Oil, Coronavirus and Future

OPEC oil ministers and their
allies, known totally as OPEC+,
agreed to remove 9.7 mb/d
from their production in a bid
to help stabilize the tumbling
oil market. The 23 nations held their
meeting through videoconference due to
the outbreak of the Covid-19 pandemic.
The figure for production cut was historic;
however, it failed to allay market concerns
and the oil prices kept falling.
The decline in oil prices was triggered by a
price war touched off between Saudi Arabia
and Russia after they failed to agree on
production cut when the market was faced
with a supply glut at the beginning of the
spread of the novel coronavirus.
Having infected more than three million
across the world so far, Covid-19 has turned
out to be one of the biggest epidemics of
recent years. In addition to the challenges
caused in the healthcare sector, it has
affected businesses and left unprecedented
impacts on the energy sector.
The global demand for oil has fallen by
three-fourths and 9.3 mb/d is forecast to be
cut from the 2020 demand, unprecedented
in the past 25 years. The OPEC+ agreement
on cutting 9.7 mb/d is a short-term

measure; however, it can partly manage
the problem. But energy decision-makers
have to consider a long-term future and
see its effects on oil production and supply
security for longer periods. These issues
were taken into consideration in the OPEC+
final statement: securing mutual interests,
effective economy and regular oil supply.
The first outcome of the unprecedented
decline in oil demand and concomitant
price drop would be the investors’ exit from
the petroleum industry whose survival
requires investment and development.
Lack of investment guarantee would cause
shortages in the oil supply in coming
years and affect global demand for energy.
That would harm both producers and
consumers.
The burden of oil price slump will be
mainly on the shoulder of oil producers;
however, if the petroleum industry fails
to resolve today’s problems through
international cooperation the entire world
will have to bear its responsibility.
Producers, consumers, investors and all oil
and energy actors are members of the same
team and nobody would be able to emerge
winner without considering collective
interests.

I
ran’s Minister of Petroleum
Bijan Zangeneh said after
the videoconference meeting
of OPEC+ that Iran along
with Libya and Venezuela
would be exempt from any
output cut. US President Donald
Trump, who used to brand OPEC
as an ineffective cartel, offered
gratitude to OPEC+ countries for
their agreement that would save

hundreds of thousands of jobs in
the US. The market also reacted
positively to this agreement with
the price index growing 4% in the
global market.
Extraordinary Meeting
An unprecedented fall in crude
oil prices since March 2020 due
to the outbreak of the coronavirus
pushed the 13 OPEC member
states plus 10 allies to hold an
online meeting one day ahead of

the G20 summit. The objective
was to restructure the oil market
and oil prices, because the
market was in critical conditions
following the spread of Covid-19
and the failure of OPEC+ talks in
early March, lowering oil prices
down to $20 a barrel. In the
meantime, a price war between
Russia and Saudi Arabia worsened
the situation. They accused each
other of having triggered the price
war. Russia once demanded that

OPEC+ countries hold a meeting,
but Saudi Arabia opposed.
However, when the prices fell
below $23 a barrel, the US shale
industry was alerted. A group of
48 Republican Senators wrote a
letter to Saudi Arabia, warning
it of the consequences of their
price war. The ensuing contacts
between President Trump and
Russian President Vladimir Putin
convinced Saudi Arabia to agree
with the meeting. As soon as Saudi

Arabia called on OPEC+ to hold
an extraordinary meeting, the oil
prices grew to about $30.
Iran’s Zangeneh had warned
that in case 15 mb/d was not
cut during May, supply would
overtake demand and the market
would suffer a serious price shock.
However, restoring stability to the
oil market would not materialize
only by lower supply by OPEC+.
Covid-19 is a global crisis and all
nations are now struggling with it.

Efforts got under way to convince
the US, Canada, Norway and other
oil producers to join OPEC+ in
cutting oil production. Russia even
conditioned its own output cut
on reduction by US oil companies.
Zangeneh had also tweeted,
saying that other oil producers
including the US and Canada had
to contribute to the oil market
stability. Saudi Arabia and Russia
had raised their output following
the failure of the 178th OPEC
ministerial meeting. They buried
the hatchet and agreed to reduce
more than agreed level from their
output.
Historic Agreement
Under such conditions the
OPEC+ meeting was held through
videoconference on April 9 with
proposals for cutting 10-12 mb/d
from the oil supply. That was apart
from the proposed cuts by the
US, Canada, Norway and Brazil.
An agreement was reached on
10 mb/d reduction, but Mexico
whose oil exports stand at 1.753
mb/d disagreed. Seven hours of
talks with Mexico followed. Finally,
after 10 hours of intensive talks,
OPEC+ agreed to reduce 10 mb/d,
but the agreement was dependent
on Mexico’s cooperation.
After the meeting which
continued to early Friday by
Tehran time, Zangeneh said:
“For the first time in the OPEC
history, a two-year decision is
being adopted, which is historic

for output cut by OPEC and non-
OPEC.” The following days saw

continued talks with Mexico. Saudi
Arabia had said from the very
beginning that the agreement’s
viability was dependent on
Mexico’s cooperation. Mexico
still insisted that it would cut
only 100,000 b/d from its output.
Negotiations continued for
winning Mexico’s agreement.
The market was prudent and the
prices did not grow.
G20 Meeting
The oil and energy ministers

G20 held a meeting on April 10
in Saudi Arabia, chaired by Saudi
Crown Prince Bin Salman. Ahead
of this meeting, the Kremlin
announced that President Putin,
President Trump and Saudi King
Salman had discussed the OPEC+
meeting, saying they wanted the
restoration of stability to the oil
market.
The US and the G20 called on the
world’s leading countries to take
“all the necessary measures”
to stabilize an energy industry
devastated by the coronavirus
pandemic, giving international
backing to deep oil production
cuts pledged by OPEC and Russia.
OPEC and Russia struck a deal to
cut 10mb/d from global supply,
the biggest supply reduction ever
made as the producers moved to
prop up the global oil market.
Confirmation of the deal was
delayed by Mexico’s refusal to
make large cuts to its own oil
production, defying Saudi Arabia’s
push to have all countries in the
OPEC+ alliance cut an equal share.

The US, Russia and Saudi
Arabia, the world’s top three
oil producers, all endorsed the
agreement to cut production, with
President Trump saying that the
US would help Mexico “pick up
some of the slack” to smooth the
deal’s progress.
The communique from the G20
meeting said members would
“commit to take all the necessary
and immediate measures to
ensure energy market stability”.
With reference to the OPEC deal,
the communique “recognize[d] the
commitment of some producers
to stabilize energy markets”. An
earlier draft of the communique
had contained a pledge to do
“whatever it takes” but this was
removed in the final version.
Alexander Novak, Russian energy
minister, told the G20 meeting
that “the role of the G20 is to
comprehensively support these
efforts [undertaken by OPEC+]”.
9.7mb/d Output Cut
OPEC+ again met on April 12. The

participants reached agreement
this time. President Trump was
quick to thank OPEC+ for this
major agreement. After the
meeting, Zangeneh said: “Based
on this agreement, oil supply by
OPEC and non-OPEC states would
be cut by 10 mb/d during May and
June (the US would account for
300,000 b/d on behalf of Mexico).”
“According to earlier quotas,
Mexico was to cut 400,000 b/d
from its oil supply, but its energy
minister opposed. Talks were held
over these days and Mexico agreed
to cut 100,000 b/d from its output
in May and June. The US said it
would account for the rest,” said
Iran’s minister. Zangeneh said
G20 countries had also agreed to
cut 3.7 mb/d from their output for
one year, adding: “This agreement
is arranged by the International
Energy Agency (IEA). Saudi
Arabia, Kuwait and the United
Arab Emirates would voluntarily
cut 2 mb/d more than planned
from their supply.” Zangeneh said:
“Along with Libya and Venezuela,

Iran is exempt from any supply cut
due to sanctions.”
That was the end of a price war
triggered between Russia and
Saudi Arabia in March in the
shadow of Covid-19.
Market Reaction
The market’s immediate reaction
was positive to the OPEC+
agreement. One day after the
historic agreement, oil prices
grew 4% with North Sea Brent
reaching $32.77 and the West
Texas Intermediate crude traded
at $24.79.
Saudi Arabia’s energy minister
said his country along with Kuwait
and the UAE would cut more
than agreed from their output,
thereby bringing the totally agreed
reduction to 12.5 mb/d, much
more than the 9.7 mb/d agreed at
the OPEC+ meeting.
Some market players have cast
doubt on real reduction in oil
output by OPEC+. However, it
must be taken into consideration
that these producers saw a

price war when they failed to
agree on cutting 1.7 mb/d from
their production. Now with the
spread of Covid-19 and increased
lockdown all across the globe,
travels have decreased and the
global economy has contracted.
A number of refineries have also
come to a semi-halt.
Covid-19 brought oil producers to
the negotiating table so as not to
lose too big shares in the market
and instead stabilize prices.
What’s more is that in case the
Covid-19 pandemic continues
spreading the global economy
contracts further, global demand
for oil will fall again in which case
OPEC+ would have to gather anew
and agree on output cut in favor
of price balance. The US, Canada
and other big producers would
have no option but to cooperate
with OPEC+ if they want to avoid
economic meltdown and if they
want to save jobs. Maybe, never
has OPEC been as instrumental as
it is now in the oil market.Iran is
exempt from any reduction in cut
because of US sanctions. However,
it has not played down the
significant status of the country.
Iran holds the largest hydrocarbon
reserves in the world and despite
all US pressure to push it out of
the market, Iran is still present.
OPEC+ Cut Arrangement

The OPEC+ agreement provides
for cutting 9.7 mb/d for two
months starting May 1 and ending
June 30.
OPEC+ agreed to “adjust
downwards their overall crude
oil production by 9.7 mb/d,
starting on 1 May 2020, for an
initial period of two months
that concludes on 30 June 2020.
For the subsequent period of
6 months, from 1 July 2020 to
31 December 2020, the total
adjustment agreed will be 7.7
mb/d. It will be followed by a 5.8
mb/d adjustment for a period of
16 months, from 1 January 2021
to 30 April 2022. The baseline for
the calculation of the adjustments
is the oil production level of
October 2018, except for the
Kingdom of Saudi Arabia and the
Russian Federation, both with
the same baseline level of 11.0
mb/d. The agreement will be valid
until 30 April 2022, however, the
extension of this agreement will
be reviewed during December
2021.”
OPEC said signatory countries’
conformity with the Declaration of
Cooperation’s is to be monitored
considering crude oil production,
based on the data from secondary
sources, according to the
methodology applied for OPEC
member states.

The US and the
G20 called on
the

world’s lead-
ing countries to

take

“all the neces-
sary measures”

to stabilize an
energy industry
devastated by
the coronavirus

pandemic, giv-
ing international

backing to deep
oil production
cuts pledged
by OPEC and
Russia.

Saudi

NIOC 1398 ReviewIran’s
 

Well D-6 in the zone run
by the Iran Offshore
Oil Company (IOOC)
and Well 140 in
the Rag Sefid field
became operational. The salty and sweet
oil pumping system in Aghajari No. 2
production unit is upgraded.
The engineers in the Tang Bijar operating
zone managed to launch a steam trace
system. Minister of Petroleum Bijan
Zangeneh visited Moscow to discuss
the fragile conditions of supply and
demand in the oil market with his Russian
counterpart. One week after the visit,
Thamir Abbas Al Ghadhban Deputy Prime
Minister for Energy Affairs and Iraq’s
minister of oil travelled to Iran and visited
EIED, a subsidiary of the Oil Industries
Engineering and Construction Company
(OIEC). During the visit, Iran and Iraq
were said to have reached agreement
on developing the Naftshhahr and
Khorramshahr fields, jointly owned by the
two countries. National Iranian South Oil
Company (NISOC) announced that for the
first time a rotor of Clark gas compressor
operated by this company had been
repaired by the company’s engineers.
Furthermore, a Rolls-Royce turbine and
its compressors would be overhauled and
come online after years of non-operation
at the Aghajari gas and liquefied gas plant.
Operations to build a tower to separate
propane from sweetened gas – as one of
major equipment in the Kharg LNG project
– ended in Ahvaz. Offshore cable-laying
operations in the wellhead platforms 7
and 8 of Bahregansar platform (electric
cable and fire optics) ended in less than
two months. One of oil tankers operated
by National Iranian Tanker Company
(NITC) was stopped in the Red Sea after
water penetrated into its engine chamber.
However, the oil tanker was put in stable
conditions and all 26 crewmembers
were announced to be in full health. US
sanctions waivers to the eight major
buyers of Iran’s crude oil came to an end.
At the same time, Minister Zangeneh met
with Mohammad Sanusi Barkindo the
visiting OPEC Secretary General on the
sidelines of the Tehran Oil Show.
During the exhibition, NISOC signed
agreements with domestic consulting

companies to conduct studies on six
reservoirs. Furthermore, five technological
achievements of the Research Institute of
Petroleum Industry (RIPI) were unveiled.
Relying on its own knowhow and
expertise, RIPI is operating as the most
specialized technological body involved
in the petroleum industry. The overhaul
of gas production installations at the
Khangiran field, as well as the installations
in the Nar, Kangan, Aghar and Dalan
areas started. Meantime, 14 exploration
blocks and their financing model were
introduced to Iranian E&P companies.
Operations for the safety of main and
auxiliary oil and gas pipelines in Maroun
were over and the protection and fire
alarm system on the Belal platform wells
were installed and launched while nothing
was outsourced.
The annual overhaul of the two platforms
of Phases 4 and 5 of the South Pars gas
field, as well as the platforms of SP10
and SP16 were successfully ended in the
mechanical, electrical, instrumentation,
inspection, health, safety and environment
sectors.
Explosions were reported on oil tankers
in Fujaira Port in the United Arab
Emirates, while Yemeni drones struck two
oil pumping stations in Saudi Arabia.
In the South Zagros area, two oil
development wells came online in
the Sarvestan and Sadatabad areas. A
homegrown riser was installed in the
Kharg waters to serve the drilling industry
for the first time.
Minister Zangeneh issues a directive,
setting priorities for the four subsidiaries
of Petroleum Ministry – National Iranian
Oil Company (NIOC), National Iranian Gas
Company (NIGC), National Petrochemical
Company (NPC) and National Iranian
Oil Refining and Distribution Company
(NIORDC) – as well as the Office of Deputy
Minister for Engineering, Research
and Technology. The priorities include
completing the production capacity
and startup of SP13, SP14 and SP22-
24, enhancing crude oil production
capacity in West Karoun’s joint oil fields,
building the Goureh-Jask pipeline and
a crude oil export terminal in Jask Port.
The Khangiran gas gathering center
as the largest gas gathering center in
Iran came online in Sarakhs, while two
projects became operational in the West

Karoun power plant. NISOC developed a smoke-free flare; a 940-tonne top
drive is installed on Platform 18F of the Forouzan oil field. This platform
has been designed and built in Iran.
Enhancing the gas recovery capacity and the sustainable production period in SP4
using perforation operations in the K reservoir layer, perforation of the K1 layer
(in 11 wells) and acid job (in 9 wells) were carried out. Platform 14B was loaded out
from the Iran Shipbuilding & Offshore Industries Complex Co (ISOICO) yard in
Bandar Abbas.
Summer, Oil Installations and Tankers Apart from the seizure of an Iranian
oil tanker in Gibraltar and the seize of Britain’s Stena Impero tanker by Iranian
navy forces, OPEC+ countries (OPEC and non-OPEC allies) agreed to extend their
previous agreement for a 1.2 mb/d cut from their output up to March 2020.
For the first time in Iran’s shipbuilding industry, ISOICO managed to overhaul an
Iranian very large crude carrier.
Installation of a 500-tonne structure of Platform FY-B in the Forouzan field,
repairing VGVC in the SGT turbine, composing for the first time in Iran by
NISOC, using internal coating technology in coiled tubing and casings for the first
time in the Masjed Soleiman oil field development project, overhaul of two oil
mobile transporter (MOT) and one mobile oil separator (MOS) units for the first time
by engineers at the Karoun Oil and Gas Production Company, designing defective
parts of a solar turbine by the Aghajari Oil and Gas Production Company engineers
were among developments at the start of this season. The third platform of SP14
was installed.
The Exploration Directorate of NIOC announced that it had started in partnership with an Iranian- European consortium gravimetric and magnetometric data gathering
in the Kopet Dag area in Khorasan  Razavi Province. The Parsi field gas
gathering project received the Energy  Globe Foundation award while NISOC
announced that the UPS system of the gas injection station of the Aghajari
Oil and Gas Production Company, as well as the subsurface valves of Well
No. 313 of the Masjed Soleiman field had been repaired domestically. As
far as environmental projects are concerned, the South Zagros Oil
and Gas Production Company brought the 44-kw Sarvestan and Saadatabad photovoltaic power
plant on-stream, while five troughs were prepared for wildlife living in the
Parsian area.
Meantime, more than 500 items of  commodities required by the petroleum industry were built or repaired during the first four months of the calendar year. The West Oil and Gas Production
Company said that in addition to repairing the Nafthshahr desalination reboiler,
part of the Cheshmeh Khosh pipeline was renovated.
The company’s engineers have developed a system to test automatic safety valves. Once a ownhole pump is  installed in Well No. 4 of the North Yaran field, over 1,000 b/d would be added to the field’s output. In South Pars, in addition to commencement of storage
at four propane and butane tanks for the refinery of SP19, the platform of
SP23 and the flare support of Platform 13A were loaded at SADRA yard. The
riser of oil pipeline in Platform R4 of the Reshadat field was replaced and
the solar turbines detection system in Salman field platform was renovated.
A new 100,000-tonne single-point mooring was installed in the area run by the Fajr Jam gas refining company in order to enhance the loading capacity of gas condensate. Well No. 30 of the
Aghajari field became operational and the  Aghajari Oil and Gas Production Company
announced that 1,563 items used in processing equipment had been built. In
the last month of  summer, as planned previously, the overhaul of many installations run by the
Iran Central Oil Fields Company (ICOFC) was over. The South Zagros Oil and Gas Production
Company started operating its fire and gas detection system.
In South Pars, the main power supply post of the onshore refinery of SP14 was
launched, while Pars Oil  and Gas Company (POGC) signed an agreement
with Petropars for developing Belal gas field. At the Iran Oil Terminals Company
(IOTC), Iranian
engineers managed to overhaul and launch Haft-e Tir tugboat. A project for reinforcing the
berthing structure of Platform PLQ of the Belal field, reducing the weight
of the Norouz 1 oil platform in Bahregan, four reparation,
reconstruction and renovation projects in the Siri area were launched aimed at
production sustainability. The top drives of platforms 7 and 8 of the Hendijan
field, weighing 1,000 tonnes each, were loaded  from the ISOICO factory in
Bandar Abbas. At the end of  summer, major installations of Saudi oil giant Aramco
were attacked, which were the 

most severe event since the Persian Gulf
War. The attacks on Aramco’s facilities
that halved Saudi oil output sharply
pushed up crude prices.
Autumn, Oil Deals and Discovery
The first offshore coupling connected to
single-point mooring at IOTC was repaired
while the first rotary actuator needed in
oil and gas industry valves was built by
the Pars Special Economic Energy Zone.
The first hydraulic pump was developed
by Iranian drilling experts. Development
of the giant South Azadegan oil field
was officially awarded to the Arvandan
Oil and Gas Production Company. In
South Pars, the main Platform 23 and
the satellite Platform 24B were headed
to the Persian Gulf for installation in
their predetermined location. Minister
Zangeneh visited Moscow to attend the
21st ministerial meeting of Gas Exporting
Countries Forum (GECF). He announced
in the first month of autumn that
Petropars would go it alone in developing
SP11 following the pull out of France’s
Total and China’s CNPCI. The agreements
for making 50 pumps needed in the
Goureh-Jask oil pipeline, worth about
€ 48 million, were signed between the
Petroleum Engineering and Development
Company (PEDEC) and Pumpiran and
Petco. The NIOC Exploration Directorate
signed two seismic testing agreements
with two Iranian companies. One was
with the Oil Exploration Operations
Company for implementing 2D seismic
testing and the other one with Tenco for
3D seismic testing. National Iranian Oil
Company (NIOC) announced a new gas
find in the southern Fars Province. The
Eram field with 19 tcf (540 bcm) of gas
reserves in place, 13 tcf of which would
be recoverable. An Iranian oil tanker was
struck with a rocket just 60 miles from
Jeddah Port. It was towed into Iranian
territorial waters after ten days.
Minister Zangeneh announced the
discovery of a new oil reservoir, i.e.
Namavaran. Exploration operations had
started in 2016 by applying the most
advanced methods and drilling three
wells. That added 22 billion barrels to
the country’s oil reserves in place and 2.2
billion barrels to recoverable oil.
The first and deepest ever directional
well was drilled in Kajdomi Formation of

the South Azadegan oil field. Platform of
SP23 and Platform 24B were installed. Gas
production from the Sarajeh and Shourije
underground storage sites started. PLC
systems were installed on Well No. 44
of Khangiran, while smart pigging was
concluded there. The 177th meeting of the
Organization of the Petroleum Exporting
Countries and their allies was held on oil
output cut. They agreed to cut another
503,000 b/d from their total output. An
extraordinary ministerial meeting of GECF
member states was held in Equatorial
Guinea. Other developments in the final
month of autumn included the reparation
of machinery and some parts of mud
pumps on the location of Fath 33 rig to
prevent any halt in operations, successful
driving of the completion string of the
first development well in the drilling of
40 wells in South Azadegan and providing
auxiliary services and installing air
hose, rebuilding and re-launching the
turbopump of production unit number
3 in the Aghajari Oil and Gas Production

Company, launching an environmental
project for gathering gas waste in the
Karoun Oil and Gas Production Company,
enhancing the output of the Khangiran

area by 1 mcm/d, inaugurating a low-
pressure gas gathering project, saving

the country more than 700,000 dollars,
conclusion of overhaul of 22 gas platforms
in the South Pars gas field, installing
the structures of platforms 23 and 24B,
and increasing the condensate storage
capacity of South Pars.
Winter, Corona Outbreak and Oil
Crash
PEDEC announced that studies and
screening by the Petroleum Engineering
Institute of the University of Tehran on the
Azadegan field have proven the capability
for a 10% increase in the recovery rate
of the oil field Iran shares with Iraq by
applying enhanced oil recovery (EOR)
methods. NISOC announced that the
studies jointly conducted by universities
and research institutes on the six fields

of Ahvaz, Karanj, Koupal, Mansouri,
Gachsaran and Bibi Hakimieh had
resulted in significant results. The S1
wellhead platform of the Salman field,
built domestically, was loaded out in
Khorramshahr Yard and pipe-laying for
gas projects in South Pars were over. Gas
recovery from top drive 14B started. The
last offshore platform of SP14 was loaded
out in SADRA Yard and the third platform
came online. The novel coronavirus
outbreak hit international headlines. The
overhaul of the Hangam gas processing
installations ended while the satellite 14D
platform was installed. The last flare of
the gas platform of SP22-24 was turned
on and the 24B platform became ready
for gas recovery and delivery to refinery.
The Khazar Exploration and Production
Company (KEPCO) adopted a plan for
testing wells in the Sardar-e-Jangal field to
be presented to the NIOC Department of
Incorporate Planning. In northeast of Iran,
a new well with a production capacity of
more than 1.3 mcm/d became operational

in Khangiran. An agreement was signed
between NIOC and power utility MAPNA
for increased production from Parsi and
Paranj fields. Well No. 44 of the Parsi field
came online by using for the first time
the gas lifting technology. The Fath 72
drilling rig, built by the Academic Center
for Education, Culture and Research
(ACECR) was unveiled by Minister
Zangeneh in Ahvaz. It was the 6th rig built
by Iranian manufacturers. The agreement
for a skied-mounted processing unit in
the South Azadegan oil field was signed
between PEDEC and ACECR under a
build-operate-transfer (BOO) deal. The
178th meeting of the OPEC Conference was
held in Vienna without any agreement
between OPEC and non-OPEC allies.
Oil prices started a downward trend.
NIOC continues to follow up on various
overhaul and reconstruction projects,
including the overhaul of three gas
injection compressors in the third
train of oil installations in Darquain.
IOTC also announced the development
of an automatic sampling system in

partnership with Iranian knowledge-
based companies. In Kharg, a 2.4km

pipeline was inaugurated to carry fuel
to the power plant there. In Lavan, the
deoxygenation tower of steam boilers
was installed and made operational
while the input and output pipes of
the desalination unit of the Salman oil
processing plant were replaced. The
coronavirus was a gatecrasher from which
Iran’s petroleum industry was not spared
either. The Petroleum Ministry, NIOC
and its subsidiaries adopted plans for
countering the impacts of Covid-19. The
Emergency Conditions Committee raised
the alert level to 3. In South Pars, Platform
13A and its structures were installed and
the last platform of SP22-24 started gas
production to be delivered to its onshore
refinery. The wellhead platform S1 was
installed in the Salman field and the first
phase of gas sweetening in Asmari came
online. On the final day of the year, the last
platform in the SP14 development project
came online. Several days before the
start of the new calendar year, Zangeneh
banned any leave for operational
managers in the petroleum industry
companies as long as the coronavirus has
not been contained, except for emergency
purposes.

Waiting for Red Ribbon

I
ran’s petrochemical industry is known
to be a major generator of hard currency.
Everyone attest to the significance of paving
the ground for the development of this sector.
The petrochemical industry has witnessed
ups and downs over recent decades. On its way to
reach its current status, the industry has left behind
threatening conditions. The petrochemical industry
has been meeting domestic needs in addition to
contributing to strengthen Iran’s standing in the
regional and global markets. Despite widespread
structural changes, numerous management and
planning, the industry has successfully emerged out
of the conditions of sanctions. Today, as sanctions
are getting tougher, the petrochemical industry
remains on the front line of the economic war. A large
number of projects have been envisaged over recent
years in the petrochemical sector; however, due
to changes in the management, lack of capital
and government support and absence of
foreign investors have come to a halt.
Efforts got under way under the 11th
administration to determine the
fate of these projects. That
was when petrochemical
managers defined
three periods for
the development
of the

petrochemical sector, known as three jumps. The
first jump happened in the 1990s and 2000s when
Iran’s petrochemical potential was better known at
the national and international levels. The second
jump covers the 2013-2021 period, during which
42 projects would have come online. Twenty-seven
projects are under way and the rest have already
come on-stream. The second jump would cost $17
billion. But the bulk of petrochemical projects are
envisaged for the third jump, i.e. 2017 to 2024. For
this period, a total of 28 projects are envisaged to
become operational. All of them are currently under
operation with a final output of 133 million tonnes.
The third jump is estimated to need $23 billion in
investment. The Petroleum Ministry is making every
effort to provide this amount of investment against
the backdrop of sanctions. The second and third
jumps are part of the 5th and 6th five-year economic
development plans. The petrochemical industry and
the economic sector have mutually boosted each
other.
Presidential Praise
Iran’s last calendar year was very tough for the
petrochemical industry; however, petrochemical
plants managed to fulfil their obligations and win
praise from President Hassan Rouhani.
Rouhani said: “The enemies imagined that
if they curb Iran’s oil income, the country’s
hard currency income would be disturbed and
therefore they exerted pressure on crude oil.
Nevertheless, all industrialists and entrepreneurs
including petrochemical industrialists who were
on the frontline, jumped to the fray.” He said that
petrochemicals’ revenue was the most important
source of non-oil income. Citing a Central Bank
report, Rouhani said: “The petrochemical
industry supplies 20% of the country’s

hard currency needs and 50% of banks’ hard
currency needs.” “It shows that the petrochemical
industry is on the frontline and when an industry is
on the frontline, we need to support it,” he added.
Rouhani called on the parliament, judiciary and
public opinion to endorse the petrochemical industry
as it is shouldering a heavy burden. Last calendar
year to 19 March2020, a number of projects were
about to come on-stream, but only the second phase
of the Takht-e Jamshid Petrochemical Plant became
operational. The other projects are to be inaugurated
in the current calendar year.
The second phase of the Takht-e Jamshid project
was aimed at putting an end to Iran’s dependence
on raw materials imports for tire manufacturing
at the Mahshahr Special Economic Petrochemical
Zone. The project was inaugurated in the presence of
Vice-President for Science and Technology Sourena
Sattari and CEO of National Petrochemical Company
Behzad Mohammadi. It is the largest supplier of raw
poly-butadiene rubber (PBR), the raw material for
tire production. Now, this plant would have an annual
production capacity of 55,000 tonnes of PBR.
Waiting for Inauguration
Petroleum Minister Bijan Zangeneh had said that
five petrochemical projects were about to come
on-stream. He said the first phase of the Bushehr
petrochemical plant’s olefin project, the Ilam olefin,
the Sabalan methanol, the Lordegan urea and
ammonia, the Miandoab petrochemical plant and
the Bid Boland gas refinery were set to become

operational. They are currently in the phase of trial-
run, waiting to come online. The NPC has said that

the Kaveh methanol petrochemical plant, the Bushehr

plant and the Ilam olefin would soon come on-
stream. The first phase of the Bushehr petrochemical

plant would have a capacity to produce 4.111 million
tonnes of products in Assaluyeh. The first phase of
the Bushehr petrochemical plant has various sections
for gas sweetening, ethane recovery, methanol
production as well as water and oxygen production.
The Kaveh methanol plant, as the largest methanol
project in the world, will have a big share in the
country’s petrochemical output with an annual
production capacity of 2.31 million tonnes. This
project enjoys the advantage of proximity to sea and
having a specific jetty for exports. The second phase
of the Ilam petrochemical plant will come online with
an annual production capacity of 800,000 tonnes of
ethylene, pyrolysis gasoline propylene in chemical
and polymer grades, as well as liquid
fuel. The Ilam petrochemical plant is
the largest petrochemical plant in

western Iran in terms of extent, production capacity
and the number of processing units. It can inject
150,000 tonnes a year of surplus ethylene to the West
Ethylene Pipeline.
Year of Inaugurations
A number of petrochemical projects are expected
to become operational in the current calendar
year. The Sabalan methanol project, the Lordegan
petrochemical project and the Masjed Soleiman
petrochemical project are set to come online in the
first half of the year. The Sabalan project is being built
on 7 ha of land in the second phase of the Pars Special
Economic Energy Zone for the production of 1.65
million tonnes of products. The Sabalan methanol
project faced delays due to the lack of cooperation on
the part of licensor in supplying catalysts. But finally
due to the cooperation of the Petrochemical Research
and Technology Company (PRTC), it is about to come
online. The Lordegan petrochemical plant with an
annual capacity of 1.755 million tonnes in Chahar
Mahal and Bakhtiari Province is expected to produce
ammonia for both domestic production of urea and
for direct supply on the market. The Bid Boland-3
project is designed to gather associated gas in
southeastern Iran in order to save national assets and
help reduce air pollution. The products of this plant
would be methane, ethane, propane, butane, acid gas
and condensate.
The Masjed Soleiman urea
and ammonia project is
designed to produce
660,000 tonnes a year
of ammonia and 1,073
tonnes of urea. It
would be fed with
861 mcm/y of
natural gas.
The plant is
located on 50
ha of land in
Khuzestan
Province.

Flooding Iran’s last calendar year began with massive
flooding. A number of provinces in southern,
western and northern Iran were inundated.
NIGC’s subsidiaries had been warned against possible
flooding beforehand, so all those areas were on alert.
Luckily, no accident was reported in the gas supply
network. Furthermore, upon request of the Crisis
Committee of the Ministry of Interior, Bijan Zangeneh
the petroleum minister instructed the NIGC to deliver
700 meters of gas pipe for being used in Golestan
Province in northern Iran to help flood-stricken people
in the province. In addition to providing services in
the gas sector and in compliance with the NIGC social
responsibility policies, gas industry staff distributed
necessary items among flood-stricken people.

Fiber Optics MOU
A memorandum of understanding was
signed between the Iran Gas Transmission
Company and the Iran Oil Pipeline and
Telecommunications Company for exchanging
fiber optics with a view to boosting the telecom
infrastructure of the Petroleum Ministry for
the purpose of economic resilience, increased
productivity, reduced costs and avoiding overlap in
operations.

Strategic Commodity Made
in Iran
The knowhow for developing vibration

monitoring and protection systems (a high-
tech strategic product) is to be developed

domestically. The technology for such systems was
monopolized by the world’s top brands. The decision
for developing this technology was the challenge of
purchasing such systems from foreign companies
to be used in the oil and gas industry equipment,
particularly rotary machinery. Once this system
has been domestically manufactured, Iran’s gas
transmission network would no longer depend on
purchasing from abroad. Moreover, it would cost
about one-twentieth less than foreign prototypes.

NIGC Research Project
Last month of the last calendar year to 19
March 2020 saw research events in the gas
industry. The research project “boosting
maintenance management system and
reparation in line with obligations of management
of physical assets at IGTC” was recognized as the top
research project by the Ministry of Science, Research
and Technology.

2nd Phase of Ilam Gas
Refinery
The second month of last calendar year started with
news about developments in the gas industry. Iran’s
24th annual Oil Show was also held in this year. NIGC
assigned building the second phase of the Ilam gas
refinery to the Iran Gas Engineering
and Development Company. Once
the second phase of the Ilam refinery
is commissioned, feedstock supply
to the facility would increase from
6.8 mcm/d to 10.2 mcm/d with
production set to increase 50%.

Gas Development in Sistan
& Baluchestan
The infrastructure was prepared for gas
distribution in Sistan &
Baluchestan Province. About
IRR 5,200 billion in credit was
earmarked for expanding gas
distribution in the province.

119 Gas Projects in West
Azarbaijan
Concurrently with President Hassan Rouhani’s
visit to West Azarbaijan Province,
operations began for 119 gas
supply projects in the northwestern
province. The 110 projects would
cost more than IRR 620 billion.

Gas Supply Projects
On the 41st anniversary of the victory of the Islamic
Revolution, 3,000 gas supply and development
projects came online with a credit
allocation of IRR 190,000 billion.
At the same time, the operation of
12 gas transmission lines started
and 579 kilometers of pipes came
online. Furthermore, construction
operations started for another 159
kilometers of new pipeline.

Last calendar year saw Iran’s oil refining industry take important steps towards development and self-sufficiency. The refining
industry has signed memorandums with the Petroleum Ministry and some other ministries and bodies. One of these MOUs was on
producing needle and sponge coke at the Bandar Abbas and Imam Khomeini oil refineries. They were signed between National
Iranian Oil Refining and Distribution Company (NIORDC) and Iranian Mines and Mining Industries Development and Renovation
Organization (IMIDRO) with a view to putting an end to Iran’s sponge coke imports. Another achievement of the oil refining industry
is full commissioning of phases 1, 2 and 3 of the Bandar Abbas gas condensate refinery, generally known as the Persian Gulf Star

refinery. Some 70% of the equipment used at the condensate refinery was made in Iran.

NIGC Activities Review

Inauguration in Rapid Succession

Mehdi Mehrabi

Technical
Knowhow to Repair
Siemens Turbines
Iranian engineers at NIGC have developed the
knowhow needed to repair the vibration section
of gas turbines manufactured by Siemens. It was
part of preventive maintenance projects in the gas
industry. That would save € 350,000 per turbine
as Iran would no longer depend on foreign expert

services for gas turbines.

Mideast Largest
Storage Site
Seven natural gas storage sites were said to
have been envisaged in Iran. The project for the
Shourijeh underground gas storage site would
be a build-operate-transfer (BOT) one. The
first appraisal wells for this purpose had been
drilled in Qezel Tappeh storage site in Golestan

Province.

IGAT9 Online
NIGC announced that 125 kilometers of the
Iran Gas Trunkline 9 (IGAT9) with a capacity
of 60 mcm had come online. Near the under
construction IGAT6, the IGAT9 is being
extended from Bid Boland to the Bazargan
border post in order to supply gas to the
western corridor.

Gas Decompressors

The winter began with news about self-
sufficiency and domestic manufacturing of

items and equipment used in the gas industry.
The first decompressor was installed at the city
gas station (CGS) of the Tehran Province Gas
Company. These decompressors could be moved

to other spots.
 

The second month of last calendar year started with
news about developments in the gas industry. Iran’s
24th annual Oil Show was also held in this year. NIGC
assigned building the second phase of the Ilam gas
refinery to the Iran Gas Engineering
and Development Company. Once
the second phase of the Ilam refinery
is commissioned, feedstock supply
to the facility would increase from
6.8 mcm/d to 10.2 mcm/d with
production set to increase 50%.

Gas Development in Sistan
& Baluchestan
The infrastructure was prepared for gas
distribution in Sistan &
Baluchestan Province. About
IRR 5,200 billion in credit was
earmarked for expanding gas
distribution in the province.

119 Gas Projects in West
Azarbaijan
Concurrently with President Hassan Rouhani’s
visit to West Azarbaijan Province,
operations began for 119 gas
supply projects in the northwestern
province. The 110 projects would
cost more than IRR 620 billion.

The knowhow for developing vibration

monitoring and protection systems (a high-
tech strategic product) is to be developed

domestically. The technology for such systems was
monopolized by the world’s top brands. The decision
for developing this technology was the challenge of
purchasing such systems from foreign companies
to be used in the oil and gas industry equipment,
particularly rotary machinery. Once this system
has been domestically manufactured, Iran’s gas
transmission network would no longer depend on
purchasing from abroad. Moreover, it would cost
about one-twentieth less than foreign prototypes.

Inauguration in Rapid Succession

Last calendar year saw Iran’s oil refining industry take important steps towards development and self-sufficiency. The refining
industry has signed memorandums with the Petroleum Ministry and some other ministries and bodies. One of these MOUs was on
producing needle and sponge coke at the Bandar Abbas and Imam Khomeini oil refineries. They were signed between National
Iranian Oil Refining and Distribution Company (NIORDC) and Iranian Mines and Mining Industries Development and Renovation
Organization (IMIDRO) with a view to putting an end to Iran’s sponge coke imports. Another achievement of the oil refining industry
is full commissioning of phases 1, 2 and 3 of the Bandar Abbas gas condensate refinery, generally known as the Persian Gulf Star

refinery. Some 70% of the equipment used at the condensate refinery was made in Iran.

Technical
Knowhow to Repair
Siemens Turbines
Iranian engineers at NIGC have developed the
knowhow needed to repair the vibration section
of gas turbines manufactured by Siemens. It was
part of preventive maintenance projects in the gas
industry. That would save € 350,000 per turbine
as Iran would no longer depend on foreign expert

services for gas turbines.

Mideast Largest
Storage Site
Seven natural gas storage sites were said to
have been envisaged in Iran. The project for the
Shourijeh underground gas storage site would
be a build-operate-transfer (BOT) one. The
first appraisal wells for this purpose had been
drilled in Qezel Tappeh storage site in Golestan

Province.

IGAT9 Online
NIGC announced that 125 kilometers of the
Iran Gas Trunkline 9 (IGAT9) with a capacity
of 60 mcm had come online. Near the under
construction IGAT6, the IGAT9 is being
extended from Bid Boland to the Bazargan
border post in order to supply gas to the
western corridor.

Gas Decompressors

The winter began with news about self-
sufficiency and domestic manufacturing of

items and equipment used in the gas industry.
The first decompressor was installed at the city
gas station (CGS) of the Tehran Province Gas
Company. These decompressors could be moved

to other spots.

Fiber Optics MOU
A memorandum of understanding was
signed between the Iran Gas Transmission
Company and the Iran Oil Pipeline and
Telecommunications Company for exchanging
fiber optics with a view to boosting the telecom
infrastructure of the Petroleum Ministry for
the purpose of economic resilience, increased
productivity, reduced costs and avoiding overlap in
operations.

Strategic Commodity Made
in Iran
The knowhow for developing vibration

monitoring and protection systems (a high-
tech strategic product) is to be developed

domestically. The technology for such systems was
monopolized by the world’s top brands. The decision
for developing this technology was the challenge of
purchasing such systems from foreign companies
to be used in the oil and gas industry equipment,
particularly rotary machinery. Once this system
has been domestically manufactured, Iran’s gas
transmission network would no longer depend on
purchasing from abroad. Moreover, it would cost
about one-twentieth less than foreign prototypes.

NIGC Research Project
Last month of the last calendar year to 19
March 2020 saw research events in the gas
industry. The research project “boosting
maintenance management system and
reparation in line with obligations of management
of physical assets at IGTC” was recognized as the top
research project by the Ministry of Science, Research
and Technology.

2nd Phase of Ilam Gas
Refinery
The second month of last calendar year started with
news about developments in the gas industry. Iran’s
24th annual Oil Show was also held in this year. NIGC
assigned building the second phase of the Ilam gas
refinery to the Iran Gas Engineering
and Development Company. Once
the second phase of the Ilam refinery
is commissioned, feedstock supply
to the facility would increase from
6.8 mcm/d to 10.2 mcm/d with
production set to increase 50%.

Gas Development in Sistan
& Baluchestan
The infrastructure was prepared for gas
distribution in Sistan &
Baluchestan Province. About
IRR 5,200 billion in credit was
earmarked for expanding gas
distribution in the province.

119 Gas Projects in West
Azarbaijan
Concurrently with President Hassan Rouhani’s
visit to West Azarbaijan Province,
operations began for 119 gas
supply projects in the northwestern
province. The 110 projects would
cost more than IRR 620 billion.

Gas Supply Projects
On the 41st anniversary of the victory of the Islamic
Revolution, 3,000 gas supply and development
projects came online with a credit
allocation of IRR 190,000 billion.
At the same time, the operation of
12 gas transmission lines started
and 579 kilometers of pipes came
online. Furthermore, construction
operations started for another 159
kilometers of new pipeline.

Iranian Specialists’ Role Prominent

Last calendar year saw Iran’s oil refining industry take important steps towards development and self-sufficiency. The refining
industry has signed memorandums with the Petroleum Ministry and some other ministries and bodies. One of these MOUs was on
producing needle and sponge coke at the Bandar Abbas and Imam Khomeini oil refineries. They were signed between National
Iranian Oil Refining and Distribution Company (NIORDC) and Iranian Mines and Mining Industries Development and Renovation
Organization (IMIDRO) with a view to putting an end to Iran’s sponge coke imports. Another achievement of the oil refining industry
is full commissioning of phases 1, 2 and 3 of the Bandar Abbas gas condensate refinery, generally known as the Persian Gulf Star

refinery. Some 70% of the equipment used at the condensate refinery was made in Iran.

First Refining
Branding in Iran
The Tabriz oil refining company has taken
effective steps towards development. To that end,
three refining projects and related projects came
online last August, costing IRR 54,150 billion. It is the
first refinery in the country to have started activity in
the branding sector. In line with its social responsibility
objectives, it has provided a variety of services to local
people. One such service was the construction of a road
and planting trees to help reduce air pollution.
The refining company also signed agreements
for the construction of a new sulfur production
unit in partnership with the Oil Design and
Construction Company.

Normal
HexaneProduction
The Imam Khomeini refinery in Shazand
has pursued a variety of development plans
ever since it was established. One of these plans
was to develop national knowhow for normal
hexane production for the first time in the country.
Normal hexane is used in the petrochemical and food
industry.The Shazand refinery, albeit with decrepit
equipment, has managed to develop a system for
evaluating catalytic performance. An evolution
has been under way at this refinery. In the last
calendar year, Lavan Oil Refining Company
first cargo of Euro-5 gasoline was loaded
to be dispatched to consumption
destinations.

Euro-5
Gasoline

The Lavan Oil Refining Company was built in
1976 under the name of Lavan Distillation Plant
with an initial capacity of 20,000 b/d of crude oil by a
Yugoslavian company under the supervision of National
Iranian Oil Company. The company has been developing
over these years. Last calendar year, it loaded its first
cargo of Euro-5 gasoline. By making processing changes
in the distillation and gasoline production units and the
operation of the light naphtha isomerization section, it
has managed to upgrade its gasoline from Euro-2 to
Euro-5 grade. Undoubtedly, improving the quality
of fuel including gasoil and gasoline would be
instrumental in improving the quality of air

Needle and
Sponge Coke
A memorandum of understanding was signed last
February for sponge coke production at the Bandar Abbas
oil refinery in the presence of the minister of petroleum and
the minister of industry, mine and trade. Needle and sponge
coke are key items in steel and aluminum industry. Iran used to
import these materials. The feedstock needed for both needle
and sponge coke production is fuel oil that is a major product
supplied by the Bandar Abbas oil refinery. The refinery has
also taken steps towards self-sufficiency and benefiting from
the potential of domestic manufacturers. The refinery
has manufactured over 4,900 items of commodities
it needs. Another instance of success by this
refinery is the receipt of a certificate from
the Global energy Foundation.

18 Loading Platforms
The Isfahan Oil Refining Company, like every other refinery, has had various development projects. It
realized its objective of implementing a 230-KW transmission line and a 230.33 high-voltage post, laying
out pipeline, pumping station and wastewater treatment station as well as loading platforms for light
products during the first months of the last calendar year. For the first time in the country, this company
launched a pipeline for a pumping station and urban wastewater treatment station. This national
environmental project for the industrial use of urban wastewater is under way with a capacity of 750
cubic meters at the Isfahan refinery with a view to cutting the level of drinking water consumption. The
Isfahan refinery has built 18 loading platforms in order to load lobe cuts, solvents and vacuum bottom with
a cost of about IRR 600 billion. These platforms are built in nine rows. The loading platforms handle light
products such as solvents, and six platforms handle heavy products like lobe cuts and vacuum bottom.

Domestic Equipment Use
The Persian Gulf Star refinery is the most Iranian refinery in the country. Over 70%
of the equipment used at this refinery has been domestically sourced and 95% of the
commissioning was done by Iranians. The 120,000 b/d refinery was built in three phases.
The capital needed for the fourth phase of facility was estimated at € 980 million. After
debottlenecking of operating phases, the fourth phase was implemented with € 900 million
and therefore € 90 million was saved. When its third phase came online, the refinery
started having a 50% share in the country’s gasoline output. Moreover, conditions have been
prepared at the refinery for the gasoline produced there to be traded on the Iran Energy
Exchange. As far as social responsibility is concerned, the company plans to build a 264-bed
hospital in Hormuzgan Province for $100 million to serve local residents.

Abadan Refinery Moving Ahead
The Abadan oil refinery is Iran’s oldest refinery.
It was built in 1912 and started work with an
initial output of 2,500 b/d. The facility has since
been through ups and downs. It was among one
of the first refining companies to launch the
IPCMMS system for mechanized maintenance.
IPCMMS belongs to NIORDC. It is available in
22 modules and 3 classes. Over 40 companies

affiliated with the Petroleum Ministry are using 1 this system now. 7