline is designed to supply Turkish domestic customers, while the second part is expected to run further - from Bulgaria to Serbia and Hungary.

4--------------U.S. Suspends Oil Export Terminal Application Review

U.S. maritime officials have suspended a review of oil refiner Phillips 66’s application for a U.S. Gulf Coast deepwater export terminal for additional information, but the company said it would continue outreach efforts to win over residents.

Phillips 66 is one of five companies that have applied for U.S. permits to build offshore facilities to load shale onto supertankers for export to Asia, Latin America and Europe.

The Maritime Administration and the U.S. Coast Guard issued so-called stop clock letters this month that temporarily halt reviews of its proposed Bluewater Texas Terminals, a 1.92 million barrel-per-day (bpd) project off Corpus Christi, Texas. They also suspended reviews of Sentinel Midstream LLC’s planned export terminal off Freeport, Texas, regulatory filings showed.

Phillips 66, which sought permits in May, planned to start construction on its project in the third quarter of next year and begin service in late 2021, according to regulatory filings.

Phillips 66 spokesman Dennis Nuss did not respond to a question on whether the suspension will delay the start-up.

U.S. officials called on Phillips 66 to engage with local officials and residents near the Corpus Christi project, citing “several dozen potentially affected property owners that were unaware of the proposed project.”

Phillips 66 has held “dozens” of meetings with local residents, elected officials and others and plans to continue such efforts, Nuss said.

“We’ve never heard from anyone,” said Deborah Galatzan, a property owner in Aransas Pass who expressed concern about the impact on businesses and the environment. She attended a July meeting where Phillips 66 officials discussed the project but called details provided “very sketchy and vague.”

Sentinel does not expect the suspension to affect its project and anticipates regulators will resume the review in the near future, Chief Executive Jeff Ballard said. Sentinel has said it expects to begin operations in early 2022.

Maritime officials previously suspended reviews of projects owned by pipeline operator Enbridge Inc and Swiss trader Trafigura AG in June and February, respectively.

5-------Asia LNG Price Dips

Asian spot prices for liquefied natural gas (LNG) slipped as new supply offers kept coming on the market amid subdued demand.

The average LNG price for January delivery into northeast Asia LNG-AS was estimated at around $5.60 per million British thermal units (mmBtu), $0.10/mmbtu down.

Buying activity was limited in both Asia and Europe as gas stocks were high, market sources said. But supply offers were ample.

“It’s a slow grind down,” one LNG trader said. “At the moment, I don’t see a reason for prices to start rising in December.”

Two of Australia’s projects were selling strips of cargoes.

Australia Pacific LNG (APLNG) has offered one cargo a month for loading over 2020.

Ichthys LNG plant has offered five cargoes for loading between December and April.

Australia’s producer Woodside Energy was selling a late December cargo from Pluto LNG, a source said.

Another Australian project, Gorgon, was expected to end its planned maintenance on one of its trains after a production reduction for more than a month.

Nigeria LNG closed a tender for two December cargoes, while Russia’s Novatek might have offered up to four cargoes on the spot market, sources said.

On the demand side, an announcement of South Korea’s energy ministry that the country will idle up to a quarter of its coal-fired power plants between December and February did not prevent prices from falling.

The impact of the closure is expected to be limited at the moment as Korea Gas Corporation (KOGAS) has purchased over a dozen cargoes for winter supply earlier this autumn. However, future winter purchases will depend on the weather, an industry source said.

Some demand came from Mexico where state power utility CFE was looking for five cargoes for delivery during January and February.

India’s Gujarat State Petroleum Corp (GSPC) was seeking a late December cargo, while Reliance Industries has bought a cargo for the first half of January delivery, market sources said.

Pakistan LNG announced that commodity trader Gunvor submitted the lowest bids for four out of five cargoes for delivery in January. The remaining cargo will be supplied by DXT Commodities.

In Europe, several deals were done for delivery from end December to early February at discounts over $0.40 per mmBtu to the Dutch gas benchmark, an LNG trader said.

6-------------Saudi Aramco IPO Oversubscribed

Saudi Aramco’s initial public offering (IPO) was on course to be oversubscribed but not by a huge margin, according to figures released so far by the lead manager before a Dec. 4 close for institutional investors to submit offers.

Bids received from institutional and retail investors totalled $44.3 billion, lead manager Samba Capital said, about 1.7 times the value Saudi Arabia aims to raise from selling a 1.5% stake in the state-owned oil giant.

Although the IPO has received more than enough bids, the level of interest is relatively muted compared to other emerging market IPOs and subdued even when compared to the listing of a top Saudi bank in 2014 that was oversubscribed many times over.

If Riyadh hits its target of raising 96 billion riyals ($25.6 billion) or more it would still be a world record IPO, valuing the company at about $1.7 trillion.

But this is lower than the $2 trillion valuation originally touted by Saudi Crown Prince Mohammed bin Salman, who has put the sale at the heart of his programme to raise cash for ambitious plans to diversify the kingdom’s oil-reliant economy.

Riyadh scaled back its original IPO plans, scrapping an international roadshow to focus instead on pushing the offering among wealthy Persian Gulf Arab allies. It has stayed quiet on when or where it might list the stock abroad, which had been central to the plans that were first announced in 2016.

Bankers said roadshows in New York and London were cancelled after international investors baulked at the proposed valuation.

In the first update on institutional interest, Samba said the value of bids had reached 118.86 billion riyals ($31.7 billion), with the bulk coming from Saudi companies and funds, while foreign investors accounted for just 10.5% of offers.

Sources told Reuters the sovereign wealth funds of Abu Dhabi and Kuwait, both OPEC oil producers like Saudi Arabia and close political allies, planned to invest.

The retail tranche, which closed to subscribers, attracted bids worth 47.4 billion riyals ($12.64 billion), around 1.5 times the amount of shares offered to them.

The level of interest is relatively modest when compared to the listing of Saudi Arabia’s National Commercial Bank in 2014 when the retail portion was 23 times oversubscribed.

Alibaba’s listing in Hong Kong this month had bids for 40 times as many shares to those on offer.

7=======Gazprom Quarterly Profit Falls

ussian state gas producer Gazprom posted a third-quarter net profit of 212 billion roubles ($3.32 billion), down 45% from the same period a year ago on lower export volumes and weaker gas prices in its core European market.

Gazprom is set to start up its major Power of Siberia gas pipeline to China that aims to deliver 38 billion cubic metres (bcm) of gas a year by 2025.

The firm is set to supply 5 bcm next year, 10 bcm in 2021 and 15 bcm in 2022, a Gazprom official said, adding China must buy at least 85% of these volumes based on the supply contract.

Gazprom expects annual exports to Europe to be around 194-204 bcm in the next four to five years, compared with 198 bcm this year.

It said it had supplied 53.5 bcm to Europe and destinations other than Russia and the ex-Soviet Union in the third quarter, down from 56.9 bcm in the same period a year ago.

Gross revenue from gas supplies to Europe and destinations excluding Russia and ex-Soviet states was 587 billion roubles, down 37% year on year, as average gas prices fell to $169.8 per 1,000 cubic metres (cm) from $250.8 per 1,000 cm in the third quarter of 2018.

Gazprom said total sales were 1.6 trillion roubles in the third quarter, down from 1.9 trillion in the same period a year ago. Net debt was 2.86 trillion roubles at the end of September.

8----French Gas Storage Brimming Ahead of Winter

France has sufficient gas in storage to see it through winter even in the event of an exceptionally cold snap, thanks in part to a sharp increase in the flow of liquefied natural gas (LNG), network operators GRTgaz and Terega said.

French gas storages are filled to the brim at 129 terawatt hour (TWh), their highest level in nine years, the operators said.

France has become an attractive destination for LNG flows and transit thanks to the completion of a pipeline linking north and southern France, its storage networks, LNG terminals and a unified gas market.

The operators said the completion of the Val de Saone gas pipeline and the creation of the single market Trading Region France last year, boosted French gas transit capacity by 42%, and smooth out the price difference between north and southern France.

LNG flows through the French network doubled in the past year, reaching 211 TWh at the end of October.

The operators said the influx of LNG helped push the French PEG gas price to its lowest since 2009 at below 8 euros ($8.82) a megawatt hour (MWh) in September.

“We are not worried about winter,” Thierry Trouve, director general of GRTgaz, a unit of Engie, told a news conference. “Storages are full, and we can also send gas to Spain, Italy or Switzerland without any restrictions.”

9--- Siberian Gas to Test CNPC's Marketing Mettle

Across China’s coal-burning northeastern provinces, pipelines are being laid, contracts signed and coal-fired boilers ripped out ahead of the arrival of the country’s first piped natural gas from Russia.

The ‘Power of Siberia’ pipeline, due to open on Dec. 2, will pipe natural gas around 3,000 km (1,865 miles) from Russia’s Siberian fields to the fading industrial region, which has lagged the push to gas in China’s south and east.

The pipeline - which will deliver gas under a 30-year, $400 billion deal signed in 2014 - has the potential to transform northeast China’s energy landscape and even slow the country’s surging imports of liquefied natural gas (LNG).

It will also make Russia a key supplier to China, to rival Turkmenistan and Australia, boosting ties amid Beijing’s trade war with the United States.

More immediately, it poses a challenge for the sole marketer of the gas, China National Petroleum Corp (CNPC), or PetroChina, as it looks to drum up demand in the relatively sparsely populated region that has relied on coal for heating during sub-zero winters.

The pipeline will emerge in Heilongjiang, which borders Russia, and feed on to Jilin and Liaoning, China’s top grain hub, where rust belt industries have long been overshadowed elsewhere.

The region’s industry and 68 million city dwellers consume just 14 billion cubic meters (bcm) of gas a year, well below the 38 bcm the pipeline will deliver at full capacity by 2025.

Russia’s Gazprom has said it expects to supply 4.6 bcm in 2020, rising to 10 bcm in 2021, 16 bcm in 2022, 21 bcm in 2023 and 25 bcm in 2024.

With local power prices capped by authorities to support manufacturing, and cheaper imported coal available via Liaoning’s Dalian port, CNPC faces a tough task to sell gas.

“It will take a long time to nurture a market in the northeast where gas-fired power generation barely exists and the industrial sector is weak,” said Li Yao, chief executive of consultancy SIA Energy.

“With no take-or-pay contracts in place (domestically), CNPC shoulders most of the marketing risk.”

Neither PetroChina nor Gazprom has revealed the gas pricing terms, but Beijing-based analysts said the price is linked to crude oil or a basket of competing fuels.

Ling Xiao, a PetroChina vice president in charge of gas marketing, said last month Siberian supplies would be priced “slightly lower” than piped imports from Turkmenistan, but the company “will still be making a loss as (the price) exceeds that of domestic city-gate benchmark rates.”

Several Russian gas industry sources said the pricing could be revised down as volumes increase due to a fall in global oil prices from around $100 a barrel when the deal was signed to around $60 now.

However, the pricing formula remains known by only a few due to its commercial sensitivity, according to one source. Gazprom said it will not comment on pricing.

PetroChina declined to comment on the pipeline or its plans to boost gas take-up.

However the company, which supplies 70% of China’s gas, has been working for the past five years to put distribution infrastructure in place.

A 3,371 km (2,095 mile) trunkline linking the arrival point in Heihe to Shanghai is being laid in phases and slated for completion by 2024, state media reported.

10----Greece Eyes €44bn for Clean Energy

Greece hopes to generate investment worth about 44 billion euros ($49 billion) over the next decade on projects to reduce its dependence on fossil fuels, authorities said.

A gameplan approved by the cabinet showed Greece will try to reduce its carbon footprint by more than 55 percent by 2030 compared with 2005, and would close down all its coal-fired power plants in the next eight years.

Wind, solar and hydroelectric power should account for at least 35 percent of energy consumption by then, up from about 15 percent in 2016, with investments worth about 9 billion euros. Other investments include natural gas networks and in recycling projects.

Athens expects this investment to consist largely of government spending, combined with European Union funds and foreign investment.

Oil and gas imports account for more than 65 percent of total energy consumption in Greece.

 “Climate change is here and we are living with the consequences on a daily basis,” Environment and Energy Minister Kostis Hatzidakis told journalists.

The country will invest about 2 billion euros in the next 10 years to help tackle natural disasters from climate change like floods and forest fires.

Torrential storms caused flash floods and the deaths of three people, while forest fires are common in Greece. In its worst tragedy, 102 people died when a fire ripped through the coastal village of Mati in July 2018.

Asian crude and products market, November2019

Crude market

Oil prices rose on average during November compared to October. There were a group of bullish factors caused such an upside movement. Over November, the promising signals of U.S.-China trade agreement were strong enough to lift up prices. Furthermore, tensions in the Middle East mostly focusing on the case of Iraq, added more support to the crude prices. One last thing that can be pointed out as the bullish factor is news of decreasing US commercial inventories.

In November, it was said that OPEC’s core group and Russia appear to reach consensus on deeper production cuts. The 177th meeting of the OPEC conference is due to be held on 5 December in Vienna. The 7th OPEC and non-OPEC Joint Ministerial Meeting is due to be held on 6 December 2019.

Members of the Organization of the Petroleum Exporting Countries will meet in Vienna, and they will be joined by Russia and other non OPEC producers Friday. That larger group, known as OPEC plus, had been expected to extend an existing agreement to cut 1.2 million barrels a day through June. The agreement had been set to expire in March. That being the case, oil prices is expected to be supported in 2020.

Products Market

Ahead of the coming IMO 2020 implementation, High Sulfur Fuel Oil (HSFO) is experiencing its year-to-date lows, while LSFO is growing at an accelerating rate. Apart from bottom of the barrel i.e. fuel oil; top and middle of the barrels were facing healthy and competitive days. In general, gasoline and gasoil are used in the essential part of the daily life, while naphtha is mostly consumed to produce luxuries. In view of these facts, naphtha trend is mostly moving in line with the movements of economic growth.

Light distillates

In naphtha market, Petrochemical demand from Japan, South Korea and India were healthy and supportive.

Having the news of first gasoline cargoes offered by Petronas and Saudi Aramco’s refinery and petrochemical plant in Malaysia, it was likely to bear downward pressure on this products crack – the differential between the price of product and Dubai-. However, the market was favorable for its suppliers.

Middle distillates

Just ahead of 2020, it is seen that proportion of the gasoil pool to be used to meet IMO 2020 standard is lower than expectations. Bearing this in mind, gasoil cracks are likely to be decreased.

Residues

HFSO cracks weakened heavily m-o-m. In contrary to the weakening factors, Indian fuel oil sales reached their lowest levels due to their domestic use as secondary feedstock for its complex refineries.  Looking forward, market is waiting to see the changes after 2020, and there are still mixed feelings about that.

 

Iran’s Private Sector Role in Petroleum Industry

Iran’s petroleum industry has been through ups and downs over the past decade, mainly due to tough sanctions imposed on Iran by the United States. However, it has been racing ahead. Domestic manufacturing and mastering modern technical knowhow has always been a major cause of concern for the petroleum industry. This issue has in recent years gained momentum as Petroleum Ministry officials have underlined the need for using domestic potential as much as possible. In such context, the significance and advantages of commercialization and revenue generation from the growth and dynamism of the private sector in the petroleum industry should be taken into consideration.

Petroleum industry managers have in recent years paved the way for the private sector to get engaged in the petroleum industry. To that effect, they have identified solutions for empowering them, removing obstacles in the way of commercialization, finding solutions to deal with risks and guarantee investment in various sectors.

According to Petroleum Ministry officials, Iran’s petroleum industry will in coming years need several hundred billion dollars to enhance the rate of oil recovery and increase production. In light of the Petroleum Ministry’s strategy of supporting domestic manufacturing, 50-70% of any amount of investment would be spent on purchasing equipment. It means filing order with the private sector in Iran. Petroleum industry is the driver of Iran’s economic growth and development. To that effect, Iranian petroleum industry officials have been concerned with strengthening the private sector in manufacturing commodities and equipment and also getting it engaged in projects overseas. That would facilitate the presence of Iranian industrialists and companies in the region. Petroleum Ministry has so far carried out many activities in this regard, including establishment of self-sufficiency circles, ad hoc committees to support domestic manufacturing, setting up domestic manufacturing research divisions, choosing 10 widely used items to be manufactured domestically and taking action for domestic manufacturing. Each has had its own positive results for the petroleum industry. Naturally, one requirement for the petroleum industry in recent decades in light of political restrictions and pressure has been to develop the domestic manufacturing of strategic equipment for the petroleum industry and reducing dependence on foreign companies.

All administrations in Iran have been preoccupied with this issue; however, the current administration has incorporated it into its decisions and plans, and has taken big strides for their implementation.

A major step taken by Iran’s petroleum industry in recent years has been placing trust in Iranian manufacturers and contractors and awarding megaprojects like construction of platforms, laying out offshore pipelines, building gas refineries at the supergiant South Pars gas field, awarding projects like "West Ethylene Pipeline" (WEP) or the Goureh-Jask oil pipeline to Iranian contractors.

Bijan Zangeneh, Iran’s Petroleum Minister, has called for more trust in the private sector in oil projects. Like in previous years, the companies affiliated with the ministry have been required to purchase the commodity or equipment they need from domestic manufacturers, and refrain from filing any order with foreign manufacturers. They have been instructed to order only commodities and equipment that are not produced domestically. Also thanks to planning made in recent years on the domestic manufacturing of strategic and important equipment for the petroleum industry, today many petroleum industry commodities are manufactured in Iran. The heads of the Society of Iranian Petroleum Industry Equipment Manufacturers (SIPIEM), Iran Industrial Equipment Manufacturers Association (SATSA), in their last meeting with Minister Zangeneh, said they would have no problem for working with the petroleum industry, and would continue their work despite all restrictions caused for the petroleum industry due to the sanctions. They have said they had not any layoff in the past and half years. That is very important. They have also said, over the past ten years, their production capacity has increased significantly. That was visible during the last Iran Oil Show. When it comes to O&M equipment manufacturing, more than 95% of equipment needed in this sector has been domestically manufactured. Bahram Barani, SIPIEM Board member, said more than 95% of the equipment related to operation and maintenance had been manufactured by SIPIEM members. Barani’s works take up added significance as Iran has been faced with tough US sanctions over the past two years. Although foreign companies have left Iran, the private sector has largely managed to meet petroleum industry needs.

Some measures taken by Petroleum Ministry over recent years with a view to empowering the private sector are as follows:

E&P Companies

Iran's Petroleum Ministry in December 2015 communicated the guideline on E&P companies’ qualifications for developing oil and gas fields in Iran. The guideline was drawn up based on Iran’s resilient economy policy and the 6th Five-Year Economic Development Plan for transferring and upgrading national technology in the upstream oil sector and empowering Iranian E&P companies. Currently, 17 private companies including Dana Energy, MAPNA, and Pasargad Energy Development Company are involved in this sector to support oil projects in Iran.

National Iranian Oil Company (NIOC) in March 2018 signed an agreement for the development of the Aban and West Paydar oil fields with Dana Energy and Russia’s Zarubezhneft, and another agreement for the integrated development of the Sepehr and Jofair fields with Pasargad Energy Development Company.

Sixty-three percent of oil equipment manufacturing capacity in Iran is intact now and domestic manufacturers hope to use this capacity when new oil contracts are implemented.

Over recent years, Iran’s petroleum industry has set up specific frameworks to establish and support domestic firms and convert them into E&P companies. Petroleum industry managers believe that Iranian E&P companies would be able to cooperate with foreign companies under joint-venture deals.

Private Firms Make 10 Commodities

Iran’s petroleum minister instructed the domestic manufacturing of 10 groups of commodities that are widely used in the petroleum industry in order to highlight the private sector’s role and also support commercialization of technologies.  Chief among these commodities are wellhead equipment, downhole completion strings, downhole pumps, drills and actuators. As a result of this decision, agreements have so far been signed with 50 private companies for the supply of the equipment. Thirty-three agreements are specifically signed for wellhead equipment and downhole completion strings. The entire 50 agreements are worth IRR 4,000,271,000,000.

Key Oil Export Project in Private Sector Hands

Construction of the Goureh-Jask pipeline and a crude oil export terminal in Jask Port are among NIOC’s prioritized projects. These projects are under implementation using maximum capacity of domestic contractors and manufacturers. The project involves building about 1,000 km of pipeline, five pumping stations, gauge and monitoring equipment, storage tanks and an export jetty. That would allow transferring 1 mb/d of crude oil from the Goureh oil terminal in Bushehr Province to Jask off the Sea of Oman. Jask would also become the second crude oil export terminal in Iran.

Flare Gas Gathering

Last year, the agreement for building facilities to gather associated petroleum gas in the petroleum industry was signed with the Persian Gulf Petrochemical Industries Company and Maroun Petrochemical Company, both private firms, for $1.2 billion. The project was aimed at preventing the burning of 770 mcf/d of flare gas (equivalent of 22 mcm/d of gas) in the provinces of Khuzestan and Kohguiluyeh and Boyer Ahmad. The project would add 1.5 million tonnes to Iran’s annual petrochemical production, worth about $2.5 billion.

Oil Recovery Maintenance

Minister Zangeneh recently said that 33 packages of oil production and preservation projects were envisaged with over $6 billion in credit. It may be said that EPD and EPC projects in this regard were defined to create jobs and bring about prosperity for domestic contractors and manufacturers. Last January, NIOC signed 9 agreements with domestic companies, worth IRR 65,000, with domestic contractors in order to increase oil production by 281,000 b/d over three years. Arrangements are currently under way for launching a tender for the signature of 23 more agreements, forecast to cost IRR 33,000 billion. All of these agreements would be implemented through domestic financing. Ten more agreements are also to be signed soon for that purpose.

The important point with these agreements is that they underscore domestic manufacturing and using domestic capacities. For instance, importing 84 foreign items that have been manufactured in Iran is banned. A directive was issued to that effect by Minister Zangeneh in August 2018.

Oil and Petroleum Products Sales

NIOC released a statement in October 2018 to trade 1 million barrels of crude oil on the international floor of the Iran Energy Exchange (IRENEX). Soon after this announcement, crude oil was offered on IRENEX. Months later, gas condensate was also offered on IRENEX. NIOC said in nearly one year, 1 million barrels of light crude oil as well as 70,000 barrels of heavy crude oil was sold on IRENEX.

A reasonable and principled policy could be partnership between an Iranian and a foreign firm under the new oil contract structure with a view to transferring advanced oil technology and paving the ground for more growth in Iran’s petroleum industry. Such policy would engage the private sector and boost it scientifically and practically. Such growth and prosperity, regardless of policy, could serve as the powerful arm of Iran’s petroleum industry to show off on the international scene.

Oil Figures in Iran’s Contemporary History

From Goodwill to Vested Interests

Oil has been through ups and downs throughout its history in Iran. It has also given rise to many developments. As far as historical events are concerned, people play significant roles in the developments. Iran’s oil sector has been no exception. There have been many influential figures changing the direction of oil issues. Some of them have proven to be successful and some others have failed, some have been praised as servant and some others as traitor. In any case, every person related to Iran’s oil is important. Without them, oil might not have been recorded in Iran’s history. The history of petroleum is tied to Iran’s future and relates the story of wishes and awareness of a nation. Among the most prominent figures involved in Iran’s petroleum industry, only a few of them – Mohammad Mossadeq, Ayatollah Qasem Kashani and Ali Razm-Ara – may be known more than others. The present article intends to introduce other influential persons whose names have not been made public enough.

Who Announced Oil Existence?

Long before William Knox D’Arcy announced the existence of oil in Iran, German General Sir Albert Houtum-Schindler conducted in-depth studies on oil in Iran. News of existence of oil in Caucasus and the possibility of emergence of windfalls was heard in the Court of Persia. It fell in the second half of Nasser ad-Din Shah’s 50-year reign. Mirza Sepahsalar, the prime minister, had been dismissed due to his objections to the Reuter concession. But Schindler re-hired him. According to Fereydoun Adamiat, Schindler carried out widespread research on Iran’s oil in the late 19th century. Schindler had said Persia was rich in oil but the Persian government had no interest in it. He had highlighted Astarabad, Shoushtar, Borazjan, Kerman, Daarab, Kermanshahan and Kurdestan as rare sources of oil. Based on studies conducted by this German man, a Dutch company prospected for oil in Iran. However, due to some problems, it was finally D’Arcy who explored oil in Iran. A review of records shows that several months before D’Arcy, Schindler had filfilled oil research in Iran; therefore, he was an influential figure in Iran’s petroleum industry. Maybe Nasser ad-Din Shah had to die before Iran’s oil gushed out.

Antoine Ketabchi Khan

Antoine Ketabchi Khan was a Turkish national of Armenian origin. He had preferred to settle in Iran due to the Turkish government’s radical crackdown on Armenians following the collapse of the Ottoman Empire. Iran was known as a country where diverse ethnic and religious groups lived together in peace.

Under the Qajar dynasty, Armenians were promoted to high posts due to their good knowledge of a foreign language like Russian, French, German or English. These posts in the Qajar government required good language skills. Ketabchi Khan worked for the Persian government for 22 years until 1900.

Based on Khosrow Motazed’s book “Earth’s Blood”, Ketabchi Khan was appointed as director of Iran’s booth at the Paris show. French archeologist Jacques de Morgan had published an article about Iran’s reserves, saying southwest Iran was rich in oil reserves. After reading the magazine, Ketabchi contacted Edward Kurt, the former Reuter secretary who was looking for oil in vain. He realized that Kurt had also read de Morgan’s article. Based on Motazed’s book, the pair went to Sir Henry Wolf, the then British ambassador to Tehran, and related the story of Iran’s underground capital and Mozafaruddin Shah’s tough financial needs.

Caucasus’s Ethnic Iranian

The Iranian territory of Caucasus was detached under the Turkmenchai and Golestan treaties following the defeat of Iran from Russia under Fath-Ali Shah Qajar and annexed to Russia’s territory. But before the Communists’ victory in early 20th century to annex Caucasus to their Marxist rule, Baku was the most important city of Caucasus. Baku was known to sit on huge oil reserves. The oil wells in this city were privately-owned. Haji Zein al-Abedin Taqiev, an ethnic Iranian, was among the proprietors of oil wells in Baku. He had offered extensive public interest aid to Iranians. Moayer al-Mamalik, in his book on the Nasseri era, writes: “Haji Taqiev had spent 10 million manats on building a school where 500 orphans from the Muslim community of Caucasus were studying. Taqiev had sent 250 poor Muslim schoolboys to Moscow and 250 others to Saint-Petersburg to study in various disciplines. He had donated his chintz-making factory for this purpose. Each girl was awarded 2,000 rubles as dowry while each boy received the same amount of capital to start work after completing their studies.”

Britain and Russia Role

In Iran’s contemporary history, no authenticated document has been found about why Teimurtash was killed by Reza Shah. There are a variety of opinions on this issue, and historians have offered their own reasons to highlight the death of Teimurtash. But among all these reasons, one reason is related to oil and explains why Reza Shah had ordered his death. Teimurtash was Reza Shah’s confidant man from 1929 to 1931. He was powerful and had bargained with the British head of Anglo-Persian Oil Company (AOPC) about increasing Iran’s share of oil revenue. As part of this mission, Teimurtash had travelled to London where he stayed for two months. He had offered to negotiate with Britain’s foreign secretary about oil. The British official was not willing to see Teimurtash. The APOC head finally convinced the minister to receive Teimurtash. Their talks ended inconclusively. On his way back home, Teimurtash stopped over in Moscow and held secret talks with several Russian officials. It was heard that Teimurtash’s suitcase had been lost in Moscow. The documents in his suitcase had been filmed and sent to Reza Shah. According to these documents, Teimurtash wanted to transfer portions of the oil concession to Russia. After that, Britain reduced Iran’s royalties and Reza Shah set fire to the D’Arcy concession. That cost Iran too much due to its legal consequences. Teimurtash’s oil activities and his juxtaposition in the middle of Britain’s oil interests and Russia’s greed for oil cost him his life. He was ordered jailed and killed in prison.

Demanding Portion in Broad Daylight

During World War II, amid clash of ideologies and power shows by leaders of hostile nations, one issue was highly dominant. Military vehicles cost nothing without fuel. This fossil fuel decided the fate of the war. That is why the Soviet Union, a party to WWII, was looking for fuel everywhere in the world to keep military vehicles running.

Iran, the southern neighbor of the Soviet Union, enjoyed the best perspective for powering Russian military vehicles. Sergey Kavtaradze, a top Russian official, had visited Iran’s northern areas and offered oil concession in northern provinces. According to Ahmad Rasekhi Langroudi’s Wave of Oil, the Iranian government had turned out his proposal. Kavtaradze got miffed and joined the Tudeh party. Tudeh activists took to the streets in Tehran, Isfahan and Tabriz to demand that Iran grant oil concession to the Soviet Union. Despite Kavtaradze’s pressure and lobbying, the Soviet Union failed and it had to look for other options to power its vehicles to fight German troops.

 

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Water Polo and Oil Industry

The history of Iran’s water polo is tied with the petroleum industry. Even before professional leagues were formed in Iran, water polo was popular in oil-rich areas in southern Iran. That explains why during three decades of national water polo league, oil teams were strongly present. National Iranian Oil Company (NIC) and its affiliates had water polo teams before the water polo federation was established. Therefore, water polo and water sports in Iran could be attributed to the emergence of the petroleum industry.

The history of water polo as a team sport began in mid-19thcentury England and Scotland, where water sports were a feature of county fairs and festivals.

The game originated as a form of rugby football played in rivers and lakes in England and Scotland with a ball constructed of Indian rubber, probably from the 1850s onwards. This ‘water rugby’ came to be called ‘water polo’ based on the English pronunciation of the Balti (Tibetan language of Kashmir) word pulu, which means ‘ball’. Early play allowed brute strength, wrestling and holding opposing players underwater to recover the ball; the goalie stood outside the playing area and defended the goal by jumping in on any opponent attempting to score by placing the ball on the deck.

Between the discovery of oil in Iran and nationalization of the petroleum industry in the country, foreign experts and technicians working in Iran’s southern oil-rich areas, particularly Khuzestan Province, introduced new sport disciplines. Water polo was one of them. It was played between foreign experts and Iranian employees on the river and sea bed and after constructing open swimming pools in Iran. The first water polo game was played between two teams from Masjid Soleiman and Ahvaz in 1938.

However, following the nationalization of the petroleum industry and the emergence of various companies involved in development, extraction, petrochemical production, etc., water polo grew into a popular sport for the families of petroleum industry staff. Matches were held between various companies affiliated with NIOC.

Iran set up a Swimming Committee in 1939 and that was when water polo was officially introduced as a game in Iran. The committee was in effect for seven years. After that, a Swimming Federation was formed. This federation comprised the three committees of swimming, diving and water polo. Later on, water polo became official.

Following the establishment of the Swimming, Diving and Water Polo Federation in Iran, matches were held between oil teams. In this way, after the formation of Iran’s water polo league, at least two oil teams were present in the matches and they won significant titles. In 1970, Iran’s water polo team participated in Asian matches in Bangkok for the first time and won the 4th title.

First Oil League

The first water polo league was held in Iran in 1983 amid the Iraqi war on Iran. That was also the beginning of water polo matches at the national level. A significant number of qualified teams joined Iran’s water polo pro league in those years. The petroleum industry had developed competent water sport teams. Petrochimi Mahshahr, Petrochimi Bandar Imam, Palayesh Naft Abadan, Naft Ahvaz, Naft Omidiyeh, Naft o Gaz Gachsaran and Petrochimi Tehran have been among the major Iranian clubs with water polo teams. Many of these teams have won titles at the Asian level. Since late 2000s, Naft Omidiyeh and Naft Gachsaran have been fighting for the championship title in Iran. The Gachsaran water polo team was the first to become championship in Iran and go to Asian games.

Winning more than 20 titles (1st to 3rd) in the premier league and dozens of medals in the first league, presence in seven rounds of Asian clubs matches and winning silver and bronze medals are indicators of the dynamism of water polo among Iranian oil companies.

The Gachsaran club was represented in the Asian clubs’ matches twice. The Gachsaran team won the championship title in 2006 and sent its team to Kuwait to compete in Asian matches. Oil teams won a championship title and once finished runners-up between 2009 and 2010. They competed in Asian matches, leading to a second-place and a third-place title. The oil teams finished runners-up in 2008 and won the championship title in 2009 in the pro league water polo matches. In the 2010s, the Gachsaran team failed to go beyond the 3rd rank. The best results they achieved over the past seven years included a third rank, a four and a fifth rank.

Naft Omidiyeh Emergence

However, since the outset of the 2010s, the Naft Omidiyeh team emerged to replace the Naft o Gaz Gachsaran team in the pro league and Asian matches. Naft Omidiyeh continued to be instrumental in the matches. The water polo team of Naft Omidiyeh was formed in 1986. It won the championship title in 1999 when Arak hosted first league matches of this discipline. Throughout its 19 years of presence in the pro league, the Naft Omidiyeh team has won one championship title, four second-place and two third-place titles. Of course, the Naft Omidiyeh team also won a championship title in the Hazfi cup of Iranian clubs.

At the Asian level, the Naft Omidiyeh team won one championship and one second-place title in Asian matches in Kuwait, a third-place title in the Asian matches held in Saudi Arabia as well as a fourth-place title. Ever since its establishment, the Naft Omidiyeh water polo team has introduced more than 23 players of different ages to Iran’s national team.

Many prominent water poloists of Iran’s history including Hossein Nsassim, Ahmad Yaqouti, Ali Moheb, Ali Amirian, Mohsen Rezvani, Ali-Reza Shahidpour, Jafari brothers and HadiBeik have shown brilliant performance at various periods. They were all from oil clubs.

Currently, Iranian oil teams are actively present in swimming and diving leagues in addition to presence in pro league and first league matches for the U-17 and U-14 categories as well as in the Khuzestan provincial league.

Naft o Gaz Gachsaran and Naft Omidiyeh are pooled together in Group B. The Gachsaran team has played 6 games, winning five of them and thereby gaining 10 scores. The Naft Omidiyeh team has played 6 games, winning four of them and thereby gaining 10 scores. The Gachsaran team is currently in the first place, followed by the Omidiyeh team

Bushehr, Where Palm Trees, Sun and Sea Mee

 Bushehr Province, located off the Persian Gulf, is the 17th largest province in Iran. The main counties in this province are Bushehr, Tangestan, Jam, Dashtestan, Dashti, Dayr, Daylam, Assaluyeh, Kangan and Guenaveh. Bushehr dates from the Elamites and the Mesopotamia. Some of historical monuments in Bushehr Province are as follows

Khour-Mowj Castle

Khour-Mowj Castle is a piece of architecture dating back to the Qajar dynasty. The arcades and gypsum of this castle indicate the Sassanid architecture while the Seljukid architecture is seen in the fabric. Only a single tower of Khour-Mowj towers has survived. The castle used to house four towers, four walls, a central building and a stable.:

Malek Edifice

The Malek edifice dates to one century before Qajar. Sprawling on 4,000 square meters, it was built by French architects using local materials. It was initially owned by Mohammad-Mahdi Malek at-Tejara. This tycoon had once travelled to France where he had visited a Middle-Age castle. He had decided to build a similar one in Bush

Coastal Strip

The Bushehr coastal strip is one of the cleanest and the best coastal areas of southern Iran. No construction has been done around it and there are palm trees and sand coasts as far as meets the eye. This coastal strip is an unrivalled tourist attraction thanks to pleasure boa

Palm Trees

Palm trees are among natural attractions in Bushehr. The cities of Ab-Pakhsh and Dashtestan are home to the highest number of palm trees in this province. The palm trees have created jobs and earn the province good revenue.