Future Builds on Petchem Industry

A major challenge oil and gas producing nations are grappling with is quitting crude oil and natural gas sales and instead of that mastering technical knowhow for producing products of higher value-added.

In parallel with the refining industry, the petrochemical industry is the best choice for this purpose. Given changes in the downstream petroleum industry in the past two decades, it may be concluded that the burden of industrial development has switched from oil to petrochemicals. Furthermore, the petrochemical industry will be main driver of the future of the world.

Having realized this fact, Islamic Republic of Iran moved to make widespread planning for the development of the petrochemical industry, and has managed to become a leading country in this sector

However, this plan is mid-way and Iran’s petrochemical industry has still two major steps to take.

By 21 March 2020 which marks the turn of Iranian calendar year, petrochemical projects worth $2 billion would have become operational. One of them is the Kaveh methanol project; the world’s largest project, with a capacity of 2.3 million tonnes.

The second phase of petrochemical industry development will be over by March 2022. Then, Iran’s petrochemical production capacity will exceed 100 million tonnes with revenue crossing $25 billion a year. Four years after that, the third phase of petrochemical industry development will come to fruition and Iran’s petrochemical industry will be producing 130 million tonnes a year of products to earn more than $37 billion in revenue.

The important point with the implementation of this development project is proof of capabilities of Iranian manpower, potential for management and planning, as well as technical knowhow of Iranian service workers who have managed to launch the world’s largest petrochemical projects amid tough sanctions.

Iran’s petroleum sector and relevant industries have shown that they would not seek anyone’s permission to undergo development. Sanctions are unjust, illegal and are in contradiction with international conventions and human rights, but this illegitimate threat has always been turned into an opportunity whose outcome in the near future will surprise everyone in the world.

 

 

Sanctions Failed to Stop Iran Petchem Sector

December 29 marks Petrochemical Industry Day in Iran. On this occasion, President Hassan Rouhani, Minister of Petroleum Bijan Zangeneh, Governor of Central Bank of Iran (CBI) Abdul-Nasser Hemmati, CEO of National Petrochemical Company Behzad Mohammadi met with a group of petrochemical industry actors.

Addressing the ceremony, Rouhani touched on sanctions targeting the petrochemical sector, saying Iran had raised its petrochemical output despite restrictions.

“Iran could also implement its development plans and is now ranked the second in the region. It will rank the first by early 2026,” he saidRouhani cited CBI data, saying 20% of the country’s hard currency needs were met by the petrochemical industry“The petrochemical industry is on the frontline of non-oil exports, requiring support from all sectors including the administration and parliament,” he saidPetchem Output Doubles

Rouhani said Iran’s petrochemical production would reach 100 million tonnes a year by 2021, i.e. the output would double from 2013.

The president said arrangements were being made for a third jump in petrochemical production, saying that would bring Iran’s petrochemical production capacity from 100 million tonnes to 133 million tonnes.

“Iran’s petrochemical revenue currently stands at $17 billion, which would reach $25 billion by 2021 and $37 billion by 2025,” he added.

Rouhani said Iran had made all these achievements under conditions of sanctions, adding: “The petrochemical industry is currently ranked the second in the region, but will become first after a third jump. That is a big honor for Iran’s petrochemical industry.”

The president also touched on feedstock supply to various petrochemical units and the production of some petrochemical catalysts inside Iran, saying it demonstrated the strength of Iran’s petrochemical industry.

Rouhani said Iran was determined to stop selling raw materials, adding: “Achieving the targeted consumption 2 mb/d of oil as feedstock for the petrochemical industry are among the objectives of this policy because it would show that the petrochemical industry converts energy into value-added.”

Rouhani also said that development of downstream industries to generate higher value-added would create jobs in the textile, packaging, agriculture and downstream industries.

The president said every effort had to be made to facilitate petrochemical exports. He added: “To that effect, talks have been held with various countries about preferential tariffs.”

Diversifying Petchem Feedstocks

For his part, Zangeneh said the Petroleum Ministry was planning to feed petrochemical plants like the Bid-Boland, NGL 3200, NGL 3100 and NGL Kharg projects.

“After the completion and commissioning of these projects, significant feedstock will be provided for petrochemical plants in addition to South Pars [gas field] and flare gas will be gathered,” he added.

Zangeneh said all the flare gas in Khuzestan Province would be gathered by investment from the Persian Gulf Petrochemical Industries Company and Maroun Petrochemical Company.

The minister said the second jump in the petrochemical sector would have been realized by 2021, adding that this sector would earn Iran $37 billion five years after the current administration bows out.

“The third jump is to sow the seeds of production for the future. It would concern not only the future of the petrochemical industry, but also the future of Iran’s non-oil economy and preventing future sale of raw materials,” he said.

Zangeneh said production from petrochemical plants had increased over recent years owing to the development of the South Pars field, implementation of other projects and receipt of more feedstock. Despite sanctions, he added, petrochemical plants have shown good performance.

Innovative Petchems

Zangeneh said diversity in production, further use of liquid feedstock and spatial planning were among plans envisaged for future.

“In this industry, major work has been done with regard to domestic manufacturing, development of technologies and cooperation with universities. For instance, several institutes have been set up or are being set up to operate in the field of innovative petrochemical products,” he said.

Zangeneh said another important issue in the petrochemical sector was financing, calling for further cooperation on the part of banks in financing petrochemical plants.

He said it was necessary for petrochemical plants to have stable conditions, adding that petrochemical plants were providing the best services and were not rent-seekers.

“We must let petrochemical plants do their job. Stable conditions could help them realize their objectives,” he said.

16 New Products

Mohammadi said 16 new products would be added to Iran’s petrochemical mix by early 2026.

He said currently 56 petrochemical plants across Iran were receiving a total of 33 million tonnes per annum of feedstock, which would be equivalent to 650,000 b/d of crude oil.

Mohammadi said by early 2022, the number of petrochemical plants would hit 83 and they would receive 62 million tonnes of feedstock annually, or 1.4 mb/d of crude oil.

He added that Iran would have 109 petrochemical plants by 2025 with an annual feedstock supply of 74 million tonnes a year, or 1.7 mb/d of crude oil.

“The total investment made in the petrochemical industry will rise from the current $53 billion to $70 billion in 2021 and to about $94 billion in 2025,” he said.

Mohammadi said NPC planned to set up a gas-to-polypropylene (GTPP) plant, comprised of a 660,000-tonne methanol unit, a 120,000-tonne PVM unit and a 120,000-tonne PP unit, in partnership with the private sector.

He said Iranian experts at the Petrochemical Research and Technology Company (PRTC) had developed technical knowhow for GTPP, adding the plant was under construction in western Iran.

Petchem Diversity to Widen Room for Maneuvering

Iran’s petrochemical industry has over recent years bolstered its presence in the international markets in a bid to increase its share in the lucrative global petrochemical trading. Currently, 56 petrochemical plants in Iran are supplying 350 various types of products. Now National Petrochemical Company (NPC) managers say they intend to diversify the petrochemical market in a bid to increase Iran’s share of global petrochemical market and minimize the vulnerability of the petrochemical sector to US sanctions.

Iran’s annual petrochemical production stands at 66 million tonnes now. Part of this production has been used to feed petrochemical plants and 31 million tonnes would be supplied on the market as final product. Of this 31 million tonnes, 22.5 million tonnes would be exported and the remaining 8.5 million tonnes would be sold on domestic markets to activate downstream industries.

Iran is currently earning a total of $17 billion from selling petrochemicals on domestic markets. That has given Iran the primary role in non-oil exports. Of this $17 billion, $12 billion is gained from exports and rest is due to domestic market sales.

The second planned jump in Iran’s petrochemical industry for qualitative and quantitative development of this industry will give rise to myriads of advantages for the downstream sector.

Iranian petrochemical industry planners intend to raise the petrochemical production capacity to 100 million tonnes from the current 66 million tonnes by 2021 which marks the end of Iran’s 6th Five-Year Economic Development Plan. Petrochemical revenue will go from $17 billion to $25 billion under the second jump.

Therefore, global scenes will become more open to Iran’s petrochemical products and the country would distance itself from selling raw materials.

Under conditions of sanctions, it would be much easier to export petrochemicals than crude oil, because of the diversity of petrochemicals and the wide spectrum of buyers. In other words, diversification of petrochemical products would expand export markets for Iran.

Diversity Overcomes Sale Restrictions

Assadollah Qarekhani, member of Majlis Energy Committee, told Iran Petroleum: “Diversification in the petrochemical products will enable us to make restrictions to sales ineffective, because it will provide customers with variety of more products.”

He added: “With such an approach, we will also earn the country higher value-added. That would help the country’s economy under economic restrictions. Meantime, diversifying the products would activate our small-scale petrochemical plants and create jobs for downstream industries and put an end to the stagnation caused by sanctions.”

Qarekhani said: “If we expand variety of our products, we can have commercial interaction with many countries and attract more customers.”

He said that the petrochemical industry does not face as much limitation as oil is faced in finding marketplaces, adding that a diversified petrochemical market would overcome sanctions.

Stronger Market Presence

Senior oil and petrochemical industry managers have felt the necessity of diversifying the petrochemical products. When there is a plan fed by ethane to produce ethylene it means that the radius of action has been limited, because only one or several products would be supplied. The market decides the fate of petrochemical products. If the same plant is fed by ethane, LPG and naphtha, more products would be supplied. For instance, in cold seasons, LPG prices increase significantly, but they drop in hot seasons.

At the same time, ethylene and downstream products are achieved from ethane. For example, propylene, butane and butadiene could be produced. That would give more room for maneuvering in feedstock, while more products would be achieved.

Iran’s Petroleum Ministry believes that the world is not always predictable and the presence of a variety of actors in the market and the concurrence of their actions and reactions may hinder the trade and economic balance or give it a new form. The existing balance in supply and demand always follows the performance of actors. If you are one of them you may not be influential, but you can secure your interests through concurrence of actions and reactions.

Undoubtedly, in case petrochemical products do not follow up on diversity in their products they will have no option but to follow the current trend and they will become inactive.

Another point hidden in the industrial literature of Iran’s petrochemical industry is that if we see large petrochemical plants are built in the world with diversity in feedstock and production, such plants are established in the heart of refineries.

Today, refining facilities built in the world can treat 1.5 mb/d of feedstock. A wide spectrum of petrochemicals will be also supplied. There are not many plants in the world to receive feedstock to supply product at the same time.

Saudi Aramco is one of the largest producers of liquefied petroleum gas in the world. Aramco has set up several PDH units to convert propane to propylene and downstream products. Such units may not be economical per se because propylene prices do not follow propane prices and propylene is produced by refining units. When at an industrial unit, the input and the output are not coordinated, it is as if no investment was made.

When Aramco has worked out such a mechanism it would become more influential in the market because it may create the necessary balance in the supply and demand at all seasons and affect the market. Aramco’s PDH units are tasked with removing fluctuations from the LPG market. Whenever the world markets are saturated with LPG, propane is delivered to such units and the rate of LPG supply is reduced so that prices would go up. If the propylene market is saturated, the relevant unit would be shut down or be overhauled. Aramco has pursued such a tactic to make profitable gains. Iran may follow similar approaches in its petrochemical industry.

Iran's Petroleum Ministry has adopted plans in order to connect the separate chains in the oil, refining and petrochemical industries. Even a group of petroleum industry managers have said a mechanism has to be worked out so that gasoline and propylene supply would go alongside each other.

Petchem Diversity to Widen Room for Maneuvering

Farzin Savadkouhi

Iran’s petrochemical industry has over recent years bolstered its presence in the international markets in a bid to increase its share in the lucrative global petrochemical trading. Currently, 56 petrochemical plants in Iran are supplying 350 various types of products. Now National Petrochemical Company (NPC) managers say they intend to diversify the petrochemical market in a bid to increase Iran’s share of global petrochemical market and minimize the vulnerability of the petrochemical sector to US sanctions.

Iran’s annual petrochemical production stands at 66 million tonnes now. Part of this production has been used to feed petrochemical plants and 31 million tonnes would be supplied on the market as final product. Of this 31 million tonnes, 22.5 million tonnes would be exported and the remaining 8.5 million tonnes would be sold on domestic markets to activate downstream industries.

Iran is currently earning a total of $17 billion from selling petrochemicals on domestic markets. That has given Iran the primary role in non-oil exports. Of this $17 billion, $12 billion is gained from exports and rest is due to domestic market sales.

The second planned jump in Iran’s petrochemical industry for qualitative and quantitative development of this industry will give rise to myriads of advantages for the downstream sector.

Iranian petrochemical industry planners intend to raise the petrochemical production capacity to 100 million tonnes from the current 66 million tonnes by 2021 which marks the end of Iran’s 6th Five-Year Economic Development Plan. Petrochemical revenue will go from $17 billion to $25 billion under the second jump.

Therefore, global scenes will become more open to Iran’s petrochemical products and the country would distance itself from selling raw materials.

Under conditions of sanctions, it would be much easier to export petrochemicals than crude oil, because of the diversity of petrochemicals and the wide spectrum of buyers. In other words, diversification of petrochemical products would expand export markets for Iran.

Diversity Overcomes Sale Restrictions

Assadollah Qarekhani, member of Majlis Energy Committee, told Iran Petroleum: “Diversification in the petrochemical products will enable us to make restrictions to sales ineffective, because it will provide customers with variety of more products.”

He added: “With such an approach, we will also earn the country higher value-added. That would help the country’s economy under economic restrictions. Meantime, diversifying the products would activate our small-scale petrochemical plants and create jobs for downstream industries and put an end to the stagnation caused by sanctions.”

Qarekhani said: “If we expand variety of our products, we can have commercial interaction with many countries and attract more customers.”

He said that the petrochemical industry does not face as much limitation as oil is faced in finding marketplaces, adding that a diversified petrochemical market would overcome sanctions.

Stronger Market Presence

Senior oil and petrochemical industry managers have felt the necessity of diversifying the petrochemical products. When there is a plan fed by ethane to produce ethylene it means that the radius of action has been limited, because only one or several products would be supplied. The market decides the fate of petrochemical products. If the same plant is fed by ethane, LPG and naphtha, more products would be supplied. For instance, in cold seasons, LPG prices increase significantly, but they drop in hot seasons.

At the same time, ethylene and downstream products are achieved from ethane. For example, propylene, butane and butadiene could be produced. That would give more room for maneuvering in feedstock, while more products would be achieved.

Iran’s Petroleum Ministry believes that the world is not always predictable and the presence of a variety of actors in the market and the concurrence of their actions and reactions may hinder the trade and economic balance or give it a new form. The existing balance in supply and demand always follows the performance of actors. If you are one of them you may not be influential, but you can secure your interests through concurrence of actions and reactions.

Undoubtedly, in case petrochemical products do not follow up on diversity in their products they will have no option but to follow the current trend and they will become inactive.

Another point hidden in the industrial literature of Iran’s petrochemical industry is that if we see large petrochemical plants are built in the world with diversity in feedstock and production, such plants are established in the heart of refineries.

Today, refining facilities built in the world can treat 1.5 mb/d of feedstock. A wide spectrum of petrochemicals will be also supplied. There are not many plants in the world to receive feedstock to supply product at the same time.

Saudi Aramco is one of the largest producers of liquefied petroleum gas in the world. Aramco has set up several PDH units to convert propane to propylene and downstream products. Such units may not be economical per se because propylene prices do not follow propane prices and propylene is produced by refining units. When at an industrial unit, the input and the output are not coordinated, it is as if no investment was made.

When Aramco has worked out such a mechanism it would become more influential in the market because it may create the necessary balance in the supply and demand at all seasons and affect the market. Aramco’s PDH units are tasked with removing fluctuations from the LPG market. Whenever the world markets are saturated with LPG, propane is delivered to such units and the rate of LPG supply is reduced so that prices would go up. If the propylene market is saturated, the relevant unit would be shut down or be overhauled. Aramco has pursued such a tactic to make profitable gains. Iran may follow similar approaches in its petrochemical industry.

Iran's Petroleum Ministry has adopted plans in order to connect the separate chains in the oil, refining and petrochemical industries. Even a group of petroleum industry managers have said a mechanism has to be worked out so that gasoline and propylene supply would go alongside each other.

Methanol Sales Guaranteed

Apadana Persian Gulf Petrochemical Plant is set to come online in late 2021. At the moment, it has had 47% progress. It has capacity to produce 1.65 million tonnes a year. The plant would receive 4,000 cubic meters a day of methane in feedstock. Although licensed by Switzerland’s Casale, the plant’s basic engineering had been done by Iranian companies. A total of € 462 million has been allocated for the plant.

Jalil Qasami, CEO of Apadana Persian Gulf Petrochemical Plant, said orders worth €250 million had been field. He put the rate of return on investment at 36.6%.

Qasami said Iran could produce 8.3 million tonnes of methanol, 300,000 of which would be consumed domestically and the rest would be exported.

“We’re not worried about selling our products,” he said.

Qasami touched on China’s methanol production, saying: “This country produces 60 million tonnes of methanol and it imports another 10 million tonnes.”

He added: “Meantime, China produces 80% of its methanol from coal that causes heavy pollution. That is while Iran is producing methanol from gas and therefore China can import methanol from Iran.”

Qasami said that the company’s methanol market was guaranteed, saying there was nothing to worry about selling products.

He added that PGPIC was planning to set up a methanol value chain in Iran in order to transform methanol to propylene and ethylene, in the downstream sector.

5 Catalysts at Nouri Plant

Nouri Petrochemical Plant floated 10% of its shares on the stock market, which was warmly welcomed by customers. Taqi Sanei, CEO of Nouri Petrochemical Plant, said the company’s profitability and share value were on the rise.

The company recently produced 2.9 million tonnes of products, 60% of which was exported. The rest had been sent to the Mercantile Exchange and petrochemical plants. The company is currently running at 91% of its capacity and is 101% ahead of its targets. The plant is receiving about 100,000 b/d of feedstock.

The plant is operating the heavy-end sweetening project that would allow for the production of Euro-5 and Euro-6 gasoil. The project would allow for gasoil with a sulfur content of 1,400 ppm to be converted to 10 ppm.

Sanei said the project had been put out to tender, the result of which would be known in two months.

Another project under way by Nouri plant is known as zero-flaring. The reason for which the plant is operating this project is that the sour gas produced throughout gasoil sweetening may not be injected into the fuel system and is then flared. But now the sour gas may be gathered and sweetened and then LPG is separated and sulfur is converted into ammonia sulphate.

Normally, petrochemical plants separate only sulfur during the sweetening phase. For the first time, the ammonia sulphate fertilizer is being produced from sour flare gas. Sanei said this project was aimed at reducing natural gas consumption and increasing LPG production.

Commisioning of this project would increase paraxylene production by 20% and benzene production by 10%.

Sanei said the plant suffered too much from sanctions due to catalyst supply.

“That is why in cooperation with knowledge-based companies, we produced five catalysts domestically. Now we have no problems with catalyst, chemicals and equipment supply,” he added.

Noting that 3,000 items had been manufactured at Nouri petrochemical plant, Sanei said domestic manufacturers had a big share in implementing the projects.

“The company has linked this plant to all South Pars refineries in order for feedstock supply and it has currently no problem with feedstock supply,” he said.

69% Margins at Mobin Petchem Plant

Mobin Petrochemical Company is one of the largest centralized utilities in the world. It provides utilities and treats industrial waste released from petrochemical plants in Assaluyeh. This plant was in fact aimed at saving on investment and production costs and reducing energy cost price in the area.

Ali-Reza Shamim, CEO of Mobin Company, said $2 billion had been invested in the utilities, adding that petrochemical companies would have a high margin when they provide centralized utilities.

The margins of Mobin company had been 51-52% since 2015, while at the moment it has now reached 65%.

Shamim said after the completion of a project, in which Mobin has a share, in 2021, the company would see its annual profits rise IRR 15,000 billion. The company’s profits currently stand at IRR 28,000 billion.

He also touched on Mobin petrochemical projects aimed at sustained production, saying that the water desalination plant of this company had been pre-commissioned. He said a 350-tonne boiler was also becoming operational.

He said that the industrial waste released by all companies in the region would be led to the waste treatment section of this company.

Pars Petchem Value Chain

Pars Petrochemical Company is a leading producer of C2+ in the Middle East and styrene monomer in the world. Despite US sanctions, it has managed to increase its production and exports 21.5% year-on-year.

Masoud Hassani, CEO of Pars Petchem, said the sanctions caused restrictions, “but we countered them and managed to increase our production and exports.”

Among resilient-oriented measures undertaken by the company were enhancing propane and butane exports in coordination with adjacent plants. In cooperation with the South Pars Gas Complex, the Pars Petchem company stored products in order to be fed into national gas trunkline.

Pars Petchem company also showed more flexibility to domestic customers and increased its production in the ethylene benzene and styrene monomer units in order to fully meet current and future needs and bring calm to the domestic market.

“The policy pursued by Pars Petrochemical is to supply new products so that the bulk of feedstock would be supplied by the company,” he said, adding that the company would complete the chain of its products in the styrene monomer and propane.

According to Hassani, the company plans to use styrene monomer to produce other products than polystyrene in order to increase value-added.

That would let the company record IRR 100,000 billion in annual profits, up from the current IRR 60,000 billion.

He said that Pars company was seeking to complete the value chain of its products, adding: “In propane, we will be moving towards the polyethylene chain and in styrene we want to supply products that are imported.”

Hassani said the styrene monomer and ethylene benzene production capacity of the Pars plant had increased 7% and 20%, respectively.

He added that a 25% hike in the styrene monomer output was envisaged within a year.

Iran, Regional Gasoline Hub

Persian Gulf Condensate Refinery to Treat 540,000b/d

Persian Gulf Star Oil Company was set up in 2006 to design, manage, finance, build, operate, maintain and overhaul a gas condensate refinery. The Bandar Abbas gas condensate refinery, known as Persian Gulf Star, is the most modern treatment facility in the Middle East.

Feedstock is supplied to the refinery via a pipeline cutting through the provinces of Bushehr, Fars and Hormuzgan.

Mohammad-Ali Dadvar, CEO of the refinery, tells "Iran Petroleum", the refinery whose gasoline production has reached 41 mb/d is expected to bring its treatment capacity to 540,000 b/d of condensate.

The following is the full text of the interview with Dadvar:

What do you think has been the most important achievement of the Persian Gulf Star refinery since 2013?

Persian Gulf Star Oil Company was established in 2006. Since 2014, I have been the chief of this refinery. Projects have been followed up based on a timeframe. We have arranged our purchases. The first equipment to have become operational at the refinery was its fire water pump in March 2015. Then various units came online. Once the feedstock pipeline was launched in July 2015 we could take feedstock to the refinery. Of course, it is noteworthy that gas condensate supply was difficult at that time and we received our feedstock two months later, thanks to support from Petroleum Ministry and National Iranian Oil Refining and Distribution Company (NIORDC). The coalesce came online in September 2015, the gasoline production unit in May 2016, phase 1 distillation in October 2016 and second phase distillation in March 2018. In 2018, all units of phase 3 of the refinery came on-stream.

Iran became self-sufficient in gasoline production under the administration of President Hassan Rouhani. How has the Persian Gulf Star refinery contributed to this achievement?

In 2017, our gasoline production reached 56-57 ml/d and had to import 12-16 ml/d. After phase 1 came online and arrangements were made for the second phase of this refinery, our gasoline imports ended completely. We are currently one of the largest gasoline production hubs in the region. We are also a gasoline exporter. Currently 450,000 b/d of condensate is refined at the Persian Gulf Star refinery. That means the condensate produced at 12-13 phases of South Pars is supplied to this refinery.

The gasoline produced at the Persian Gulf Star refinery is Euro-5, thereby contributing largely to reducing environmental pollution. Are other units of this refinery complying with environmental standards?

As you mentioned the most important product at this refinery is Euro-5 gasoline which avoids emission of environmental pollution. The sulfur content of gasoline produced at this refinery is below standard levels. In fact, both aromatics and benzene are of low content in gasoline. So is the sulfur content of gasoil. With regard to operational processes, it may be said that the furnaces and equipment causing pollution are under real-time detection. We have sought to minimize any spill of product. Therefore, it can be argued that the refinery stands at a good level in terms of processing and non-processing issues.

How much is the current refining capacity of the Persian Gulf Star refinery?

Based on the primary design, this refinery was set to treat 310,000 b/d of condensate, but now we have reached the 450,000 b/d capacity, which would soon reach 480,000 b/d. We have also benefited from consultation with our colleagues to explore the strengths of the installed equipment, identify untapped capacities and produce feedstock.

How is the refinery financed?

We received €2.8 billion in loan from agent banks for financing. But we have to take into account the point that launching this refinery has largely helped the government become independent of gasoline imports. How much did we need to spend if we wanted to import 16 ml/d of gasoline? It would cost $8 million, which would exceed $3 billion a year. Therefore, this refinery has had significant financial achievement. As this refinery has become operational we had already received authorization from Petroleum Ministry to return our spending on various sections of the refinery.

What are your plans for Phase 4?

Phase 4 of the Persian Gulf Star refinery was initially planned to treat 120,000 b/d of condensate. But after recent revisions, this phase becomes a phase of optimization of capacity and debottlenecking. The capital needed for Phase 4 was estimated at €980 million. But by spending €90 million on debottlenecking, €900 million was saved, which could be used as investment in other sectors. Furthermore, in our mid and long-term plans, we plan to raise the refinery production capacity to 540,000 b/d. We also want to increase the capacity of our feedstock line to enable us to transfer the feedstock coming from Assaluyeh to Jask.

What steps have you taken with regard to self-sufficiency in manufacturing commodities and equipment?

All equipment for the Persian Gulf Star refinery has been manufactured domestically. We manufacture our instruments on our own. We benefit from the thought and idea of our youth. It can be argued that the refinery is more than 83% Iranian in manufacturing, implementation and engineering.

Can Iran Build Petro-Refineries?

Petro-refinery has been a controversial concept. In Iran, information on the quantity and quality of this issue is rare. What the public thinks about petro-refinery is that petrochemical refinery implies a method for obtaining other links of the value chain in the petrochemical industry, directly fed on refinery feedstock. In fact, petro-refinery is a new generation of coordination between refining and petrochemical units.

In petro-refineries, the focus is not merely on fuel production, rather the mix of products is regulated based on the highest value-added. That comes at a time when many believe that supply of products alongside fuel could generate value-added for the refining industry in the country. In fact, the possibility of higher profitability in the refining industry would encourage everyone towards this branch and that is why Iran’s refining industry is faced with such issues.

Many refining actors believe that petro-refineries are not such easy and those who speak about it have a basic understanding that does not reflect the entire reality. However, estimates show that such talent exists not only in Iran’s refining industry, but also in petrochemical units. Therefore, refining and petrochemical plants can help operate petro-refineries.

Law Favors Petro-Refineries

The Petroleum Ministry is authorized by law to facilitate conditions for investment in petro-refineries and therefore actors of this sector would no longer have any concern for such activity. This comes at a time when some Iranian oil contractors have long embarked on widespread studies in this sector.

Petro-refineries are not welcome in the global petroleum industry; however, they are becoming popular in Iran only. However, petro-refineries would be economically viable only if the share of fuel production in Iran’s oil refineries has been optimized and some refined petroleum products are allocated as feedstock to petrochemical plants in a bid to generate higher value-added. That is while the entire production is spent on common fuel products.

High Margins Awaiting Investors

Launching a petro-refinery in Iran would definitely earn investors high revenue. Meantime, the margins of such refineries would be highly attractive.

Iran is rich in hydrocarbon feedstock and such materials are supplied at low prices on the market. Consequently, domestic or foreign investors would achieve big profits after building a petro-refinery. Furthermore, low-cost and skilled manpower in Iran could effectively facilitate this trend.

It is noteworthy that refineries in Iran aim to produce fuel and refined products are now limited their activities to producing common fuel. Since fuel is always needed in Iran, kerosene, gasoil, fuel oil and by far gas are used for heating purposes at households or used as fuel in energy-intensive industries, as well as gasoline, gasoil and jet fuel in the transportation industry. Everywhere in the world, economic aspects are prioritized over other aspects and a refinery is not focused entirely upon fuel production. In Iran, such a process may be pursued at petrochemical plants built adjacent to refineries.

Iran, Modern Economic Model

Petro-refineries always embrace the most optimal economic model in the world. In fact, when full concentration is on fuel production it would mean that the entire light and heavy naphtha would be used for fuel production and such gases as C3 and C4 would be converted to liquefied gas. However, in case old methods are reconsidered, that would prove to be possible in Iran.

In the refining industry, the general approach is often targeted at light and middle-distillate production. Therefore, thermal or catalytic cracking is used for transforming heavy molecules to light molecules. Thus, FCC and RFCC units at refineries would produce insufficient olefin for feeding petrochemical units. Such olefin has to be burnt or be mixed with C3 and C4 to be used as liquefied petroleum gas. However, when the most economic model of refining is to be used, the maximum fuel production description is removed and portions of existing naphtha would be used as feedstock for petrochemical plants. That is when an economically viable petrochemical facility may be built within a refinery to improve the economy of the entire complex and result in the construction of a petro-refinery.

At such refineries, the entire output would not be necessarily fuel. Rather, some sort of balance would be created between naphtha and gasoline, propylene and middle-distillate products. Under such circumstances, refiners would enjoy a higher degree of flexibility because it would envisage surplus capacity in both gasoline production and olefin units. That is how a balanced supply and demand is inserted into olefin and benzene production. It means that the feedstock for the gasoline production unit would be reduced while the feedstock for the olefin unit would increase. Therefore, by influencing the supply and demand balance, the maximum margins would be generated to empower refiners to act more forcefully.

Lucrative Market for Petchems and Petro-Refineries

Since the fuel market is much larger than the petrochemical market, a higher share would be allocated to fuel. In many refineries in the world, more than 80% of activity is earmarked for fuel production and the remaining capacity is used for petrochemical production. Therefore, such an approach could yield positive results.

The younger generation active in the oil, gas and petrochemical refining industry has realized that it can distance itself from old patterns and gain more value-added from petro-refineries.

Ali-Reza Sadeq-Abadi, CEO of National Iranian Oil Refining and Distribution Company (NIORDC), has said: “I believe that Iran’s refining industry is ready to realize its objectives with regard to petro-refinery construction because we have already reached a good level of fuel production and we are no longer importing. Therefore, the previous restrictions have been lifted.”

He added: “Once a journalist asked me how it would be possible to reach economic growth in the refining industry and I said the only solution was that gasoline would become a purely commercial commodity rather than a security commodity, and that would be possible only if we have surplus production.”

Sadeq-Abadi said: “We have now surplus gasoline and we no longer face pressure like before. We have the best chance to develop petro-refineries. Therefore, petro-refineries may be envisaged in the projects for upgrading refining units. That would definitely require adequate financial resources.”

He said: “Apart from that the heavier crude oil the more cracking would be needed. That is how light olefin of higher value-added would be achieved. We need to keep in mind that if we can create the highest value-added without any element being prevented from reaching its highest value we would be able to build a petro-refinery.”

In fact, this issue is of high significance for Iran’s economy. By developing petro-refineries, the current economic voids could be filled while the existing potentialities would meet petrochemical needs in the best possible manner. Such conditions are now ready in Iran and foreign investors can think of higher profitability by relying upon the talents and capacities of Iran’s refining and petrochemical industry.

Iran, sitting atop rich hydrocarbon reserves and endowed with industrial infrastructure, is a country interested in development. It can serve as a bridge for the investors’ commercial interactions. Iran’s petrochemical sector has its own traditional customers in addition to a new spectrum of buyers. Petro-refineries would be of great help in this sector. Iran’s proximity to border waters and the country’s strategic location would make investment in petro-refineries more attractive.

No Feet-Dragging at West Karoun Oil Output

Yadavaran Output Capacity Set to Grow

Touraj Dehqani, CEO of Petroleum Engineering and Development Company (PEDEC), has said the company plans to increase production from the Yadavaran oil field. He also told Iran Petroleum that Iran was in talks with China’s Sinopec for the second phase development of the Yadavaran field. He noted that in case the Chinese company shows no willingness to develop this field, PEDEC would drill 25 wells in order to add 50,000 b/d to the field’s output.

Dehqani also said National Iranian Oil Company (NIOC) would accept no feet-dragging in recovery from the oil fields located in West Karoun, where Iran shares these reservoirs with neighboring Iraq.

Here is the full text of the interview Dehqani granted to Iran Petroleum:

Iran is currently ahead of its neighbors in recovery from the jointly owned fields located in the West Karoun area. But the US sanctions re-imposed on Iran and the ensuing unwillingness of foreign investors to develop these fields have given rise to anxieties that NIOC would delay its development plans for West Karoun. What do you think?

No, there is no delay in the development of West Karoun fields. If we look at official data about production from these fields we will see that even Iraq is not faced with the sanctions Iran is grappling with, but they are lagging behind us. We are under sanctions, but our production is continuing. But regarding delay in production, we will not accept such a thing which pertains to our national interests. In case any delay is found we will take action accordingly.

Regarding West Karoun I have to say that this sector is high-risk and we will not achieve whatever we forecast about oil. In fact there is huge oil in West Karoun but the reservoir is not attractive enough, making oil extraction difficult and adding to production costs. Sometimes host companies do not reach agreement with foreign parties due to costs. In other cases, throughout the process they may see that their estimates are different from what they knew about the field’s deposits and recoverable oil.

Add to all these issues the US sanctions on Iran’s petroleum industry. You’ll see that Iran has not delayed extraction from West Karoun oil fields. We can review oil production data for West Karoun. The current production capacity of oil from the West Karoun oil fields exceeds 350,000 b/d. That is while the production capacity was less than 70,000 b/d by 2013. This factor has been multiplied by five in recent years. Meantime, development of the North Azadegan field (phase 1), Yadavaran (phase 1) and North Yaran provided a total output of 215,000 b/d in 2016. Development of the South Azadegan oil field was also assigned to Iranian contractors after the foreign company involved in the project was removed in 2014 due to its delay. More than 120 wells have since been drilled, quadrupling the production capacity of the field.

So you mean that your development plans for increasing production from such fields are continuing, aren’t they?

Sure! In the fields with good potential for increased capacity we follow our output hike plans. By next March, we will add 10,000 b/d to the Yadavaran output. We also plan to add another 50,000 b/d to the South Azadegan output as soon as NIOC gives its nod. Regarding North Azadegan, I have to say that this reservoir is not very big, but we can increase its output. We recently received proposals about drilling several wells there in order to boost output. We are reviewing these proposals.

When will increased Yadavaran output plans become operational? Does it mean that you will no longer hold any talks with the Chinese before starting the second-phase development and that it would be awarded to Iranian contractors?

We are still in talks with the Chinese over the second-phase development of this field. But our colleagues at PEDEC have drawn up a complementary plan for the development of the Yadavaran field and presented to the NIOC Directorate of Consolidated Planning. Based on this plan, the production capacity of the Yadavaran field would increase another 50,000 b/d after the drilling of 25 wells. In fact our objective was to implement the project ourselves if Chinese companies fail to come for whatsoever reason. As soon as NIOC gives its approval we will start our work. I have to note that we rely on domestic contractors in the development of West Karoun fields. But we will not cut our interaction with foreign companies in order to not lag behind the world in terms of knowledge.

You referred to the South Azadegan field. It is among fields whose capacity is increasing. Recently, MOT facilities were put online there.

That’s true. A foreign investor built the MOT facility for South Azadegan with a capacity of 50,000 b/d in less than a year under a build-operate-own (BOO) agreement. This project came online while many thought due to the sanctions imposed on Iran we will not be able to import the slightest item and no foreign investor would come to Iran. Now that the project has become operational I have to say that over the past one year we have imported all necessary times and the foreign investor said the project was implemented in Iran at a much higher speed than everywhere else. The project was ready in less than five months. This project is important for us if we take into consideration the fact that 70% of field development costs go to drilling wells, 20% to laying pipes and lines and less than 10% to processing installations. Normally, the pace of work is slow when it comes to building processing units. Therefore we decided to resolve this challenge in the South Azadegan field and we reached our objective thanks to our idea of building MOT. The minister of petroleum has ordered that the same project be implemented in other fields.

What stage is the agreement for developing Sepehr and Jofair and also Aban and West Paydar in now?

Regarding the Sepehr and Jofair fields, whose agreement was signed with Pasargard Energy Development Company under the IPC framework last March, I have to say that the Joint Management Committee has met and issued necessary permits for hiring contractors. PEDC has said drilling will start in 2020 for spudding 16 wells with the help of four rigs. The contractor has no problem with financing the project up to $150 million.

As for the Aban and West Paydar fields, the agreement was signed between Dana Energy and its foreign partners on one side and NIOC on the other. The contractor is currently implementing the project. The contractor is mainly involved in providing and installing downhole pumps. So far four pumps have been installed and we will soon see production increase from these fields.

The agreement for the development of the Sepehr and Jofair fields was signed for a 20-year period, aimed at the production of 110,000 b/d of oil and an accumulated output of 512 million barrels over 20 years. Direct CAPEX was estimated at $2.427 billion and indirect CAPEX was estimated at $413 million.

The agreement for the Aban and West Paydar fields development was signed for 10 years with a view to improving the recovery rate and increasing production. The objective is to reach 48,000 b/d production over a 10-year period, which would be renewable subject to the parties’ consent.

 

 

Iranian Contractors Develop NISOC Fields

Hamid-Reza Masoudi, CEO of Petropars, said 28 reservoirs owned by National Iranian South Oil Company (NISOC) would create jobs as they are being developed by domestic companies.

He said that the projects included drilling about 280 new wells, workover on hundreds of wells, as well as other activities.

Masoudi said Petropars was involved in this project since March 2008 as the manager.

“Planning services and examining the mix of projects, developing methodology and implementation, describing workflow and technical design, presenting a framework and endorsing the integration of tender bid documents are among important activities carried out so far in this national project,” he added.

Noting that the ECP/EPD projects had been done with financial resources, he said: “Focus on using Iranian contractors, particularly active contractors in the region, was an outstanding feature of this project.”

Masoudi said this project, aimed to support domestic manufacturers, envisages conditions for granting financial facilities to contractors to supply material and equipment.

“It was agreed that the contractors’ equity be reduced so that domestic contractors would be able to operate the projects with lower finance. Such supportive measure would upgrade them to operate larger projects,” he added.

Masoudi said about 95% of commodities needed in these projects would be supplied by domestic companies.

He added: “The result of such actions would be a change in the capability of domestic manufacturers and creating occupational opportunities, developing business and improving provinces where projects are under way, particularly through maximum hiring of local manpower.”

Masoudi touched on more than $4 billion investment in this project, adding: “Four percent of the credit allocation to this project would be spent within the framework of social responsibility for development activities in the cities and villages adjacent to the project, including building education facilities, road construction and building healthcare centers.”

He also referred to environmental programs for gathering flare gas, saying: “By preventing associated petroleum gas from being flared, it would be possible to use this gas by injecting it into existing wells or transferring it to petrochemical plants with a view to an improvement in the environmental indices in the region.”

2-Oil Output Hike Planned in Siri

Ali-Reza Salmanzadeh, CEO of Iran Offshore Oil Company (IOOC) has said that a company plan is under way to increase production in the Sivand oil field.

He said that an offshore drilling rig had been installed while two wells were being spudded.

Salmanzadeh said the project was under way under an IRR 12,000 billion agreement with an Iranian company in the Sivand and Esfand fields.

“An important point with this agreement is the supply of 60% of drilling equipment by domestic manufacturers in compliance with international standards, which would be an effective step towards empowering domestic manufacturers of drilling equipment in the development of offshore fields,” he said.

Salmanzadeh said each and every phase in this project, including operating vessels, transportation as well as offshore drilling services were handed by Iranian workforce.

He added that the project with a total of 16,000 b/d would be added to the Siri oil output, including 7,200 b/d from Sivand and 8,800 b/d from Esfand. He said such output hike would also provide feedstock to the area.

Salmanzadeh said in light of the special conditions of these fields from geological structure and drilling sophistication point of view, implementation of the project would enhance the integrated management of major offshore projects by National Iranian Oil Company (NIOC) and Iranian contractors in order to clear the way for their presence in international projects.

“After the implementation of this project, which involves drilling, workover and completion of 40 wells, construction and installation of two wellhead platforms, completion and installation of five offshore platforms, building subsea pipelines and gas flow facilities, IOOC’s oil production capacity will also increase. That would create jobs for offshore oil experts and give impetus to contractors and manufacturers for more dynamism,” he added.

New PET Output Record Hit

The head of the Tondguyan Petrochemical Plant has said production from this facility is forecast to reach 1.1 million tonnes this calendar year. 

Issa Anousha said that the facility was the largest producer of polyethylene terephthalate (PET) in Iran, adding that during the first three quarters of the current calendar year, the plant had met 87% of its target.

According to the official, the plant was envisaging about 1.29 million tonnes of products in the current calendar year.

“During the nine-month period, despite overhaul, about 1.06 million tonnes of products had been produced. By the end of the year, a new record will be hit with a 1.3 million tonne output,” he said.

Anousha said the Tondgyan plant’s petrochemical production capacity stood at 1.58 million tonnes.

Elaborating on the causes of the record in production, he said: “Sustained production, reduction of production costs, sustainable and reliable supply of spare parts and equipment, debottlenecking, unified management, convergence and increased satisfaction of employees were on the agenda.”

Anousha said new production records had been registered at the Tondguyan plant, adding: “Under the present circumstances, there is nothing to worry about with regard to filling domestic needs, and Iran has become a reliable exporter of PET.”

4-South Pars Condensate Production Monitored Real-Time

Ali Ahmadi, chief supervisor at the South Pars Gas Complex (SPGC), has said the gas condensate production at this complex was regularly being monitored.

“We are making well-arranged plans for gas condensate recovery from all refineries to be supplied to buyers,” he said.

Noting that SPGC was producing natural gas and other key products on a sustainable, safe and incessant basis, he added: “In cold seasons too, sustainable gas production continues to meet domestic gas needs.”

Ahmadi said SPGC refineries were thoroughly ready to fill gas needs in winter. He added that overhaul of gas plants was being implemented on schedule.

He said that real-time monitoring of production would allow for a precise forecast of gas condensate production to be presented to the Department of International Affairs of National Iranian Oil Company (NIOC).

“On this basis, all actions and activities pertaining to coordination and supervision on production have been regulated based on the SPGC’s mission for maximum recovery from joint resources and supply of a 70% share in the country’s energy mix,” he added.

He noted that despite international restrictions, effective and preventive measures had been taken with regard to the overhaul of refineries.

Ahmadi said for the first time in SPGC, dense loading had been used at the gas trains of the sixth refinery of SPGC. 

Dense loading is preferable to sock loading in several instances. The advantages of dense loading include increased density, capacity, run length, reactor integrity, and product quality. Sock loading, as a result of its tendency to create void spaces, may not maximize a reactor's capacity.

Kamran Shokrollahi, head of engineering and technical services of the sixth refinery of SPGC, said dense loading was on the agenda in light of the feasibility of process engineering for upgrading unloading and loading on dehydration bed.

“Humidity absorbents that are tasked with dehydration and regulating dew point for gas, lose their capacity after some time and therefore loading has to be done with a new material,” he said.

Shokrollahi said dense loading was commonly done manually, adding that now it was done mechanically.

5-Tehran Oil Refinery, Iran’s 1st Green Refinery

Tehran oil refinery has been recognized as the first green refinery in Iran, particularly after the implementation of the CO2 transmission project and conversion of 40,000 tonnes a year of CO2 to industrial and feedstock carbon.

The Tehran Carbon Factory is annually converting 40,000 tonnes of CO2 supplied by Tehran refinery to industrial and feedstock carbon. This plant would save the annual consumption of more than 15,000 tonnes of fossil fuel for CO2 production. This plant is currently supplying 30% of domestic needs, while the second phase of this plant would envisage exports.

Ali Hashemi, director of operations at Tehran oil refinery, touched on the significance of the environment in excellent organizations, saying the carbon factory enjoyed the advantage of proximity to Tehran oil refinery.

He insisted that recognition of competitive advantages at any spot in the country had to be incorporated into the strategy of domestic companies, saying: “In today’s world, controlling and monitoring operations from the beginning of the process of production until the end of the lifecycle of the product with the objective of regular improvement of social, economic and environmental achievements is an obligation and a strategic objective.”

The carbon factory would prevent the emission of 40,000 tonnes of CO2. CO2 is used in chemical industry, food industry, medical sector, transportation as well as urea and methanol production.

Tehran oil refinery treated about 8.763 million barrels of crude oil (equivalent of more than 14.2 mcm) in 2018 to produce nearly 9 billion liters of products including gasoline, gasoil, fuel oil and liquefied petroleum gas.

Tehran oil refinery is located 15 kilometers south of Tehran. This facility plays a key role in supplying necessary petroleum products and is able to produce Euro-5 gasoil in Iran.

With two refineries, 250,000 b/d of crude is processed. LPG, gasoline, kerosene, gasoil, fuel oil, aviation fuel, jet fuel, light and heavy base oil and sulfur constitute the refinery’s products.

6-SP22-24 3rd Platform Operational

Ali-Asghar Sadeqi, deputy manager of South Pars 22-24 development, has said gas produced in the third platform of the giant offshore gas field had been carried to an onshore refinery.

He said the platform gas production capacity stood at 500 mcf/d (14 mcm/d).

Sadeqi said the flare of the platform had been launched after the completion of hookup and commissioning and the sustainable supply of gas to the onshore refineries of SP22-24.He said that the commissioning of SP23 platform had increased the gas production capacity in the offshore sector of SP22-24 to 42 mcm/d, adding that three platforms out of a total four platforms in these phases were being implemented with a capacity of 14.2 mcm/d each.

Sadeqi said the three phases were aimed at producing 14 mcm/d of sweet gas, 20,000 b/d of gas condensate, 100 tonnes a day of sulfur, 250,000 tonnes a year of LPG and 250,000 tonnes a year of ethane.

Meanwhile, Abdollah Mehrabi, director of the offshore section of SP22-24, said the installation of equipment on Platform 24B has had over 30% progress, so the platform would soon become operational.

“Hookup activities and the launch of this platform will continue until gas is delivered to the refinery in a bid to accelerate winter fuel supply,” he said.

7-Petchem Plant 2nd Phase Operational

Behzad Mohammadi, CEO of National Petrochemical Company (NPC), said the second phase of the Takht-e Jamshid Petrochemical Plant would become operational to produce 85,000 tonnes of polymer products.

He said it was one of a total 27 projects envisaged to come online as part of the second jump in Iran’s petrochemical production.

“The second phase of the Takht-e Jamshid Petrochemical Plant is ready to come online. After the commencement of this project, in addition to increased petrochemical

production capacity, the ground would be prepared for further diversity in the mix of petrochemical and polymer products,” he added.

Mohammadi said the petrochemical project would be able to produce 85,000 tonnes a year of polybutadiene rubber (PBR), adding: “This product is widely used in the downstream petrochemical sector, particularly in tire and rubber production. It will end Iran’s dependence on importing specific polymer grades.”

Mohammadi said the main features of the second phase of the Takht-e Jamshid plant included application of domestic knowhow and diversity of products.

“This is one of the first petrochemical projects in the country to have become operational with Iranian savvy,” he said.

He said that Iran would be able to export surplus products to regional and international markets in addition to filling domestic needs.

Mohammadi said 16 key petrochemical products would be added to the petrochemical mix by 2025, which would contribute to the resilience of the petrochemical industry.

Noting that the technical savvy for converting natural gas to polypropylene had been developed for the first time in Iran by Petrochemical Research and Technology Company (PRTC), he said: “The basic engineering for converting natural gas to PP in western Iran is under way. It will come online next year.”

The second phase of the Takht-e Jamshid petrochemical plant is aimed at producing 85,000 tonnes a year of PBR, 20,000 tonnes of latex, 5,000 tonnes of STP and 18,000 tonnes of Hips-grade PBR.

8-KEPCO Strikes 3 Research Agreements

Khazar Exploration and Production Company (KEPCO) has signed three research agreements with three Iranian companies.

The research agreement “Identifying Geological Hazards and Possible Hydrocarbon Zones Using Geophysical Methods and Geological and Reservoir Data in the Caspian Sea” was signed between KEPCO CEO Ali Osoluli and Davoud Sarbaz, CEO of Dana Energy Geophysical Business Company. The agreement on “Mechanism of Formation of Mud Volcano and its Effects on Hydrocarbon Reservoirs Using Distance Measurement Technology in the Caspian Sea” was signed between Osouli and Mansour Qorbani, CEO of Pars Aryan Zamin, and the agreement on “Modeling Sedimentary Zone and Demarcating Deltas and Expanding Rock Reservoir in Southern Caspian Sea” were signed between Osouli and Ali Misaqi, CEO of Tavana Energy.

KEPCO said in a statement that the research agreements were aimed at optimal use of the potential of research and knowledge-based centers for supplying the research needs of the company’s technical section.

According to the statement, the existence of geological hazards during drilling at the Sardar-e-Jangal oil field had made research a must, specifically because the Caspian Sea sedimentary areas remained unknown. Furthermore, research was needed due to the presence of volcano muds that indicate hydrocarbon reserves.

This project covers 4,110 square kilometers in the Iranian sector of the Caspian Sea, where four blocks undergo 3D seismic testing.

The second project is to be implemented through satellite images in cooperation with the knowledge and research-based Pars Aryan Zamin.

And the final project is set to provide data for the National Iranian Oil Company (NIOC) for the petroleum industry needs during the 6th Five-Year Economic Development Plan. That would also provide more accurate data for using national capacities in the technology sector for more exploration work in the Caspian Sea deep waters.

9-New Model for 28 Fields Development

Abdollah Mousavi, CEO of National Iranian Drilling Company (NIDC), said a new method had been designed to develop 28 fields.

He said technical, engineering and legal experts of the Petroleum Ministry had been consulted in drafting the agreements.

“The EPD and EPC projects are under way with domestic finance and they are extremely significant in terms of entrepreneurship and contracting,” he added.

Mousavi said NIDC’s presence in the implementation of these projects was instrumental.

He added that these projects were being implemented using drilling equipment and rigs and integrated technical and engineering services provided by National Iranian South Oil Company (NISOC) and Iranian Central Oil Fields Company (ICOFC).

Mousavi said NISOC, ICOFC and the Iranian Offshore Oil Company (IOOC) would be for the first time employing Iranian contractors and carrying out detailed engineering studies and drilling for the projects.

“The supply of more than 95% of required commodities of the projects by domestic companies would pave the ground for job creation and development of social responsibilities,” he added.

Mousavi said standardization of activities and honoring environmental and HSE obligations on one side and reliance on domestic potential on the other would be key to sustainable development.

10-Modern Technologies in Petchem Sector

Ali-Mohammad Bosaqzadeh, project manager at National Petrochemical Company (NPC), said using modern technologies could transform the path towards new petrochemical projects. 

He said that modern technologies would be of help in the plans envisaged for the second and third jumps in the petrochemical industry.

Bosaqzadeh said an important issue in the petrochemical industry was the application of emerging and modern technologies in the production of petrochemicals.

He added: “Converting methanol to propylene and using catalysts in producing petrochemicals are examples of application of modern technologies in this industry.”

Using new generation catalysts in the petrochemical industry has always been of significance, he said, adding that Petrochemical Research and Technology Company (PRTC) is producing such catalysts. He said that methanol, HDPE and LLDPE process catalyst is an example.

Bosaqzadeh said petrochemical plants were economically and industrially significant due to final products and completion of value chain.

“Using modern technologies and know-how will help generate high value-added in this industry. R&D, knowledge-based companies and startups are effective in the optimal use of existing capacities in the country,” he said.

He added that the plans envisaged in the petrochemical industry would materialize through empowering the private sector.

“Transfer of technical knowhow, domestic manufacturing of technology, domestic manufacturing of equipment and materials are fully supported by Petroleum Ministry and NPC,” he said.

Bosaqzadeh said supporting production, modifying consumption patterns, innovation and endeavor were among examples of resilient economy in the petrochemical industry.

He said: “The petrochemical industry’s plans are based on using domestic potential to meet domestic needs and supply international markets, paving the ground for the development of this industry.”

The official added: “The petrochemical industry is progressing quickly in the world. If Iranian petrochemical companies want to safeguard their competitiveness in international markets they need to benefit from cutting edge technology and modern science.”

11-Gas-powered Cars Save Iran $1.8bn

Ali-Reza Sadeq-Abadi, CEO of National Iranian Oil Refining and Distribution Company (NIORDC), said gas-powered cars would save Iran $1.8 billion a year.

Addressing a conference on “CNG, Sustainable Development Opportunity”, he said: “The energy consumption intensity in Iran is extremely high in all sectors including energy consumers, transportation, power plants, industry, households and commerce.”

Noting that continuing the present conditions is economically, environmentally and socially not feasible, he said: “Policymaking is not hard. More important than policymaking is consensus so that all decision-makers would accept that policy and agree to implement it.”

“The average daily consumption of gas and liquid fuel is 750 mcm to 800 mcm, which is very high,” he said.

Sadeq-Abadi said any combustion would create pollution, regardless of its size.

“Although the share of CNG in the country's energy mix is increasing, any combustion causes pollution.”

“We need to know Tehran’s capacity in the industrial, household and transportation sector to see how much combustion we can have in this big city, and to make plans and policy on that basis,” he said.

“The amount of fuel we are consuming now, coupled with such high energy intensity, will naturally damage the environment and make us lose significant sources of energy,” said Sadeq-Abadi.

He said that about 1.4 million cars were consuming around 20 ml/d of gasoline in Iran, whose fuel could be switched to CNG.

“If we replace 10 ml/d with CNG, we will save the country $1.8 billion,” he added, adding that such initiative would have a fast rate of return, not to mention job creation and benefits for the environment.

Azadegan Up for Investment

The Azadegan oil field is Iran’s largest oil field and the third largest field in the world, just behind Saudi Arabia’s Ghawar and Kuwait’s Burgan oil fields. Azadegan was discovered in 1997. It covers an area of 20 kilometers in width and 75 kilometers in length in Azadegan Plan, some 100 kilometers west of the city of Ahvaz. Azadegan was initially estimated to hold 33 billion barrels of oil. In 1999, a new oil layer with 2.2 billion barrels was discovered in this field. Azadegan is divided into South Azadegan and North Azadegan.

South Azadegan is expected to produce 320,000 b/d in phase 1, which would reach 600,000 b/d in the second phase.

South Azadegan is estimated to hold 25.6 billion barrels of oil in place. Oil production began in this field in 2008 and represents a good opportunity for investment for enhanced production. Initial estimates show that the field would need at least $2.5 billion in investment.

Iran, first signed an agreement with Japan’s Inpex in 2003 for developing Azadegan, but the company pulled out in 2006. In 2007, the National Iranian Oil Company (NIOC) decided to develop North Azadegan under a buyback deal. Sanctions were being toughened against Iran, thereby dissuading international companies from investing in Iran. However, the Chinese regardless of international norms were willing to develop it. China’s CNPCI entered into talks with NIOC for developing both South Azadegan and North Azadegan.

In October 2009, NIOC and CNPCI signed a buyback deal for developing the field. In 2012, once a master development plan was formulated the operations started. The agreement did not pay off and the agreement was cancelled due to the Chinese company’s refusal to meet its commitments. NIOC then decided to assign the project to domestic firms.

Iranian contractors have since drilled more than 120 wells, quadrupling the field’s production capacity. Azadegan remains an attractive choice for investment.

Under the first MDP drawn up for South Azadegan, the field’s output was estimated at 150,000 b/d. It was finalized in June 2012 for an output of 320,000 b/d in the first phase of development and 600,000 b/d in the second phase.

The measures  have been carried out so far in this field include building mobile treatment units with a capacity of 50,000 b/d under a build-operate-own (BOO) deal in less than a year. This project is a major development in building production units. Following successful implementation of the project, Petroleum Ministry obligated domestic manufacturers to indigenize and change manner of construction and installation of operation and desalination units.

Prior to imposition of sanctions on Iran last year, 17 international firms had volunteered to develop the Azadegan field. Russia’s Rosneft, China’s Sinopec and CNPC, Italy’s Eni, Denmark’s Maersk, Austria’s OMV, India’s ONGC, Indonesia’s Pertamina and Iran’s TANCO and Persia Oil and Gas were among local and foreign companies bidding for the development of Azadegan.

Now due to the US sanctions, foreign companies have dropped their bid to develop Azadegan. Therefore, domestic contractors are handling the job and they have so far proven to be successful.

 

North Pars Gas Field Awaiting Investment

Some 120 kilometers southeast of the southern Bushehr Province, Iran owns a gas field holding more than 57 tcf of gas in place. North Pars is among fields with high potential for investment. The field is estimated to require $16 billion in investment, including $5 billion in the upstream sector and $11 billion in the downstream sector (mainly LNG plants).

North Pars was discovered in 1963 following 3D seismic testing. Then, 6 exploration, appraisal and development wells were drilled for the field development. Two foreign companies including Exxon were in charge of North Pars development. That was halted in 1979.

At the time of its discovery, North Pars was the largest gas reservoir in Iran. Investment in North Pars was accelerated until the jointly-owned South Pars was discovered to become Iran’s top priority.

Today, South Pars is in its final stages of development and it is time for North Pars to undergo development.

A brief review of North Pars shows that 17 wells have so far been drilled, while 26 offshore platforms have been installed at North Pars. However, development and production are yet to start there.

North Pars whose production capacity equals four South Pars phases, has capacity to produce 3,600 mcf/d of gas. Such recovery would require drilling 46 wells. The rate of recovery envisaged for North Pars stands at 61%.

North Pars’s gas is planned to be used at LNG plants in order for Iran to produce 20 million tonnes a year of liquefied natural gas.

National Iranian Oil Company (NIOC) officials eye financing and attracting manpower for new projects, including North Pars. The North Pars development is envisaged in four phases, each phase with about 1.2 bcf/d of gas.

The LNG produced from one phase of this field would belong to Iran, while the revenue from the sales of LNG from the other two phases would belong to foreign investor. The foreign party will have authority to sell its LNG to its own buyers. The gas produced from one phase of this field would be used for domestic purposes and injection.

About IRR 12,000 billion is estimated to be required for infrastructure like electricity, water, jetty, access routes, helicopter center, emergency centers and telecommunications.

Geographical integration has been done in North Pars and South Pars, covering a total area of 46,000 ha. North Pars and South Pars cover 16,000 ha and 30,000 ha, respectively.

The Exploration Directorate of NIOC and Pars Oil and Gas Company are jointly conducting studies to have a precise estimate of gas reserves in North Pars.

In case North Pars becomes a special economic energy zone, it would be possible to offer facilities to investors. This issue is currently under review.   

North Pars has also oil layers with an API gravity of 12.

NIOC and Sinopec signed a $16 billion agreement in 2007 for the development of North Pars in four phases, but the Chinese firm pulled out of the project.

 

Petrodollar Elimination

Following the imposition of renewed sanctions, I.R. Iran has been attempting to quit selling crude oil in US dollar and even urge others to do so. If crude oil trading began to switch to other currencies, petrodollar demand would be undercut and to a great extent American influence over global finance would diminish. While having a glance at the history of petrodollar, the present article aims at reviewing attempts made by Iran and other oil exporting counties to replace US dollar with other currencies in their oil trades.

Petrodollar

Oil is the world's most traded and strategic commodity. The US dollar status as the premier world reserve currency is tied to the petrodollar. The petrodollar system is an exchange of oil- in futures market or spot market- for US dollars between oil buyers and oil producers. Although the advocates of the system argue that the system helped increase the stability of oil prices denominated in US dollars, economy of oil-exporting nations becomes dependent on the dollar's value and demand for American goods increases, and it leads to the US economy prosperity.

Oil is priced in dollars because through Bretton Woods the dollar was pegged to gold, and everything else was essentially pegged or floated to the dollar. Commodities, for decades, have been mostly traded in the US dollar, with oil almost exclusively bought and sold in the US currency.

The question raised here is:" Why is oil priced and traded in US dollars". In 1944 as a consequence of the Bretton Woods Conference the US dollar backed by gold became the world reserve currency, prior to that it was the British Pound. The petrodollar arose from the ashes of the Bretton Woods system after President Nixon cut the dollar’s last tie to gold in 1971.

In 1971, US President Richard Nixon unilaterally canceled the international convertibility of US dollars to gold. Since 1974, the world has run on “petrodollars”. After the “oil shock” of 1973-74, in which oil prices shot up from $3 a barrel to $12, Nixon’s Secretary of State Henry Kissinger got an idea and convinced the Saudi royal family to buy in.

In 1975, the Organization of Petroleum Exporting Countries (OPEC) agreed to sell oil exclusively in US dollars.  The petrodollar allows the US Government to gain revenue by issuing bonds at lower interest rate than they would otherwise be able to do. Consequently, the US Government can run higher budget deficit than most other countries and still be considered the world's most prosperous and powerful economy.

Movements to Shift toward other Currencies

 On 30 October2000, the United Nation granted Saddam Hussein permission to sell oil in Euro. In March 2003 his government was overthrown by US troops and he was eventually killed.
In order to resist US pressures and sanctions imposed on Iran, on 8 December 2008, Iran announced it had converted all of its oil exports payments in non-US dollar currencies. In 2011, Muammar Al Gadhafi announced that his country wanted to quit selling Libyan oil in US dollars.

 Furthermore, in 2015 China and the United Arab Emirates created a currency swap agreement. In 2016, India and Iran partially transacted oil sales in Indian Rupees. On 26 March 2018, China launched its oil futures priced in Yuan and it is growing at a significant pace. The JCPOA was a good chance for Iran to get rid of maximum pressure exerted on it; however, it aggravated Saudi Arabia, the US ally. Imposition of sanctions on Venezuela -another OPEC member state- has prevented it to be in the top 10 oil exporters. If China and Russia help Venezuela to overcome the current challenge, the petrodollar is dead. To that effect, the US will do everything in her power to prevent that.
The US needs to back its dollar with gold; otherwise it will be vulnerable to pressure from Saudi Arabia, Russia and China.

Even Saudi Arabia - a US ally- has threatened to sell its oil in currencies other than the US dollar if Washington passes a bill known as NOPEC allowing OPEC members to be sued under antitrust laws.

It is said that Saudi Arabia will de-dollarize only to the extent that it could use the yuan when conducting trades with China, while keeping the overall "petrodollar" system intact.

In the meantime, renewed sanctions on Iran have intensified Europe's efforts to find alternatives to the dollar dominance. A special purpose vehicle – INSTEX, short for Instrument in Support of Trade Exchanges, was launched in June 2019, allowing at least some business to continue with Iran. The non-dollar payment system enables money to be paid into the home country's account, which doesn't cross the border into or out of Iran.

China, the world's largest importer of crude oil, set up a yuan-denominated oil contract in Shanghai in March 2018. A year since the Shanghai International Energy Exchange (INE) opened for trading, the combined turnover of the INE crude oil futures stood at nearly 36.7 million lots, with a total value of 17.1 trillion yuan.

Russia last year increased efforts to sell oil in Euros in an attempt to bypass US sanctions.

China, caught in a trade war with the US, is expanding oil trading denominated in yuan, while the European Union are also seeking to reduce their dependence on the dollar for payments for oil. The petroyuan for oil futures trading could become a tool to counter US dollar hegemony in the oil market. It is said that the biggest importer of Iranian oil, China is likely to continue imports in yuan and may hedge against price fluctuations on the Shanghai market.

The European Commission, the executive body of the EU, declared its intention in December of creating a euro-denominated price benchmark for crude oil, saying that it would gather opinions from exchanges and market players by the summer of 2019 to study ways of increasing the use of the euro for oil trading.

In conclusion, it can be argued that the exclusivity of the US dollar as a vehicle for global crude oil trading is increasingly being challenged. In other words, if crude oil trading began to switch to other currencies, petrodollar demand would be undercut and to a great extent American influence over global finance would diminish. In fact, the attempt by Iran would defuse the US ominous plots aimed at making Iran bow down.

 

 

 

 

 

2019 Oil Market Hotbeds

Fereydoun Barkeshli, President of Vienna Energy Research Group

The year 2019 was fraught with events for global oil markets. However, as far as the pricing was concerned the impacts were weak and short-lived on the market. That could have largely affected the oil market in the middle of the decade, but by the end of the last decade of the 21st century, the impact has been meager. In other words, 2019 ended the same way it had started. No significant development was witnessed in the trend of prices with which are mainly concerned producers, consumers, speculators and market analysts. Nonetheless, in the final hours of 2019, oil prices experienced an unpredicted jump to cross $70 a barrel, an unprecedented record since 2018.

Oil Demand

We start surveying the oil market survey with the demand side. The US-China trade war is not new; however, rarely could one believe some unbelievable decisions would take effect.

China holds the second largest hard currency reserves, just behind the United States. The issue of modifying the US-China trade balance dates from the Bill Clinton era in the 1990s. The Federal Reserve always worried that China relying on its huge hard currency reserves, would cause the US an irreparable financial crisis. China with its $1.27 trillion reserves could significantly affect the US dollar’s valuation, in which case, its own economy would have been affected by losing the world’s largest economy.

US President Donald Trump started his baleful views in 2018, and subsequently in 2019 he levied new tariffs on the US’s imports of 150 Chinese items. That negatively affected China’s economic growth. Trump aimed to strike a trade balance between the two nations and reform the yuan-dollar conversion rates so as to render US exports to China economical.

It is not popular for a pro-OPEC oil analyst to start analyzing the market focusing on demand side. We have long been analyzing the oil market based on supply side figures. This may be a message that the supply-dominated era is faced with challenges.

During the whole first decade and most of the second decade of the 21st century, China’s economy was the driving force behind the oil consumption and demand growth in the world. It continues to be such, but with a downward trend and in light of worrying signs about its extent. In fact, economic developments in China are a determining factor for economic growth in South Korea, Singapore, Thailand, the Philippines and even China and the European Union. China’s downward and somewhat uncertain growth is extensive and the US wants to curtail it. Trump believes that Europe and Asia owe their development to the US economy and now other nations are required to take action to help the US economy have a jump.

Therefore, on the eve of the end of the second decade of the present century, the global oil market is mainly concerned with volatile demand. In fact, the uncertain future of demand is a problem beyond low demand because reductions are periodical. Such ambiguity in reduced oil demand involves the US economy, too. Imposing new tariffs on imports from China inflicts costs on US consumers. That poses a threat to American consumers’ purchasing power as Americans are earning less revenue for gasoline and energy spendings. In the long-term, it would be more economical for the US to produce goods which it currently imports from China. But this process is long-term and may take at least a decade.

Supply Challenges

On the supply side, the issue of shale oil and gas was not taken seriously up until the middle of the second decade of the 21st century. Within five years, shale oil production changed the US’s status from a net importer of crude oil to a net exporter. Shortly, 7 mb/d of oil was added to the market regular supply. Although it was costly, it required high-tech and harmed the environment.

Meantime, the US increased its conventional crude oil production by 1.3 mb/d in late October 2019. Regardless of opposition to oil exploitation in the protected Alaska zone, Trump also authorized oil exploration without Congress approval in the zones that had not been authorized to produce oil even in the midst of the 1973-1975 oil crisis.

Under such circumstances, the Organization of the Petroleum Exporting Countries (OPEC) was led to reveal some of its untold secrets. OPEC’s core comprises five founding partners and six co-partners. Throughout its 60-year-old history, never has OPEC been able to supply regularly more than 33.4 mb/d of oil. In fact, the bulk of OPEC’s production capacity was created when international oil companies were operating in the member states. Since early 1970s, when OPEC members were encouraged by Libya’s leader Moamer Gaddafi to expel international oil companies (IOCs) and replace them with national oil companies (NOCs), investments were made mainly to make up for the natural depletion of wells and therefore no capacity enhancement was done. That is while NOCs frequently release reports about new oil find. The new explorations never led to significant capacity building in any OPEC member state. Meanwhile, non-OPEC producers have been regularly building new capacity. The non-OPEC capacity building has mainly come from Russia and Central Asian republics and Caucasus.

OPEC+ Deal

Under such abnormal and worrying circumstances caused by ambiguous and weakened supply and OPEC’s weakened status, Russia agreed after two decades to cooperate with OPEC. It is noteworthy that cooperation between OPEC and non-OPEC producers was first brought up by Iran. During an OPEC Conference, Iran formally submitted the proposal for Azerbaijan’s OPEC membership, which Saudi Arabia vetoed.

The Declaration of Cooperation signed in September 2018 between OPEC and non-OPEC started with a 1.2 mb/d cut from output. The OPEC+ deal became more significant in December 2019 after OPEC and non-OPEC partners agreed to further cut their combined oil output.

As Qatar and Ecuador have pulled out of OPEC, figures changed slightly; however, the OPEC+ deal delivered a positive message to the market, which was desperately felt since early last year. The 177th meeting of the OPEC Conference convinced the market that conventional crude oil producers were firmly determined to help stabilize the market in favor of both producers and consumers. At the December 5-6 meeting of OPEC and OPEC+, delegates from shale oil producing companies were also in attendance to follow up on the negotiations. Shale oil is currently produced for $40 a barrel, but due to low margins, there is little willingness for investment. Shale oil producers are mainly small and medium-sized companies whose resilience to oil price fluctuations is limited. Therefore, they want to be assured about market conditions. Shale oil has yet to test the waters in international markets. Shale oil is super-light crude oil with an API gravity of 50. Even in North America, few refineries can easily treat shale oil.

Aramco and 177th Meeting

The ordinary meeting of the OPEC Conference was overshadowed by Saudi Aramco’s long-awaited initial public offering (IPO). The issue of privatization and internationalization of Aramco, as the world’s largest oil company, was first raised in mid-2015 and turned out to be very controversial. Global oil prices definitely affect Aramco stocks’ valuation. Saudi Arabia made serious efforts several months ago to upgrade the global market and boost the value of Aramco’s shares. There was speculation about invitation to Russian oil companies to buy shares in Aramco. Russia was also trying to gain concessions by tying Aramco’s IPO with the OPEC+ deal.

Just 72 hours before finalizing Aramco’s IPO, Saudi Arabia said it was listing on domestic stock exchanges. That kept Russia out of the loop.

Saudi Arabia’s decision to privatize a small portion of Aramco’s shares was an audacious act that was tied with the OPEC meeting. The Saudi government initially planned to list Aramco on international stock markets, but due to global oil conditions and attacks on its facilities, only 1.5% of Aramco shares were traded domestically.

Oil Geopolitics

Geopolitical developments have always affected global markets. The September attacks on Saudi oil facilities in Abqaiq suddenly removed 6 mb/d from Saudi oil production. However, oil prices jumped only 3.2% in the market.

Aramco has more than 110 million barrels of oil reserves ready for delivery. Therefore, the company managed to fulfill its obligations vis-à-vis buyers. But for one week following the attacks, nobody knew when Aramco would be able to repair its damaged facilities.

That sent a significant message to producers and the markets. It would be vital to give assurances to markets about sufficient oil supply. Under normal conditions, some events are likely to largely change prices. When supply is certain, the oil market is less affected. In fact, geopolitical risks caused by supply and demand have found a new form and the structures are playing a decisive role. Oil speculators have been marginalized by IT companies.

Environment: From Reality to Imagination

The year 2019 may be described as the year of environmentalists. Opponents of fossil fuels did not hesitate to lay the blame on fossil fuels for environmental damage throughout 2019. It has to be acknowledged that OPEC and oil and gas producers acted passively. OPEC and OPEC+ found themselves under tacit apology conditions. Maybe in the future, as technology grows solar panels become cleaner. Then, fossil fuels can also become clean by incorporating modern technologies.

Renewable energy advocates and lobbies have come to the scene with their plans. Therefore, the OPEC Secretariat is required to display its readiness, which would not be limited to public relations and publicity. Oil has to envisage new demand and functions. The petroleum industry cannot and should not wait for the success or failure of car manufacturers and consumers’ view of electrified cars.

Oil Market in 2020

The current year will be fraught with challenges for the oil market. 2020 will present fear and hope to oil producers. OPEC is faced with limited options.

Will Russia continue to stick with its OPEC+ commitments? To what extent will Russia continue to honor the Declaration of Cooperation?

Russia is incessantly seeking to expand its markets and win bigger shares. Russia’s view of oil market is largely affected by its gas market perspective. In other words, Russia regards oil exports and markets as its strategic target. Therefore, restraint in oil production is strategically costly for Moscow. Russia expects Saudi Arabia to bear such costs in return for its commitment to the OPEC+ deal. Russia expects Saudi Arabia and OPEC to play the role of a swing producer in favor of Russia. Russia expects OPEC to make efforts to preserve its market share.

Saudi Arabia’s reaction to possible non-conformity by Russia and other non-OPEC oil producers would be a major cause of concern for OPEC in 2020.

Will Saudi Arabia, Russia and others submit to an all-out price war? If any producer crosses the red lines set by others, the mid-1980s years are likely to recur.

If a price war breaks out, what would happen to shale oil then? Daniel Yergin says shale oil production below $40 a barrel will be cut by half within six months, impossible to be back to previous levels.

The future of Aramco’s listing, which Saudi leaders have tied to their future, will be the main bargaining chip wielded by Saudi Arabia’s rivals during the next OPEC+ meeting.

Aramco Stocks, Future Challenges

Saudi Aramco’s initial public offering (IPO), as promised in previous years, opened a new chapter in Saudi Arabia’s oil activities.

The oil giant earned $25.6 billion selling 1.5% of its shares on the Riyadh stock exchange. It was the largest sum ever earned through IPO on the stock market. Each share was valuated at 32 Saudi riyals ($8.53). Just ahead of sales, demand had surpassed the number of shares offered for sale. Based on this sample, the Aramco shares are estimated to be valued at $1.7 trillion, which is less than the $2 trillion expected before.

Aramco has achieved the highest market value for a stock market in the world, while it is faced with numerous challenges in protecting its shares.

The initial plan by the Saudi government in selling Aramco shares was to sell up to $100 billion. The Saudis planned to sell Aramco’s shares in order to fund their ambitious economic development plan. Based on Crown Prince Mohammad bin Salman’s Vision 2030, Saudi Arabia hopes to become the economic hub in the region and wean its economy off oil. Under Vision 2030, there has been focus on reducing dependence on oil exports and attracting foreign investment. The ambitious plan also calls for using renewable energies in the country’s energy mix.

Saudi Arabia hopes to increase its gross national product (GNP) and reduce the unemployment rate once Vision 2030 takes effect.

Restrictions

However, various reasons did not let Aramco’s share listing to reach $100 billion. First and foremost, the market did not welcome the offer amid oil price stagnation. Over recent months, despite security and military developments in the Persian Gulf, which is the main oil shipment lane, no significant change was seen in energy prices.

The second reason was Saudi Arabia’s anxiety over potential buyers for listing. In the wake of last September attacks on Aramco facilities, the Saudi government thought any extra share listing might receive a cold welcome and even lead to price loss per share.

The third reason resulted from environmental concerns. Environmentalists believed that Aramco’s share listing would mean further production and subsequently further destruction of the environment. Aramco is the second company in the world in terms of harming the environment.

The fourth reason was the Americans’ lack of willingness for buying Aramco’s shares under the present chaotic circumstances.

Listing shares to gain $25 billion has materialized by investors from Saudi Arabia and fellow Persian Gulf states. The Americans have long shown willingness to buy Aramco’s shares. However, it seems that security concerns over renewed attacks on Aramco and the fact that the shares were not listed on the New York Stock Exchange despite the Trump Administration’s desire, Americans did not welcome it. President Donald Trump had earlier invited Aramco to list on NYSEX, saying it was highly significant for Aramco to sell its shares in the United States.

The fourth reason resulted from differences about the value of Aramco’s shares. Saudi officials had estimated at $2,000 billion the value of Aramco’s shares, but most independent sources estimate it at $1,200 billion. Due to such ambiguity, Aramco has delayed its listing on many occasions.

Challenges Ahead

Some energy experts believe that in case Aramco continues to sell shares, and oil companies from OPEC member states refuse to follow suit, Aramco is likely to push other oil companies aside. Despite such forecasts, the fact is that Aramco’s share listing is faced with serious challenges.

Since 2018 Saudi Arabia had considered selling 5% of Aramco’s shares; however, due to oil price fluctuations in that year, the Saudi government waited for oil prices to stabilize. No vital changes transpired global markets on one side and the Saudi government faced a serious budget deficit on the other side. Therefore, the government had no option but to list Aramco’s shares on the stock market. That means Saudi Arabia did not sell Aramco’s shares at the right time.

Furthermore, Aramco’s listing outlook in the stock market is more affected by economic issues rather than political affairs. The ruling government in Saudi Arabia has proven incapable in recent years in securing its oil production and supply, as it has been engaged in direct and proxy wars.

The Yemeni Houthi attacks on Aramco showed that Saudi Arabia had failed to create a safe margin for its oil facilities. Meantime, due to no change in regional policies and the persistence of past affairs, such scenarios are likely to repeat themselves in the future. Therefore, Saudi Arabia is highly vulnerable to any military attacks on its oil facilities, and Aramco’s shares are likely to lose value under a threat or military attack.

That is why some experts and officials in Europe and the US believed that Saudi Arabia had to build confidence at the international level before listing Aramco’s shares.

In the global energy markets, climate change, the increased share of renewable energies in the energy mix, paying attention to innovation and advanced technology in the energy industry as well as US shale oil and gas production may in the long term, cut oil prices and subsequently profits for Aramco.

Domestically, Saudi Arabia’s development policy is intertwined with reduced dependence on oil sales; however, such reduction is to be compensated by the listing of Aramco’s shares. In fact, although Saudi Arabia earned $25 billion from selling shares so that the country would be able to take bigger steps towards an oil-independent economy, this high revenue has been gained from oil. Therefore, any reduction in Aramco’s shares would challenge Saudi Arabia’s policy of domestic development.

Petrobras, Total Open to Offers for Deepwater Brazil Blocks

Petrobras and Total plan to jointly farm-out part of their interests in the deepwater BM-P-2 concession in the Pelotas basin, offshore Rio Grande do Sul State.

Each company currently has a 50% stake in the permit, which Petrobras operates. They are looking to divest in the range 30-65%.

BM-P-2 is in water depths of 1,000-2,000 m (3,281-6,562 ft). Petrobras secured 100% in 2004 under the 6th Bidding Round staged by Brazil’s National Agency of Petroleum, Natural Gas and Biofuels (ANP).

Total acquired a 50% interest in 2013. The concession covers exploration blocks P-M-1269, P-M-1271, P-M-1351, and P-M-1353 and is said to be strategically positioned in relation to blocks in the Pelotas basin likely to be offered under the 18th ANP Bidding Round in 2021.

2-------------Beach Farming Into Frontier Permit Offshore New Zealand

Beach Energy Ltd. has reached agreement with OMV GSB Ltd. to acquire a 30% participating interest in exploration permit PEP50119 in the Great South basin offshore New Zealand.

Under the agreement, Beach will acquire a 30% participating interest in the permit in exchange for funding a 30% share of the Tawhaki-1 well cost and the associated work program and budget.

The transaction is subject to New Zealand government and regulator approval.

Following completion, Beach’s interest in PEP50119 will be 30%, with operator OMV holding a 52.93% interest, and Mitsui E&P Australia Pty Ltd holding 17.07%.

The PEP50119 exploration permit contains the large Tawhaki prospect and other leads. Tawhaki is a basement drape structural trap with up to 470 sq km (181 sq mi) under structural closure.

The prospect is defined by modern, high-quality 3D seismic data and interpreted to have Cretaceous reservoirs of similar age and quality to the excellent sandstones encountered in Caravel-1, about 130 km (81 mi) to the north in PEP38264 (Beach 37.5% and operator).

3--------------Tullow Backing Into Dussafu Permit Offshore Gabon

Tullow Oil Gabon has exercised a longstanding 10% back-in right to the Dussafu production-sharing contract (PSC) offshore Gabon.

According to one of the partners, Panoro Energy, Tullow and the PSC co-venturers have accordingly entered into a deed of novation and amendment.

The interests of the various parties will be: BW Energy, operator (73.5%), Tullow (10%), Gabon Oil Co. (9%), and Panoro (7.5%).

Tullow’s option was subject the company reimbursing the partners for its share of historic costs related to the Dussafu development. The total amount had been disputed, but Tullow will now pay $19.8 million after adjusting for the company’s lifting entitlement since oil production started in September 2018.

However, negotiations continue to resolve other disputed costs, which amount to an additional $18.7 million. If no agreement is reached, the dispute will head to arbitration.

4-----------OGA Reviewing UK Offshore License Bids

Britain’s Oil and Gas Authority (OGA) received 104 applications in response to the UK’s 32nd Offshore Licensing Round, which closed on Nov. 12.

These cover 245 blocks or part-blocks. Bids came in from 71 companies.

On offer was acreage in the Central North Sea, Northern North Sea, Southern North Sea and West of Shetland.

To support the application process, the OGA made available various datasets over these regions via its own website and the UK National Data Repository.

Nick Richardson, Head of Exploration and New Ventures at the OGA, said the response had exceeded the interest shown in the 30th Round which was also covered more mature offshore areas.

Awards should follow in 2Q 2020. The OGA will discuss the timing and nature of the 33rd round with the industry, but this is unlikely to take place next year, it added.

5---------------EnQuest Joins Petronas in Offshore Malaysia Block

Petronas has assigned EnQuest an 85% operated interest in the production-sharing contract (PSC) for block PM409.

The 1,700-sq km (656-sq mi) concession is offshore Peninsular Malaysia in water depths of 70-100 m (229-328 ft) and in a proven hydrocarbon area containing various undeveloped discoveries.

It is also contiguous to EnQuest’s PM8/Seligi PSC, providing potential tieback opportunities to the company’s Seligi field production hub.

During the initial four-year exploration term, the company and partner Petronas have committed to drilling one well.

Russia Has Vessel to Build Nord Stream 2

President Vladimir Putin said Russia has a “pipe-laying vessel” to complete the construction of the Nord Stream 2 gas pipeline to Germany, Kommersant daily reported citing unnamed sources, following sanctions imposed by Washington.

Putin spoke about the vessel to a gathering of Russian top businessmen, Kommersant reported. He said, according to the newspaper, the completion of the project would be “stretched” by several months because of the sanctions.

U.S. President Donald Trump imposed sanctions last week on the Nord Stream 2 pipeline designed by Moscow to bypass Ukraine and increase gas supplies via the Baltic Sea to Germany, Russia’s biggest energy customer.

Swiss-Dutch company Allseas, which was laying the pipeline using two vessels - Pioneering Spirit and Solitaire - suspended work to avoid U.S. sanctions.

In 2016, Russian energy giant Gazprom bought a special pipe-laying vessel called Academic Cherskiy to be used as a last resort if European companies stopped working on Nord Stream 2.

A Gazprom source said Cherskiy’s average pipe-laying speed is slower than the Pioneering Spirit but did not provide a specific estimate. According to Refinitiv Eikon data, Cherskiy is currently based in the Russian Pacific port of Nakhodka.

Before Washington announced sanctions on the companies building Nord Stream 2, Russian officials had said it would be up and running before or around the middle of 2020.

2------China Sets Non-State Crude Import Quotas

China has issued a first round of crude oil import quotas for private firms next year that will allow non-state refiners to ship in 103.83 million tonnes of crude, state media and industry sources said.

That level is up 8% from the 96.25 million tonnes issued in the first batch of non-state firm import quotas for 2019, according to Shanghai Securities News and Beijing-based energy consultancy SIA Energy.

The bulk of the increase will go to new mega-refinery projects that started up in the past couple of years.

Hengli Petrochemical received a first-round quota for 10 million tonnes of crude, according to trade sources. That is more than double the 4 million tonnes it received in the first batch last year when the refinery was starting up, according to trade data.

Hengli’s first-round batch is already a hefty chunk compared with its total quota allocation for 2019 of 16.8 million tonnes.

Elsewhere, Zhejiang Petrochemical Company (ZPC), which has recently started up a second crude distillation unit (CDU), received a quota of 8 million tonnes in the first batch for 2020. That was up from 7.5 million tonnes in 2019’s first round, trade data showed.

The quotas were broadly in line with expectations, SIA Energy consultant Seng Yick Tee said. China’s commerce ministry said in November that non-state crude oil import quotas for the whole of 2020 would be 202 million tonnes, the same as for 2019.

“The focus in 2020 will be ZPC’s commercial runs and also Sinopec Zhanjiang refinery,” he said, referring to a new 200,000 barrels per day plant that is expected to start up in second-quarter 2020.

India LatAm Oil Imports Hits 20-Month Low

Latin America’s share of Indian oil imports plunged in November to its lowest in 20 months, tanker arrival data showed, as refiners bought similar heavier grades from the Middle East to reduce shipping costs.India, the world’s third largest oil consumer, bought about 390,400 barrels per day (bpd) of Latin American oil during November, or 9.1% of the country’s total imports, down from 12% in October, the data from shipping and industry sources showed.“Freight rates peaked in October 2019 and that prompted refiners to go for short-haul crude like from the Middle East,” Ehsan Ul Haq, an analyst with Refinitiv, said.India’s overall imports from the United States, Canada, and Africa also declined from October, the data showed.Freight rates surged in October after nearly 300 oil tankers globally were placed off limit by oil firms and traders for fear of violating U.S. sanctions against Iran and Venezuela.Middle Eastern oil accounted for 68% of India’s imports in November, up from 57% in October, the data showed, with Saudi Arabia regaining its status as top supplier a month after losing it to Iraq. Africa’s share fell to 13% from 16.5%.Overall, India imported about 4.28 million bpd in November, down 6% from October and 1.2% higher than a year earlier, the data from shipping and industry sources showed.The sources declined to be identified as they were not authorised to speak with the media

China Sets Non-State Crude Import Quotas

China has issued a first round of crude oil import quotas for private firms next year that will allow non-state refiners to ship in 103.83 million tonnes of crude, state media and industry sources said.That level is up 8% from the 96.25 million tonnes issued in the first batch of non-state firm import quotas for 2019, according to Shanghai Securities News and Beijing-based energy consultancy SIA Energy.The bulk of the increase will go to new mega-refinery projects that started up in the past couple of years.Hengli Petrochemical received a first-round quota for 10 million tonnes of crude, according to trade sources. That is more than double the 4 million tonnes it received in the first batch last year when the refinery was starting up, according to trade data.Hengli’s first-round batch is already a hefty chunk compared with its total quota allocation for 2019 of 16.8 million tonnes.Elsewhere, Zhejiang Petrochemical Company (ZPC), which has recently started up a second crude distillation unit (CDU), received a quota of 8 million tonnes in the first batch for 2020. That was up from 7.5 million tonnes in 2019’s first round, trade data showed.The quotas were broadly in line with expectations, SIA Energy consultant Seng Yick Tee said. China’s commerce ministry said in November that non-state crude oil import quotas for the whole of 2020 would be 202 million tonnes, the same as for 2019.“The focus in 2020 will be ZPC’s commercial runs and also Sinopec Zhanjiang refinery,” he said, referring to a new 200,000 barrels per day plant that is expected to start up in second-quarter 202Egypt, Ethiopia, Sudan Agree on Nile DamEgypt, Ethiopia and Sudan have come closer to aligning their views on filling the reservoir of and operating the giant hydroelectric dam that Ethiopia is building on the Blue Nile, the Sudanese irrigation minister said. Egypt is worried the Grand Ethiopian Renaissance Dam (GERD), under construction near Ethiopia’s border with Sudan, will restrict supplies of already scarce Nile waters on which it is almost entirely dependent. “Proposals were submitted by the three countries regarding filling the reservoir and operating the dam and a convergence (of views) occurred,” Sudanese Irrigation and Water Resources Minister Yasser Abbas told reporters after he met his Egyptian and Ethiopian counterparts in Khartoum. In November, the foreign ministers of Egypt, Ethiopia and Sudan agreed to work towards resolving their dispute over the $4 billion dam by Jan. 15, 2020, after meeting U.S. Treasury Secretary Steven Mnuchin and World Bank President David Malpass in Washington. They met in Washington again this month and are due for a third meeting on Jan. 13, where they will try to finalise an agreement to resolve the dispute. The U.S. administration invited the three sides for talks after Egypt called for an external mediator on the issue, saying three-way talks had been exhausted. Addis Ababa had previously rejected the idea, accusing Egypt of trying to sidestep the process. The three countries’ irrigation ministers will have further discussions at a meeting in the Ethiopian capital on Jan. 9-10, the Egyptian irrigation ministry said in a statement after the meetinQatar Petroleum to Start Forward Pricing Qatar Petroleum will start pricing its crude oil grades of Qatar marine and Qatar land on a prospective pricing basis in February 2020, the company said, confirming an earlier report by Reuters.QP currently prices the two grades on a retroactive basis but will move this to forward pricing, a more popular approach used by other Middle East crude exporters such as Saudi Arabia that better matches the trading cycle of crude.The new step will improve the overall competitiveness of Qatar Marine and Qatar Land, and allow existing and new customers to make better comparisons between the Qatari crude grades and other grades, QP said.By changing the pricing methodology QP is following the United Arab Emirates’ Abu Dhabi National Oil Co (ADNOC), which in November introduced a new pricing mechanism for its flagship Murban crude.ADNOC said it expected to implement its new Murban forward pricing mechanism between the second and third quarters of 2020 Kuwait Petroleum Corporation also said it would change its Asia crude oil pricing marker effective Feb. 1.It said it believed Kuwait’s crude pricing should reflect evolving oil market fundamentals and dynamics to service its customers. Middle East sour crude grades are typically traded two months forward in the Asia market, meaning that next year’s March-loading crude cargoes will be traded in January  

Crude and products market, January 2020
Crude and condensate market

 As 2020 gets underway, the possibility for end of OPEC cut agreement amid accelerating supply growth from non-OPEC countries should be though about. Such producing countries as Brazil, Norway and Guyana are expected to have large additions, while US shale crude supply growth is expected to slow down.
Looking at the Middle East producers, recent tension in the region made buyers more conservative about the future. As market situation is gloomy these days, the refineries are doing their best to diversify their basket of feedstock in order to be less dependent on Middle East grades.  
In the condensate market, signs of better relationship between UAE and Qatar may bring two countries together to enter Qatari condensate negotiations in 2020. This would tighten supply/ demand fundamentals and intensify price competition between UAE and Korean buyers.

Products market
Products market is experiencing the transition period with the implementation of IMO 2020.  As of early January 2020, the significant rally in very low sulfur fuel oil (VLSFO) cracks, coupled with the bottoming out of HSFO cracks. At the refineries, it is the interplay between VLSFO production and the supply of clean products (mogas and gasoil/diesel specifically). As demand for VLSFO has grown steadily through the transition period, they forced the clean products market to go up as well. Most refineries in Asia are reported to behave as if they are enjoying high demand of LSFO. They are producing more LSFO and caused bullish sentiment in clean products. LSFO production of Chinese refineries, however, couldn't take off yet as tax reform on Chinese fuel oil production has not been implemented yet.  The State Taxation Administration announced at the start of this year that it is planning several tax cuts to optimize its 2020 business environment.
Middle Distillates are performing healthy on the back of high bunker demand. As expected, implementation of IMO2020 absorbed more gasoil in the bunker pool. Looking forward into the products market, fluctuation is still expected as players are still challenging new situations. Moreover, China would be potentially able to change the market balance if anticipated tax changes will apply or not.
 
Limited LPG availability out of Middle East, where the regional balance remains markedly tighter, alongside firming demand indications in China, India and South Korea heavily rely on imported supply- created tightness to the LPG market. Looking forward, the boom days is expected to vanish as we go closer to the end of winter.

Iran Oil ‘Takes Off’ for Mastering Technology

Iran’s petroleum industry has accelerated its development after dealing with tough conditions of sanctions over a decade and going into ups and downs. Nationalization of technical knowhow and acquisition of cutting-edge technologies have always constituted a major cause of concern for Iran’s petroleum industry. That has gathered steam in recent years thanks to efforts made by Petroleum Ministry managers in meeting the country’s needs and making maximum use of domestic capabilities.

“Iran Petroleum Takeoff 2019” was held at the Research Institute of Petroleum Industry from December 16 to December 18. Minister of Petroleum Bijan Zangeneh attended the event in order to show that knowledge-based companies and startups counted a lot for the petroleum industry.

Addressing the event, Zangeneh said: “The Petroleum Ministry’s new plan is focused on supporting domestic manufacturing, while guaranteeing purchase. The Petroleum Ministry will guarantee purchase from the manufacturers supplying necessary commodities for the petroleum industry and receive quality certificate.”

He added: “A lot could be done in supporting knowledge-based companies, the easiest of which is guaranteeing purchase of innovative commodities. In other words, we will support every manufacturer being able to manufacture commodities required by the petroleum industry and receive standards from the Association of Petroleum. Such companies would be able to receive banking facilities based on such guarantee.”

Zangeneh touched on down-hole pumps or seamless pipes used in the petroleum industry, saying: “In case such quality commodities are produced, we will ban their purchase from abroad at the same time.”

“I think it is for the first time that an executive organ, spending huge investment and offering technological services and supplying sophisticated equipment, is supporting startups and knowledge-based companies in order to become influential in this sector,” he added.

Zangeneh said the Innovation Fund was one of these advantages, adding: “Within a week we will present our proposal for the establishment of this fund with an initial capital of IRR 1,000 billion. After consulting pundits, a process has been designed for an optimal choice of startups and knowledge-based companies for the "Rey Complex". It is estimated that 100 to 150 companies would be set up at the complex. One of the links in the designed process is the Petroleum Takeoff event.”

The minister said the needs and challenges of the petroleum industry are mostly related to software and processes.

“I will focus on direct communications with startups and knowledge-based companies on a weekly basis and I hope to serve as a mentor and support these complexes,” he said.

Zangeneh said: “I place too much hope in young and creative manpower. I feel compelled to share my experience, if any, with the youth and startups gratuitously and without any expectation of return. That would help them contribute to the future of the petroleum industry.”

Standard Regulatory Body

Sourena Sattari, Vice-President for Science and Technology, underscored the necessity of existence of an oil equipment standard regulatory body, saying: “Sanctions provide a good chance for researchers and elites active in the industrial sector to prove their capabilities to managers.”   

“In the pharmaceutical industry, the Food and Drug Organization verifies products based on global standards. The petroleum industry has to take steps in such direction,” he said, adding that Petroleum Ministry officials had to verify the compliance of every product with international standards prior to any market supply.

He said that research and technology were luxury issues, adding: “We have to benefit from the potential of research through state investment. That is up to faculty members, researchers and elites. That indicates that research is no longer a luxury issue and it has to be taken into consideration more seriously.”

Final Test for Technological Products

Hassan Montazer- Torbati, CEO of National Iranian Gas Company (NIGC) said the petroleum ministry needed to have all equipment at its disposal for the final test of products of knowledge-based companies and startups.

He said that the process of production in the petroleum industry should not stop even a single day. “The issue of technology has been focused upon by Mr. Zangeneh since the beginning of the current calendar year, and he has spent time on the formation of an ecosystem of technology and innovation at the Petroleum Ministry.”

Montazer -Torbati said the Petroleum Ministry would be a major consumer for the products of knowledge-based companies.

“The ecosystem of innovation and technology is not just an event; rather it’s a process requiring patience. However, we will be faced with bottlenecks in our efforts to arrive at the desirable result,” he added.

The official said: “We are tough in drawing up technical standards; however, the prepared equipment is likely to face ambiguities. Therefore, in the ecosystem of technology and innovation, there must be a phase for the final test of equipment and products.”

“This phase requires an all-out assessment of universities. We have also to envisage workshops for field test in order to ensure the quality of products,” he said.

Montazer-Torbati said the bulk of gas industry equipment had been made domestically, and NIGC was following up on the domestic manufacturing of the equipment.

He said: “Only a small portion of these items has not been made domestically.”

26 Projects with 16 Universities

Saeed Mohammadzadeh, deputy minister of petroleum for engineering, research and technology, said standards were a significant and important index in the petroleum industry. He added that Zangeneh attached great significance to API standards. He added that these standards had been drawn up in previous years.

He said the Office of Deputy Minister of Petroleum for Engineering Affairs was ready to support petroleum industry researchers.

“Owing to government support for the petroleum industry we are witnessing the development of ecosystem in this industry, and we hope to hold this event next year on a larger scale,” he added.

He said 26 petroleum industry projects were under way in cooperation with 16 universities and research centers, adding that the Ministry of Petroleum was using the scientific capacities of the country.

Mohammadzadeh said the main idea behind the first Petroleum Takeoff was to show the Ministry of Petroleum’s determination to cooperate with universities, elites and researchers. He expressed hope that the petroleum industry and universities would mutually benefit from existing potentialities.

“Global statistics about Iran’s status in the production of science and practice of science indicates inconsistency. Despite Iran’s acceptable ranking in the production of science, we do not stand in an acceptable position in the practice of science and this trend has to be corrected,” he said.

Mohammadzadeh said: “Therefore, we need an intermediary link to clear the way for the use of science in the industry and this important issue is being followed up at the Petroleum Ministry within the framework of technological and innovative ecosystem project.”

Innovative Ecosystem

Jafar Tofiqi, director of the Research Institute of Petroleum Industry (RIPI), said Minister Zangeneh had played an influential role in the formation and upgrade of scientific and research ecosystems of the petroleum industry over the past two decades.

“Today, thanks to his support and follow-up, the ecosystem of innovation is taking shape in this industry,” he said.

Tofiqi said: “Offering petroleum industry-related disciplines at prestigious universities, making efforts to set up petroleum engineering faculties at universities, equipment of laboratories and upgrading scientific infrastructure, signing major agreements with universities and supporting the ecosystem of innovation are among the effective measures undertaken by Mr. Zangeneh.”

He said: “The project for developing the ecosystem of innovation in the petroleum industry in completing the previous chains is being followed up on with the support of the minister of petroleum. To that effect, an innovation center has opened at RIPI.”

Domestic Knowledge-Based Companies

Abolfazl Varvani Farahani, head of research and technology at the Iran Offshore Oil Company (IOOC), said on the sidelines of the Petroleum Takeoff event: “This company supports domestic research and knowledge-based companies.”

“Following the minister of petroleum’s instruction regarding support for knowledge-based companies and technological ideas, IOOC has been firm in this sector and is decided to make maximum use of the capacities of researchers at knowledge-based companies,” he said.

Farahani said Petroleum Takeoff was a demand-oriented event for manufacturing companies to discuss their operation challenges with knowledge-based companies.

“In case there is any idea on the part of these companies or accelerators, memorandum of cooperation will be signed with them. IOOC has signed 16 MOUs, which we expect to result in production,” he said.

Farahani said the research sector had been neglected, adding that knowledge-based companies, researchers and elites could be effective in helping Iran overcome sanctions.

“A major pillar of development of innovation and using knowledge-based companies is startups and accelerators,” he said.

Carbonate Rock Academy

Ebrahim Alavi Taleqani, director of research and technology at National Iranian Oil Company (NIOC), said a centralized academy would be set up to focus on carbonate rocks. The academy would be launched by Khawrazmi University.

“We have a 10-year agreement with Khawrazmi University on carbonate rocks. That is an NIOC megaproject. We have not yet had any centralized academy for carbonate rocks. We hope that this center would be soon launched at Khawrazmi University so that students and professors would be able to provide technological services to the country and NIOC,” he said.

Taleqani said: “Most university projects are individual and therefore professors and students are unwilling to do networking and we have sought to use the potential of all education groups at university projects. Our objective at the Petroleum Ministry and its subsidiaries are to be able to develop all these projects.”

He said: “We have 26 big projects at the Petroleum Ministry, for which memorandums of cooperation have been signed. They include five exploration, nine upstream and 12 downstream projects.”

TENCO Poised to Strike Oil Development Agreement

Omid Asakareh, CEO of Negin Afagh Kish Energy Development Co (TENCO), says his company is set to sign an agreement for the development of an oil field in southern Iran. He told "Iran Petroleum" TENCO would most probably operate the project in partnership with a foreign firm, saying each side’s share would depend on negotiations. He, however, said, TENCO would be able to carry on with the project on its own.

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

Three years ago, TENCO was cleared by Iran’s Petroleum Ministry as an E&P company. How many memorandums have you signed since then? How many of them have been finalized as agreements?

Since 2016 when the issue of E&P companies was raised at the Petroleum Ministry and some companies were qualified, TENCO decided to step into upstream oil sector. Of course, we are new in this sector, but we reconsidered our framework of activities to comply with E&P. After being qualified by the Petroleum Ministry, we signed five MOUs in early 2017 with National Iranian Oil Company (NIOC) for developing the Azadegan (South Azadegan and North Azadegan), Mansouri, Ab Teimour, Farzad A and Farzad B fields. Following that, we entered into talks with National Iranian South Oil Company (NISOC) for developing oil fields based on a specific framework of agreement. The Russian companies Zarubezhneft and Tat Neft, Pergas consortium and Pasargad Oil Company were our rivals. Concurrently with receiving data, we embarked on our talks with domestic and foreign companies for field development. To attract investment, we pursued a variety of options like finance, usance and loans in order to develop the fields and find a clear perspective about the economic viability of the projects to know which model would fit field development projects. Regular meetings were held with the NIOC Engineering and Development Department. In conclusion, NIOC recognized TENCO as a company qualified to develop oil fields. We have already won confirmation for our investment and economic models.

How come no agreement has been signed so far?

We must have a foreign partner for field development because development of fields needs certain technology. We have signed an MOU with a major foreign E&P companies and we expect the agreement to be signed for this field by 2020.

Due to the certain conditions imposed on Iran’s petroleum industry due to sanctions, we will not reveal the name of foreign companies until we sign agreements. However, we are currently in talks with them about terms and conditions of partnership.

How will the field be developed?

This field is among newly discovered ones in Khuzestan Province. It comprises of the Asmari and Bangestan reservoirs. NIOC was mainly focused on the Asmari reservoir, but we plan to develop both reservoirs over a 10-year period. The agreement is subject to renewal for 20 years.

In which section of the field do you need specific technology?

We have the asphaltene problem in the Bangestan reservoir. We need technology to resolve this problem. Of course this problem has not become serious and we can start planning for its resolution. But application of technology would depend on our final negotiations with our would-be foreign partner. After signing agreement, we will draw up an MDP within a specific timeframe.

What installations would be built throughout the implementation of the project?

Surface facilities would not need development; however, we will establish several desalination units, as well as wellhead installations in order to enhance recovery. Now if the Petroleum Ministry envisages building petro-refineries, I think there is a possibility of building petro-refineries. One positive point with the development of this field is that unlike such fields as Ab Teimour that need enhanced recovery from day one, in this field our conditions will be better and I believe that our field will be attractive to foreign investors due to the fast rate of return.

How much investment is estimated to be needed for this development project?

Since we have a foreign partner for this development project, the contract value has not been finalized. However, I think that we can bring the field’s output to a desirable figure with $1 billion over a 10-year period. The share of companies has not been specified in the field development, but we have basically agreed in our talks that our company’s share would be 20-50%.

When do you expect this agreement to be signed?

We expect this development agreement to be have been signed by 2020. But for whatsoever reason the foreign party pulls out in the final stages, we will have no problem with development. However, I would like to stress that foreign companies’ presence is important in terms of financing and sophisticated drilling technology with a view to enhancing the rate of recovery, which would help accelerate the project.

Have you held any talks for enhanced recovery?

Yes, of course! In the Ahvaz 235 project, run by National Iranian South Oil Company (NISOC), our talks are in the final phase and we are close to signing an agreement. That would add 72,000 b/d to the Ahvaz 235 project. That is partly due to enhanced recovery and partly to avoid fall-off in output. The project is to be implemented over a two-year period. The Ahvaz 235 project for the maintenance of production is one of the largest onshore projects in NISOC-run areas. Normally, we provide 20% of equity and NIOC will provide the rest, but we have said we would account for 35% of equity. This project will require drilling 31 wells and workover of 12 other wells. We will also account for the renovation of surface installations including purchase, installation, implementation and overhaul. An advantage with this project is the allocation of 4% of this sum to eradicating poverty in Khuzestan Province, which would generate a big capacity for job creation. Our priority would be to recruit local people.

Will you benefit from any foreign partners in this project?

Sure! We have held talks with a foreign company deemed qualified by NIOC. Since the foreign party is private-owned we are hopeful that our talks would come to fruition.

Will you bid for any other project?

We will definitely bid for more projects in the future. We are currently planning to bid for the Ahvaz 14, Ramin and Maroun projects.

Last March, TENCO was assigned the project to study the Toudaj exploration block. Which phase are studies in now?

The Toudaj block is located above the Eram gas field and near the Sarvestan and Saadatabad fields. Based on NIOC data, technical studies have been concluded and we have submitted our technical proposals to the NIOC Directorate of Exploration. We are ready to sign an agreement.

Is developing this block economically viable?

Studies on exploration blocks are always high-risk. That is why domestic companies hesitate on entering this sector independently. Since this is the first time NIOC is trusting Iranian companies in this sector and has decided to assign studies on exploration blocks to Iranians. we expect more flexibility so that other Iranian companies would dare enter this sector.

What kind of flexibility do you mean exactly? Risk is an inevitable part of exploration studies and companies enter talks based on such knowledge. Is oil potential always known?

Yes, that’s it. Let me provide you with an example. We have to spend $35 million on this project. If our studies reach conclusion, NIOC would pay back all fees. But if no conclusion is reached, we will receive no compensation. That is the risk with exploration block studies. However, I think that we can be flexible. I have to note that we are ready to sign agreement with the Directorate of Exploration on the Toudaj exploration block.

Do you see this block development economically viable based on technical studies?

We have reached good results in our studies. Since this block is situated near the Saadatabad and Sarvestan fields, as is the case with the Namavaran reservoir, these fields are likely to be connected. Of course we do not expect exploring any big field. We have established contracts with Iranian and foreign experts and we benefit from their advice. We are assured that we have oil and gas in this block. We even know at what depth we can reach oil and gas. However, we are not sure about the volume of reserves and the economic viability of the block. In fact, we have not yet realized if this project is economically viable. If it turns out to be viable, we will certainly develop it on our own.

Will this issue be included in this text of the agreement?

Our agreement has two sections. In the first section that would last two to three years, we will drill exploration wells and conclude the exploration phase. If the block is apt for development, we will go into the next section that involves the development of the field.

Are you involved in seismic testing, too?

Yes, of course. We signed the 3D seismic testing for Paniz in October 2019 with the Directorate of Exploration. It is the toughest water-earth project in the Middle East, whose implementation is of high significance to us. We have also recently participated in the tender bid for the Darregaz and Zarrineh Kuh 2D seismic testing projects near the border with Turkmenistan and we won the tender bid. It has been endorsed by the Petroleum Committee and NIOC Board of Directors. We have also taken part in the bid for the Gachsaran seismic testing project. We also plan to bid for the Arvand seismic testing project which is a full finance project.

Sanctions-hit Iran to Raise Output 1mb/d

The Economic Committee of the Iranian Supreme Leader’s Office has adopted a plan requiring Iranian exploration and production (E&P) companies to add 1 mb/d to Iran’s oil production in the midst of sanctions and in the absence of foreign companies. This strategy is for Iran to regain its market share immediately once sanctions are lifted.

Mehdi Mir-Moezzi, director of the Society of Iranian E&P Companies, says Iran needs to prepare itself for post-sanctions era.

“Therefore, this project is being implemented to prevent any production loss in oil fields and increase Iran’s sanctions-hit oil production capacity,” he said.

Over the past two years, the US has imposed the toughest ever sanctions against Iran’s petroleum industry, pushing many foreign companies to suspend their cooperation with Iranian firms. Some foreign firms totally quit.

The US said its sanctions were aimed at zeroing Iran’s oil exports; however, official data provided by the Petroleum Ministry shows that Iran’s oil exports have not been down to zero.

Many foreign companies pulled out of Iran as sanctions struck, but the Petroleum Ministry never stopped its development plans to avoid loss. IT even continued its talks with Iranian E&P companies in a bid to avoid stagnation in the activities.

The idea of E&P companies was developed during the first administration of President Hassan Rouhani. Then, Petroleum Ministry cleared a group of E&P firms to carry out related projects. That marked a first step for Iranian contractors to get engaged in E&P projects.

National Iranian Oil Company (NIOC) has since signed numerous memorandums with E&P companies, some of which have led to signing agreements.

Meantime, Iranian E&P companies set up a society so that their managers would convene every month to discuss issues and problems.

During the 24th forum of CEOs of E&P companies, one important decision was the 1mb/d increase in Iran’s oil output.

Planning to Contain Loss

Mir-Moezzi said the Islamic establishment had reached the conclusion that the output hike had to materialize in the absence of foreign companies and in light of the significance of developing oil fields in Iran.

Referring to the sanctions imposed on Iran’s petroleum industry, he added: “After the reduction of sanctions or their removal, Iran would be back to the global oil market. By that time, in order to regain our share of the market we need to be ready for that purpose.”

“Therefore, we have to be ready from now to think of avoiding output fall and increasing production capacity. That is why the idea was developed for a 1mb/d increase in oil output by E&P companies in the absence of foreign companies,” he said.

Mir-Moezzi said this project was in support of Iranian E&P companies, expressing hope that within 10 to 15 years, internationally-recognized companies would take shape in Iran.

Noting that four consortia of E&P companies have expressed their readiness to join the project, he said: “The consortiums have taken shape in order to put together the capacity of companies for developing larger fields. NIOC also plans to study a related structure in this regard.”

Arrangements for Output Hike

Mir-Moezzi said arrangements had been made with NIOC for the planned output hike. He added that some modifications were made to the newly-developed Iran Petroleum Contract (IPC) model in a bid to support Iranian companies throughout implementation of agreements. He added that the National Development Fund of Iran (NDFI) would be also tapped for that purpose.

He said that eight fields were envisaged to be developed by Iranian E&P companies, expressing hope that agreements for developing some of these fields would be pursued seriously.

Natural Recovery

Gholam-Reza Manouchehri, CEO of Oil Industries Engineering and Construction Company (OIEC), said a new paradigm was needed to be defined in the country in light of technical and engineering potentialities.

“We have to acknowledge that we are faced with many problems with regard to financing. Furthermore, in light of restrictions faced with by the upstream petroleum industry in cutting edge technologies we had better focus on natural recovery (and not secondary and tertiary recoveries) from conventional reserves,” he said.

He added that it was difficult to reach a mechanism for E&P companies to raise output by 1mb/d.

“We have to find the mechanism. That is not so simple,” he added.

Manouchehri said a solution had to be found to make upstream oil activities in Iran more attractive to investors.

“We need to make efforts for that purpose,” he added.

Manouchehri also touched on OIEC studies in the Mansouri field, saying: “Our studies show that there is still room for maneuvering when it comes to recovery from this field and we should not neglect the chance of the presence of the private sector and contractors, consultants and manufacturers in this regard.”

RIPI Develops Oil Absorbents

Oil cleanup absorbers, known as oil absorbents, are among largely consumed materials in the petroleum industry. Due to the extensive network of pipelines and installations in offshore zones, oil absorbents are among basic necessities of oil companies.

Iran is currently buying oil absorbents from foreign companies, but the Research Institute of Petroleum Industry (RIPI) has developed some prototypes which would soon reach commercial production. RIPI’s product has been successfully tested at zones operated by Gachsaran Oil and Gas Production Company. Now it is competing with foreign companies and trying to introduce its products to domestic oil companies.

Tal’at Khalkhali, director of RIPI’s Division for Chemical, Polymer and Petrochemical Processes Development, has said production of oil absorbents to clean oil slicks off water started in partnership with the RIPI’s Division of the Environment and the National Iranian Oil Company’s Directorate of Research and Technology, two years ago.

She said: “The project mainly focused on developing modern technologies to reduce environmental pollution in the petroleum industry. Part of the project was assigned to us in order to develop absorbents for cleaning oil slicks off water surface.”

She said the project was based on using nano materials, adding that the absorbents containing nano materials were produced.

“Using nano-absorbents was mainly for research purposes. In this project, we produced nano-materials with higher absorption than commercial absorbents available on the market. But due to the petroleum industry’s dependence on commercial absorbents, we decided to produce them,” she added.

Khalkhali said the absorbents were tested in Zohren River in Pazanan-2 area administered by Gachsaran Oil and Gas Production Company.

She added: “Following the commissioning of the production line for these absorbents at RIPI, we are currently bidding for absorbent production for Gachsaran Oil and Gas Production Company.”

She said RIPI was in talks with the Iranian Oil Pipelines and Telecommunications Company (IOPTC) as one of the leading consumers of this product.

“Upon their request, we have carried out pilot tests at RIPI in the presence of HSE experts,” she said.

Asked about the use of oil absorbents, Khalkhali said: “Oil slicks caused by leaks slip into sea and rivers from various routes, cause water pollution. For these absorbents to function properly and effectively, they need to remain floated on the water after absorbing oil materials.”

She added that another significant factor in increasing the absorbency of these materials would be to use highly-absorbent materials.

She said another key factor in the efficiency of an oil absorbent was the level of absorbency per gram of the absorbent’s weight.

Currently, Khalkhali said, the pads produced by RIPI are similar to those purchased from European companies.

She said the absorbents produced by RIPI are mainly made of non-woven polymers.

“In producing these non-woven polymers, very thin fabrics from organophilic polymers are thermally welded to provide canals for absorbing and saving oil. After oil has been removed from the absorbents, they are recycled to a lower quality from the initial quality. But normally, companies do not recycle these absorbents, but they burn or bury them in furnaces after separating oil,” she said.

Khalkhali said the absorbent included pads, booms and cushions for various purposes.

“Booms are long absorbents with various diameters. They encircle oil slicks to prevent its spread, while they act as oil absorbent,” he added.

Khalkhali said Iran would no longer need to import absorbents, adding: “All consumer companies can supply their needs domestically. Meantime, there would be room for domestic production and employment.”

According to her, importing companies are the main rivals of RIPI in this sector.

“Oil absorbents are among widely consumed materials, but we don’t have any precise data about them and most companies are importing this product from various points of entry,” she said.

Khalkhali said in case RIPI modified its products to comply with industrial challenges, job would be created for the youth while hard currency would be saved. “Furthermore, we will be able to export our products in the region,” she added.

Khalkhali said: “RIPI has competent manpower and suitable infrastructure to develop technical savvy for many materials and equipment used in the petroleum industry.”

She expressed hope that RIPI’s relations with oil experts would improve and industrialists would share their experience with RIPI so that necessary measures would be undertaken for commercialization, production, job creation and ending imports.

Iran Firms to Develop Farzad-B

Amid tough sanctions imposed on Iran’s petroleum industry, Farzad-B gas field is set to be developed by an Iranian firm.

Bijan Zangeneh, Iran’s minister of petroleum, announced in late December that the project would be operated by Petropars. National Iranian Oil Company (NIOC) will allocate over $75 million for the project.

It comes at a time Iran is continuing to show willingness for partnership with foreign companies, while at the same time it would not halt its development plans.

Petropars is known to Iranian and foreign contractors. Having had a good performance in the development of a number of South Pars phases and cooperation with foreign companies, it recently handled the development of SP11. The agreement for the SP11 development was initially signed in July 2017 between NIOC and a consortium of French giant Total, China’s CNPCI and Petropars. But after the 2018 withdrawal of the United States from the 2015 nuclear deal and the subsequent re-imposition of sanctions against Iran, Total and CNPCI pulled out. Now Petropars is implementing the project alone.

The assignment of Farzad-B to Petropars did not come out all of a sudden. Minister Zangeneh had earlier announced that talks were under way with India and/or other foreign companies for the project.

Farzad-B project had been discussed in details by Iranian and Indian officials over recent years. It was even discussed at high level by Iranian and Indian presidents.

Iran’s talks with the Indians continued up to last October. Zangeneh last said: “Regarding Farzad-B, plans are under way. We have officially sent a message to the Indians for talks within the framework agreed upon. We are interested in cooperation with the Indians, but if they do not show any willingness for cooperation we will go ahead with Iranian companies.”

As foreign companies did not step in, the minister of petroleum waited no longer and agreed to the awarding of the Belal gas field, as well as Farzad-B, to Petropars.

The petroleum minister and CEO of Pars Oil and Gas Company (POGC), as the client and contractor, insist that development of joint fields is a priority of the Petroleum Ministry. Iran always welcomes cooperation between Iranian contractors and foreign companies.

As the process of development of Farzad-B has lasted until now, there is little data about the field which remains largely unknown and which may make development of Petropars more difficult.

The Petroleum Ministry decided several years ago to engage domestic companies in oil projects. Enhanced oil recovery (EOR) projects were assigned to universities and research institutes, while exploration agreements were signed with domestic firms.

Petropars is no stranger to Zangeneh. The minister had helped boost this company. Petropars is now a leading company engaged in the petroleum industry. Some two decades has passed since its establishment, and it has become irreplaceable in the South Pars development.

During days when foreign companies were torn between staying and leaving, domestic companies were of great help despite all restrictions.

India Refused to Step In

Farzad-A and Farzad-B fields are jointly owned by Iran and Saudi Arabia. Part of the Farsi block, Farzad-B is located 15 kilometers from Farsi Island in the Persian Gulf. It holds about 22 tcf of gas, 60% of which is recoverable. India’s ONGC discovered Farzad-B in 2008, but it failed to sign an agreement due to the sanctions imposed on Iran. The project remained undecided until Hassan Rouhani took office in 2013. Over the past seven years, Iran and India have been in talks on this tight field.

Iran's Petroleum Ministry has shown high flexibility vis-à-vis India. During his 2018 visit to India, President Rouhani agreed with the Indian side that Farzad-B project become active by September 2018.

Zangeneh said last June: “We offered big concessions. One of them was that we agreed with their request not to produce LNG, while they had initially agreed with this. They said they would not do so because of financial squeeze. Then we said we would remunerate them for their investment under a buyback deal after production starts from this field, but the Indians said they disagreed and requested to be remunerated in another way. We got permission from the president to remunerate them through our exports to Iraq and Turkey. That has been unique in our agreements. We have notified the Indian side of this issue. We showed flexibility in all aspects, but the Indians did not strike any agreement apparently due to sanctions.”

Despite all these flexibilities shown by Petroleum Ministry for the development of the field, talks did not come to fruition and the Farzad-B development was assigned to Petropars.

Farzad-A and Farzad-B development would cost $5.2 billion, $2.2 billion of which would be for Phase 1 of Farzad-B for an output of 1bcf/d.

Petropars is planned to conduct engineering, exploration well drilling and basic design. It is allowed to have a foreign partner.

Oil Sector Eyes Low Energy Intensity

Energy consumption is not bad per se as long as it brings about development and progress. However, in recent years, Iran’s energy consumption has grown about 10% while gross national product (GNP) has grown 5-6%. Should this trend continue, Iran will soon switch from a leading energy exporter to an importer of energy, in which case domestic energy supply will be faced with serious challenges. Currently, a lion share of Iran’s production is spent on energy subsidy, which is estimated at about IRR 350,000 at current regional prices. It is rising on an annual basis. In other words, the capital which should serve national development and growth is burnt, causing environmental pollution.

Official data and estimates show energy waste in the country without contributing to production. Iran has potential to save energy, particularly in the oil and gas sector. In this regard, researchers at the Research Institute of Petroleum Industry (RIPI) are looking for solutions for an efficient use of energy. Their main objective is to reduce energy intensity, particularly in the petroleum industry in order to clear the way for new energies.

To know more about RIPI’s achievements, "Iran Petroleum" has interviewed Mohammad Reza Habibi, head of Technology Development and Optimization Division at RIPI.

The energy intensity in Iran stands high due to decrepit equipment used in the oil industry. Has RIPI conducted any studies to resolve this problem?

Most equipment used in the petroleum industry is dilapidated. According to studies conducted over previous years, most of this equipment is of low efficiency in terms of energy indexes. Another issue pertains to sanctions. In such issues as turbine supply, we did not have the possibility to purchase from foreign countries and we had to meet our needs domestically. Companies like MAPNA manufacture some gas turbines, as well as turbines used in power plants. But domestic manufacturing in the oil sector is impossible. Therefore, we had to go towards other options in order to reduce energy intensity. The proposal was to modify turbines in order to increase their output. I have to recall that without sanctions, end users preferred to use new models. But under sanctions we have no option but to use existing models. For modification, we conducted a pilot study on one of the turbines and then domestic companies conduct necessary tests. Several private companies are active in this sector and they have gained sufficient experience.

Currently, a subsidiary of National Iranian Oil Company (NIOC) is looking for modification of operation of its turbines, and as I said, this company has received a project to improve the performance of turbines. It is currently in the state of technical studies.

How many companies have you cooperated with in reducing energy intensity?

The most important company in partnership with the Division of Energy is the Iran Fuel Conservation Organization (IFCO). The most important joint project with this company is designing and domestic manufacturing of gas-based micro combined heat and power (MCHP). The consulting company for this project was Germany’s FEV that is one of the leading companies in internal consumption engines. More than half of car manufacturing companies have partnership deals with this firm. The final product of the project would be able to generate 12kW of three-phase electricity and 25KW of heat with a total output exceeding 90%. In case this project reaches mass production, it will significantly contribute to reducing energy intensity in (residential, administrative and commercial) buildings. In our project, FEV was tasked with monitoring development and converting automotive engines to industrial engines.

Which industrial groups or companies have you cooperated with in the petroleum industry?

We have had significant cooperation with all NIOC subsidiaries, National Iranian Oil Refining and Distribution Company (NIORDC), and petrochemical companies. We have gained good experience on turbines, air coolers and other energy equipment. Outside the petroleum industry, we cooperate with big power plants (like Shahid Rajaei Power Plant and Isfahan Power Plant).

Would you please tell us about the MCHP product and its use in the petroleum industry?

NIOC is the client for this product. The product may be used on a pilot basis for one year in the small welfare and administrative buildings of the Ministry of Petroleum in order to resolve possible problems. In my view, one of our main problems in various industrial sectors is low energy prices and energy efficiency is not attractive to companies in the industry or in the buildings. The attractiveness factor has declined further in light of the depreciation of Iran’s currency. For instance, last year, the Micro CHP product manufactured at RIPI was supposed to be consumed domestically (price ranging between IRR 350 and 450 million) and since some trade units used to spend huge costs on electricity generation in the summer, purchasing the MCHP apparatus was cost-effective for them. However, the device currently costs IRR 1,000 to 1,200; therefore, it would no longer be economical for the private sector to buy such equipment unless the government supports them. It is noteworthy that the reason for the high price of these devices is hard currency spending on the control sector, generators and fuel supply. Of course, the company developing the product has made efforts for the domestic manufacturing of some parts, which I hope would come to fruition, soon. It has to be taken into consideration that the product is referred to as micro due to its generation power standing below 50KW. With last year’s prices, it was economical to use this device instead of emergency power system, but currently it is less attractive in the building sector. Of course, we are looking for foreign markets, and foreign companies in neighboring countries like Iraq are looking for customers. The product is competitive there.

Is there any competitive source of power for this product?

The product has not been manufactured under the license of any other country, but the most important part of CHP systems is the durability of engine. All tests on this sector have been conducted under the supervision of a foreign consultant. We have purchased control equipment from companies that have no cooperation with US companies. Although they cost higher, what counts for us is the continuation of such cooperation. Currently, the most important part of CHPs is their engine that affects both price and quality. We produce engines here at much lower prices than similar ones. Meantime, their quality is acceptable. Domestic manufacturing of engines significantly contributes to the competitiveness of the product with foreign ones. Compared with foreign-made ones, the domestic product costs less than half.

What other sectors can be CHPs used in?

It may be used in residential, administrative and commercial buildings. They occupy a small space in central heating rooms. It can also supply electricity and heat to big companies (particularly when consumption reaches its peak). All across the world, due to environmental concerns, everything contributing to lower energy intensity is welcomed. In many cases, even governments subsidize such projects. For instance, in Germany, the government pays for partial costs of CHP. That is while; we have not been able to find a reliable sponsor for the commercialization of the product. However, in case NIOC concludes it had a reliable product for energy efficiency, it would be able to take further steps for promoting these products.

Is this project supposed to be completed?

Yes, the complementary project is gas engine driven heat pump (GHP) which is connected to compressor for heat/cold generation. The GHP system is widely welcomed across the world, but we are trying to build the control and chamber units in the country because compressor supply would not cost too much. Currently, foreign-made GHPs are imported at high costs. They are used instead of chillers in shopping centers. This product enjoys a more attractive market compared with CHP. If manufactured domestically, it would have big advantages. In other words, it would help reduce energy consumption peak and help in the gas storage. Some costs for developing and manufacturing GHP have already been spent on the MCHP project (like engine development). However, development of this product would cost higher as hard currency exchange rates increase.

Is it economical for foreign companies to step into the energy efficiency market in Iran under the conditions of sanctions?

If we create a suitable market in the country, it will definitely be economical. A major problem now pertains to changes in law and prices. Until last year, using solar energy in farmlands was cost-effective, but now this equipment is used at high costs and is no longer economical to import such equipment. In other words, such changes could not create a good market. Many foreign companies have no market in common with the US to be worried about cooperation with Iran. Therefore, we ourselves need to create such conditions.

 

Oil Teams Brilliant Performance at Iran Soccer Pro League

Three soccer clubs affiliated with Iran’s Ministry of Petroleum have competed in the pro league. These teams – Sanat Naft Abadan, Naft Masjed Soleyman and Pars Jonoubi Jam – have been grappling with various difficulties; however, they have performed better than thought. Owing to their brilliant performance they are now hopeful of continuing with their tactics for the second season of the pro league competitions.

We briefly review the performance of these three teams during the first half-season of the pro league matches of Iranian soccer clubs.

Sanat Naft Abadan FC

Undoubtedly, Sanat Naft Abadan soccer team was one of the teams that surprised everyone. Known as Iran’s Brazil-style soccer team, it was regularly in the middle of the ranking table. But now it has reached the top and it has by no means any intention of losing its status. Its last match versus Sepahan was an indicative of the performance of this team in the first half-season.

In Abadan’s Takhti stadium with sold-out tickets, Sanat Naft Abadan overpowered Sepahan 4-2. Sepahan used to be the highest-starred team of the league. But Sanat Naft Abadan showed that it has improved a lot and it is no longer content with any rankings in the middle of the table.

After 16 matches and by the end of the first half-season, Sanat Naft Abadan stands fourth with a score of 30. It is above Esteghlal (29) and Shahr Khodro (28). Sanat Naft Abadan is on equal footing with Tractor Sazi. Sanat Naft Abadan is only 4 scores away from Persepolis which is at the top. Such good performance shows pretty well that Sanat Naft Abadan has a good chance to berth a place in the Asian championship league.

Naft Masjed Soleyman FC

The team led by Mehdi Tartar recorded the most unexpected score in the half-season of the pro league matches of the current calendar year. Tartar took over this team after it survived during the final days of the previous season’s pro league matches. The head coach hopes to keep the team in its position. What he and his players did in Masjed Soleyman made history. In its 15 matches in the pro league stage, the team has either won or settled. In addition to Masjed Soleyman, Sepahan has also won 15 matches without suffering any defeat. But one has to compare the facilities these two teams have had at their disposal.

Naft Masjed Soleyman is one of the deep-rooted and the oldest football teams in Iran. Under the leadership of Mehdi Tartar, it has made it difficult for all teams of the pro league. At Azadi Stadium, it even defeated Persepolis. With a score of 23, it is now eighth in the table. They have guaranteed their own place in the pro league and they will definitely improve their ranking in case they push ahead with their efforts for the season.

Another point with the success of Naft Masjed Soleyman is that in Hazfi Cup, they overpowered Sirjan’s Gol Gohar, Mashhad’s Shahr Khodro and Bushehr’s Shahin teams to make their way into semifinals. They are one step away from the Hazfi Cup finale. The motivated young players of this team would definitely take this finals step.

Pars Jonoubi Jam FC

Pars Jonoubi shot to prominence two seasons ago as the phenomenon of the pro league matches. This year, it is faced with tougher conditions compared with previous years. They started the pro league under the leadership of Faraz Kamalvand. In the first week of competitions at Azadi Stadium, they showed an appreciable performance vis-à-vis Persepolis. However, due to the challenges on their way, they failed to promote their ranking in the league table. This promising team is now led by Houman Afazeli. In the second half season, it will try its best to improve its ranking in the table.

Pars Jonoubi currently stands 12th with a score of 14. They are likely to promote their status to single-digit ranking with several wins and guarantee their survival in the pro league.

Dragan Skočić: Players Need More Attention

Dragan Skočić is currently coaching Sanat Naft Abadan. Asked about his cooperation with this football club, he said: “First and foremost, I will never be forced to go to another club. But everyone has to keep in mind that based on a clause in the contract I can leave the club very easily and without any difficulty.”

“Legally speaking, I can negotiate with any specific team or person. That’s not what I say in person. That’s a FIFA rule. Players are struggling to convince me to stay longer in Abadan. I think they should try to fare better and better,” he said.

Skočić added: “I’ve heard that in Khuzestan efforts are under way to keep me. I know it may cause some problems, but I expect them to pay attention to the players, too.”

Mehdi Tartar: I’ve Ambitions

Mehdi Tartar, head coach of Naft Masjed Soleyman soccer team, said: “Everything is good, but my future remains unsure. I’ve not made p my mind yet. I will be consulting with my close associates in coming days before making my final decision about staying in the second half-season.”

He said that Naft Masjed Soleyman is willing to stay in the pro league, “but I have bigger objectives in mind”.

Houman Afazeli: Honorable Football

Houman Afazeli has just joined the Pars Jonoubi Jam FC. He said: “This team has a very good record. It has experienced some problems in the recent couple of years, which I hope would be resolved as soon as possible. The club has promised me so.”

He expressed hope that the problems would be resolved soon “otherwise, we will have tough time ahead”.

Afazeli said the players had to be remunerated so as to keep them satisfied.

He said: “Coaching requires risking. Twelve pro league teams and 18 first league teams have all their own problems. If one is to choose, he has to assume the problems, too.”

“Over the past two years, I have worked with teams whose members have been remunerated suitably,” he said.

Afazeli said: “When I was young I thought technical issues would resolve other issues, but now I know that without the club’s cooperation, nothing is possible. In football, everything is collective.”

“The objective we seek now is to have an honorable football. Meantime, in light of the ranking, we intend to secure our berth in the pro league. We want to keep our fans happy as they are the main pillar of the club. They motivate us to work and overcome shortcomings,” he said in conclusion.

 

Oil Figures in Iran’s Contemporary History (2)

From Conspiracy to Death

Iran’s oil history has been into ups and downs. It would not be exaggeration if we say that we have had several hundred years of history throughout one hundred years of oil operation. In historical events, some persons have played significant roles, leading either to success or to failure. Some have served the country and some have turned out to be traitors. In fact, such figures make history and drive it forward. Decisions and behaviors of historical figures have been influential on Iran’s contemporary history. Getting to know this history can open a bright horizon for us. Here we review some of these figures:

George Curzon

Several decades before William Knox D’Arcy came to Iran to explore oil; many like Jacques de Morgan had conducted research about Iran and had written articles. The plateau of Iran was known to political and scientific circles. Among these persons was George Curzon, a noted British journalist. He smartly sought to learn about Iran’s black gold through writing articles for the Times of London, which were then published in a book.

Curzon travelled to Iran in the late 19th century and conducted in-depth research throughout the Persian territory. His well-thought-out journalist did not survive by only rich information about oil; rather, his notes about oil were related to the social history of the country particularly in the final decade of Nasser ad-Din Shah Qajar’s reign on Persia.

Anthropology and sociology have largely been used in this book which has been translated into Persian. Curzon’s precise descriptions of Borazjan, Darab, Ramhormoz, Dalaki and large portions of southwestern Iran are interesting. Curzon was styled as Lord Curzon of Kedleston between 1898 and 1911, and as Earl Curzon of Kedleston between 1911 and 1921, and was known commonly as Lord Curzon, was a British Conservative statesman who served as Viceroy of India from 1899 to 1905, during which time he created the territory of Eastern Bengal and Assam, and as Secretary of State for Foreign Affairs from 1919 to 1924.

Otto Klein

World War I (1914-1918) was a strange conflict. Like WWII, Germany was on one side and Britain and France on the other. In WWI, the Germans and the Ottomans were united. That was while the Ottoman Empire was living its final days as it had been disintegrated. The Germans were well aware of the significance of Iran’s oil for powering military vehicles and also Britain’s military power. Therefore, Captain Otto Klein, a senior German officer stationed as diplomat, stepped into Iran’s oil sector.

What Klein was after, was a pipeline carrying oil from Naftoun to the Abadan refinery to power British military vehicles. Cutting this vital oil flow would mean a halt in the British bombing of German troops. Klein instigated some nomads to sink a vessel at the estuary of Arvandroud River so that no Iranian oil would be delivered to British troops. Klein had accomplished the mission assigned to him by the German government. He was pursuing his country’s interests in the war with Britain. However, that left significant impacts on Iran’s oil history. As a result of Klein’s actions, Britain dispatched more troops and intelligence forces to Iran’s Khuzestan. In January 1915, 12,000 British and Indian soldiers arrived in Khuzestan.

Kermit Roosevelt

In 2000, it became known for friends and foes alike that the US was the chief orchestrator of the August 1953 coup in Iran. That removed any doubt about the US’s role in the coup which overthrew the democratically elected government of Mohammad Mossadeq. The Central Intelligence Agency (CIA) declassified its document in the New York Times about the US-backed coup. Kermit Roosevelt had said before 2000 that the coup had been engineered by the US. The coup did not let Iran’s oil industry continue  its own way.Several months following Iran’s 1979 Islamic Revolution, Roosevelt made it clear that his country was involved in the coup targeting Iran’s oil. Gholam-Reza Nejati has cited quotes from Roosevelt in his book Iran Petroleum Industry Nationalization Movement. Roosevelt said in an interview with Los Angeles Times that he had decided to break his 25-year silence and explain the US’s role in the coup. He said he had convinced the Shah that the coup was instrumental.

Sadchikov

In the aftermath of WWII, after the then three superpowers, i.e. the United States, Britain and the Soviet Union that had occupied Iran, Communists moved to take an oil concession. As Allies were close to victory, the occupiers had to pull out of Iran. The USSR seized on the moment and refused to leave Azerbaijan in a bid to take an oil concession. Sadchikov, Russia’s then ambassador to Tehran was representing the Soviet Union. The USSR was adamant on taking Iran’s oil in a bid to create a safety belt against the Western bloc. He sought every excuse to justify his presence in Iran. One excuse he often forwarded was to protect the security of Baku oil mines. When the Russians’ controversy over the occupation of Azerbaijan reached its climax, Qavam had become prime minister in Iran. He offered to hold talks with the USSR. Sadchikov only wanted oil concession for northern Iran. Sadchikov and Qavam agreed on the establishment of a Russian-Iranian company to operate for 25 years. Sadchikov was trapped by Qavam’s oil plot. That allowed Qavam to cleanse Azerbaijan and refer the oil concession case to parliament. The parliament had a clever reaction and it did not award any concession to the Soviet Union.

Ali Akbar Davar

Reforms and development in Iran depended on many other issues. Development was not bound to building railroads and manufacturing vehicles to road construction. Changes had to occur within all social and legal systems. That was how Ali Akbar Davar was dragged into Iran’s legal system. Davar is known as the founder of Iran’s modern legal system. The Pahlavi regime needed more petrodollar after entering the second decade of the 14th century AH. The D’Arcy Concession was then called into question. The interests from the D’Arcy Concession were so meager that the regime of Pahlavi I raised its voice.  Davar had to defend Iran at international bodies when legal action was taken against Anglo-Iranian Oil Company (AIOC). Davar was involved in the entire case initiated by Reza Shah. Davar’s speeches in the face of Britain’s then prime minister at international courts are well-known to everybody. When Davar was abroad to follow up on the case of the complaint against AIOC, Pahlavi I had already killed Teimourtash. Davar was the minister of justice, but he found that he was being framed. After several years of serving at the ministry of finance, he committed suicide.

 

Qazvin, City of GatesQazvin

in the ancient writings of Europe has been referred to as the old city “Arsas” or “Arsasia” and in Greek histories “Razhya” and during the era of Ashkanian Dynasty on its founder “Ardepa”. Sasanian called it “Kashvin”, it means the land that shouldn’t be ignored, some people called it “Qasvin” or the city where people are strong and firm and some historians called it “Caspian”.Qazvin is located at an altitude of 1,278 meters. It was the capital of Iran under Safavid Dynasty and that is why most historical monuments there date back to that period. Qazvin is credited with different titles including the City of Gates and the Capital of Iran’s Calligraphy. Historic evidence indicates that Qazvin region was first civilized under the Medes in the 9th century BC. Archeological discoveries in Boein Zahra, south of Qazvin Desert, show that humans lived there in the 4th and 5th millennia BC.The foundation of the city of Qazvin is attributed to Shapur II the Great of Sassanid Dynasty. Shapur founded the city and fortified it against enemy attacks. As Shapur expanded its military base, the city of Qazvin took shape. The most important monuments in Qazvin are Qajar Bath, 40-Column Palace, a mausoleum and an old stchehel sotounSafavid Garden, which houses Saadatabad Garden, Qazvin Cultural Park and Savafid government center, are among the most important monuments in the city of Qazvin. They all date back to the Safavid Dynasty. Safavid Garden sprawls on more than 6 ha of land and offers visitors a view of remnants of Safavid, Afsharid, Zand and Qajar dynasties. The chehel sotoun edifice or kiosk is the main monument in the Safavid Garden. In the face of threats by Ottoman Turks, Shah Tahmasb Safavid decided to move his capital from Tabriz to Qazvin in 951 AH. In the same year, he bought Zangi Abad lands from Mirza Sharaf Jahan, a then famous figure, for constructing royal buildings upon. Shah Tahmasb then instructed a group of architects to build a square-shape garden in the middle of the purchased land and erect towering buildings, verandas and pools.The original plan was designed by a Turkish architect. The kiosk and a façade are the only monuments remaining from the gardens of Savafid period in Qazvin. This kiosk was damaged and restored during different periods.When Shah Abbas moved his capital from Qazvin to Isfahan, he ordered the construction of Naqsh-e Jahan Square, Ali Qapou Edifice and a chehel sotoun palace in Isfahan based on the monuments in Qazvin

Aminiha Hosseiniye

hBuilt in 1858, it comprises 16 interconnected structures, constructed by a merchant called, Haj Mohammad Reza Amini. The public mourning area or Hosseinieh consists of three parallel halls running in an east to west direction with wooden sash windows that are inter linked with each other. The southern halls boast of 9 latticed worked sash windows with colored panes. Its ceiling is adorned with painting and mirror works. The center hall has rounded alcoves adorned with ornate mirror and plasterwork. This hall is connected to the northern and southern halls by two sets of five doors. On the semi-circular segment over the doors leading to the northern porch fine emblems in connection with the twelve months (of the year) can be noted. The ceiling of this hall is adorned with plaster and mirror, in addition to paintings on wood.The section under the halls comprises sectors such as the cellar, basement, store room, and kitchen which have access to the northern and southern courtyard. The north facing wall of the southern courtyard is made of stone with innumerable embossments.Jame MosqueQazvin’s Jame Mosque is one of the oldest buildings in Iran. This mosque is used for congregational prayers, particularly for weekly Friday Prayers. The oldest part of the mosque is said to have been constructed by the orders of Harun al-Rashid in 807. Other structures were then added with the last being during the final years of the Safavid rule. The double layered main dome of the mosque is from the Seljuk era, and is locked to the public. It houses some precious examples of relief calligraphy from medieval times. Renovations have also been carried out on many sections of the mosque. The interesting point is that the foundation of the mosque is laid on a fire temple used by Zoroastrians.The verandas built during Safavid era were all reconstructed under Qajar Dynasty. Despite the devastating invasion by Mongols, the mosque still stands in full glory. Some parts have been restored. There are five rows of inscriptions in ancient handwriting in the mosque.

Qajar Bath

& MuseumQajar Bath is one of the largest and one of the most ancient baths in Qazvin. It was built in 1057 AH under the order of Shah Abbas Safavid. Amir Gouneh Khan Qajar Qazvini, a top general of Shah Abbas, built the bath. It was initially known as Royal Bath, but it was then renamed Qajar Bath.Sprawling on 1,045 square meters, the bath has separate rooms for men and women. The architecture inside the bath is fantastic.This historic monument has turned into a museum of anthropology and its difference with other such baths is that it puts on display social customs of Qazvin

Tehran GateAs

mentioned above, Qazvin is the city of gates. In the past, the city had eight gates, known as Rasht, Bagh Shah, Darb Koushk, Tabriz, Tehran, Sheikh Abad, Imamzadeh Hossein and Khandaq Bar. Only two of them – Tehran and Darb Koushk – have survived. The Tehran Gate, one of the most renowned, was used to protect the city against attacks and looting by other cities. This gate was built outside the city, but due to the expansion of Qazvin and demographic growth, it lies now inside the city.Tehran Gate, dating back to the Qajar Dynasty, was restored in 1968

Russian Church

, QazvinThe church was built in 1905 for the Russians engineers hired for road constructions in Its architectural planning is based upon an irregular polygon made out of red bricks. The first floor of the bell tower of the chapel gives great views of the surrounding field. The paved churchyard leads to many tombs, one of which belongs to a Russian pilot who was killed when his plane went down during the war.In front of the church is a memorial to a Russian road engineer.The church is sometimes referred to as the “Cantor” or “Kantur” church from the name of the area where it stand