Oil Shock in Shadow of Price War

The world is faced with one of the deadliest epidemics in recent history. In addition to human fatalities, the novel coronavirus has largely affected markets across the globe, making any forecast difficult for analysts. In the global oil market, a drop in demand for oil, which is a factor of oil shock, is not unrelated to the coronavirus contagion, but it sees that politicians are more infective than the virus. The latest OPEC+ ministerial meeting ended inconclusively. The inclinations of political leaders in some countries overpowered the logic of economy. The most evident consequence of this confrontation was the outbreak of the oil price war. That inflicted the biggest losses on oil producers in recent years. Oil producers are not the sole survivors of this political confrontation in the economic sector. Oil companies are also collateral victims whose revenue loss and possible bankruptcy is predictable. But when the issue is being looked
into more profoundly, maybe neither OPEC top producers nor major oil companies would bear the brunt of ongoing conditions. In the longterm, the energy supply security would be the main victim of this oil shock. The most significant outcome of the decline in the revenue of oil producers would be lower investment in the development of the petroleum industry, particularly the upstream sector, which would in the near future lead to a sharp decline in supplies, in which case, a new shock will strike with unhappy consequences for everyone. Proud politicians have apparently no taste for learning from the history of the oil market. Therefore, the only remedy to this problem would for oil sector actors to embrace collective wisdom and stand against any marginal act by those who are trying to impose their own wills on the market through triggering a price war and imposing an illegitimate embargo on the market

OPEC Meeting Ends Inconclusively

The 178th (extraordinary) Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC) was held in Vienna, Austria on Thursday, 5 March 2020. As Iran’s Petroleum Minister mentioned, the meeting ended inconclusively. Top sTory T

extraordinary meeting was held to explore avenues to deal with falling demand for oil in global markets due to the spread of the novel coronavirus. Due to the killer COVID-19, journalists were using video conference at the hotel. Before the OPEC meeting, the OPEC/non-OPEC Joint Ministerial Monitoring Committee (JMMC) had held talks. But in the end nothing was achieved.
1.5mb/d Cut Proposed During the March 5 meeting, OPEC agreed to reduce 1.5 mb/d from its output, but said it was dependent on Russia joining the initiative. On March 6, the proposal was shared by non-OPEC partners led by Russia. “OPEC would account for 1mb/d and non-OPEC for 500,000 b/d cut, depending on non-OPEC’s agreement,” Zangeneh said, adding that Iran, Libya and Venezuela would remain exempt. The Iranian minister had noted that non-OPEC countries could choose to accept or reject the proposal for a production cut in the second quarter of 2020. Noting that OPEC would not cut its production without non-OPEC’s agreement to be engaged, he said that the share of each country from the cut would be the same as before. Asked about Russia’s production cut in case of agreement, Zangeneh replied: “The total production cut for non-OPEC would be 500,000 b/d. They can divide it between themselves.” He said OPEC had fulfilled its role, adding: “If we calculate based on ratio, non-OPEC’s share will be one-third and OPEC’s share two-thirds.” Asked if OPEC had any alternative plan in case of Russia’s rejection of the proposal, Zangeneh said: “No, we have no alternative plan.” He added: “Iran, Libya and Venezuela are exempt from any production cut,” he said.
Call for Output Cut In its final statement at the 178th meeting, OPEC said its agreement with non-OPEC partners for production cut had to be extended until the end of
2020 due to the spread of COVID-19. “However, the COVID-19 outbreak has had a major adverse impact on global economic and oil demand forecasts in 2020, particularly for the first and second quarters. Global oil demand growth in 2020 is now forecast to be 0.48 mb/d, down from 1.1 mb/d in December 2019. Moreover, the unprecedented situation, and the ever-shifting market dynamics, means risks are skewed to the downside,” the statement said. “Accordingly, in view of the current fundamentals and the consensus on market perspectives, the Conference decided to recommend to the 8th OPEC and non-OPEC Ministerial Meeting to extend the adjustment levels agreed upon at the 177th Meeting of the Conference and the 7th OPEC and non-OPEC Ministerial Meeting for the remainder of the year. It also agreed to recommend to the 8th OPEC and non-OPEC Ministerial Meeting a further adjustment of 1.5 mb/d until 30 June 2020 to be applied pro-rata between OPEC (1.0 mb/d) and non-OPEC producing countries (0.5 mb/d) participating in the Declaration of Cooperation (DoC),” it added. The Conference also took note of the announcement from Ecuador that it has withdrawn from its Membership of OPEC, with effect from 1 January 2020. According to the statement, the “Conference confirmed that its next Ordinary Meeting will convene in Vienna, Austria, on 9 June 2020, and noted that September 2020 will mark the 60 Year Anniversary since the founding of OPEC in Baghdad in 1960.”
Output Cut Extension One day after the 178th meeting, the heads of delegations from OPEC member states suggested that the 1.5 mb/d output cut continue until the end of 2020. Intensive talks and regularly monitoring market conditions indicated the OPEC member states’ serious commitment to cooperate for restoring stability to the oil market.   The OPEC statement indicated its members were determined to overcome challenges. In other words, the OPEC+ agreement for production cut in December 2019 for removing 1.7 mb/d from the market would remain in effect until the end of March.  OPEC’s proposal for the 1.5 mb/d production cut was to take effect after the end of
March. In case of the extension of the previous deal and the acceptance of the new proposal, OPEC+ had to cut a total 3.2 mb/d from its production up to the end of 2020.
OPEC+ Talks End in Failure On March 6, Minister Zangeneh said ahead of the OPEC+ meeting that the talks would be tough. “Russia has not yet announced its agreement with the OPEC proposal for production cut. It has not expressed its clear opposition either,” he said. He expressed hope that OPEC and its partners would reach agreement on the oil production cut. Asked what would happen if OPEC and non-OPEC fail to reach agreement, Zangeneh said: “I hope that we would not reach that point.” In response to a question on whether OPEC+ risked collapse, he said: “We are making efforts to reach agreement with our colleagues from non-OPEC nations.” Asked to what extent it was worrying that Iran had reported the second highest number of coronavirus cases after China, Zangeneh said: “We announce our own conditions, but some countries refuse to do so.” Asked if the world should trust the data announced by Iran, he said: “We did not receive any aid from the international community. The US is lying. The US prevents us from buying medication and food for the Iranian people. When the US Secretary of State [Mike Pompeo] says medication and food are not subject to any sanctions, that’s not true. How can we pay for medication and food? Our crude oil exports, our petroleum products, petrochemicals, iron and cooper are all under sanctions. How can we pay for food and medication for the Iranian people?” The OPEC+ agreement ended inconclusively as Russia refused to join the production cut. Zangeneh, however, said the doors to negotiations had to remain open because the market was oversupplied. He said OPEC and non-OPEC insisted on their own positions and in the end no conclusion was achieved.  “Some OPEC members insisted that non-OPEC partners should also account for a specific share in the production cut, but they disagreed and the talks hit deadlock,” said Zangeneh.  He said more talks were likely to break the deadlock, adding: “The market needs production cut.” Zangeneh said: “Finalization of OPEC’s proposal depended on the cooperation of non-OPEC. But whereas the non-OPEC partners did not cooperate, no agreement was achieved and even the previous OPEC+ agreement for a 1.7 mb/d production cut
was not extended.” He said that from the beginning of April, each country would be able to increase its production. He added that the March 6 meeting was “one of the worst” in the OPEC history. “A remedy has to be sought,” he said. Zangeneh said: “The meeting was a test. The participants failed the test. It was a tough meeting.” He said that the OPEC+ meeting was held with a 6-hour delay due to private talks. “Saudi Arabia and Russia failed to reach agreement. Both sides should be given time to think in calm. We should not close the doors to talks, rather than that we need to insist on the points both sides have in common,” he said. Regarding the possibility of any new meeting, the minister said: “Holding a new meeting particularly under the present circumstances is difficult, but bilateral or multilateral talks were more likely through videoconference.” “The parties need to show flexibility in talks; otherwise, all parties will be loser,” he added. Zangeneh said another meeting was needed to be held prior to the OPEC June ministerial Conference. “Under the present circumstances, the market needs decision-making for oil production cut.”  He said that OPEC would not cut its production without Russia being in the loop. “OPEC did not make any decision about how to continue without non-OPEC. OPEC insists that it needs non-OPEC’s cooperation for production cut. That is why we failed to reach agreement,” he added. Zangeneh said more time was needed to calm down conditions with a view to reaching agreement. He added: “For the finalization of a new proposal we need another meeting or videoconference talks because both producers and consumers need to reduce oil production anew and any new output cut would need more consultation, free of any tensions.” Asked if Russia was mulling the option of leaving OPEC+, he said: “No, OPEC+ is still alive.”
COVID-19 Looming Large O

6th Homegrown Oil Rig Unveiled

 

The sixth oil rig built by Iranians – Fath 72 – was unveiled in February at a ceremony attended by Petroleum Minister Bijan Zangeneh.

Built by the Academic Center for Education, Culture and Research (ACECR), Fath 72 is planned to be installed in an exploration zone, soon.

Hamid-Reza Tayebi, head of ACECR, said Iran had mastered technical savvy to build oil rigs.

Zangeneh said oil rig construction was a long-term dream of Iran’s petroleum industry that had come true. He added that Iran would need drilling and necessary equipment for many years to come. What he is trying to say is that oil rig construction remained a lucrative job in Iran. The Petroleum Ministry has also pledged to support domestic manufacturers in this sector.  

The oil industry, as a technology-oriented sector, needs sustained investment for the development of its fleet, offering services, growing specialized human resources and applying state-of-the-art technologies. That is why a major portion of capital expenditures in the exploration-production chain is spent on drilling. The number of drilling rigs used in the oil and gas fields serves as an indicator of development of fields and would facilitate further production from hydrocarbon resources.

Mohsen Paknejad, deputy minister of petroleum for supervision on hydrocarbon resources, said in light of the drilling industry’s direct impact on oil production, the main strategy adopted by the Petroleum Ministry relies on supporting and reinforcing domestic manufacturing potential in this sector.

Most of equipment used in the drilling industry is made in Iran. Drilling companies in Iran have close cooperation with domestic manufacturers. Upon instructions by Minister Zangeneh, oil companies are required to purchase their required commodities and equipment that are domestically-manufactured, and are endorsed by the Petroleum Ministry.

But the Petroleum Ministry’s support for the drilling industry is not limited to the manufacturing of equipment and provision of services. Over recent years, the ministry has sought to support drilling rig construction in Iran. At the beginning it seemed a tough job and many imagined that Iranian companies would never be able to build rigs, but now the sixth one has been built in the country.

The National Iranian Drilling Company (NIDC) and ACERC signed a €33 million agreement for building three drilling rigs. Fath 71 was delivered in 2018 and Fath 72 in 2019.

Abdollah Mousavi, CEO of NIDC, said that since Fath 71 became operational, 15 wells have been drilled.

According to NIDC officials, 45% of parts in Fath 72 rig was domestically-made. Mousavi hopes the NIDC-ACERC agreement would lead to the construction of fully Iranian rigs.

Fath 72 Specifications

Fath 72 could drill wells at the maximum depth of 20,000 feet. The rig is 150 feet high and can support one million pounds of static load. A 500-tonne top drive, a 137.5-inch rotary table and three 1,600-horsepower mud pumps are integrated into this rig.

The rig was tested successfully prior to being delivered to NIDC. Every details from designing to operation are handled by ACERC.

ACERC is forecast to deliver its third drilling rig (Fath 73) in 2020.

ACERC stepped into Iran’s petroleum industry in the 1980s. Hamid-Reza Tayebi, head of ACERC, has said this center was tasked with developing technology for various industries across Iran.

“On such basis, we stepped into building drilling rigs. We made efforts to transfer in technology for building rigs. Transfer of technical savvy has so far been done for drilling rigs. Therefore, I can say that we own technical knowhow for designing drilling rigs,” he said.

Ministerial Support

Minister Zangeneh has described the domestic construction of drilling rigs as important.

Highlighting the big volume of investment needed for building rigs, he said: “The investment we may need for many factories in Iran is not sufficient for even a single rig. A drilling rig is not just an item; rather it is a mobile factory that may be moved from one spot to another.”

He heaped praise on ACERC for its obstinacy in bringing the rig construction project into fruition, saying: “Older systems resist any new development. Toughness is needed; otherwise, nothing will go ahead as desired. The ACERC team is young and serious, and favors national development.”

Zangeneh called on ACERC to press ahead with its projects, adding: “Supporting ACERC will continue. Rig construction is not limited to Iran. If we can build a rig in compliance with international standards, we will be able to provide services.”

Sanctions Impact

ACERC has built Fath 72, while Iran has been under tough US sanctions targeting mainly Iran’s petroleum industry.

However, Petroleum Ministry officials have said that despite sanctions they would not let any halt in petroleum industry activities.

Mousavi said US sanctions would bring both hardship and blessing. “We have to withstand hardships to benefit from blessings [of sanctions].”

He said the drilling industry had become indigenized in Iran, adding: “We will try to hire seasoned experts and specialists to push ahead with the petroleum industry plans.”

Mousavi said providing effective and continued support for manufacturers and industrialists would top the agenda of cooperation between NIDC and the private sector.

“Synergy between manufacturers and industrialists would be effective in domestic manufacturing and supply of quality-oriented products,” he said.

According to Mousavi, NIDC has over the past one decade cooperated with various companies, knowledge-based centers and major industrial plants, and provided roadmaps as part of its plans for the transfer of technical savvy, designing and building drilling equipment.

“The outcome of this mutual cooperation has been the manufacturing of 20,000 items and parts,” said Mousavi.

Skid-Mounted Processing Facility at South Azadegan

National Iranian Oil Company (NIOC) intends to engage Iranian and/or foreign companies in the construction of skid-mounted processing facilities using the build-operate-own (BOO) method.

An agreement has been recently signed to that effect between the Academic Center for Education, Culture and Research (ACECR) and Petroleum Engineering and Development Company (PEDEC).

This skid-mounted facility which is to be used in the South Azadegan field may process 50,000 b/d of crude oil.

Overseen by Petroleum Minister Bijan Zangeneh, the agreement was signed by Touraj Dehqani, CEO of PEDEC, and Mohammad-Reza Pour-Abed, deputy head of ACECR.

The facility is expected to be designed and built within 15 months. The duration of operation for this project is set at three years, which may be renewed up to five years.

Addressing the signing ceremony, Zangeneh said future operation and desalination units should be skid-mounted in order to minimize costs and time. Demand is high for activity in this sector as most of the existing units are decrepit and ageing.

He said processing each barrel of crude oil was estimated to cost $1.2, which would be reduced through competitiveness.

Zangeneh said the petroleum industry can become the standard-bearer of Iran’s industrial development by envisaging projects and creating demand. He said Iran would continue to resist the abnormal conditions caused by sanctions.

“What we are after, is the development and prosperity of Iran. Working for Iran to become the top power in the region is not a slogan, but a national demand and expectation,” he added.

Accelerating Joint Field Development

Dehqani, CEO of PEDEC, spoke about the experience of using skid-mounted processing units in the development of fields, saying: “Development of fields is capital-intensive. Such projects involve drilling and completion of wells at 60-70%, pipeline and gathering facilities at 20% and production and sweetening at 7-8%.”

“Experience shows that the bulk of development operations pertains to drilling and completion of wells. The pace and quality of implementation is good due to existing potential and facilities. A case in point is that following foreign companies’ exit from the South Azadegan project, 150 wells have been drilled and completed by Iranians,” he said.

Dehqani added that whereas the production and sweetening units were time-intensive, it delayed the development of fields.

“The technical complications of this sector is even likely to delay the implementation of a development project for one year. This issue takes up added significance in joint fields and high-risk reservoirs,” he said.

He said skid-mounted processing facilities could be built quickly, adding: “Such installations that can conduct full processing were first used in the South Azadegan field. Apart from contract issues, it did not last more than one year.”

Dehqani said using the potential of the Jofair processing unit and the skid-mounted installations there, the oil production capacity of the Azadegan field enhanced.

He said thanks to Minister Zangeneh’s support as well as NIOC’s current and former CEOs support, knowhow to build skid-mounted facilities has been mastered.

“The construction of a 50,000 b/d skid-mounted processing unit by ACERC can be a beginning for the implementation of this project and the acceleration of development,” he said.

Experience Spreading to More Sectors

As mentioned earlier, NIOC first used the skid-mounted facilities experience in the South Azadegan field. It was happy with this experience due to the increased output recorded in the field which Iran shares with neighboring Iraq.

After that, Minister Zangeneh notified companies of the necessity of switching to skid-mounted production and desalination facilities.

Drilling wells, laying pipes and related processes account for major portion of field development costs. But non-operation of a refining unit whose share of development is meager may delay a project and cause capital stagnation.

As long as the processing unit of South Azadegan is not complete, such units would be of no help to development.

But the question is to know how the field development would be affected in case the processing unit is not completed.

Dehqani has said that such problem did not exist in South Azadegan “because we won part of the production and desalination capacity of West Karoun, as well as the skid-mounted processing capacity.”

He, however, said: “Of course we would definitely need extra processing capacity to process oil, based on the target set for phase 1 of South Azadegan development (320,000 b/d).”

 

Iran Oil Sector Needs $20-$25bn Investment Annually

Iran’s petroleum industry will need $20 billion to $25 billion in annual investment in order to grow. However, myriads of restrictions caused by the US unilateral sanctions targeting Iran’s petroleum industry have hindered foreign investment in this sector.

However, given the high money supply growth rate in Iran, petroleum industry officials and market actors believe that these capitals could be directed into the petroleum sector.

The first conference on the petroleum industry financing development was held in Tehran for the Petroleum Ministry-affiliated companies with a view to introducing modern instruments for the domestic financing of projects, facilitation of financial transactions based on emerging financial platforms and cost management.

Iran’s Minister of Petroleum Bijan Zangeneh, addressing the conference, said there were numerous ways for financing in Iran’s petroleum industry, which could be used for the activation of petroleum industry projects.

The minister said the petroleum industry should naturally receive $20 billion to $25 billion in investment per annum, adding: “If this figure declines, the cycle of activation of petroleum industry projects would be hindered. Therefore, we are obligated to activate the flow of investment.”

Diversity of Financing Methods

The conference on financing in the petroleum industry is aimed at exploring diverse and attractive methods for absorbing investment and giving an impetus to the private sector for more contribution.

Zangeneh also touched on various methods developed for the financing of petroleum projects in Iran, saying: “For financing projects, there are numerous ways including National Development Fund of Iran (NDFI), foreign financing, banking resources and money market, bonds and Islamic financing bonds or selling corporate shares for investment in new projects. Oil company managers have experienced the last method and stock markets are well familiar with it.”

However, the Petroleum Ministry believes that attracting more investment into development projects, including second and third jumps in the petrochemical sector, building petrorefinery plants, operation of upstream oil and gas projects by Iranian E&P companies and more contribution of the private sector would require using other options and methods rather than those mentioned earlier. The Petroleum Ministry is currently envisaging numerous projects and welcomes the private sector’s involvement in this sector. Nevertheless, oil authorities maintain that financing instruments need to be defined so as to be highly attractive to the private sector so that potential investors would step in with more assurance and make projects more active for economic prosperity in Iran.

$30bn Needed in 5 Years

Minister Zangeneh also referred to petrochemical projects that are planned to come online within five years in Iran, saying: “None of the petrochemical projects envisaged for the second and third jump are behind schedule. However, we would need at least $30 billion within five years to operate these incomplete projects.”

Petrochemical projects are attractive to investors due to their high profitability. That explains why the private sector is still interested in this sector.

The Petroleum Ministry believes that micro-capitals may be used for completing these incomplete projects.

Zangeneh said: “Moreover, $10 billion to $12 billion mid-stream and downstream petrochemical projects or olefin chain with combined feedstock projects have also been finalized, but not started yet. Therefore, we can say that about $40 billion in investment would be needed in this sector.”

He added: “We can also invest up to $20 billion in petro-refining projects, optimizing existing refineries performance and building new ones.”

Zangeneh also touched on investment in the gas sector, saying: “The investment made in the gas industry is mainly state-owned with the private sector making a small contribution like in the networks of distribution. However, the private sector can be involved in underground gas storage projects.”

The minister referred to oil extraction, exploration and production projects, saying he did not expect Iranian companies to assume the exploration risks.

“Rather, we want them to develop the places explored by the government and National Iranian Oil Company (NIOC) or preserve production at an operating field. There are many grounds for the oil and gas sector in this regard,” he said.

Zangeneh said the petroleum industry would need technology and financing for development. He added: “We would need tens of billions of dollars in investment to develop the petroleum industry, develop oil and gas fields, renovate and reconstruct oil installations.”

“In addition to using the new model of oil contracts, the Petroleum Ministry would be also applying EPC or EPD. We also attracted part of the resources from the capital market in order to keep the flow of activities running,” he said.

Zangeneh referred to Iranian E&P companies, saying: “The involvement of E&P companies in the petroleum industry is associated with such risks as timeframe for implementation and reservoir.”

He added: “Reimbursing costs of implementation of projects would depend on the objectives set forth in the agreement. In fact, payment will start when the party to contract reaches production. Meanwhile, an E&P company is neither a shareholder nor an oil producer. It has to take its resources from the capital market and therefore financing methods need to be reliable. Meantime, a sophisticated system is required to evaluate these companies and explain their ranking so that people would be able to invest and make deliberate decisions.”

Following Zangeneh’s speech, capital market experts and a number of petroleum industry managers outlined methods of financing and investment in the petroleum industry in light of the profitability of this industry.

Hassan Montazer Torbati, CEO of National Iranian Gas Company (NIGC) also introduced a number of petroleum industry projects that would be attractive to the private sector. He also explained some of incentives envisaged by NIGC for investment in this sector.

Hard Currency Remuneration

Construction of a pipeline to transmit gas to Oman, some sections of the Iran Gas Trunkline-7 (IGAT-7), IGAT-8, IGAT-9, IGAT-10 and IGAT12 development of the Sarajeh storage site in Qom, as well as the second phase of the Ilam gas refinery are among projects proposed by NIGC for the private sector.

Montazer Torbati also suggested that NIGC preferred to award build-operate-transfer (BOT) projects to the private sector in gas production and supply.

He specifically referred to refining projects, adding that their costs would be remunerated from revenue achieved through selling byproducts.

“In the pipeline and station construction projects, remuneration will be done by replacing liquid fuel with natural gas, while in the refinery projects, that would be done from the guaranteed purchase of services,” he added. “Projects are also envisaged in the gas consumption optimization projects in the power plant sector. Remuneration will be made from the savings due to increased power generation from gas.”

Torbati told "Iran Petroleum": “Fortunately, as our repayment will be in hard currency, foreign companies will be able to be directly involved in the projects for which we need investment or the private sector can take loans for these projects and carry them out in partnership with foreign companies.”

He cited the instance of a successful project carried out in partnership with the private sector for implementing a BOT gas project, saying: “We intend to identify project risks in order to minimize them and prepare the ground for further cooperation with the private sector in the gas industry.”

$3bn Gas Storage Projects

Montazer Torbati said one area of interest for foreign companies was gas storage. He said: “In this sector we need foreign technology, but we will also tell domestic and foreign private firms that investment in the gas storage sector would be guaranteed and highly profitable for investors.”

He said arrangements were being made for the construction of five gas storage facilities.

“Each storage tank costs on average $500 million. Therefore, there is capacity for $2.5 billion to $3 billion investment in the gas storage sector. That would serve both the private sector and foreign companies,” he added.

High Potential for Investment

Talin Mansourian, director of investment at NIOC, also presented a report about the methods of financing for NIOC up, mid and downstream projects. Touching on opportunities for investment, she said: “Despite all the restrictions we have in attracting financial resources in the oil sector I still believe that there is huge potential in this sector for attracting investment. Given Iran’s current circumstances, if no foreign investment is made in Iran, we will not be stopped and we will go ahead with our projects.”

She said bank loans, NDFI, bonds, standard parallel salams and fixed-rate bonds were among NIOC’s financing instruments.

“The maximum amount of bonds issued so far at NIOC has been IRR 50,000 billion,” she added.

Mansourian said financing at the South Pars gas field and West Karoun oil fields had been done through bonds.

She referred to fixed-rate bonds as useful instruments for financing, saying: “IRR 30,000 billion worth of fixed-rate bonds is being printed to finance projects for the preservation of production at oil fields. Furthermore, standard parallel salams worth IRR 25,000 have been issued for NIOC’s projects.”

Mansourian said NIOC’s opportunities for investment were divided into exploration, field development, enhanced field output, desalting and small-scale natural gas liquefaction project.

“Exploration projects are IPC or buy-back agreements covering projects with investment ranging from $30 to $150 million. If the development of fields runs into trouble for any reason whatsoever, reimbursement of costs to exploration companies will be done on installment,” he said.

Mansourian said enhanced production from some fields needed $50 to $300 million of investment. “These projects are covered by EPCF/EPDF and EPC/EPD agreements. The Zilaei, Ramin, Maroun 1, Maroun 4, Siahmakan, Mansourabad, Ahvaz 1, Ahvaz 4, Resalat and Reshadat fields are among such projects for enhanced oil production,” she said.

He added: “The prefabricated desalination units need $30 million to $70 million investment, while small-scale natural gas liquefaction plants would be covered by $50 to $100 million service agreements in the form of BOO and gas sales. In this regard, crude oil processing plants and LNG projects are examples.”

Petchem Investment

The National Petrochemical Company (NPC) introduced five strategic petrochemical projects for the private sector as follows: Abuali Sina Petrochemical Plant, Kangan Petrochemical Development Company, Damavand Petrochemical Company, Kian Petrochemical Plant and Hemmat Petrochemical Plant.

Hossein Ali-Morad, director of investment at NPC, said the state-run company was planning to enhance petrochemical production up to the end of the second jump in the petrochemical sector.

He said: “Forty-two projects are envisaged in the second petrochemical jump (2013-2021), 15 of which have come online. Of the remaining 27 projects that would come on-stream in the future, 6 are strategic due to supplying special products, and impact the downstream sector.”

Ali-Morad touched on the NPC’s production in the petrochemical sector in 2013, which reached 56 million tonnes, saying: “The rated capacity of the petrochemical industry reached 64 million tonnes a year in 2013, which is forecast to increase 58% to 100 million tonnes by early 2022. If we compare it with the 2013 output, we would see an 80% growth in the rated capacity of petrochemical production.”

He went on to talk about revenue from the petrochemical industry, saying: “This industry gained about $16 billion in revenue in 2013, which grew to $17 billion in 2017 and is forecast to reach $25 billion by early 2022.”

“Meantime, the investment made in the second jump reaches $17 billion, $11 billion of which has so far been provided. For the remaining $6 billion, we are waiting for the capital market response,” he said.

Ali-Morad said: “From 2021 to 2025, we will see a third jump in the petrochemical sector, by which the rated capacity of this industry will reach 133 million tonnes a year.”

He added: “Twenty-eight projects are envisaged in the third jump, 7 of which are considered as strategic ones due to planning for reducing imports and helping downstream industries.”

He said the third jump was expected to attract $23 billion in investment. “So far, $8 billion has been invested and we are waiting for the financing of the remaining $15 billion.”

Ali-Morad said financing petrochemical projects was possible through capital market.

“After liquidity, foreign resources, NDFI, domestic resources, banks and debt bonds we reach the capital market,” he said, regretting that no action had been taken for using the potential of investment funds like project fund and private funds.

“In order to finance $21 billion worth of projects and reach a petrochemical output of 133 million tonnes, we will need to benefit from the capital market’s credit line and present approaches for this market,” he said.

2025, Year of Refining Jump

The Jamal Ahmad storage site, construction of a storage tank in Mashad, construction of a new sulfuric acid recovery unit, building an oil jetty in Qeshm, building an oil jetty in Chabahar Port, building a trans-Tehran pipeline, upgrading the quality of products at the Abadan refinery, and upgrading the quality of the Tehran refinery’s products are among the most imported projects suggested by National Iranian Oil Refining and Distribution Company (NIORDC) for the private sector.

Samad Ahangar, director of investment at NIORDC, presented the projects offered by this company for investment.

He said Iran was ranked the 13th in the world in the refining industry, adding: “Iran is currently enjoying a 2.2 mb/d refining capacity. Furthermore, inside Iran, the company ranks 1st to 3rd respectively in terms of sales, profitability and exports.”

“Since 2002, the refining capacity has grown from 1.6 mb/d to 2.3 mb/d. Over this period of time, gasoline production has increased from 36 ml/d to 100 ml/d, which indicates the significant jump in the refining sector,” he said.

Ahangar predicted another jump in Iranian refineries’ output in 2025, saying “principled and reasonable” planning was required to make that happen.

“Refining projects have been financed through various resources. For instance, since 2016, about IRR 31,000 billion worth of investment has been made. The figure reached IRR 19,000 billion last [calendar] year, which was provided through annual budget allocations and finance by foreign investors,” he said.

attractive to the private sector. He also explained some of incentives envisaged by NIGC for investment in this sector. Hard Currency Remuneration Construction of a pipeline to transmit gas to Oman, some sections of the Iran Gas Trunkline-7 (IGAT-7), IGAT-8, IGAT-9, IGAT-10 and IGAT12 development of the Sarajeh storage site in Qom, as well as the second phase of the Ilam gas refinery are among projects proposed by NIGC for the private sector. Montazer Torbati also suggested that NIGC preferred to award build-operate-transfer (BOT) projects to the private sector in gas production and supply.  He specifically referred to refining projects, adding that their costs would be remunerated from revenue achieved through selling byproducts. “In the pipeline and station construction projects, remuneration will be done by replacing liquid fuel with natural gas, while in the refinery projects, that would be done from the guaranteed purchase of services,” he added. “Projects are also envisaged in the gas consumption optimization projects in the power plant sector. Remuneration will be made from the savings due to increased power generation from gas.” Torbati told “Iran Petroleum”: “Fortunately, as our repayment will be in hard currency, foreign companies will be able to be directly involved in the projects for which we need investment or the private sector can take loans for these projects and carry them out in partnership with foreign companies.” He cited the instance of a successful project carried out in partnership with the private sector for implementing a BOT gas project, saying: “We intend to identify project risks in order to minimize them and prepare the ground for further cooperation with the private sector in the gas industry.” $3bn Gas Storage Projects Montazer Torbati said one area of interest for foreign companies was gas storage. He said: “In this sector we need foreign technology, but we will also tell domestic and foreign private firms that investment in the gas storage sector would be guaranteed and highly profitable for investors.” He said arrangements were being made for the construction of five gas storage facilities.  “Each storage tank costs on average $500 million. Therefore, there is capacity for $2.5 billion to $3 billion investment in the gas storage sector. That would serve both the private sector and foreign companies,” he added. High Potential for Investment Talin Mansourian, director of investment at NIOC, also presented a report about the methods of financing for NIOC up, mid and downstream projects. Touching on opportunities for investment, she said: “Despite all the restrictions we have in attracting financial resources in the oil sector I still believe that there is huge potential in this sector for attracting investment. Given Iran’s current circumstances, if no foreign investment is made in Iran, we will not be
stopped and we will go ahead with our projects.” She said bank loans, NDFI, bonds, standard parallel salams and fixed-rate bonds were among NIOC’s financing instruments.  “The maximum amount of bonds issued so far at NIOC has been IRR 50,000 billion,” she added. Mansourian said financing at the South Pars gas field and West Karoun oil fields had been done through bonds. She referred to fixed-rate bonds as useful instruments for financing, saying: “IRR 30,000 billion worth of fixed-rate bonds is being printed to finance projects for the preservation of production at oil fields. Furthermore, standard parallel salams worth IRR 25,000 have been issued for NIOC’s projects.” Mansourian said NIOC’s opportunities for investment were divided into exploration, field development, enhanced field output, desalting and small-scale natural gas liquefaction project. “Exploration projects are IPC or buy-back agreements covering projects with investment ranging from $30 to $150 million. If the development of fields runs into trouble for any reason whatsoever, reimbursement of costs to exploration companies will be done on installment,” he said.  Mansourian said enhanced production from some fields needed $50 to $300 million of investment. “These projects are covered by EPCF/EPDF and EPC/EPD agreements. The Zilaei, Ramin, Maroun 1, Maroun 4, Siahmakan, Mansourabad, Ahvaz 1, Ahvaz 4, Resalat and Reshadat fields are among such projects for enhanced oil production,” she said. He added: “The prefabricated desalination units
need $30 million to $70 million investment, while small-scale natural gas liquefaction plants would be covered by $50 to $100 million service agreements in the form of BOO and gas sales. In this regard, crude oil processing plants and LNG projects are examples.” Petchem Investment The National Petrochemical Company (NPC) introduced five strategic petrochemical projects for the private sector as follows: Abuali Sina Petrochemical Plant, Kangan Petrochemical Development Company, Damavand Petrochemical Company, Kian Petrochemical Plant and Hemmat Petrochemical Plant. Hossein Ali-Morad, director of investment at NPC, said the state-run company was planning to enhance petrochemical production up to the end of the second jump in the petrochemical sector.  He said: “Forty-two projects are envisaged in the second petrochemical jump (2013-2021), 15 of which have come online. Of the remaining 27 projects that would come on-stream in the future, 6 are strategic due to supplying special products, and impact the downstream sector.” Ali-Morad touched on the NPC’s production in the petrochemical sector in 2013, which reached 56 million tonnes, saying: “The rated capacity of the petrochemical industry reached 64 million tonnes a year in 2013, which is forecast to increase 58% to 100 million tonnes by early 2022. If we compare it with the 2013 output, we would see an 80% growth in the rated capacity of petrochemical production.” He went on to talk
about revenue from the petrochemical industry, saying: “This industry gained about $16 billion in revenue in 2013, which grew to $17 billion in 2017 and is forecast to reach $25 billion by early 2022.” “Meantime, the investment made in the second jump reaches $17 billion, $11 billion of which has so far been provided. For the remaining $6 billion, we are waiting for the capital market response,” he said. Ali-Morad said: “From 2021 to 2025, we will see a third jump in the petrochemical sector, by which the rated capacity of this industry will reach 133 million tonnes a year.” He added: “Twenty-eight projects are envisaged in the third jump, 7 of which are considered as strategic ones due to planning for reducing imports and helping downstream industries.” He said the third jump was expected to attract $23 billion in investment. “So far, $8 billion has been invested and we are waiting for the financing of the remaining $15 billion.” Ali-Morad said financing petrochemical projects was possible through capital market.  “After liquidity, foreign resources, NDFI, domestic resources, banks and debt bonds we reach the capital market,” he said, regretting that no action had been taken for using the potential of investment funds like project fund and private funds. “In order to finance $21 billion worth of projects and reach a petrochemical output of 133 million tonnes, we will need to benefit from the capital market’s credit line and present approaches for this market,” he said. 2025, Year of Refining Jump The Jamal Ahmad storage site, construction of a storage tank in Mashad, construction of a new sulfuric acid recovery unit, building an oil jetty in Qeshm, building an oil jetty in Chabahar Port, building a transTehran pipeline, upgrading the quality of products at the Abadan refinery, and upgrading the quality of the Tehran refinery’s products are among the most imported projects suggested by National Iranian Oil Refining and Distribution Company (NIORDC) for the private sector. Samad Ahangar, director of investment at NIORDC, presented the projects offered by this company for investment. He said Iran was ranked the 13th in the world in the refining industry, adding: “Iran is currently enjoying a 2.2 mb/d refining capacity. Furthermore, inside Iran, the company ranks 1st to 3rd respectively in terms of sales, profitability and exports.” “Since 2002, the refining capacity has grown from 1.6 mb/d to 2.3 mb/d. Over this period of time, gasoline production has increased from 36 ml/d to 100 ml/d, which indicates the significant jump in the refining sector,” he said. Ahangar predicted another jump in Iranian refineries’ output in 2025, saying “principled and reasonable” planning was required to make that happen. “Refining projects have been financed through various resources. For instance, since 2016, about IRR 31,000 billion worth of investment has been made. The figure reached IRR 19,000 billion last [calendar] ye

SP13 Last Platform Installed

The last platform in Phase 13 of the giant South Pars gas field has been installed, the project manager said. Payam Motamed said the 13C satellite platform was the fourth and last platform in the SP13 project. It was installed on March 7 under
suitable weather conditions and in compliance with safety standards by the installation vessel HL5000.  He said this offshore structure weighed 2,500 tonnes, adding this platform had been built by the Iran Marine Industrial Company along with the main
platform 13A, applying the push-pull method on the vessel FLB124. It was sealed before being headed into the Iran-Qatar water borders in the Persian Gulf. “After the installation of the offshore top drive of Platform 13A and the location of a vessel carrying Platform 13C under
stable weather conditions, all activities pertaining to the preparation of the jacket and the installation of caisson, the top drive of the satellite platform 13C was installed,” he added.  Motamed said the vessel Sea Pad would soon transfer and install related structures like
the flare and the connection bridge between the top drive the flare. “After completing the installation of this platform, construction activities pertaining to joints and startup of wells, the latest measures required for operating Platfor

19 Rigs Involved in Onshore Oil Field Development The head of National Iranian Drilling Company (NIDC) has said 19 drilling rigs were involved in the development of 28 oil fields administered by National Iranian South Oil Company (NISOC). Abdollah Mousavi touched on interaction with private entities involved in the petroleum industry in the current calendar year after numerous memorandums and agreements were signed, saying: “NIDC being alongside these companies in the implementation of projects for enhancing the production capacity of operating fields paved the way for the effective presence of this company in fieldoriented projects.” He said that those projects would become operational in NISOC-run areas, adding: “In this regard, 15 drilling rigs would be used during a specific timeframe.
SP11 Development to Start Soon A deputy head of National Iranian Oil Company (NIOC) said operations for the development of Phase 11 of the giant South Pars gas field would start soon. Reza Dehqan, deputy CEO of NIOC for development and engineering, said: “Most border fields in the country have been decided upon, including SP11 whose first jacket will be installed in coming weeks.” He said that the last platform of SP13 would be installed in the last week of the current calendar year. “Therefore, except for SP11, the case of offshore development of SP11 would be closed this year. In the onshore sector, the remaining activities of SP14 would be continued next calendar year,” he said. Dehqan said preparatory work had started for developing the Belal and Farzad fields. “The process of development in other joint fields like Azadegan, Yadavaran and Yaran in West Karoun would continue like before,” he added.
South Pars Offshore Section Nearly Complete The CEO of Pars Oil and Gas Company (POGC) has announced the completion of the offshore section of the South Pars gas field. “Iranian companies grew in light of the South Pars development,” Mohammad Meshkinfam said. He added that the offshore section of the South Pars gas field, except for SP11, would be fully operational in the current calendar year ending March 20. “The first jacket of this phase will be installed soon and after the drilling of wells, the top drive will be installed,” he said. Meshkinfam said Iran was outperforming Qatar in gas recovery from South Pars which they share. “Iran’s gas recovery from the shared South Pars gas field currently stands at 650 mcm/d while Qatar’s varies between 570 mcm/d and 580 mcm/d,” he added.
Gas Distribution Hits New Record The head of the Iranian Gas Transmission Company (IGTC) said the company had set a new record in gas distribution by supplying 792 mcm/d of gas in a single day.  Saeed Tavakoli said as a cold snap struck the country, 792 mcm/d of gas was supplied in one day.  “Our 18 stations were operating at full capacity. Some trunklines whose capacity is 90 mcm/d supplied 142 mcm/d,” he said. Tavakoli, who was addressing the closing ceremony of knowledge-based companies and startups involved in the petroleum industry, said domestic companies had made progress in domestic manufacturing.  “Manufacturing various thermocouples and 20 highpressure transformers are among these advancements,” he said. “But as the CEO of National Iranian Gas Company (NIGC) said, knowledge-based

Rouhani: New Budget Least Oil-Dependent The Iranian president has said the budget bill drafted for next calendar year would have minimum dependence on oil revenue. “We knew that we had to reduce dependence on oil. There is least dependence possible on oil in this budget,” Hassan Rouhani said. He added that the government had done its best, drawn up the budget and went through all procedures to get necessary permits. Rouhani said the Supreme Council for Economic Coordination had examined the budget entirely before being sent to parliament for enactment. “We adopted a framework that was endorsed by the Supreme Leader. Based on that framework, we submitted the budget bill to MPs,” he added. Rouhani said MPs had given their implicit approval to the proposed budget bill, adding: “I feel happy that the budget bill was sent to the Select Committee. I hope that it will be adopted as soon as possible.” The president also said that the efforts undertaken by all production centers as well as oil service workers and engineers working at wells, oil and gas pumping stations and refineries to supply energy needs should be expressed. He said the government felt compelled to fulfil its obligations for guaranteeing business health and serving public livelihood. “The issue of public health is significant to us and every effort is being to spare each and everyone exposed to the
coronavirus would be safe. Safety is very important to us,” he added. “We have to offer our gratitude to all service workers, engineers, farmers and those
working at refineries to supply energy to people at the right moment, all those who are working at power plants to guarantee power supply, all those who are working at giant
water treatments to ensure drinking water supply and all those who are working in transportation and business to make life comfortable for

PRTC to Produce 9 Petchem Catalysts The head of Petrochemical Research and Technology Company (PRTC), Ali Pajoohan, said the company has signed agreements to develop nine catalysts for petrochemical purposes over two years. He said that PRTC’s big success in commercialization would be development of catalyst in two years. “Designing and preparing plants is timeconsuming and over two years, 9 important catalysts will definitely reach industrial production with PRTC’s technical knowhow,” he added. Referring to PRTC’s agreements, Pajoohan said: “Twenty agreements have been signed for commercialization, which are products of research in the past years. The current research projects also number 70. Every year numerous projects are defined, leading to commercial agreement.” He said one of these activities was related to PET production, which entered the phase of commercialization in partnership with the Tondguyan Petrochemical Company in the third quarter of the current [calendar] year. He said the project would soon reach industrial production by the Tondguyan plant. Pajoohan said the gas-topolypropylene (GTPP) plant in Eslamabad-e Gharb was another activity of the current calendar year.
Domestic Manufacturing Booms in Various Sectors Iran’s minister of industry, mine and trade Reza Rahmani said Iran had managed to develop its potential for domestic manufacturing. “We have banned the import of any product that may be domestically manufactured,” he said. He said prosperity in production was a must for all aspects of the economy in the current calendar year. He added that Iranian industrialists and manufacturers had marked an epic year. Rahmani said an exhibition had been held for showcasing domestic products and potentialities at the beginning of the year. “We carried out various plans and we have sufficient time to present a variety of approaches for different sectors of production and focus further on domestic manufacturing. Our first plan is to increase employment and several such plans have so far become operational,” he added. Rahmani said Iran cut imports $12 billion in 2018 from the preceding year.  He added: “Our manufacturers fared very well and strong motivations have been created in various sectors and we are witnessing a stronger manufacturing.” The minister said: “We cannot announce some of production data, but it can be said that we have increased our manufacturing potential in various sectors.
Petchem KnowledgeBased Companies in Kish Five memorandums of understanding have been signed for establishing knowledge-based companies operating in the petrochemical sector in the Kish Innovation Center. This MOU is aimed at helping develop the petrochemical industry by relying on domestic potential. It was signed between Ali Vatani, senior advisor to vice-president for scientific and technological affairs, Jafar Rabiei, CEO of Persian Gulf Petrochemical Industries Company, Gholam-Hossein Mozaffari, CEO of Kish Free Zone Organization, Hojjatollah Seydi, CEO of Bank Saderat Iran, and Majid Mohammadpour, CEO of Society of Iranian Petroleum Industry Equipment Manufacturers (SIPIEM). Addressing the ceremony, Rabiei said the petrochemical sector was determined to use domestically-manufactured products. “All petrochemical companies welcome the cooperation and contribution of domestic manufacturers and producers as well knowledge-based companies and startups,” he said. Expressing hope that this MOU would bring closer together domestic manufacturers and industries, he said: “Domestic companies have to make maximum use of these potentialities because working in the Kish Island Innovation Center would reduce the final costs of domestic manufacturers due to exemption from value-added tax.”
Oil Pollution Very Low The head of the Department of the Environment has heaped praise on Iran’s petroleum minister for his environmental activities.Issa Kalantari said: “With Minister [Bijan] Zangeneh, the petroleum industry is making headway with minimum pollution.” He said that 70,000 trucks as well as all buses and minibuses were to be renovated per year, adding that 200,000 electric motorcycle would be produced so that carburetor-based motorcycle would be phased out over a 10-year period. “That needs $20 billion in investment. With sanctions in effect, it is difficult to attract such investment,” he said. Kalantari said in a country like Iran, the environment is an obligatory option.  “No industry or activity is environmentally friendly per se; however, pollution is relative. For instance, we think agriculture is environmentally friendly, but it is not.” The official said the government had spent a lot on saving the environment under conditions of sanctions. “If today we used the gasoline distributed in big cities in 2012 it would be impossible to live in these cities,” he said. Kalantari said: “I appreciate the petroleum minister’s efforts for protecting the environment. Thanks to him, the petroleum industry is making progress with minimum amount of pollution. But we must know that if we have problems with the transportation industry it is not because of fuel.”
Largest Petchem Project in Assaluyeh
CEO of Persian Gulf Petrochemical Industries Company (PGPIC) Jafar Rabiei said planning was under way for implementing the Hormuz petrochemical megaproject in Assaluyeh, as the largest petrochemical project in Iran, in 2023. He touched on PGPIC’s increased year-on-year production and forecasts for a 103% realization of production plans in the current calendar year despite sanctions, saying: “I cannot speak about how the company’s approaches during years of sanctions, but our performance is indicative of our success.” “With the inauguration of the Persian Gulf Bid Boland gas refinery, Ilam’s olefin and
Lordegan’s petrochemical up to the end of the current [calendar] year, projects valued at €3.8 billion plus IRR 55,000 billion would come on-stream, which would raise the production capacity of this company by 6 million tonnes,” he said. Rabiei said PGPIC’s output had reached 128%, adding: “This year’s recapitalization in subsidiary companies will be spent on the completion of projects and change the capital into asset. It will be partly paid for PGPIC’s debts to National Petrochemical Company in the past years.” He said that development companies could not be expected to produce big margins from their projects. “The projects
including naphtha light fraction sweetening at Bu Ali Sina Petrochemical Plant, Hangam Ammonia Plant, the second section of the flare project, the first phase of the Yadavaran refinery (NGL 3200) are among projects that would come
online next [calendar] year.” Rabiei said the paraxylene project of Bu Ali Sina Petrochemical Plant, Assaluyeh’s Sadaft, Karoun monoxide production, bottle PET capacity enhancement at Tondguyan Petrochemical
Plant, Ilam and Gachsaran polypropylene projects would come on-stream in 2021. He said that the Dehdasht petrochemical project, the heavy fraction sweetening project at Nouri Petrochemical Plant and the second phase of gas flare project would come online in 2022. He added that the second phase of the Persian Gulf Yadavaran refinery, the Andimeshk ethyl-oxide project, the Gachsaran polyethylene project, the second phase of the Arvand petrochemical plant, the Guilan petrochemical plant for producing MEG from natural gas, the Hemmat petrochemical project and the Hormuz petrochemical megaproject would be for 2023

Iran’s gas refining capacity is set to cross 1 bcm/d by late 2020. In the meantime, all Iranian cities and villages will be connected to the gas distribution network within three years at the latest. It is noteworthy that more than 3,000 villages a year in Iran are connected to the natural gas distribution network.  In parallel with expanding its domestic distribution network, Iran has worked seriously on gas export projects like Iran Gas Trunkline 6 (IGAT-6) and IGAT-9. Iran has also a long-term plan to win an 18% share of global gas trade.Hassan Montazer Torbati, CEO of National Iranian Gas Company (NIGC), has said carrying gas with pipeline remained attractive in the world. He said Iran’s neighboring countries still have potential to receive Iran’s natural gas via pipeline, adding that liquefied natural gas (LNG) is meant for exporting to farther destinations. Vastest Gas Network Iran’s gas transmission network is able to transfer as much gas as produced by gas refineries. Of course, increasing natural gas treatment depends on the expansion of gas pipelines and gas compressors. According to Iran’s gas transmission plans, the country would expand its current 37,000 km of gas pipeline to 64,000 km by the end of the 7th Five-Year Economic Development Plan. According to forecasts, gas compressor stations will also increase to 140 from the current 80, which would place Iran among the owners of the vastest gas transmission network in the world. With more than half a century of activity in the energy sector, Iran’s gas transmission industry is ranked the first supplier of energy in the country. Such a position was hardly imaginable when NIGC was established five centuries ago. The strategic planning by the Petroleum Ministry and senior NIGC managers, daily growing demand for energy, gaining revenue from gas exports for investment and launching infrastructure industry in the country prepared the ground for the quick and structural development of the gas industry. According to BP’s annual data in 2017, Iran comes second behind Russia in terms of gas reserves with 33.2 tcm of gas, which accounts for 17.2% of the world’s total reserves. Qatar and Turkmenistan are ranked
following Iran. With an annual production of 233.9 bcm of gas, Iran is the third largest producer of gas just behind the United States and Russia. Iran’s share of global gas production stands at 6.1%. Iran, Unrivalled in Mideast Transmission of natural gas from production points and refineries to consumption centers is of high significance. Iran’s gas transmission network includes IGAT-1 to IGAT-10. IGAT-11 is being completed. These trunklines, fitted with compressors and connections, are tasked with carrying gas from refineries to all provinces and consumptions destinations. Iran’s 38,000-km pipeline network is operating in 10 districts with 81 gas compressors. It can distribute more than 800 mcm/d of gas. Until the 1979 Islamic Revolution, there was only 2,900 km of pipeline. Under Iran’s 10-year Vision Plan, the country would have 70,000 km of pipeline. The number of gas compressor stations has increased from 14 to 81 since 1979, which would grow to 140 under the Vision Plan. The gas transmission safety index reached 100% in January 2019. Saeed Tavakoli, CEO of Iranian Gas Transmission Company (IGTC), has said that last calendar year 240 bcm of gas was distributed across the country. At the start of the last quarter of that year, gas transmission reached 761 mcm/d. In the same year, 5,740 km of gas pipeline was pigged while intelligent pigging was carried out on 7,457 km. Other measures related to gas transmission last calendar year included reducing loss in the gas transmission network by 6%, preparing a package for Safa Shahr-4 gas compression installations, successful overhaul of Zorya DJ turbine for the first time in Iran to save IRR 46 billion, conducting research projects to improve the technology used in injection current anodes for improving resistance to corrosion and upgrading mechanical properties with a view to increasing the life cycle of pipes, supplying compressor oil for the INGRSOLL-RAND air compressors, on industrial scale at IGTC and IGTC signing an MOU with the Iranian Space Agency
to receive communications services and meet industrial communications needs on domestically developed satellite platforms. Blowdown valve leak reparation, recovering wasted gas, studying new methods of pipe pigging after manufacturing, assessing possible damage from recent floods and offering solutions, studying international standards and experience regarding access to pipelines, gas quantity management, upgrading energy and carbon management, upgrading engineering potential and project management, risk management improvement, renovation projects and development of strategic companies were among the main measures taken by IGTC in the current calendar year. Techno-Engineering Services to Neighbors Iran is currently exporting technical and engineering services in its gas industry to neighboring countries. This achievement has been made due to the Iranian gas industry’s full support for the private sector in the shadow of sanctions. The IGTC’s Self-Sufficiency Committee and a specialized working group have been set up and a guideline has been drafted for selfsufficiency through using domestically-manufactured products and equipment in the gas industry through cooperation with qualified domestic firms and parks of science and technology.  Following the Islamic Revolution, Iran’s gas industry embraced the slogan of “independence, freedom, Islamic Republic” and focused on such objectives as independence in infrastructure industry, hard currency saving, selfreliance, development, and design based on needs to
take great strides in the domestic manufacturing of commodities and parts needed in the gas industry. Iran’s gas industry has upgraded its quality to national and international standards, made maximum use of domestic potentialities and delivered products on time and at suitable price. Domestic manufacturers are currently designing and producing many items needed in the gas industry. In gas supply which includes urban distribution network and pressure reduction stations, more than 400 items are used, more than 98% of which is manufactured domestically. Pipes, steel and polyethylene joints, valves, meters and regulators are some of them. In gas transmission, over 500 items are used, more than 90% of which is homegrown. In the refinery equipment sector, most metallic equipment and pressure reservoirs like scrubbers, separators, cooling tower components, chemicals, humidity absorbents and catalysts are manufactured by domestic companies. IGTC has moved to identify competent individuals and companies to support domestic manufacturing. IGTC has taken effective steps through various incentive tools, intellectual assistance, reducing red tape, sharing necessary information, establishing close communications between manufacturers and researchers, and encouraging investors to support knowledge-based companies.  Designing and manufacturing gas turbines, intelligent pigging, domestic manufacturing of turbine control systems, DCS control systems at refineries, turbo-expander control system, designing and developing turbo-expanders, special gearbox for compressors, flame and gas detection sensors, coating nano-fluid, and quake-sensitive valves are just some of the NIGC achievements in supporting domestically manufactured equipment. 4,600km Pipe in 6 Years Based on current instructions in Iran’s gas transmission industry, 580 km of gas pipeline was set to be built in the current calendar year, while another 4,100 km is expected by 2025.  To that end, at least 200 kilometers of sheet and 56-inch pipe would be used.  Iran operates 294 turbocompressors in its gas transmission network, all of which are maintained without receiving assistance

District 7 Gas Transmission Sustains      25bcm Supply
 Over recent years, we have witnessed significant development in provincial gas transmission networks covered by District 7. Have you had any macro-planning? The startup of production centers at Khorramabad-Sanandaj-Kuhdasht-Ilam pipeline and equipping with center with necessary machinery are among measures taken over recent years for this district. How much gas has been transmitted totally over nine months and how much pigging and leak detection has been done? During the first three quarters of the current calendar year (ending on 21 March 2020), more than 25 bcm of gas was transmitted while 3,850 kilometers of pigging and 2,300 kilometers of leak detection has been done. What have you needed to develop cooperation with domestic companies for supplying equipment? This operating district has always been ahead of others for holding tender bids independently. Widespread activities
have been done, including meetings or logistic operations for identifying the potential of domestic manufacturing companies, receiving their CVs and placing the domestic manufacturers on the vendor list, introducing domestic knowledge-based companies to engineering and operation division or the exchange of information and transfer of knowhow, prioritizing domestic manufacturers for registering purchase orders, distributing polling forms among domestic companies and gathering their views and suggestions, identifying newlyestablished companies that remain unknown and holding meetings for presentation. What was specifically done this calendar year in support of domestic companies? All domestically-sourced necessary commodities and items, including spare parts for turbocompressors, filters and accessory equipment, have been purchased from domestic manufacturers. What activities have been done with regard to upgrading equipment and software for District 7?
In communications and information technology, state-of-the-art technology has been used in creating ICT infrastructure. The database and network infrastructure in District 7 is among the most updated networks at NIGC. Furthermore, the BPMS software has been used to develop applied software in the district. Are you cooperating specifically with knowledge-based companies and parks of science and technology? Yes, we cooperate with scientific and research centers. We are specifically working with the Hamedan Park of Science and Technology in research affairs. We have good contacts with Bu Ali Sina University, Hamedan University of Technology, Hamedan University of Medical Sciences and the Hamedan branch of Islamic Azad University. We also plan effective interaction with Iran University of Science and Technology, as well as universities that have won IGTC’s satisfaction.  A new chapter has opened in selfsufficiency for IGTC. What has been the case with District 7? In this district, domestic manufacturing and selfsufficiency mainly pertain to the manufacturing and reconstruction of MAN turbine parts. So far, more than 600 spare parts of the MAN turbine have been manufactured by domestic knowledgebased companies. More than 100 items have been also manufactured domestically for gas compressor and gas metering stations as well as gas exports. The file of overhauls for the current calendar year is closed, isn’t it? Have any
specific measures been taken to boost the sustainability of gas supply? Yes, the overhaul is done. The most important measures include the overhaul of the MAN gas compressors in Section A and Section C of the Arak gas compressor installations, overhaul of dry gas seal in the Famanin and Bijar gas compressor stations, making Cold Section parts for MAN gas turbines, as well as overhaul of gas coolers in Famanin and Bijar. Furthermore, for the purpose of increasing the gas transmission network sustainability and changing the pipelines, maximum gas supply to western provinces is assured through IGAT-6. Anything else you would like to add for conclusion? District 7 has effective and competent staff serving the nation. My colleagues at the operation and logistics sections are using their expertise and experience to fulfil their mission of sustainable gas transmission to western provinces successfully. In order to demonstrate the endeavor and hardships of our colleagues who sometimes need to work in remote and mountainous areas or riverbeds, for the first time a permanent festival of “Me and Work” was designed, asking the staff to paint the image of their operations or send us relevant photos. So far, more than 100 photos have been sent to the secretariat of the festival for a competition.
Furthermore, District 7 is a major source of gas export to Iraq. This tough task is being fulfilled owing to competent manpower and the capacity of Naftshahr metering stations in the best possible manner. In the near future, a new metering station is to become available in Qasr-e Shirin. District 7 covers 4,821 kilometers of pipeline, accounting for %13 of Iran’s total pipe length. Once new projects become operational, the total length will reach 5,500 kilometers.
In communications and information technology, state-of-the-art technology has been used in creating ICT infrastructure. The database and network infrastructure in District 7 is among the most updated networks at NIGC. Furthermore, the BPMS software has been used to develop applied software in the district

NISOC Eyes Output Lift

The newly-developed contract model known as Iran Petroleum Contract (IPC) was unveiled in 2015, coinciding with signing of a historic nuclear deal between Iran and six world powers.

The IPC model was developed for undeveloped oil and gas fields. Therefore, experts at National Iranian South Oil Company (NISOC) proposed a new model based on IPC. Upon agreement by Petroleum Minister Bijan Zangeneh, a 12-member team was set up to develop a new model of contract for development of oil and gas fields located in southern Iran. Following various meetings, the NISOC-designed model was adopted by the Board of Directors of National Iranian Oil Company (NIOC). It was authorized to be implemented for four to five fields with nine reservoirs.

NISOC embarked on negotiations with qualified Iranian and foreign companies cleared by NIOC for the development of oil fields in Iran.

Following 70 meetings, 18 memorandums were signed with four foreign and four domestic E&P firms. Under the terms and conditions of these MOUs and upon approval of the Reservoirs Council of the Iranian Ministry of Petroleum, 8-9 development projects were drawn up for selected reservoirs. Then, three heads of agreement were signed with the Pergas consortium to develop the Karanj field, with MAPNA to develop the Parsi and Paranj fields and with TENCO to develop the Shadegan field.

However, due to the re-imposition of US banking sanctions, negotiations with Pergas failed. But negotiations with Iranian companies continued for developing oil fields. The most recent one was the HOA signed with MAPNA.

At the signing ceremony, Zangeneh said the NISCO-designed model of contract had been applied to the MAPNA case.

The only difference between the NISOC-designed model and IPC is the indirect presence of contractor during operation.

Ageing Fields Need High-Tech

Iran’s petroleum industry needs E&P companies for managing upstream projects. But the undeniable fact is that this industry needs state-of-the-art technology. The petroleum industry is a complicated industry. Many NIOC managers highlight the high capacity of Iranian oil experts and believe that they can help establish qualified companies.

NISOC is currently in talks with Iranian contractors for the development of five oil fields. For instance, talks are under way for developing Rag Sefid and Shadegan fields. Agreements are forecast to be signed for their development soon.

Regarding Karanj, an HOA was signed with Pergas, but in case no agreement is finalized, development of this field would be assigned to Iranian companies.

NISOC accounts for 90% of Iran’s oil exports. Ahmad Mohammadi, CEO of NISOC, said the company was set to enhance production from some of its oil fields. For instance, Parsi and Paranj fields with 12 billion barrels of oil in place hold untapped oil. Even with a recovery rate of 1%, 700-800 million barrels of oil would be extracted.

28 Oil Reservoirs Developed

Alongside negotiations for increasing oil production in NISOC-run fields, development of 28 reservoirs topped the agenda of NIOC. Agreements for some of them have also been signed. Six projects were put out to tender in NISOC-administered areas to allow for domestic contractors to start working at these fields.

Mohammadi said the project had 15% progress, adding that the successful bidders of seven other tenders would be named soon.

These 13 packages include Mansouri, Asmari, Ramshir, Gachsaran, Khami, Nargesi, Lali, Kaboud, Maroun 14, Ahvaz 14, Zilaei, Maroun 2, Maroun 5 and Siamakan fields. The winners of tender bids held for all 28 NISOC-administered reservoirs would be known in the first half of the next calendar year.

The investment estimated to be required for production from these fields stands at $4.6 billion. Development of these fields would increase NISOC oil output by 700,000 b/d,and development of each reservoir estimated to last two years,

In parallel with increased production projects, NISOC is focusing on no-flaring in line with its environmental requirements and obligations to cap greenhouse gas emissions. To that end, an agreement has been signed with the Persian Gulf Petrochemical Industries Company and the Maroun Petrochemical Plant for flare gas gathering to feed the Bid-Boland 2 refinery. The $1.2 billion refinery would be fed with flare gas from Gachsaran and Aghajari area, Bushehr Province, Kohguiluyeh and Boyer Ahmad Province, outskirt of Ahvaz and east of Karoun River.

Iran Oil Sector Attracts Investment

If sanctions on Iran are lifted, the international companies that had started feasibility studies on oil and gas reservoirs in Iran can file request with NIOC for renewed work in Iran. Upon NIOC approval they will be allowed to resume work.

Mohammadi said: “Iran remains highly attractive to investors in the petroleum industry; however, due to the prevailing international conditions on Iran’s petroleum industry and international sanctions, foreign investment is faced with restrictions in this sector. However, the potential for investment in Iran’s petroleum industry is so high that both domestic and foreign companies can be involved.”

He also underlined the fast rate of return on investment in Iran’s petroleum industry, saying: “Currently, as oil reservoirs get older in southern Iran they need new technology for enhanced recovery. When compared with renewable and nuclear energies, the past fifteen years have witnessed a decline in the consumption of hydrocarbon resources. In the future, the share of renewables will increase on a daily basis, requiring us to accelerate production.”

Darquain-3 Up for Investment

 

West Karoun is now known to Iranians. This border area is expected to form Iran’s oil civilization. According to plans, Iran intends to increase output from the 11 oil fields located in West Karoun by 1 mb/d within four years. The Darquain field will have a 200,000 b/d share in the above figure. Darquain which lies in Khuzestan Province is 45 kilometers north of the city of Khorramshahr and 100 kilometers south of the oil-rich city of Ahvaz. The field is expected to see its output exceed 220,000 b/d once phase 3 development is fulfilled.

Darquain is one of the 49 oil fields introduced for investment under the Iran Petroleum Contract (IPC) model.

Darquain which was discovered in 1964 following drilling one exploration well, holds over 5 billion barrels of oil in place, 1.3 billion barrels of which is recoverable. Darquain’s oil is light with an API gravity of 39. The oil produced at this field is delivered to the Ahvaz-Abadan oil pipeline.

According to estimates, the investment required for the development of Darquain-3 amounts to $1.5 billion. Darquain-3 envisages operating the Ilam and Sarvak reservoirs, as well as the untaped part of Fahlyan. To that end, water and gas would be injected into the Sarvak reservoir and gas into the Fahlyan reservoir.

Furthermore, 31 oil well, 6 gas injection wells, crude oil processing facilities including line pipes, processing installations, gas compressors, infrastructure including crude oil storage tanks and roads are among other activities under way at Darquain-3.

Darquain-1 and Darquain-2 were developed by Italy’s Eni under buyback deals. A state-of-the-art technology – simultaneous oil and associated gas injection – is being used there.

In August 2011, an agreement was signed with an Iranian consortium for the Darquain-3 development after Eni quit cooperating with Iran due to international sanctions. But the Iranian consortium failed to handle the project and the project remains open to international investment.

In phases 1 and 2, oil was recovered from Fahlyan formation. In phase 3, oil recovery from the Ilam and Sarvak layers will be done as well.

Darquain-1 came online in 2005. Darquain-2 required $1.3 billion in investment and demining 7.5 million square meters. Darquain-2 came online in February 2011.

Darquain-3 was expected to become operational within five years. Three years have since passed and the field is still far from startup. According to plans, in the first stage, 14,000 b/d of light crude and in the second stage, 46,000 b/d of heavy crude will be extracted from the Ilam and Sarvak layers.

Darquain-3 targets the heavy crude layers of Ilam and Sarvak and the undeveloped part of Fahlyan. Eni completed feasibility studies on this project and submitted its results.

The findings of Eni studies indicate that the heavy crude in the Ilam and Sarvak layers were recoverable. Due to the heavy crude oil content, the third phase is totally different from the first and second phases.

Therefore, with a view to developing Darquain-3, National Iranian Oil Company (NIOC) held talks with foreign companies for partnership after Iran’s nuclear deal with six world powers came into effect in 2016.

Jahangir Pourhang, CEO of Arvandan Oil and Gas Production Company (AOGPC), announced in February that Darquain’s output capacity had increased 20,000 b/d over the past year. He had said that a tender bid was held for workover on five wells in this oil field.

$135bn Investment Needed

Development of joint oil and gas fields in Iran has slowed down in recent years due to financial and technical shortages. That had earned Iran’s neighbors big margins. Due to the financial and technical restrictions, Iran has concentrated on the development of the South Pars gas field, shared with Qatar, and West Karoun oil fields, shared mainly with Iraq.

Iran has introduced the fields jointly owned with Iraq to foreign companies for development so that they would agree with Iran under IPC terms. One of these fields is Arvand.

The Arvand oil field in Khuzestan Province is located 50 kilometers south of Abadan and at the estuary of Arvandroud River.

This field measures 42 meters in length and 13 meters in width with about 1 billion barrels of oil in place. The recovery rate for this field is estimated at 15%. The Arvand field also contains over 14 bcm of dry gas and 55 million barrels of gas condensate.

The Arvand field was discovered in August 2008. The oil reservoir of this field lies along the Iran-Iraq border. The Fahlyan reservoir of this jointly-owned field holds light crude oil with an API gravity of 44.

Several years ago, an agreement was signed between AOGPC and Iranian Offshore Engineering and Construction Company (IOEC) for the development of the Arvand oil field. The agreement never came into effect due to financial problems.

According to the predetermined schedule, the Arvand field is expected to start producing oil at 5,000 b/d which would reach 20,000 b/d in the final phase. The total investment envisaged for this field is $135 million, which is likely to be revised up. According to plans, Arvand’s oil will be delivered to Abadan refinery.

Iran and Iraq currently share Dehloran, Naftshahr, West Paydar, Azar, Azadegan, Yadavaran, Aban and Arvand. However, in neighboring Iraq, they are known under different names.

Due to unequal recovery from this field and the possibility of migration, NIOC is currently concentrating on the development of joint oil fields.

Investment Return in Soroush/Reshadat Fields

Reshadat oil field is one of the major projects in Iran for enhancing oil production. Development of this field would bring its output ceiling to 80,000 b/d.

Being classified among the old offshore oil fields, Reshadat is located 110 kilometers southwest of Lavan area. The field was discovered in 1965 and started production in 1969 following installation of three platforms.

Reshadat is currently faced with pressure fall-off. It is necessary to apply enhanced oil recovery (EOR) in this oil field. National Iranian Oil Company (NIOC) has introduced this field as a profitable investment opportunity.

There is a lot of demand for high-quality oil of this field with an API gravity of 36 at international markets. That can constitute an attractive chance for foreign companies to work in this field.

Currently, oil recovery is under way at only Platform R-4, while other platforms are not operating.

Development of this field started in late 2000s to bring its production to 75,000 b/d. The plan included drilling thirty wells, building a storage tank with a capacity of 500,000 barrels and laying 185 kilometers of pipeline.

Due to serious damage inflicted on the subsea structures of the platform during the “imposed war”, transfer and installation of separator was postponed to after structure upgrade. In 2015, after subsea structures were reinforced, the separator was moved to the platform for installation.

Operators mobilized all their potential, and closed ranks with logistics and offshore reconstruction groups to work under very tough weather conditions of southern Iran. The separator was safely installed following pipe-laying. Pre-commissioning and commissioning operations were done to let the new separator lead oil and associated gas via an offshore pipeline to the platform. The current crude oil production at this field would go from 8,000 b/d to 75,000 b/d once the development plan is completed.

The new development plan is under way in five phases for an output of 78,000 b/d. The five phases include drilling, jacket installation, platform completion, pipe-laying and a storage tank construction in Lavan.

Soroush Awaiting Investment

Soroush oil field is known as Iran’s largest offshore oil field. It started production in cooperation with Shell in 2011, but now it needs to undergo development for enhanced output. The main reservoir of this oil field is located in the Persian Gulf.

With 14 billion barrels of oil in place, Reshadat is among NIOC choices for investment by international firms. So far, only three percent of Reshadat’s oil has been recovered.

Reshadat’s oil along with the oil supplied by neighboring Norouz is moved to the Persian Gulf floating terminal prior to being sold to customers based on a timeframe set by the NIOC Directorate of International Affairs.

A major feature of the Soroush platform is that it can produce and export oil at the same time. It is among few platforms where no-flaring is under way. Before Shell operated this field, the US and Italy were producing oil there before the 1979 Islamic Revolution.

NIOC says this field would have a recovery rate of 5% under normal conditions, which is low compared with similar fields. Therefore, application of enhanced recovery projects would bring the recovery rate to 10 to 15%, which would lead to the recovery of an extra 1 to 1.5 billion barrels from this field. With oil barrel at $50, a 10% recovery rate would earn Iran about $30 billion in revenue.

Under a 10-year plan, universities are required to cooperate with research centers and foreign advisors to carry out short-term and long-term schemes in order to enhance output from this field.

NIOC is currently working on maximum efficient recovery projects. Enhanced recovery from the Soroush field lies within such framework.

Under a new partnership agreement between the Iranian Offshore Oil Company (IOOC) and universities, a variety of scenarios are being examined for enhanced recovery from the Soroush field.

IOOC officials have said implementing a CO2 or polymer injection project based on a model developed by the Sahand University of Technology would allow for a 500 million increase in the accumulated production from the Soroush field. That would allow for up to 1.5 billion barrel recovery.

The initial recovery from this field is low due to its heavy substance, but simulations and examination of output show that injection of polymer or CO2 would significantly increase the field’s recovery rate.

By increasing the rate of recovery in Soroush, Iran hopes to apply the same method in similar fields with heavy crude oil and high viscosity.

Investment Project: Forouzan Field

Forouzan oil field is an offshore reservoir in the Persian Gulf waters. This field, offered by Iran for development, produces the best quality oil near Kharg Island.

Discovered in 1966 with 2.309 billion barrels of oil in place, Forouzan is shared with Saudi Arabia where it is known as Marjan.

Due to financial shortages and international sanctions against Iran’s petroleum industry, Foruzan field has been awaiting investment for 15 years. It is yet to find a foreign investors.

Oil recovery rate in Saudi Arabia’s Marjan is ten times that of Iran’s Forouzan output. This ratio highlights the significance of development of Forouzan in Iran.

National Iranian Oil Company (NIOC) in April 2002 signed a buyback agreement with Petroiran Development Company (PEDCO) for the renewed development of the Forouzan oil field for increased output. Under the terms of the agreement, production from the Forouzan field was expected to increase 65,000 b/d. Sometime later, Iran Offshore Oil Company (IOOC) affiliated to NIOC announced that Forouzan field could produce more crude oil. Therefore, the project conditions were reconsidered and previous designs were revised. The new changes added to the field development costs and created obstacles to the financing of the project. As the government’s Economic Council did not endorse the project and it was halted.

Upon a proposal from the Petroleum and Engineering Development Company (PEDEC), the Forouzan development agreement was cancelled and IOOC replaced PEDCO.

Development of the Forouzan field is aimed at raising crude oil output from this field from the current 35,000 b/d to 100,000 b/d. Saudi Arabia is currently extracting 450,000 b/d from Marjan field.

Iran was producing 180,000 b/d from Forouzan field in 1987, which declined to 40,000 b/d in the early 2000s.

According to the master development plan drawn up for Forouzan field, the objective is to recover more than 300 million barrels of crude oil over 25 years. Furthermore, 250 mcf/d of gas will be pumped from this field to Kharg Island via a subsea pipeline.

Construction of offshore platforms for developing this field has been assigned to the Iranian Offshore Engineering and Construction Company (IOEC) which has ordered the required top drives to a foreign company in order to accelerate the work.

Despite absence of investment and international sanctions haunting Iran’s petroleum industry, Iran recovered about 763 million barrels from its sector of the Forouzan field up to 2015. Saudi Arabia has extracted 2,260 million barrels. Given Iran’s 11% share, such output from Forouzan is significant.

Shares of Iran and Saudi in the jointly-owned field depends on various parameters: the demarcations they have already agreed upon, the structure of oil reservoirs, geological calculations and reservoir engineering. Iran and Saudi Arabia agreed on their shares of Forouzan in an agreement signed on 22 October 1968 by virtue of international law.       

Balal Gas Layer

Located in the southern Hormuzgan Province, the Balal field is located in the Lavan area in the Persian Gulf. Balal oil field has two reservoirs, known as Arab and Khatya.

Balal oil field, has over recent decades, managed to have a good share in Iran's oil production. However, the discovery of gas layers in this field, which are geologically similar to the giant South Pars gas field, has given rise to a new priority for Iran's petroleum industry in the offshore sector.

The gas layer of this field was introduced to foreign investors as a lucrative project in Iran. Balal produces both oil and gas.

A buyback deal was signed in 1999 with foreign companies for the development of the Balal field. The project came online in early 2003. The field started producing 20,000 b/d of oil. The oil recovered from Balal is of high quality and is much better than the North Sea Brent.

Development of the Khatya oil layer is one of the important projects operated by the Iranian Offshore Oil Company (IOOC). Five wells drilled in this oil layer are producing oil, and another well is expected to be drilled soon. France's Total, which developed Balal in 2000 and 2001, failed to extract any oil from Khatya. Now the oil extracted from this layer is carried to Lavan Island via a 100-kilometer-long pipeline. Balal oil is blended with the oil produced by Salman field prior to being processed and prepared for export.

The contract for development of Balal had been signed in 1999 between National Iranian Oil Company (NIOC) and an international firm.

According to estimates, the gas layers of the Balal field can produce 500 mcf/d of gas. The field is estimated to hold 6 tcf of gas in place.

Balal is located in the easternmost part of South Pars. Its main reservoir is Kangan-Dalan.

According to NIOC officials, H2S of gas produced in Balal is below 100 ppm.

Balal is once more open to foreign investment. Owning to its valuable potential, foreign companies have shown willingness to invest in this project.

The CEO of IOOC has said that renowned international companies have expressed willingness to develop this field which requires cutting edge technology, as is the case with all offshore projects of IOOC. Negotiations are under way with foreign companies which hope to cooperate with IOOC in investment, development and provision of technical services. To that effect, the technical section of IOOC has been examining bottlenecks and drawn up technical and investment packages.

Iranian petroleum industry managers believe that once sanctions are lifted, NIOC would easily raise the level of its oil production and exports. Therefore, Iran hopes to revive its mature oil fields and rejuvenate its oil infrastructure by relying on domestic expertise in a bid to regain its position as the fourth largest oil producer after Saudi Arabia, the United States and Russia.

NIOC eyes 5 mb/d output and 1.4 bcm/d of gas over a five-year period. Iran’s production capacity currently stands at nearly 4 mb/d of oil and 700 mcm/d of gas.

 

Petro-Refineries High Profitability for Investors

Building petro-refineries in Iran is about to commence. Iran’s Petroleum Minister Bijan Zangeneh has said that refineries and particularly petro-refineries would exemplify Iran’s presence in the oil market through supplying oil products. The Petroleum Ministry has pledged support for investment in petro-refinery projects.

The ministerial support for petro-refineries in Iran is not limited to instructions and call for investor. Rather, bilateral meetings have been held between investors and the Office of Deputy Minister of Petroleum for Planning with regard to building refineries using private investment.

Houshang Falahatian, deputy minister of petroleum for planning, has said investment in refinery projects would carry no risks and will even be highly profitable.

Over the past one year, construction of refineries and petro-refineries in Iran has got under way by reliance on private investors. Next calendar year could be viewed as an important period for investment in this sector in Iran because it is the first time that refining and petro-refining plants would be built based on private investment. Refinery construction came to the limelight pursuant to the Law on Supporting Development of Crude Oil and Gas Condensate Downstream Industry Using Private Investment. The Iranian parliament last year adopted this law which requires the Petroleum Ministry to draft a bylaw to be endorsed by the Council of Ministers. This bylaw was posted on the Petroleum Ministry’s website in February.

Under this bylaw, refineries and petro-refineries would be built on coastal areas. Potential investors were asked to register on the website and upload essential information for investment in refinery and petro-refinery projects. Falahatian said the Ministry of Petroleum and National Iranian Oil Refining and Distribution Company (NIORDC) will consider the requests and announce whether they are accepted or rejected.

Petro-Refineries Capacity

There is capacity for the treatment of 2.5 mb/d of crude oil and gas condensate by refineries and petro-refineries. This volume of crude oil and gas condensate is legally required to be converted to high-value products which would generate value-added and make Iran more resilient to sanctions.

Falahatian has said due to the diversity of petro-refining capacity, the number of such facilities would be different. That depends on the MDP and financing model proposed by investors.

Initial Capital

Investors are required to provide 10-30% of the required capital. In case investment is to be made in underprivileged areas, a 10% portion is acceptable. But in some other areas, the minimum fund is required to be 30%. Investors can resort to issuing bonds, capital market and banking facilities to provide the remainder of investment.

Falahatian believes that after the construction of refineries and petro-refineries using private investment, investors will receive feedstock for some time. That would allow them to launch their operation and then they can pay for the feedstock they have received. This period lasts less than one year.

Falahatian said the so-called “feedstock grace period” would be paid by National Development Fund of Iran (NDFI) to petro-refineries.

“Repayment will be subject to terms of NDFI,” he added.

Asked about possible risks to investors, Falahatian said: “Reimbursement of private investments will be subject to the banking law and the Stock Exchange and Securities Organization law. Therefore, there would be no risk to the public, and investors will even receive significant and acceptable profits.”

Feedstock Supply After Startup

When asked about when feedstock would be supplied to the newly-established refineries, Falahatian said: “The feedstock grace period starts when an industrial plant has come on-stream. An industrial unit with 30-50% progress is not supposed to receive any feedstock. There is no use of supplying them with such feedstock?”

He said in case feedstock is supplied prior to the completion of the refinery project, the investor will have to sell it and he will become a tradesman.

“An industrial unit will receive feedstock when it will be able to produce at 80% of its production capacity,” he added.

Falahatian said: “We expect to quit crude oil and gas condensate exports within three to four years when these refineries become operational. That would add to our revenue and minimize the sanction risks.”

He said that if each barrel of crude oil is converted into products instead of being sold at $60 a barrel, it would create many job opportunities.

If crude oil is converted into products, a value chain will be created, and will enable Iran to make revenues like developed nations that have no crude oil. Then the oil would be converted into technology which would be of higher value.

Falahatian said these projects would need more than $50 billion in investment.

IP-92/14

Gas Market Future; US Challenge

 

Shuaib Bahman

 

The energy market has over recent years witnessed new developments as new players have emerged. One of these players is the US whose shale oil production has impacted world markets.

However, the US presence in the energy sector is not limited to shale oil. The US is trying to become a leading producer and exporter of liquefied natural gas (LNG).

The US has boosted its gas storage capacity. That may lead to a drop in prices. The US once used to give privileges to hydrocarbon-rich Persian Gulf Arab monarchies, but today it is a net exporter of gas. US gas exports seem to be facing obstacles like methods of transmission; however, studies show that the United States has been actively and competitively present in the LNG market.

In 2019, four new LNG facilities were launched in the US to help the country increase gas exports. The US remained the third largest exporter of LNG in the world, behind Qatar and Australia, in that year. However, the US is not content with the third position in the gas market and intends to become the world’s top LNG exporter by 2024.

The new LNG facilities built in various places from Maryland to Texas will make the US a leading gas exporter in the world and create a key market for shale gas. US gas exports in 2019 was 60% higher year-on-year.

However, the US presence in the LNG market can give rise to consequences similar to those seen over the US presence in the oil market. In other words, as the US stepped into the oil market to introduce changes into both supply and demand, the same scenario is likely for the gas market. The most important issue with LNG exports in the US is to find and break into new markets. To find new oil markets, the US triggered crises in Venezuela and Libya and imposed sanctions on Iran. Washington will most probably resort to the lever of politics and even security and military interventions in order to win a toehold in the gas market.

Therefore, the US’s increased willingness for a stronger presence in gas exports can be accompanied with crises and sanctions for the traditional exporters of LNG.

 

Rivalry in Europe

 

Europe received more than 10% of total US LNG exports in 2017, up 5% from the year before. The percentage rose to 11 in 2018. Over a nine-month period from August 2018 to April 2019, the European Union received 30% of US LNG exports.

After US President Donald Trump and European Commission chief Jean-Claude Juncker signed a joint declaration on zeroing energy duties on 25 July 2018, US LNG exports to the EU rose 272% compared with the past.

These figures show that the US has been able to increase the level of its presence in the European market despite the presence of strong rivals like Russia and Persian Gulf states.

Given Russia’s traditionally large share of Europe’s gas imports, US officials have on many occasions used their lever of sanctions on Russia’s gas and the planned construction of new pipelines to carry LNG to European nations.

The US plans to offer $1 billion in aid to central and eastern European nations in a bid to reduce their dependence on Russia’s oil and gas, and block the construction of the Nord Stream 2 pipeline.

As far as Persian Gulf states are concerned, the US may keep stirring up security tensions in Iraq and Syria to stop gas supply from this region to the Mediterranean and then to Europe.

 

Obstacles, Challenges

 

The US continues to play its destructive role in the global energy markets and challenge traditional oil and gas exporters. However, it is faced with its own problems.

First and foremost, the US is facing the challenge of delivery of LNG. Countries like Russia are geographically close to Europe and they can easily use a pipeline to pump gas to destinations. The US is deprived of such advantage and it has to carry LNG on very large carriers, thereby adding to costs. Meanwhile, port facilities in all European countries cannot handle such carriers and the US does not have many of them yet.

The second issue is market rivalry. Although the US, has over recent years, managed to export its LNG, it cannot remain indifferent to the role of such bodies as the Gas Exporting Countries Forum (GECF). Accounting for 42% of world gas production, holding 70% of global gas reserves, carrying 38% of gas transferred by pipelines and holding an 85% share in gas trade, the GECF is able to adopt a suitable approach to defeat US bullying in the energy sector.

The third issue pertains to occurrence of unpredictable events. For instance, the novel coronavirus largely impacted energy consumption level in the world. China is not a direct importer of US LNG, but reduced LNG consumption in this giant economy has reduced LNG consumption in the world.

Such an event, even though they cause temporary disturbance in the global markets, would by no means be in the US interests. Under such circumstances, customers may not be willing to load US cargoes, which would lead to a halt in production. Such a scenario would inflict damage on the entire US gas industry.

Stainless Tubes for Petrobars Mero Partners Sandvik will supply stainless steel umbilical tubes for Petrobras’ Mero oil field project in the presalt Santos basin offshore Brazil. According to the company, field developments in the region more typically employ thermoplastic hose umbilicals. For this contract, Sandvik will supply more than 500 km (310 mi) of super duplex Sandvik SAF 2507 stainless steel umbilical tubes encapsulated by Prysmian Group. Mero is managed by the Libra Consortium, a partnership between Petrobras, Total, Shell Brasil, CNPC, and CNOOC.
Tower Lines Up Partner for Offshore Cameroon Zell Tower Resources has agreed to farm out a 24% interest in the Thali production-sharing contract offshore Cameroon to Brisbane-based OilLR Pty. OilLR will pay $7.5 million toward the cost of an appraisal well (NJOM-3) on the block, which Tower estimates could cost up to $16 million to drill. Tower remains in discussions with various other parties on farming out up to a further 24.5% stake in the concession on similar terms.
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Zarubezhneft Step in Indonesia Gas Field Premier Oil plans further well interventions to improve production from its block A gas fields in the Natuna Sea offshore Indonesia. The campaign, scheduled for 2021, will include well workovers and sidetracks on the Anoa field, infill drilling on Pelikan, and an appraisal well to test Anoa’s northern flank.
Shell to Take Control of North Sea Licenses Shell U.K. has agreed to take operated interest from Egdon Resources in two UK North Sea licenses. P1929 contains the Resolution gas field, discovered by Total in 1966, while P2304 includes the Endeavour field. Egdon will retain 30% of both licenses. Shell will pay 85% of the costs of the acquisition and processing of a 3D seismic survey over both fields up to a certain cost threshold. It would also cover the full costs of all studies and manpower costs up to an appraisal drilling investment decision on the licenses. Completion of the farm-in remains conditional on approvals from the UK’s Oil & Gas Authority.
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ConocoPhillips to Win Controlling Share in Tasmania Permit 3D Oil has executed a farmout agreement that gives ConocoPhillips a 75% operated interest in the T/49P exploration permit in the Otway basin offshore Tasmania. Pending government approvals, the two companies expect to sign a joint operating agreement. The permit is adjacent to the producing Thylacine and Geographe gas fields operated by Beach Energy. ConocoPhillips has agreed to pay 3D Oil A$5 million ($3 million) to cover previous costs on the permit, and the company will also acquire 1,580 sq km (610 sq mi) of 3D seismic later this year, at no cost to 3D Oil.
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CNOOC Eyes Gas-Upstream Business Merger

China National Offshore Oil and Gas Corp (CNOOC) is set to inject its struggling natural gas terminal and power unit into its flagship listed vehicle CNOOC Ltd, three senior sources with knowledge of the matter said. The plan for the internal merger, first looked into a year ago by top management at China’s third-biggest energy major, has been revived given sharp losses last year at the unit’s gas trading division and a government-mandated industry reshuffle that will anyway absorb some of its terminal assets. While the merger could help raise the proportion of cleanerburning gas in CNOOC Ltd’s output portfolio and improve its “green” profile, similar to global peers like Shell and Total, the deal is likely to struggle to attract investors given the steep losses at the gas and power unit. “Shareholders may have welcomed it in 2017 or 2018 when China’s gas demand soared and terminal business was robust,” said an equity analyst with a western bank who tracks CNOOC Ltd.
“But the timing is wrong now because of the unit’s big trading losses,” the analyst added. CNOOC said it does not comment on market speculation, while a top executive at the gas and power unit declined to comment. But, one source, who advises CNOOC on strategic matters, described the plan as “group level strategy”, although all
three sources said there was no specific timeline for the deal yet. “Apart from internal synergy ... an extension into the midand-downstream gas business can be a trendy topic in the capital markets as investors increasingly favour a

IEA: Oil Demand Set for First Contraction Since 200

Global oil demand is set to contract in 2020 for the first time in more than a decade as global economic activity stalls due to the coronavirus, the International Energy Agency said. The downward revision came as oil prices dropped as much as third in their biggest one-day fall since the 1991 Persian Gulf War after Saudi Arabia launched a bid for market share following the collapse of an output pact with Russia. The energy watchdog said it expected oil demand to be 99.9 million barrels per day (bpd) in 2020, lowering its annual forecast by almost 1 million bpd and signalling a contraction of 90,000 bpd, the first time demand will have fallen since 2009. Global oil demand fell 2.5 million bpd on the year in the first quarter, or around 2.5%, the IEA estimated in its report, as coronavirus cut travel and economic activity. Around 1.8 million bpd of that was in China. The Paris-based IEA said in its medium-term outlook report that in an extreme scenario where governments fail to contain the spread of the coronavirus, which has affected over 100,000 people, consumption could drop by up to
730,000 bpd. The virus has led to a sharp drop in industrial activity particularly in China and other Asian economies, as well as Italy, one of the worst-affected places outside China. The virus has led to a slowdown in demand for ground and air transport. IEA Executive Director Fatih Birol urged producers to “behave responsibly” in the face of the coronavirus crisis,
after a deal on output restraint between OPEC, Russia and other producers collapsed, sending oil prices plunging. “At such a time of uncertainty and potential vulnerability to the world economy ... playing Russian roulette with the oil markets may

Saudi Arabia, Russia Engage in Oil Price War While OPEC’s de facto leader Saudi Arabia trades blows in a war for market share with Russia after their three-year pact to cut oil supplies collapsed, other OPEC states are already sounding the alarm over plunging oil prices. Crude lost as much as a third of its value after the March 6 meeting between OPEC and its allies, including Russia, ended in acrimony and led to scrapping all restrictions on output in a market already awash with oil. Riyadh, the biggest OPEC producer, said it would hike its supplies to the market to a record high of 12.3 million barrels per day, about 2.6 million bpd above its current level. Russia said it would also pump more, even as the coronavirus hits demand.
Oil Price Fall to Boost Brazil Sugar Output The sharp fall in global oil prices should result in higher sugar production in Brazil in the new crop that starts in April, Ricardo Mussa, the incoming chief executive officer of the world’s largest sugar producing company, Raíz�en, said on March 9. “There was already the intention to raise sugar production this year, and oil’s price fall boosts that plan,” Mussa told reporters after a presentation to investors and analysts organized by Cosan SA, which owns 50% of Raíz�en, a 50-50 venture in which Royal Dutch Shell Plc holds the other half. Most Brazilian mills have flexibility to adjust their production plans between sugar and ethanol, depending on the prices for both products, by earmarking more cane to produce one or the other.
Qatar Petroleum Acquires Yara Qatar Fertiliser State Qatar Petroleum (QP) said it had signed an agreement with Yara international to acquire its 25 percent stake in Qatar Fertiliser Company (QAFCO) for $1 billion, according to statements by both companies. The transaction will mark a conclusion of a partnership that started with establishing QAFCO, a joint venture, in which Yara owned a 25% share with the remaining 75% owned by Industries Qatar (IQ), which in turn is owned 51% by QP. QAFCO since then has become the world’s largest single-site urea producer, representing a significant percentage of the world’s traded urea volume, according to a QP statement.
Japan Spot LNG Price Falls to Record Lows Prices for spot liquefied natural gas (LNG) cargoes imported into Japan, the world’s biggest buyer of the fuel, fell in February to the lowest since the country’s trade ministry started compiling data in 2014. LNG prices have been hit by a perfect storm of new supply coming on stream in the United States and Australia, a warmer northern hemisphere winter, and the coronavirus outbreak this year that has eviscerated demand for gas and other commodities. The average contract price for spot LNG cargoes shipped to Japan in February fell to $3.40 per million British thermal units (mmBtu), according to data released by the Ministry of Economy, Trade and Industry (METI) on March 10.
         

IP-92/11

US Sanctions Render Iran Gas Mature

 

Javad Asghari

 

Iran’s gas refining capacity is set to cross 1 bcm/d by late 2020. In the meantime, all Iranian cities and villages will be connected to the gas distribution network within three years at the latest.

It is noteworthy that more than 3,000 villages a year in Iran are connected to the natural gas distribution network.

In parallel with expanding its domestic distribution network, Iran has worked seriously on gas export projects like Iran Gas Trunkline 6 (IGAT-6) and IGAT-9. Iran has also a long-term plan to win an 18% share of global gas trade.

Hassan Montazer Torbati, CEO of National Iranian Gas Company (NIGC), has said carrying gas with pipeline remained attractive in the world. He said Iran’s neighboring countries still have potential to receive Iran’s natural gas via pipeline, adding that liquefied natural gas (LNG) is meant for exporting to farther destinations.

 

Vastest Gas Network

 

Iran’s gas transmission network is able to transfer as much gas as produced by gas refineries. Of course, increasing natural gas treatment depends on the expansion of gas pipelines and gas compressors.

According to Iran’s gas transmission plans, the country would expand its current 37,000 km of gas pipeline to 64,000 km by the end of the 7th Five-Year Economic Development Plan. According to forecasts, gas compressor stations will also increase to 140 from the current 80, which would place Iran among the owners of the vastest gas transmission network in the world.

With more than half a century of activity in the energy sector, Iran’s gas transmission industry is ranked the first supplier of energy in the country. Such a position was hardly imaginable when NIGC was established five centuries ago. The strategic planning by the Petroleum Ministry and senior NIGC managers, daily growing demand for energy, gaining revenue from gas exports for investment and launching infrastructure industry in the country prepared the ground for the quick and structural development of the gas industry.

According to BP’s annual data in 2017, Iran comes second behind Russia in terms of gas reserves with 33.2 tcm of gas, which accounts for 17.2% of the world’s total reserves. Qatar and Turkmenistan are ranked following Iran.

With an annual production of 233.9 bcm of gas, Iran is the third largest producer of gas just behind the United States and Russia. Iran’s share of global gas production stands at 6.1%.

 

Iran, Unrivalled in Mideast

 

Transmission of natural gas from production points and refineries to consumption centers is of high significance. Iran’s gas transmission network includes IGAT-1 to IGAT-10. IGAT-11 is being completed. These trunklines, fitted with compressors and connections, are tasked with carrying gas from refineries to all provinces and consumptions destinations.

Iran’s 38,000-km pipeline network is operating in 10 districts with 81 gas compressors. It can distribute more than 800 mcm/d of gas.

Until the 1979 Islamic Revolution, there was only 2,900 km of pipeline. Under Iran’s 10-year Vision Plan, the country would have 70,000 km of pipeline. The number of gas compressor stations has increased from 14 to 81 since 1979, which would grow to 140 under the Vision Plan.

The gas transmission safety index reached 100% in January 2019.

Saeed Tavakoli, CEO of Iranian Gas Transmission Company (IGTC), has said that last calendar year 240 bcm of gas was distributed across the country. At the start of the last quarter of that year, gas transmission reached 761 mcm/d.

In the same year, 5,740 km of gas pipeline was pigged while intelligent pigging was carried out on 7,457 km.

Other measures related to gas transmission last calendar year included reducing loss in the gas transmission network by 6%, preparing a package for Safa Shahr-4 gas compression installations, successful overhaul of Zorya DJ turbine for the first time in Iran to save IRR 46 billion, conducting research projects to improve the technology used in injection current anodes for improving resistance to corrosion and upgrading mechanical properties with a view to increasing the life cycle of pipes, supplying compressor oil for the INGRSOLL-RAND air compressors, on industrial scale at IGTC and IGTC signing an MOU with the Iranian Space Agency to receive communications services and meet industrial communications needs on domestically developed satellite platforms.

Blowdown valve leak reparation, recovering wasted gas, studying new methods of pipe pigging after manufacturing, assessing possible damage from recent floods and offering solutions, studying international standards and experience regarding access to pipelines, gas quantity management, upgrading energy and carbon management, upgrading engineering potential and project management, risk management improvement, renovation projects and development of strategic companies were among the main measures taken by IGTC in the current calendar year.

 

Techno-Engineering Services to Neighbors

 

Iran is currently exporting technical and engineering services in its gas industry to neighboring countries. This achievement has been made due to the Iranian gas industry’s full support for the private sector in the shadow of sanctions. The IGTC’s Self-Sufficiency Committee and a specialized working group have been set up and a guideline has been drafted for self-sufficiency through using domestically-manufactured products and equipment in the gas industry through cooperation with qualified domestic firms and parks of science and technology.

Following the Islamic Revolution, Iran’s gas industry embraced the slogan of “independence, freedom, Islamic Republic” and focused on such objectives as independence in infrastructure industry, hard currency saving, self-reliance, development, and design based on needs to take great strides in the domestic manufacturing of commodities and parts needed in the gas industry. Iran’s gas industry has upgraded its quality to national and international standards, made maximum use of domestic potentialities and delivered products on time and at suitable price. Domestic manufacturers are currently designing and producing many items needed in the gas industry.

In gas supply which includes urban distribution network and pressure reduction stations, more than 400 items are used, more than 98% of which is manufactured domestically. Pipes, steel and polyethylene joints, valves, meters and regulators are some of them. In gas transmission, over 500 items are used, more than 90% of which is homegrown.

In the refinery equipment sector, most metallic equipment and pressure reservoirs like scrubbers, separators, cooling tower components, chemicals, humidity absorbents and catalysts are manufactured by domestic companies.

IGTC has moved to identify competent individuals and companies to support domestic manufacturing. IGTC has taken effective steps through various incentive tools, intellectual assistance, reducing red tape, sharing necessary information, establishing close communications between manufacturers and researchers, and encouraging investors to support knowledge-based companies.

Designing and manufacturing gas turbines, intelligent pigging, domestic manufacturing of turbine control systems, DCS control systems at refineries, turbo-expander control system, designing and developing turbo-expanders, special gearbox for compressors, flame and gas detection sensors, coating nano-fluid, and quake-sensitive valves are just some of the NIGC achievements in supporting domestically manufactured equipment.

 

4,600km Pipe in 6 Years

 

Based on current instructions in Iran’s gas transmission industry, 580 km of gas pipeline was set to be built in the current calendar year, while another 4,100 km is expected by 2025.

To that end, at least 200 kilometers of sheet and 56-inch pipe would be used.

Iran operates 294 turbocompressors in its gas transmission network, all of which are maintained without receiving assistance from foreign companies.                            

 

IP-92/بازار

Asian Crude and Products Market

Crude Market

Oil prices crashed by almost a third since January 2020, as crude oil demand is already reduced by the Coronavirus outbreak. Furthermore, the market moved down just after Saudi Arabia launched a price war following the collapse of its oil-cutting alliance with Russia on 6 March 2020. 

The remarkable fall in crude prices on 9 March 2020 just after OPEC meetings is undoubtedly being heavily influenced by a clash among the world’s biggest oil producers and Coronavirus outbreak.

OPEC ministers said on March 5th they backed an additional 1.5 million barrels per day (bpd) of oil cuts until the end of 2020, in addition to rolling over existing cuts of 2.1 million bpd. That would have meant removing a total of about 3.6 million bpd from the market, i.e. 3.6% of global supply.

Moscow rejected the proposal on March 6th, saying it was only willing to extend existing OPEC+ cuts of 2.1 million bpd, which is due to expire at the end of March. But in response, OPEC even refused to extend the existing cuts.

A three-year pact between OPEC and Russia ended in acrimony on March 6th after Moscow refused to support deeper oil cuts to cope with the outbreak of Coronavirus, and OPEC responded by removing all limits on its own production.

The failure of talks may have farther reaching implications, as OPEC's de facto leader Saudi Arabia and Russia have used oil talks to build a broader political partnership in the last few years after effectively supporting opposite sides in the Syrian war. The result will be higher oil price volatility and geopolitical volatility.

Beyond Moscow and Riyadh's ties, plunging oil prices will put pressure on the U.S. shale producers, whose output costs are much higher than those of Russian and Saudi production, even though many shale producers are well hedged against price falls.

It might be too early to assess the impact; however, today market is drastically downward.

 

Products Market

On the products side, contrary to the expectations, High Sulphur Fuel Oil (HSFO) is still improving. The market is supported by supply side with less production and far less arbitrage from Europe. The Coronavirus and its impact have not spared fuel oil markets, with the slowdown of the Chinese economy weighing on required goods transportation, as well as wider market sentiment.

In contrast to the fuel oil market, light and middle distillates cracks saw lower cracks due to demand side. Coronavirus concerns lead to fewer activities and less demand by users. Looking ahead, Asian light and middle distillate market will be busy again in April onwards with Coronavirus vanish and Ramadan affairs appear in Muslim countries.

 

 

 

Petchem 2nd, 3rd Jumps Offer Chance for Investmen

Iran’s petrochemical industry has proven to be highly resilient in the face of economic bottlenecks caused by sanctions. The actors in this industry never imagined that the petrochemical sector would soon become the main lever of industrial and economic development in Iran. Iran’s petrochemical industry started out in 1964 by producing chemical fertilizers. Soon after the commissioning of the Marvdasht petrochemical plant, the Razi, Abadan, Ahvaz and Bandar Imam petrochemical plants came on-stream one after another in the following years. Undoubtedly, Iran’s petrochemical industry was seen from the very beginning as potentially able to win the top rank in Asia. In 1978, Iran’s petrochemical industry was recognized as the Middle East petrochemical brand with a rated capacity of 3 million tonnes. In that year, 17 petrochemical products were manufactured, earning Iran $0.05 billion from the domestic sales of 1.52 million tonnes and export of 0.6 million tonnes.  Iran’s petrochemical industry remains an income-generating sector in Iran. It currently makes up around 32% of Iran’s total non-oil exports. In other words, as petrochemicals production grew in Iran, this sector becomes an internationally famous brand. Now, it can be argued that Iran’s petrochemical industry would not be content with the current levels of development. When petrochemical industry development topped the agenda in 1989, the total investment made in this industry amounted to IRR 420 billion. However, when the industrial production reached 880,000 tonnes, petrochemical exports hit $26 million.  The petrochemical industry has shown a big appetite for production and exports. Therefore, the first and second five-year economic development plans and the commissioning of some petrochemical plants like those in Arak and Isfahan and the completion of various sectors of Bandar Imam
Petrochemical Plant empowered Iran to reach 12-million-tonne output at the end of the Second Development Plan. Output Hike Targeted When senior petrochemical managers raised the idea of the second and third jumps in the petrochemical sector, one could imagine that higher targets were envisaged. In light of the feeding capacity and existing infrastructure, reaching higher figures was not seen as unlikely. The National Petrochemical Company (NPC) was always insisting that its policy for the Second Development Plan would be higher profitability, development of exports, expansion of privatization and further diversification of products. The incomplete projects came online and no project remained hamstrung. After obtaining ISO standards, Iran enhanced its annual petrochemical exports to international markets and won recognition as a brand. Iran’s petrochemical exports grew 16% yearon-year to reach 2.9 million tonnes worth $580 million. Thus, increased production became a principle following the completion of the value chain in the petrochemical industry. It was seen at the same time that optimal use of existing capacities, implementing development projects, developing exports and upgrading the status of the petrochemical industry in nonoil exports, privatization and structural changes in the NPC were in line with the Third Development Plan. Of course, like before, completing incomplete projects from the Second Development Plan were among the priorities of the Third Development Plan. Under the Forth Development Plan, the petrochemicals output doubled. Output data shows that under the Forth Development Plan (2005-2010), 40 projects with a capacity of 34.3 million tonnes came online.  A 10-million-tonne increase in the petrochemical output during the Fifth Development Plan practically led the country towards the second jump. Petchem Outlook It is still believed that operation of petrochemical development projects by the end of the Sixth Five-Year Development Plan, i.e. 2021, will bring Iran’s share of Middle East petrochemicals production to 41%. Furthermore, the Sixth Development Plan requires nonoil exports to grow 21.7% annually and bring Iran’s revenue from
$46.9 billion in 2017 to $113 billion in 2021. Iran’s Petroleum Ministry has sketched out a horizon for the petrochemical sector, which is fully realizable. Many senior managers and pundits, as well as petrochemical actors believe that the second and third jumps in the petrochemical sector would be inevitable. Habibollah Bitaraf, former deputy minister of petroleum, told “Iran Petroleum” that the petrochemical industry is potentially developable in Iran. “Although Iran comes first in the world in terms of hydrocarbon reserves, we need modern technologies to use this capacity. In the petrochemical sector, a technological movement has recently begun, which would take time,” he said. Bitaraf said good agreements had been signed over recent years between the Petrochemical Research and Technology Company (PRTC) and the Research Institute of Petroleum Industry (RIPI) on “technological production”, resulting in the development of license and production of catalysts in the petrochemical sector.  “In the meantime, we need to preserve our interactions with the world,” he said. Bitaraf said the main approach in the second and third petrochemical jumps was to increase exports and diversify the mix of petrochemical products. “The Petroleum Ministry’s policy is based on reducing crude oil sales and instead developing products of higher value-added. Therefore, the mix of petrochemical products is becoming more diverse,” he added. “For the third jump we would need investment. In light of restrictions to foreign investment attraction in Iran we can use domestic investment for the realization of the third jump in the petrochemical sector.” He said: “At present, we need to direct the bulk of domestic investment in trading to the petrochemical sector.” Bitaraf said as long as managers are afraid of risks, obstacle will come up on the way of realization of objectives. Rasoul Ashrafzadeh, CEO of Iranians Investment Petrochemical Company, said: “We need to take into consideration the point that the third jump projects are basically for completing the value chain, which means a more active downstream petrochemical sector.” He said even under the present sanctions that have caused many restrictions for Iran, the third jump plans could materialize.  “In any case, Iran’s petroleum industry has been sanctioned time and again over the past forty years. Therefore, we know how to leave behind these conditions although it is difficult. However, the issue of sanctions is not new for the petrochemical industry actors. In my view, we can find a way to either

IP-92/16

Nouri Petchem Co. Saves Sousas  

 

Masoumeh Asghari

 

Industrial companies involved in various sectors make efforts throughout their professional activity to minimize as much possible as the damage caused by their presence to the environment.

Such efforts are observed in oil, steel, petrochemical or even downstream and small-sized companies. Observing the environmental standards indicates the healthy status of production and lending credence to clean industries for a clean planet.

State companies and multinational firms have a specialized division for this purpose, not to mention credit allocation for environmental concerns. But the conditions are quite different with private companies. The private companies do not ignore their pro-environmental role despite credit crunch.

Among industrial and oil companies, petrochemical companies are leading in this regard and have registered significant record and efforts.

One of these private companies with remarkable performance is Nouri Petrochemical Company. Apart from its industrial, environmental, security, health and social responsibility operations, it has taken unprecedented measures over recent years. The company has been protecting sousas or humpback dolphins.

In line with its social responsibilities and in compliance with its statement in protecting the environment, Nouri Petrochemical Company has shown full support for a research project for studying the impacts of oil and gas industry on the Persian Gulf offshore environment. To that effect, the Bushehr Province Department of the Environment has officially named the Nouri company as the protector of humpback dolphins in the Persian Gulf.

This project is under way with a view to studying the population and demographic dispersal of dolphins in the Persian Gulf in the Mand protected zone in a bid to safeguard this animal species on its own financial and logistic burden.

Endorsed by the Bushehr Province Department of the Environment, this project is aimed at finding suitable scientific and practical solutions to protect environmental assets particularly Persian Gulf fauna against the environmental impacts of oil and gas industry on the coasts of this southern province.

 

Win-Win Initiatives

 

The Nouri Petrochemical Company has over recent years insisted on updating its systems to get as much closer as possible to international environmental standards. Therefore, it has tried to push ahead with its production under the best possible conditions in a mutual coexistence with its surrounding environment.

Mahmoud Sadeh, HSE director at the Nouri company, said: “Over these years we have tried to mitigate greenhouse gas emissions by roughly 300,000 tonnes, reduce natural gas consumption by 63 mcm, slash the specific energy consumption of products by 5 gigajoules per tonne and enhance the output of processing furnaces (pursuant to Petroleum Ministry instructions) and we have succeeded.”

He announced the full implementation of a project for identifying and reducing volatile organic compounds’ leak from equipment and joints by applying the leak detection and repair method.

He added: “Furthermore, a project has been implemented for studying the pollution caused by heavy metals and polycyclic aromatic hydrocarbons (PAHs) in the urban and industrial soil, mineralogy, morphology and metallic pollution of aerosols in the cities of Assaluyeh and Kangan in partnership with the University of Shiraz and under the supervision of the Bushehr Province Department of the Environment.”

 

No Flaring

 

Sadeh said a tender bid was under way for the construction of an amine production unit to remove sulfur contents from the off-gas of units with a view to reducing flaring.

Taqi Sanei, CEO of Nouri Petrochemical Company, has earlier announced implementation of “no-flaring” at this company in the near future.

“In this project, we will tangibly reduce the natural gas consumption and for the first time we will convert sulfur to the aluminum sulfate fertilizer, whose result will be zero flaring at the Nouri Petrochemical Company,” he said.

Sadeh said the Nouri Petrochemical Company was awarded the green prize in 2017 by the Department of the Environment.

He added that in 2017 and 2018, the company’s anti-pollution operation was endorsed by the Bushehr Province Department of the Environment. UNIDCO’s Energy Foundation also awarded the company for its energy efficiency management in 2018.

Obtaining the energy consumption compliance certificate in 2017 was another environmental achievement for the Nouri company.

The company did not record any environmental incident like bad flaring, release of wastewater into the environment, substandard destruction of wastewater, receipt of environmental warning from supervisory bodies or any complaint from local communities. That shows the Nouri Petrochemical Company’s efforts for peaceful coexistence with people and the environment have come to fruition.

The Nouri Petrochemical Company has prevented the emission of volatile organic compounds and instead allotted more than 8 ha of land to green space to serve the environment.

Sadeh said more than 90% of industrial waste produced at the company would be recycled.

“Receiving a certificate of appreciation from the Department of the Environment due to cultural activities in the environment sector and protecting Persian Gulf dolphins and receiving the golden plaque from the fourth seminar on petroleum industry social responsibilities for environmental activities in 2019 are among other honors of this company,” he said.

Sadeh touched on the specific design of industrial and health waste released from the plant, saying: “The waste collection and disposal system at the Nouri Petrochemical Company has been designed so that contaminated water or water suspected of contamination would not be released into the environment and all the industrial and health waste is transferred to Mobin Petrochemical Company for treatment.”

He noted that this plant had no connection with sea and the water cooling system was a closed cycle fully isolated from the environment.

Sadeh said three categories of waste were being produced at this plant. “Industiral waste, including hydrocarbon-contaminated water generated from washing industrial equipment and draining rainwater to the CWD system. The oil and hydrocarbons are recovered in two stages and after being separated through delivery to the feedstock tank. Wastewater and surface running water are classified in this group, flowing into a joint canal of this company and Mobin Petrochemical Company.”

Touching on the emission of air pollutants, he said: “This plant has 16 furnaces mainly fueled by natural gas. This company designs furnaces in strict compliance with national standards. For the purpose of optimization of the function of furnaces, fuel consumption and greenhouse gas emissions reduction has been done by applying the Natural Draft Low-NOx Gas Burner technology. Furthermore, the quality of fuel oil is being permanently monitored by taking random samples to be analyzed at laboratory.”

Sadeh said other effective measures taken included establishing an online monitoring system to watch the intensity of gas flow to the flare, flaring reduction through sweetening sulfured gas and using it as fuel oil.

Regarding green belt measures, he said: “We allotted 135 of the complex built-up area to green belt. This trend continues. Cooperation between Nouri Petrochemical Company and Bushehr Province Department of the Environment has entered a new phase.”

He said that the Dayer-Nakhilou national park had been registered as a protected area for sea mammals by the International Union for Conservation of Nature (IUCN).

Nouri Petrochemical Company, which is located on 61 of land in the Pars Special Economic Energy Zone in Assaluyeh, is among strategic projects of the 3rd Five-Year Economic Development Plan.

Known as a large producer of aromatics in the world, it has a rated capacity of 5.4 million tonnes.

Its products are used in polyesters, artificial tissues, paints, resins, PET disposable bottles and pesticides. They are exported to Spain, Saudi Arabia, the United Arab Emirates, Singapore, China, India, Taiwan, Thailand, Pakistan, South Korea, Qatar, the Netherlands and Indonesia.

Petchem Sector Needs Culture Building Investment in any sector would be sacred and appreciable as long as it lies within the framework set out by the Islamic Republic establishment. The impacts of any investment under the present circumstances where economic resilience has to be upgraded would be like war-era endeavor. Moreover, encouraging and supporting investors and facilitating investment in Iran, as a developing nation, is key to development. To that end, in order to remove obstacles to investment, and overcoming allegations and accusations fabricated against the petrochemical sector, we feel compelled to outline petrochemical achievements in clear terms to the society. As the late Imam Khomeini said, whatever that is done has to be shared with people. I believe that culture-building is a key element of the petrochemical industry. Any negligence of this factor and mere reliance on technicality and profitability would lead to inverse results and the petrochemical industry growth will be halted. With regard to culture-building in this industry, dissemination of information has been done about quantity, revenue, profitability on the stock market, etc. Alongside these aspects, the public opinion has to become familiar with the impacts of the petrochemical industry on the economy and society. Otherwise, ambiguities will be raised about the petrochemical industry. For instance, a day named after the petrochemical industry in Iran’s calendar can provide a good change for effective communications with the public regarding the introduction of this industry.
Hopes Pinned on Development and Financing The petrochemical industry is currently focused on the financing of projects and the supplying needs through domestic manufacturing. In both sectors, efforts are under way for facilitation of activities with a view to implementing projects. What has to be highlighted is that under the present circumstances, the pacing of petrochemical industry development may either increase or decline, but given the past experiences I don’t think we would face any specific and tough problem. The good news is that next calendar year we will be inaugurating a project every month.  Thanks to the petrochemical industry’s experience during the first and second jumps, we expect favorable conditions on the rest of the path. For the third jump, about 23 projects are envisaged. These projects are planned to supply the downstream chain or complete the value chain. That would largely reduce the sales of middle products. The question raised here is: “What would happen to projects in light of sanctions”. It is noteworthy that some of the third jump projects and their stakeholders have been determined. The key issue here is financing, but since all of these projects are operated by private companies, the revenue gained by these companies from other projects would help finance petrochemical projects.  Furthermore, the companies that can list on the stock market would be able to use profits for financing future projects. Another issue regarding the financing of third jump projects is the stock market.  Last but not least, as 70-80% of petrochemical projects supply products for exports, advanced selling of their products would contribute to hard currency generation.
Gholam-Hossein Bayat, Board Member, NPC Ali-Mohammad Bosaqzadeh Projects Director, NPC
Regulatory Body, Key to Iran Petchem Needs Regulatory work is a key issue in the petrochemical industry. However, the important point is that any regulatory role has to be assigned to private entities. Any state monopoly on regulatory bodies would be inutile. Private entities like existing associations should take over the regulatory role in the petrochemical industry. Under the present circumstances, National Petrochemical Company (NPC) should no longer remain under authority of Petroleum Ministry. It is noteworthy that NPC and Petroleum Ministry have currently a conflict of interests. Once, NPC totally belonged to Petroleum Ministry; therefore, the ministry set the price of feedstock delivery to petrochemical plants. Petrochemical revenue also went directly to Petroleum Ministry and NPC. However, the revenue from petrochemical projects was the important point. But now that petrochemical plants have been privatized the Petroleum Ministry is no longer gaining any income. Therefore, Petroleum Ministry and the petroleum industry aim to sell oil products at the best price. But in the petrochemical industry, sometimes prices have to be rethought in favor of development so that investors would be encouraged to contribute. They are in conflict with each other. In my view, the petrochemical industry and its development have to be reflected upon. The issue of development has no administrator in Iran and the country needs a planning body similar to the organization established in the 1960s when appropriate development plans were drawn up. The Planning Organization is required to conduct spatial studies and have programs for the petrochemical industry so that infrastructure projects would be located. Abbas Sha’ri-Moqaddam Ex-CEO, NPC
Leading Investors to Petchem Sector Iran’s 2015 nuclear deal with six world powers led to political and economic overture, providing chances for development. However, under the present restrictions, leading money stock towards investment in the petrochemical sector would be a key option for development and completion of petrochemical projects. The best chance is currently available to facilitate investment in the petrochemical sector. That would materialize through properly choosing projects and considering profitability and marketing through selling bonds. For instance, such option is being implemented currently for building the Siraf refinery. That would help curb the inflation rate and bring about development in the petrochemical sector and the entire economy. Of course, it is noteworthy that such objective would be achieved only through providing necessary infrastructure. For this purpose, the Stock Exchange and Securities Organization and the Central Bank are required to let banks free with the rate of return in order to facilitate investment in the petrochemical sector. The Iranian government has recently adopted a law to support development of downstream sector of crude oil and gas condensate. Petroleum Ministry has also envisaged feedstock grace period to encourage investment in refinery and petro-refinery projects. The Siraf refining project that had attracted no investment for 8 years drew some investors. In any case, creating motivation would be

Skid-Mounted Processing    Facility at South Azadegan

National Iranian Oil Company (NIOC) intends to engage Iranian and/or foreign companies in the construction of skid-mounted processing facilities using the buildoperate-own (BOO) method. An agreement has been recently signed to that effect between the Academic Center for Education, Culture and Research (ACECR) and Petroleum Engineering and Development Company (PEDEC). This skid-mounted facility which is to be used in the South Azadegan field may process 50,000 b/d of crude oil.  Overseen by Petroleum Minister Bijan Zangeneh, the agreement was signed by Touraj Dehqani, CEO of PEDEC, and Mohammad-Reza Pour-Abed, deputy head of ACECR. The facility is expected to be designed and built within 15 months. The duration of operation for this project is set at three years, which may be renewed up to five years. Addressing the signing ceremony, Zangeneh said future operation and desalination units should be skid-mounted in order to minimize costs and time. Demand is high for activity in this sector as most of the existing units are decrepit and ageing. He said processing each barrel of crude oil was estimated to cost $1.2, which would be reduced through competitiveness.
Zangeneh said the petroleum industry can become the standardbearer of Iran’s industrial development by envisaging projects and creating demand. He said Iran would continue to resist the abnormal conditions caused by sanctions.  “What we are after, is the development and prosperity of Iran. Working for Iran to become the top power in the region is not a slogan, but a national demand and expectation,” he added. Accelerating Joint Field Development Dehqani, CEO of PEDEC, spoke about the experience of using skid-mounted processing units in the development of fields, saying: “Development of fields is capital-intensive. Such projects involve drilling and completion of wells at 60-70%, pipeline and gathering facilities at 20% and production and sweetening at 7-8%.” “Experience shows that the bulk of development operations pertains to drilling and completion of wells. The pace and quality of implementation is good due to existing potential and facilities. A case in point is that following foreign companies’ exit from the South Azadegan project, 150 wells have been drilled and completed by Iranians,” he said. Dehqani added that whereas the production and sweetening units were time-intensive, it delayed the development of fields.  “The technical complications of this sector is even likely to delay the implementation of a development project for one year. This issue takes up added significance in joint fields and high-risk reservoirs,” he said. He said skid-mounted processing facilities could be built quickly, adding: “Such installations that can conduct full processing were first used in the South Azadegan field.
Apart from contract issues, it did not last more than one year.” Dehqani said using the potential of the Jofair processing unit and the skid-mounted installations there, the oil production capacity of the Azadegan field enhanced. He said thanks to Minister Zangeneh’s support as well as NIOC’s current and former CEOs support, knowhow to build skidmounted facilities has been mastered. “The construction of a 50,000 b/d skid-mounted processing unit by ACERC can be a beginning for the implementation of this project and the acceleration of development,” he said. Experience Spreading to More Sectors As mentioned earlier, NIOC first used the skid-mounted facilities experience in the South Azadegan field. It was happy with this experience due to the increased output recorded in the field which Iran shares with neighboring Iraq. After that, Minister Zangeneh notified companies of the necessity of switching to skid-mounted production and desalination facilities. Drilling wells, laying pipes and related processes account for major portion of field development costs. But non-operation of a refining unit whose share of development is meager may delay a project and cause capital stagnation.  As long as the processing unit of South Azadegan is not complete, such units would be of no help to development. But the question is to know how the field development would be affected in case the processing unit is not completed. Dehqani has said that such problem did not exist in South Azadegan “because we won part of the production and desalination capacity of West Karoun, as well as the skidmounted processing capacity.” He, however, said: “Of course we would definitely need extra processing capacity to process oil, based on the target set for phase 1 of South Azadegan development (320,000 b/d).”

Investment in Oil Startups
R&DR&D
The idea of establishing oil startups was first raised less than a year ago by Petroleum Minister Bijan Zangeneh. The minister gave instructions to the Office of Deputy Minister of Petroleum for Engineering, Research and Technology to follow up on the formation of oil startups. To that effect, Petroleum Ministry has now allotted 18,000 of land for knowledge-based and startup companies involved in the oil sector. Addressing a group of 250 oil startups and knowledgebased companies, Zangeneh said permission had been given for the establishment of the Petroleum Industry Research and Innovation Fund with an initial capital of IRR 1,000 billion to support

The minister expressed hope that startups would bring about changes in the petroleum industry and resolve many problems including energy efficiency. Iran has more than 700 billion barrels of oil in deposits with a recovery rate of below 30%. Zangeneh said with oil price at $50, a 1% increase in the recovery rate of reservoirs would earn the country $350-400 billion. “Therefore, we should not let it go so easily because this
wealth belongs to people and we can’t abandon it,” he added. According to him, over recent years the Petroleum Ministry has sought to attract investment and develop technical knowhow for enhancing recovery rate from oil reservoirs. However, US sanctions have barred transfer of cutting edge technologies to Iran. Under such circumstances, startups and knowledge-based companies can resolve the problems of Iranian oil firms seeking to boost their productivity. Over
the past one year, Petroleum Ministry has moved to support action for oil startups. Less than one year has passed and the number of startups willing to be active in the oil sector is increasing. Oil production companies and contractors have asked startups and knowledge-based companies to present their solutions for the existing problems. During the gathering, contractors and oil production companies made clear their technological needs to startups and knowledge
based companies, and asked them to meet their technological needs. They guaranteed persistent cooperation in case the startups and knowledgebased companies manage to provide suitable solutions. Ali Vahdat, manager of Innovation and Prosperity Fund, said the fund’s financial instruments had been completed. He added that over the past one year, IRR 21,000 billion had been injected into knowledgebased companies while IRR 11,000 billion had been issued in banking guarantees for knowledge-based companies and startups.  The fund offers such services as guaranteeing purchase and quality, providing leasing facilities and financial instruments, as well as investment and issuing innovation bonds for knowledgebased companies and startups. Minister as ‘Mentor’ Minister Zangeneh has over the past one year focused
on the activity of startups. Addressing the gathering, he said he was making efforts to help startups and knowledge-based companies as “mentor”. He said he would share his experience with these companies so that the future generation would hopefully work for the development of the country.  “Over this [past one-year] period, I have realized that many mechanisms have been worked out for supporting knowledge-based companies and startups. But as there was no customer, knowledge-based companies failed to benefit from these mechanisms effectively,” he added. Zangeneh’s support for the development of ideas and technology is not limited to startups and knowledge-based companies in the oil sector. During his term in office in 1997, Zangeneh introduced upstream oil disciplines at universities. That was followed by the establishment of oil institutes at universities.  The minister
recalls how painful was the task of linking the petroleum industry with universities, saying: “We are currently witnessing oil and university linked up. Gone is the time when universities accused the petroleum industry of being noncooperative or the oil industry staff say ‘they are just university professors and know nothing of practical work’.” Zangeneh said engagement of researchers at the Research Institute of Petroleum Industry (RIPI) and formation of knowledge-based companies and startups were among supporting measures undertaken by the Petroleum Ministry. “The MOU recently signed for sponge and needle coke was like knowledge-based companies in nature. Two strategic products for aluminum and steel production will be supplied with an investment of about $1 billion by the Bandar Abbas and Imam Khomeini oil refineries,” he added. Zangeneh

sue of knowledge-based companies, I thought of holding numerous joint meetings with them and my colleagues in order to learn from them.” “The most significant thing I learnt from them was the necessity of creating a suitable ecosystem for knowledge-based companies,” he said. He added that an ecosystem would give identity to knowledge-based companies and bring them together to learn more than science and technology. Problems Not Limited to Engineering Zangeneh said working with knowledge-based companies would give rise to major developments in the petroleum industry.  “Some may think that our problems in the petroleum industry would be limited to engineering. That is while our problems are mainly related to non-engineering rather than engineering issues. Startups can of help to us in this regard and they resolve many of our problems,” he said. Zangeneh cited the example of fuel smuggling as a challenge unrelated to engineering. He said: “We have to find a remedy. The issue of energy efficiency is unlimited and we
are very weak at it.” Petroleum Ministry Measures for Startups Zangeneh also outlined the measures taken by his ministry in support of knowledge-based companies. He touched on the allotment of 18,000 ha of land for the construction of a park of technology in Shahr-e Rey to house knowledge-based companies and startups, setting up the Petroleum Industry Research and Innovation Fund with an initial capital of IRR 1,000 billion in partnership with the Ministry of Science, Research and Technology, Innovation and Prosperity Fund, presenting oil companies’ technological needs to knowledge-based companies and startups, credit allocation to knowledge-based companies and activating the system of commodity and equipment purchase guarantee. Zangeneh said 100 startups and knowledge-based companies would be soon set up in Shahr-e Rey. What Did Startups Want? Zangeneh visited 200 booths of companies which have been present at the exhibition for three years. On the sidelines of the event, 40 panel discussions
were held for interaction and acquisition of knowledge on technological supply and demand. Following his visit, Zangeneh said he was happy with the big activity of knowledge-based companies. Some startups and knowledgebased companies complained that the process of qualification for cooperation with the petroleum industry was long. In response, Zangeneh said the petroleum industry required compliance with high standards. He, however, said, that should not lead to inconclusive administrative procedures. The risk caused by any beginning was also among concerns raised by knowledge-based actors. In this regard, Zangeneh said the Petroleum Ministry would hedge such risks as part of its support for startups and knowledgebased companies. He noted that risks should not be transmitted to consumers, in which case, the consumer will evade any cooperation.  “But we want to encourage consumers to come and strike agreements without having to worry about risks,” he said. Facilitating Startup Activity Saeed Mohammadzadeh, deputy minister of petroleum
for engineering, research and technology, said research and innovation constituted the most significant practical tool for supporting startups and knowledge-based companies. He said instructions for that purpose had been promulgated, adding that this instrument was expected to hedge risks and present models for guaranteeing purchase in a bid to pave the ground for the presence of various sectors. He highlighted the Petroleum Ministry’s effective and serious measures regarding standards, saying: “The issue of updating standards and upgrading the body issuing quality certificate in the petroleum industry is seriously being followed up on.” Hassan Montazer Torbati, CEO of National Iranian Gas Company (NIGC), said 28 gas industry items had been identified to be manufactured domestically. He said the Petroleum Ministry was trying to supply the technical needs of companies through knowledge-based companies and startups. He called on knowledgebased companies to present their technological ideas on consumption management to NIGC, noting that domestic and industrial gas consumption in
Iran was high due to the low price of this energy commodity. Ali Pajoohan, CEO of Petrochemical Research and Technology (PRTC), said his company was ready for any type of cooperation with knowledgebased companies and startups to meet petrochemical industry needs. He said good connections had been made with researchers in various sectors. “In light of our appropriate infrastructure and facilities at PRTC centers in Tehran, Arak and Mahshahr, we will test the achievements and products of knowledgebased companies and startups at our centers and introduce them to the petrochemical industry in compliance with standards,” he added. Pajoohan said numerous agreements were signed with petrochemical companies to supply their needs and facilitate the presence of knowledge-based companies and startups based on new instructions and in light of the needs of petrochemical plants. On the sidelines of the event, four MOUs were signed with the Persian Gulf Park of Science and Technology, Isfahan Park of Science and Technology, Khorasan Razavi Park of Science and Technology and Khuzestan Park of Science and Technology.
The MOUs were signed in the presence of Minister Zangeneh and Minister of Science, Research and Technology Mansour Gholami. These MOUs were mainly aimed at a better use of scientific potential and capacities of these centers with a view to achieving oil, gas, refining and petrochemical technologies and commercializing them in favor of meeting petrochemical needs. Meantime, an MOU was signed between petrochemical companies for the establishment of knowledge-based companies in Kish Island. This memorandum was signed to help petrochemical industry development with domestic capabilities.  It was signed between Ali Vatani, senior presidential advisor for scientific and technological affairs, Jafar Rabiei, CEO of Persian Gulf Petrochemical Industries Company, Gholam-Hossein Mozaffari, CEO of Kish Free Zone Organization, Hojjatollah Seyedi, CEO of Bank Saderat Iran, and Majid Mohammadpour, CEO of Society of Iranian Petroleum Industry Equipment Manufacturers (SIPIEM). Seyedi has said the MOU would allow for the allocation of IRR 25,000 billion to domestic manufacturers.
R&DR&D
Zangeneh said: “Some may think that our problems in the petroleum industry would be limited to engineering. That is while our problems are mainly related to nonengineering rather than engineering issues. Startups can of help to us in this regard and they resolve many of our problems
 

IP-25

 

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.

 

 

IP-92/7

Interview with NIDC Weightlifter

Dreaming of World and Olympic Championship

 

Iranian weightlifters finished in second place at the 2020 Asian Junior Weightlifting Championships in Tashkent, Uzbekistan. The Iran team won four gold, 10 silver and 5 bronze medals, scoring 641 totally.

One of the weightlifters who had a prominent role in the matches was Afshin Taheri, from the National Iranian Drilling Company (NIDC). In addition to several Asian and world medals, he won the championship in both snatch and clean-and-jerk in the 96-kg category in Tashkent.

“Iran Petroleum” has interviewed Afshin Taheri. The full text of the interview is as follows:

 

You earned Iran’s weightlifting a new honor, this time in Asia. Would you please explain about the matches?

Many thanks for your kind words. In fact, I did nothing of significance. Like every other member of the team, I tried my best for championship. I hope to have been effective. The Asian games in Tashkent were high-level matches. We were eying the championship title, but unfortunately we finished runners-up. I think we achieved a good result with one weightlifter being absent on our side. I hope that we would win the championship title in the next round.

 

You reportedly were successful in Tashkent. Who were your rivals? What record did you set?

Yes, as you mentioned I lifted weights in the 96-kg category. My rivals were from Kazakhstan, Uzbekistan, South Korea, Mongolia and several other nations. As far as my records are concerned I have to say that due to my preparedness ahead of these matches I did not expect myself to gain this medal. I lifted a 161-kg weight in the snatch and 186-kg weight in the clean-and-jerk category.

 

How come you won the gold medal?

As I mentioned I was well prepared to compete in the matches. I had lifted weights during training. In the snatch, I had more chance to win gold which I finally won. However, I did gain silver in the clean-and-jerk category. Thanks to God, I contributed to this victory and finished runner-up. I promise to fare better in the future.

 

What was the first medal you ever gained in weightlifting?

My first presence at national matches dates from 2017 at World Juniors Championship, which I finished the fourth. However, four months after that, I won a silver medal in the Asian matches in Nepal. I remember lifting a139-kg weight in the snatch category and 157-kg weight in the clean-and-jerk category.

 

What were your best ranks in weightlifting?

My best titles were second rank in the Asian juniors games in the 77-kg category in Nepal, third rank in Asian youth matches in 2018 in Uzbekistan in the 85-kg category and second rank in world youth championship in 2019 in Fiji in the 96-kg category and finally Asian champion in Tashkent in 2020.

 

Do you choose your weights or do you prepare based on the rivals’ weights?

As I mentioned, the rivals’ close ranks have driven some weightlifters to choose risky weights in order to win medals, which would cause their elimination. I chose my weights based on their choice, my own preparedness and trainers’ instructions.

 

How do you assess the level of Asian games in Tashkent?

The matches were at very good levels like in previous years. Many teams competed and competition was very close. In the 96-kg category there were seven of us who lifted the same weight. All weightlifters were eying championship and they could not be eliminated easily.

 

With the medals you have won, is it time for an Olympic medal now?

Like every other athlete, I am eying an Olympic gold medal. Of course, I have first to become the champion of world matches. Then I can prepare for Olympic matches. Such objective is attainable and I have to train more in order to get ready.

 

Prior to Asian matches, you won the Pro League championship title on behalf of NIDC. Can you explain about that?

The Pro League matches represent Iran’s weightlifting. This year’s matches were held at a very high level. We were competing in full force and we managed to win the championship title of Pro League matches and became the standard-bearer of weightlifting in Iran. I have to note that Pro League matches helped me get further prepared for Asian matches.

 

Anything for conclusion?

I feel compelled to offer my gratitude to all those who were involved in my progress. My special thanks go to my beloved trainers at National Iranian Oil Company (NIOC) and NIDC, like Mohammad-Reza Kazeminejad, Hamid Rashidi, Amir Hezbeh and Bahman Makvandi. Our achievements are the immediate result of their efforts. Without them, we would have not been able to win such honors. My championship is the result of efforts by everyone and therefore its credit goes to all of them.

 

 

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Iran Weightlifter Bags Gold in Asian Champs

 

Iranian weightlifter Afshin Taheri in the weight category of 96 kg snatched a gold medal in 2020 Asian Junior Weightlifting Championships underway in Tashkent.

In his first round of snatch field, he lifted 150 kg weight. He then lifted 156 kg weight.

In his last round, he lifted 160 kg weight and ranked the first.

Kazakhstan and Syria ranked second and third, respectively.

In the clean-and-jerk category, Taheri lifted a 176-kg weight. For the second attempt, he chose a 181-kg weight that he easily lifted. In his final attempt, he lifted a 186-kg weight and won the silver medal. In clean-and-jerk, he won the silver medal for a total 346-kg weight.

Taheri had earlier become champion in the Pro League matches in Iran for NIDC in the 96-kg category. Before NIDC, he was with National Iranian South Oil Company (NISOC).

 

IP-92/1

How Iran’s Oil Attracted US

 

Ali Bahrami

 

The United States suffered least damage among the nations involved in the World War I and World War II. It escaped unscathed even from devastating post-war crises, and even upgraded its political, economic, military and cultural power on a daily basis. In the 1950s, nobody heard any more about Italian Fascism and German Nazism, as Europe was divided between Capitalists and Communists. As the world came closer to mid-1860s, it became further polarized: one pole led by the US and the other led by the Soviet Union.

The Non-Aligned Movement (NAM) was standing against the polarized world; however, technical, military, economic and ideological power had polarized the world. Such bipolar world gave rise to the “Cold War”.

Under such circumstances, the US had to remain strong, leave behind economic crises and upgrade its industrial and military strength. The key requirement for all of this was summarized in energy.

Without access to energy, the US would see all its dreams shattered. The US’s footsteps were seen everywhere: from the Middle East to Far East and from Central America to South America. In this regard, Iran was not spared. The US stepped into Iran’s energy sector following the 1953 coup against the government of Prime Minister Mohammad Mossadeq.

 

US Coup Fallout

 

The 1953 coup opened a new chapter in the history of Iran. Later on it came out that the Central Intelligence Agency (CIA) had engineered the coup against the Mossadeq administration.

In Iran’s modern history, we read: “The 19 August1953 coup should be seen as a US-Britain joint action aimed at preserving the international oil cartel. The coup was executed on August 19. When hooligans were out in the streets, Gen. Zahedi led 32 Sherman tanks to central Tehran to lay a siege to key spots. Following three hours of clashes with three tanks stationed to protect Mossadeq’s residence and radio station, Fazlollah Zahedi was announced the Shah-appointed legitimate prime minister.”

The Americans were coup leaders and they demanded a share in post-Mossadeq Iran’s oil. The Mossadeq administration and the objections he lifted were based on Iran’s main source of income, i.e. oil. Now Mossadeq had been sidelined and Iranian oil barrels were ready to be delivered to superpowers like the US. Fazlollah Zahedi had failed to attract Britain.

Mahmoud Tolouei says: “The Zahedi government was the August coup inheritor, but the British did not show any sign of financial support for him. However, the Americans stepped in and offered $45 million in cash. Even the then US ambassador to Tehran had suggested that financial aid to the Zahedi government increase. That was the starting point for the Americans to strengthen their position in future oil consortia to the dismay of Britain despite its cooperation in the August coup. Eisenhower, then US president, had said Iran’s oil and the Suez Canal were his priorities. Bermuda Island hosted a meeting between President Eisenhower and British and French prime ministers to discuss Iran’s oil issues. An agreement was soon finalized about the formation of the Iran oil consortium. Upon a US proposal, in addition to Britain, the Netherlands and France were invited to the Iran oil table. On 16 December 1953, the most important outcome of the Bermuda conference, the first meeting was held between the Anglo-Iranian Oil Company (AIOC) and five American firms – Standard Oil New Jersey, Texaco, Socony-Vacuum, Standard Oil California and Golf Oil – as well as Royal Dutch Shell and France’s oil company to make arrangements for the formation of the Iran Oil Consortium in London.”

Every arrangement had been made so that Britain would no longer hold a monopoly on Iran’s oil. The Allies had emerged winner in the Second World War and the Axis powers had been crushed. However, Britain was overwhelmed by fighting Germany’s Nazism. The Americans, more prepared than ever, were plotting to take Iran’s oil and energy. The US needed Iran’s energy to keep fighting the Soviet Union amid the “Cold War”.

 

Britain on the Decline

 

There is no unanimity on why Britain’s role was overshadowed in Iran’s oil. However, the most significant analyses in this regard are mentioned in the following two books: Iran’s Pahlavi-Era Foreign Policy by Abdorreza Houshang Mahdavi and Iran’s Foreign Relations by Alireza Azghandi.

“Iranians’ Hatred for British Colony: One of the most important reasons for oil companies to come to Iran under the aegis of the consortium agreement was the Iranians’ hatred of Britain as the symbol of colonization. That is also why talks about the issue of oil lasted three years. The Iranians would never welcome back AIOC. Even throughout negotiations and when Britain was demanding a bigger share of the consortium (44%), the Americans opposed and told them they could not seek any higher share because AIOC was a symbol of foreign domination and largely detested in Iran. Had AIOC been granted a higher share than others, more protests would have followed in Iran.

Britain’s economic and political weakness: The British government is apparently among the winners of WWII. But in fact it had been weakened to the point that it would no longer preserve the giant empire created three centuries before across the globe. Nationalist movements were emerging in Britain’s colonies. India’s independence came afterwards. This nationalist fervor had transpired Iran too and Iranians viewed AIOC as the symbol of Britain’s colonial policy. The British empire was crumbling under heavy debts following WWII, while the US was in a position of force and ready to flex muscles.

US influence in Iran: Another reason for AIOC’s failure in Iran was the US abandoning isolation. The US took advantage of the British empire’s economic and financial weakness to gain new interests. Therefore, the oil consortium in Iran was the product of rivalry between Western industrialized nations and the US’s increased power.

Therefore, alongside Iran’s domestic conditions, the international atmosphere should be also taken into account. The oil consortium was a clear example of Iran’s foreign policy, known as positive nationalism. The consortium was established in the interest of the US as a major player in the international system.”

Nowruz, Rebirth of Nature

Although it is not clear whether proto-Indo-Iranians celebrated a feast as the first day of the calendar, there are indications that both Iranians and Indians may have observed the beginning of both autumn and spring, related to the harvest and the sowing of seeds, respectively, for the celebration of New Year.We have reasons to believe that the celebration is much older than that date and was surely celebrated by the people and royalty during the Achaemenid times (555–330 BC). It was, therefore, a highly auspicious occasion for the ancient Iranian peoples. It has been suggested that the famous Persepolis complex, or at least the palace of Apadana and the Hundred Columns Hall, were built for the specific purpose of celebrating Nowruz. Although, there may be no mention of Nowruz in recorded Achaemenid inscriptions,there is a detailed account by Xenophon of Nowruz celebration taking place in Persepolis and the continuity of this festival in the Achaemenid tradition. In 539 BC the Jews came under Persian rule thus exposing both groups to each other’s customs. The story of Purim as told in the Book of Esther is adapted from a Persian novella about the shrewdness of harem queens suggesting that Purim may be a transformation of the Persian New Year. Nowruz was the holiday of Arsacid/Parthian dynastic Empires who ruled Iran (248 BC-224 AD). There are specific references to the celebration of Nowruz during the reign of Vologases I (51–78 AD), but these include no details. Before Sassanids established their power in West Asia around 300 AD, Parthians celebrated Nowruz in Autumn and 1st of Farvardin began at the Autumn Equinox. During Parthian dynasty the Spring Festival was Mehragan, a Zoroastrian and Iranian festival celebrated in honor of Mithra. Extensive records on the celebration of Nowruz appear following the accession of Artaxerxes I of Persia, the founder of the Sassanid dynasty (224–651 AD). Under the Sassanid Emperors, Nowruz was celebrated as the most important day of the year. Most royal traditions of Nowruz such as royal audiences with the public, cash gifts, and the pardoning of prisoners, were established during the Sassanian era and persisted unchanged until modern

Haji Firouz Haji Firouz in the language of literature and satire Haji  is the traditional herald of Nowruz, the Persian New Year. He oversees celebrations for the new year perhaps as a remnant of the ancient Zoroastrian fire-keeper. His face is covered in soot and he is clad in bright red clothes and a felt hat. While ushering in Nowruz, Hajji Firouz plays a tambourine and sings “Hāji Firouz-e, sal-i-ye ruz-e” (It is Hāji Firouz time, It happens one day in a year). People of all ages gather around him and his troupe of musicians and listen to them play the drum and dance through the streets with tambourines and trumpets spreading good cheer and the news of the coming New Year. The sound of his songs and the sight of his dance is often analogous to hearing Christmas music in a shopping mall, telling all that Nowruz is in the air. Although the blackness of his skin has been the source of some racial controversy in Iranian intellectual circles, Hāji Firouz’s intentions and spirit have always been well received and loved by the people. People consider it only as a face paint and there is no racial implication.
Haft Seen Haft-Seen or the seven ‘S’s is a traditional table setting of Nowruz, the traditional Iranian spring celebration. The haft seen table includes seven items all starting with the letter seen (س) in the Persian alphabet.
The Haft Seen items are: Sabzeh : wheat, barley, mung bean or lentil sprouts growing in a dish - symbolizing rebirth-Samanu: sweet pudding made from wheat germ - symbolizing affluence Senjed : dried oleaster Wild Olive fruit - symbolizing love Seer :garlic - symbolizing medicine Seeb : apple - symbolizing beauty and health Somāq : sumac fruit - symbolizing (the color of) sunrise Serkeh: vinegar - symbolizing old-age and patience
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