Sanctions, Development and Self-Sufficiency

Kasra nouri
Director General of Public Relations

Iranian people are enduing very difficult days. In addition to the covid-19 pandemic, US sanctions impose a burden. Iran’s Minister of Petroleum Bijan Zangeneh has described the US sanctions as “unprecedented, evil, smart, cruel, unjust and illegal”.

These sanctions, known to be the toughest ever in history, span over all sectors in Iran.  

These unilateral sanctions were slapped despite opposition from most nations and even UN Security Council member states. These sanctions are targeting Iranian people, particularly the Iranian petroleum industry.

The impact of these sanctions on public welfare, health and calm is undeniable given the economic problems caused by it; however, Iran’s petroleum industry has managed over the past eight years to resist sanctions and proceed with its development measures by relying on the knowledge, experience and expertise of Iranian savants.

Successful implementation of projects, discovery of oil and gas fields, operation of petrochemical megaprojects, laying oil and gas pipelines and building major refining projects are just cases in point. The intervention of Iranian experts, knowledge-based companies and contractors in management, design, manufacturing, installation and operation of development projects has yielded results. 

The signing of numerous oil agreements with Iranian companies shows that the contractors active in the petroleum industry have acquired a degree of technical knowhow to bring every sophisticated project into fruition. The outcome of these efforts may be seen in the startup of development projects in the South Pars gas field, particularly because most of them have come online over the past eight years when Iran’s petroleum industry has been under toughest ever restrictions.

With the installation of 37 offshore platforms in South Pars and the drilling of 336 wells, Iran has outdone Qatar in gas recovery from the joint field. Furthermore, Iran has become an exporter of petroleum products, developed its petrochemical industry, and expanded its gas distribution network at the rural and urban levels.

The Islamic Republic of Iran’s policy relies on interaction based on mutual respect, shared interest and peaceful coexistence. The country does not let illegal and illogical political pressure from the US threaten national interests.

This is the basis of Iran’s oil diplomacy. While welcoming cooperation, it will never submit to unjust sanctions and will rather use them as a pretext for development.

Iran's New Platforms Show Off in Persian Gulf

 Production from Hendijan oil field dates back to early 1960s. It is now hosting a new generation of oil platforms that would double its output.

Alireza Salmanzadeh, CEO of Iranian Offshore Oil Company (IOOC), has said Iranian offshore contractors and engineers had totally built and installed the two platforms which would add 20,000 b/d to Hendijan’s output.

Hendijan and Bahregansar platforms are among the oldest offshore platforms in Iran. Iran’s first offshore well was drilled on the Bahregansar drilling platform in 1959. The field started producing 3,200 b/d of oil in 1961.

The Hendijan field has been developed in the Asmari and Bangestan reservoirs. Its oil is rich in H2S. The first stage of processing and sweetening in the Bahregansar platform would be carried out by two strippers. Once water is separated from gas, the oil contained in this field would be delivered to the reservoirs of the Bahregan oil area.

The Bahregansar platform has capacity to process up to 60,000 b/d of oil. However, this capacity has declined due to maximum efficient recovery (MER).

IOOC officials say the field would see its output rise after installation of two new platforms, as well as drilling four new wells and applying secondary recovery.  

Platforms Installed

The two platforms were loaded in Bandar Abbas Yard in September and were installed the following month. The platform was installed with the help of Iranian contractors like Deep Offshore Technology Company (DOT), affiliated with SADRA.

Crude oil sweetening is done on the Bahregansar production platform. Installation of these platforms would provide further access to wells. Furthermore, in light of the existence of wellhead equipment including wellhead safety and control panel, fire warning systems, well control systems and instruments, the wells would enjoy higher safety.

Platform 07 is planned to carry 22,000 b/d of crude oil and Platform 08 is designed for the delivery of 14,000 b/d. Platform 08 is equipped with pigging systems, well test devices, chemical injection processing systems as well as control and safety systems. Installation of the platform would upgrade production safety because up to the current stage, it was being done only with temporary topsides and partial platforms to access the wells. No wellhead control system was available, and controlling any possible accident was difficult.

The new platforms were one of the first new-generation ones in Iran. Production operation is to be done mainly automatically and remotely. Even well test would require no on-site presence. Therefore, quite new equipment has been used. The equipment was mainly foreign-made; however, Iranian manufacturers managed to develop their technology.

In all stages of manufacturing, offshore standards that are among the toughest petroleum industry standards have been respected, and safety concerns have been addressed. If in some cases, it was necessary to ease some restrictions; secondary protection would be made available, first. After installing the power supply section of the Bahregansar platform, subsea cables were connected to the power supply for the full operation of equipment.

4New Wells to Add 20,000 b/d

According to plans, at least four new wells would be drilled in platforms 07 and 08. Currently, the two platforms have 11 wells totally. After drilling new wells and applying secondary recovery methods like water or gas injection or installing downhole pumps, up to 20,000 b/d more oil would be recovered.

Full project description included design and engineering studies, purchase of commodity and installing jackets at the two platforms along with two topsides fitted with processing equipment, production manifolds and current test, pigging facilities, well test separators, chemical injection equipment, well safety and control package, safety equipment and fire warning, helipad and platform integrated safety and control system, manual and automatic valves, laying 4.5 km of pipeline for the transfer of oil from wells to platforms, as well as purchase of 27 kilometers of subsea composite cable for power supply. Each needed a separate management; however, it was awarded to contractor for only €45 million.

In the preliminary stages, based on a basic design conducted by foreign advisors, the detailed design was done by Jam Design and Development Company. It included data gathering, as well as seabed geophysical and geotechnical surveying.

The purchase of commodities and construction of platform jackets was done by Mobin Saze Gostar, an affiliate of ISOICO. The jackets were installed in 2019. Oilfield pipes were also purchased and installed in 2012. When topsides were being built, Iran came under sanctions and it could no longer purchase necessary equipment. However, with the collaboration of domestic manufacturers of equipment this problem was resolved and the topsides were built. Mechanical equipment, instruments and other necessary items were installed. The subsea pipeline was installed by Sa Iran in 2019.

Hendijan Output Set to Rise

Salmanzadeh said with the installation of the two platforms, lifting of wells for artificial production by water injection, oil production level from Hendijan would increase by applying secondary recovery methods.

Operations for the installation of Platform 07 were tougher than for Platform 08 because of the water depth. In addition, as the well’s depth varied from 3 to 4.4 meters, the platform was turned 90 degrees. 

NIGC Chief: Natural Gas Storage a Must for Iran

Underground gas storage is an operation necessitating best-in-class technologies. That would allow for the storage of a key source of energy to be used when consumption reaches its peak.

Investment in gas storage and extending gas storage sites across Iran constitute a key necessity for Iran which is highly dependent on gas.The general mechanism of storage is that in hot seasons, gas is injected into storage tanks to be used in the cold season.

The storage industry has its own technological complications, thereby requiring knowhow and specialized equipment. Due to myriad uncertainties and the unpredictability of the reservoir behavior, gas storage is a sensitive mission assigned to National Iranian Gas Company (NIGC).

Those working in underground natural gas storage sites are faced with high pressure. That requires compliance with safety standards and equipment with knowhow.

Hassan Montazer Torbati CEO of NIGC believes that underground natural gas storage creates a strategic privilege for Iran, due to economic advantages, safety and easy access. In an interview, he said achieving this goal would be a must for Iran which depends on this clean energy for its most basic needs.

The following is the full text of the interview with Montazer Torbati:

Would you please start by telling us about the necessity of natural gas storage and the advantages of this strategic industry?

Most hydrocarbon reservoirs in Iran are located in the southern half of the country with tropical climate conditions. That is while the bulk of population lives in north and northeast and mainly in colder areas far from energy zones. Therefore, we have to provide solid support for sustainable energy supply to these areas so as to be reliable. What happened in winter 2008 in Northern provinces taught us a lesson: not to be content with the huge gas resources lying in southern Iran. Rather, we need to stabilize the energy security in farther areas and resort to reliable solutions for the purpose of energy security when problems arise. Aside from economic advantages over pipeline construction, underground natural gas storage is a reliable option as it brings peace of mind during cold seasons. Storing gas in underground storages to ensure energy supply at peak points is a main advantage of gas storage. In the winter, households see their gas consumption be multiplied. We would need some resources in order to respond to the growing needs of consumers. Furthermore, if pipelines are damaged by natural disasters like flooding or earthquake, we cannot halt gas supply to cities until reparation is done. The storage sites built in the vicinity of big cities would be of help when crises emerge. By extracting from these reservoirs we can supply gas to cities temporarily so that necessary repair is done.

You referred to northeast. Do you have any plans under way in light of gas import suspension?

One of our plans to compensate for gas supply shortage in northeastern Iran is the storage development project in the Shourijeh field. After Phase 1 of underground storage there ended successfully, Phase 2 was planned. Unlike Phase 1 which was an EPC project, Phase 2 is a build-operate-transfer (BOT) one. Operations for drilling the first appraisal well in the "Qezel Tappeh" gas field, 20 km northwest of Gonbad Kavous, have started, which we hope would be a big step in guaranteeing gas supply to local residents. Regarding the significance of development of storage sites in these areas it would be enough to say that with these projects NIGC would no longer have to build pipelines, and gas imports rate would decline further.

Has any arrangements been made for other areas in the country?

In western Iran, studies will begin on the Bankoul and Baba Qir fields by drilling a natural gas well. It might be interesting to know that initial assessments for exploration drilling operations in the Bakoul field started in 1972 to estimate oil reserves. After one well was spudded in Bankoul and two wells in Baba Qir, the wells were abandoned. Pre-feasibility studies on natural gas storage were conducted in 2017. Based on the results of this assessment, an appraisal well was decided to be drilled to study the possibility of underground gas storage in the Bankul field. Moreover, an appraisal well was to be drilled in Baba Qir to study the possibility of gas and condensate recovery from Baba Qir. Gas storage feasibility operations before presenting a plan for the Bankoul development began in 2019 and would continue up to 2023. The feasibility operations for the future development of Baba Qir are also to end by that time.

Are salt domes used for establishing underground gas storages?

The Nasrabad salt dome is located between Qom and Kashan. Following exploration operations in this salt dome, some structures were found that could be developed. In the next stage, a well was drilled and then coring was done in the salt dome. By analyzing the chemical and geomechanical properties and the salt purity we can assess the possibility of natural gas storage there. The results of these studies will be announced soon. I hope that the Nasrabad salt structure could be instrumental in underground storage.

Do you have necessary technology for the successful implementation of these projects?

As you know, our options for underground gas storage include hydrocarbon reservoirs, water tables and salt domes. In the country we have necessary technology to handle wells and do storage in hydrocarbon reservoirs. But as far as storage in water tables and salt domes is concerned, we need to upgrade our knowhow and technology. For this purpose, contractors are required to have foreign proprietors of technology alongside them.

Iran Measures in Oil and Gas Storage

Nadi Saboori

When we need a commodity we may purchase more than we need and store it somewhere. In as much a big market as crude oil and natural gas, the simple process of storage is largely complicated. The possibility of oil and gas storage directly affects state revenue. When oil prices started falling in 2014, one of the most important indices highlighted in oil analysis reports was the volume of commercial crude oil, which clearly shows the significance of storage.

According to official data from the Organization of the Petroleum Exporting Countries (OPEC), Iran sits atop the third largest oil reserves among member states. Iran holds 155.6 billion barrels of recoverable oil. OPEC members hold more than 75% of the world oil reserves. 

One of the most important projects pursued in Iran in terms of crude oil storage is to construct strategic crude oil storage sites. The Petroleum Engineering and Development Company (PEDEC) is following up on this project which involves building metal and concrete storage tanks for the purposes of “preventing production-related fluctuations”, “avoiding the necessity to reduce production under emergency conditions”, “sustainable and continuous production” and “increasing crude oil exports if need be”.

This project was so important that in 2019, deputy managing directors of National Iranian Oil Company (NIOC) and senior PEDEC managers visited the crude oil strategic reserves project twice in several months.

Reza Dehqan, deputy CEO of NIOC for development and engineering, visited the Goureh and Omidieh crude oil strategic reserves project. He expressed hope that the project would come on-stream as soon as possible.

The crude oil strategic reserves project comprises two phases. Phase 1 includes building 3-million-barrel metal storage tanks in Siri, Bahregan and Ahvaz, and Phase 2 includes building eight concrete storage tanks to storage 5 million barrels. These tanks would be located in Omidieh in Khuzestan Province.

Upon NIOC instructions, PEDEC signed agreements with two Iranian firms in October 2018 to build storage tanks in Jask.

According to NIOC data, these tanks have been located on 5,000 of land, lying 65 kilometers west of the city of Jask for oil, gas, refining and petrochemical projects over three years. Totally, 10 million barrels of light and heavy crude oil would be stored in 20 storage tanks, each having 500,000-barrel capacity. The storage tanks would keep oil for exports in addition to pumping oil to offshore pipes and single-point moorings.

Iran Oil Market Influence

In Iran, implementing crude oil storage projects is part of a chain of strategic projects. The projected construction of 20 storage tanks for light and heavy crude oil in Jask is also part of long-term projects in Iran for diversification in the crude oil export spots, as well as development of Makran.

Oil and gas market has been subject to drastic changes over recent years. Particularly after shale oil producers emerged, crude oil producers felt the need for tools to manage crude oil exports. In Iran, which is under US sanctions, higher capacity of crude oil storage would mean an upper hand in selling oil at the time of embargo.

Under the economic resilience policy which has been pursued in recent years, the petroleum industry is playing a significant role. Of a total 24 principles enshrined in the economic resilience policy, three principles pertain to the petroleum industry. Iran hopes to increase its strategic oil and gas reserves in a bid to boost its clout with the oil and gas market owing to its special geographical location.

Natural Gas Storage

Iran is also home to huge natural gas reserves. According to BP’s annual data, Iran has 31 tcm of recoverable natural gas, i.e. 16% of total world reserves. Iran comes second after Russia in terms of gas reserves.

Meantime, Iran is among few nations where natural gas, a clean fuel, makes up the bulk of its fuel mix. Currently, about 99% of Iranians are connected to natural gas network and further extension of gas trunklines is under way.

Given the necessity of controlling gas production fluctuations and compensating gas shortages in Iran, gas storage projects have become operational since years ago. One of these projects was the construction of underground gas storage in Sarajeh, Qom. This facility is located 40 kilometers from Qom and 165 kilometers from Tehran.

Ramin Hatami, CEO of Iranian Central Oil Fields Company (ICOFC), has said 1.026 bcm of gas was injected into this tank in 2018. ICOFC is one of the main oil and gas producers affiliated with NIOC.

Hassan Montazer Torbati, CEO of National Iranian Gas Company (NIGC), has said that construction of new underground natural gas storage had started simultaneously with the development of natural gas production in the giant South Pars gas field. NIGC is eying seven new underground gas storage projects in various provinces, which would be the largest underground gas storage facilities in the Middle East.

Building underground gas storages requires special turbocompressors for gas injection.

Another underground gas storage project is to develop the Shouriej underground gas storage, which is located 180 kilometers from the northeastern city of Mashhad.

Gas Storage Ended Turkmen Gas Imports

Montazer Torbati, touching on the significance of underground gas storage in energy policymaking, said: “Storing natural gas sufficiently in the country is an NIGC strategy. The annual gas storage has to conform with the amount of gas transmission in the network and the length of gas trunklines. Currently, gas storage in the Sarajeh and Shourijeh underground storages, as the only underground storages, is not homogenous.”

The policies adopted in recent years for developing gas storage in Iran have paved the ground for receiving gas from underground gas storage facilities. Therefore, in cold winters, a halt to Turkmenistan’s gas supply to Iran would not cause any problems.

Due to its geographical location in northeastern Iran, the Shourijeh gas storage facility is a major tool in the hands of East Oil and Gas Production Company (EOGPC) in order to supply the needs of six provinces in northern and northeastern Iran.

Ahmad Rajabi, director of production at ICOFC, has said the Shourijeh underground gas storage facility put an end to Iran’s dependence on Turkmenistan’s gas in 2019 thanks to 33% increase in the underground gas storage capacity.

According to official data, during the first eight months of last calendar year (ended on 19 March 2020), 869 mcm of gas was injected into Sarajeh and 1.449 bcm to Shourijeh D.

Montazer Torbati recently said feasibility studies had begun on underground natural gas storage in the Baba Qir and Bankoul reservoirs, located in western Iran, and pre-feasibility studies for gas storage in the Mokhtar reservoir in southern Iran. Furthermore, the feasibility study on gas storage in Nasrabad in Kashan is in its final stage with its storage capacity earlier said to be 3 to 4 bcm.

IGAT-7 and Makran Coastal Development

 Sistan and Baluchestan Province has become the gateway for Iran’s gas exports to East after the startup of the Iran Gas Trunkline-7 (IGAT-7), thereby adding to the strategic importance of the region.

Completion of the main trunkline and extension of gas supply networks in this province are under way with a good rate of progress. Iran’s petroleum industry has been instrumental in the development of the Makran area and the livelihood of its residents. However, the important point in the development of this region is the petrochemical industry in Makran. Energy analysts believe that as soon as gas reaches Sistan Baluchestan Province, Makran would become conducive to petrochemical plants thanks to proximity to high seas. That would bring about major developments in the economy of the area.

Prior to building IGAT-7, studies had started on establishing petrochemical plants in Makran. However, due to the lack of infrastructure, no action was taken. In the initial plan for the Makran Petrochemical Park in the Chabahar free zone, 18 petrochemical projects were planned to be built in three phases to produce methanol, urea, ammonia, olefin and aromatics from ethane, methane and gas condensate.

With changes in 2014 and 2015 in oil prices and subsequently petrochemical products prices, the Negin Makran Petrochemical Development Co. (NMPDO) decided to study futures markets of petrochemical products and benefit from the viewpoints of international consultants in redesigning the Makran Petrochemical Park as the third petrochemical hub in the country. Therefore, it entered into cooperation with a group of international consultants experienced in designing industrial parks, mainly in the petrochemical sector. It was finally agreed that the Makran Petrochemical Park be designed and built in several phases. In Phase 1, five GTC units, one urea and ammonia production unit and a centralized utility were envisaged. The first phase of GTX units has had 25% progress now. Last June, special equipment for these complexes was brought into Chabahar via ShahidBeheshti Port to be delivered to the Makran Petrochemical Park. GTX plants are often built in three phases. In Phase 1, natural gas is converted into methanol, which would feed the second phase to produce olefins. In Phase 3, downstream olefin derivatives would be supplied. By feeding more gas into petrochemical plants in this area, petrochemical development goals would undergo major changes in terms of quantity and quality. Based on new planning, 30 downstream projects are envisaged in this area, which would enter new and diverse products into the petrochemical mix after the completion of the value chain. Finally, a balanced development in the upstream and downstream sectors as well as completion of the value chain would be achieved.

From IGAT-7 which carries gas from Assaluyeh to eastern Iran for final exports to Pakistan, some connections have been made into Iranshahr, Jask and Chabahar. Gas supply to southern Sistan and Baluchestan, particularly Chabahar, is under way due to industrial plants in the Chabahar free zone. Building a petrochemical plant, steel plants and utilities, power plants and other industries in southern Sistan and Baluchestan, particularly in Chabahar, would need gas. In parallel, the completion of gas supply to this area has given fresh impetus to the private sector to invest in new production units there.

The proximity of these cities to high seas and consumer market, mainly China and India, is a unique advantage. Compared with Mahshahr and Assaluyeh, Iranshahr is about 1,000 kilometers closer to target markets like India and China. Chabahar enjoys a unique position in the region in terms of exports.

$10bn Investment in Petchem Park

In Phase 1 of Makran Petrochemical Park, $10 billion would be invested. Under the current circumstances, widespread efforts are needed for attracting this amount of investment. We have not had already any model similar to the Makran Petrochemical Park anywhere else in the country. The most similar models might be the Assaluyeh and Mahshahr petrochemical hubs, which took shape in late 1990s and in 2000s when the economic conditions in the country were much better.

One area targeted by investment delegations in recent years has been the Makran Petrochemical Park. For instance, in none of foreign trips by President Hassan Rouhani, investment in Chabahar and Makran has been neglected. That is why over recent years, numerous high-ranking delegations from China, India, Spain, Germany, Afghanistan, Oman, Japan and France have visited the park. Some agreements have been finalized with companies from Japan, France and Germany in different domains. Some have started work as contractor or investor.

With new changes in the units of Phase 1 of the Makran Petrochemical Park, the main feedstock for these projects is methane. The Makran petrochemical park is receiving 30 mcm/d of methane.

Construction of IGAT-7, 907-kilometer trunkline stretching from Assaluyeh to Iranshahr, began in 2006. Iranshahr was connected to gas network in 2010. With the approval of the third petrochemical hub in Chabahar after Mahshahr and Assaluyeh and projections for major steel mills and power plants in southern Sistan and Baluchestan Province, the urgency of building a pipeline stretching from Iranshahr to southern Sistan and Baluchestan was felt.

One reason for redesigning the master plan of the Makran Petrochemical Park was to complete the value chain. For instance, in the initial design of the Makran Petrochemical Park, five methanol production plants with a capacity of 1.6 million tonnes a year had been forecast.

A major incentive for investment in the third petrochemical hub is three categories of discount in the feedstock price, which is of high significance to investors; 10% discount in the feedstock price due to the construction of plants in underdeveloped and underprivileged areas, 10% discount in the feedstock price due to completion of the value chain up to the second phase, and 10% discount for completing the value chain up to the third phase. In total, 30% discount is offered in feedstock prices for the petrochemical plants in the future petrochemical parks. That would be decisive for producers and will be considered as an element of competitiveness in internal and external markets. Furthermore, 20-year tax exemption due to location in a free zone, possibility of 100% ownership by foreign investors and the proximity of Makran to Indian and Chinese markets, reduced transportation costs and access to national railroads are among other objectives of this petrochemical site in southeastern Iran.

Gas for Sistan and Baluchestan

The Iranian government has adopted major plans for the integrated development of the Makran coasts and is bracing for a bright horizon. Gas supply to Chabahar would serve the public in addition to supplying the needs of major industrial and export-oriented projects like the Sarbaz cement plant, petrochemical plants in the Makran Petrochemical Park, Makran steel, Chabahar and Konarak power plants among other industries.

Building such giant projects in Sistan and Baluchestan is unprecedented and gas supply could give rise to major developments in the development of the region, as well as job creation.

In addition to petrochemical and steel industries in Chabahar, people in densely-populated areas like Chabahar, Konarak, Dashtyari, Nikshahr, Qasr Qand, Fanouj, Rask and Sarbaz are waiting for gas supply.

This project would end the need for the distribution of LPG and kerosene among local residents, and would also clear the way for taking big strides towards industrialization of the province with an export-oriented approach.

Meantime, the gas supply project to Chabahar has had 50% progress. It is expected to become operational by 2021, which would create 8,000 jobs in Makran. The pipeline can transmit 50 mcm/d of gas, 30 mcm/d of which would be consumed at the Makran petrochemical plants, 10 mcm/d would be fed into the Chabahar and Konarak power plants, as well as other industrial and mining projects, and 10 mcm/d to households.

Gas Transmission Capacity Hits 870mcm/d

There is currently 37,400 kilometers of high-pressure gas transmission pipeline across Iran. National Iranian Gas Company (NIGC) officials say Iran stands the fourth in  the global ranking in this sector. Apart from that, Iran enjoys a stable gas supply system.

Mehdi Jamshidi Dana, CEO of Iranian Gas Transmission Company (IGTC), said recently Iran’s gas transmission capacity had reached 870 mcm/d. During the first five months of the current calendar year, sweet gas transmission in Iran grew 12% year-on-year.

Iran’s current gas production capacity stands at 880 mcm/d, which is forecast to reach 1,000 mcm/d by March 2021. The domestic gas consumption varies between 550 mcm/d and 750 mcm/d.For the distribution of such big volume of gas to domestic and industrial consumers, long gas pipelines have been built in recent years. That is why gas transmission from production to consumption centers has been under way without any halt.

A total of 86 gas compressors along with 316 turbocompressors are installed on a 37,400-km-long high-pressure gas transmission pipeline in order to carry gas to consumers. All of these turbocompressors are not operating; however, in wintertime, maximum gas transmission may require the operation of all turbocompressors in addition to activating spare turbines.

Jamshidi-Dana has said that the 316 turbines serving gas transmission was equivalent to 75% of Iran’s aviation fleet.

The operational phases of the South Pars gas field in the past seven years have brought production capacity in the giant offshore South Pars field to 700 mcm/d from 280 mcm/d in recent years. As a result, the gas distribution network in Iran has expanded and Iran’s dependence on Turkmen gas imports in the winter has ended without causing any halt in national gas distribution.

According to IGTC officials, the company has managed to raise the gas transmission stability to 100 percent in recent years, even registering good records in the gas transmission. For instance, on a single day last February, 816 mcm/d of sweet gas was distributed.

Jamshidi-Dana said the operation of the Iran Gas Trunkline 9 (IGAT-9) in the current calendar year would add another 50 mcm/d to the aforesaid amount.

Gas Transmission Capacity

In September, 99,850 km of IGAT-6 and IGAT-9 along with five gas compressors became operational. Inauguration of the projects would stabilize gas transmission and add 110 mcm/d to the gas transmission capacity.

Furthermore, the South Pars gas production capacity would increase this year, which would require new transmission lines to carry gas to consumers. Therefore, in parallel with planning to raise gas production, the gas transmission network should have enough capacity.

“The current gas transmission capacity is good because the gas produced at South Pars would not increase any further. We forecast another 50 mcm/d gas production, but IGAT-9 would also come on-stream to help us avoid gas retention in South Pars and be able to pump it,” Jamshidi-Dana said.

110 bcm Sweet Gas Pumped

During the first five months of the current calendar year, about 110 bcm of gas had been distributed, up 12% year-on-year. For NIGC, the priority is to prevent any halt in domestic gas distribution and avoid any pressure fall-off. All that has materialized under the aegis of enhanced gas production capacity, and extended gas transmission pipelines.

Meantime, the gas storage capacity rose in the first half of the current calendar year. Gas storage is a routine process in the countries with gas fields with a view to ensuring the stability of natural and processed gas.

Iran runs two major natural gas storage sites in Sarajeh and Shourijeh. Every year, NIGC carries the gas processed at the refineries from across the country to these two sites for storage in order to be used in winter. The general rule for gas storage is to inject gas during eight months of the year to be used during the final four months.

Touching on the increased amount of gas injection into the Sarajeh and Shourijeh storage tanks, Jamshidi-Dana said: “Last [calendar] year, 748 mcm of gas was being injected into the Sarajeh site in Qom, but this year it is up 8% to over 810 mcm. Furthermore, gas storage in the Shourijeh storage site of Sarakhs has increased from 938 mcm last calendar year to over 1.385 bcm, up 48%.”

He said gas storage at these two sites would be of great help in the stability of gas distribution during winter.

Sanctions Turned Into Opportunity

Iran’s petroleum industry has been slapped with toughest ever sanctions following the US’s withdrawal from the Joint Comprehensive Plan of Action (JCPOA) in May 2018. In the face of such conditions, the petroleum industry has turned the threat of sanctions to an opportunity.

IGTC officials maintain that the sanctions served as an opportunity both during the 2010-2011 period and during the past two years. For instance, 105 turbines used by IGTC were supplied by European and US companies.

Foreign companies were forced by US sanctions to leave Iran and even stop their technical and engineering services cooperation with Iran. In some cases, foreign companies even declined to reply Jamshidi Dana’s emails.

However, gas industry experts have managed to design and develop turbines in order to meet their need in this sector.

“We are currently manufacturing a turbine in Iran, which is originally European,” said Jamshidi-Dana, adding that the Iranian manufacturer was easily manufacturing all parts of turbines. IGTC is benefitting from the services of this company in both production and maintenance and overhaul. As sanctions barred Western companies from offering technical and engineering services to Iran, IGTC turned to East Europe.

Jamshidi-Dana said although East Europe’s technology for turbine manufacturing was imported, IGTC embarked on a campaign for the domestic manufacturing of the turbines.

He said that 105 domestically manufactured turbines were incorporated with the West Europe technology, adding that Iranian companies were manufacturing 85 turbines whose technology comes from East Europe.

He acknowledged that domestic manufacturing of turbines would have some problems, but risks have been assumed.

“If we are to obtain self-sufficiency and manufacture domestically, a group has to assume its risk and here IGTC has assumed this risk,” said Jamshidi-Dana.

27 Petchem Development Projects Envisaged

The CEO of National Petrochemical Company (NPC) has said 27 petrochemical development projects were envisaged, adding that seven of them are under way.

“Studies on 20 accelerative projects in the four propylene methanol, benzene and ethylene branches have been concluded,” Behzad Mohammadi said.

Addressing a ceremony to inaugurate the methanol-to-propylene (MTP) project of Petrochemical Research and Technology Company (PRTC), he highlighted the intelligent development of the petrochemical industry.

“On the path of development of this industry, we have to move towards diversifying the products. The petrochemical industry has to be stable and resilient,” he said.

Noting that five percent of basic petrochemical products were made of propylene, he said: “This percentage will not change even if the projects envisaged for the second and third jumps in the petrochemical industry become operational. That is why accelerative projects have been envisaged in order to develop this industry.”

Mohammadi said the petrochemical industry production capacity had increased from 66 million tonnes to 70 million tonnes in six months.

He added that last calendar year, Iran sold 30 million tonnes of petrochemicals for $15 billion. Of this, 22 million tonnes was exported for $10 billion, while 8 million tonnes was sold domestically for $5 billion.

Mohammadi touched on the trend of increased demand for petrochemicals in the world, saying: “Demand for petroleum products will reach 125% by 2040 when demand for petrochemicals would reach 240%.”

Maroun Meets Oil/Gas Output Target

CEO of Maroun Oil and Gas Production Company Hamid Kavian said the company had fully met its oil, gas and naphtha production targets.

“In oil production, 101% of our targets was met while in the rich gas and naphtha the percentage was 101 and 102.5%, respectively.” he said.

“After implementing projects related to development, workover and extension of wells, the production potential of +6.1 has materialized,” he added.

Noting that gas flaring in the operating installations of the company had declined 50% during the first half of the current calendar year Kavian said: “More than 98% of desalination wastes was injected into disposal wells and mobile oil separators and mobile oil transformers were used for the total recovery of 57,000 barrels.”

“In 73,784 cases, the thickness of pipes and installations were measured in the first half of the year, up 25% year-on-year,” he said.

Touching on other important measures undertaken by the company, Kavian referred to the overhaul of 190 pieces of equipment below 14,000 horsepower, safety of oil and gas pipelines in 35 points and supply of equipment for fighting oil pollution in rivers.

Phase 1 of Goureh-Jask Pipeline due This Year

Phase 1 of the Goureh-Jask crude oil pipeline will come on-stream by the end of the current calendar year to 20 March 2021.

The phase entails the operation of pump stations No. 2 and 4, receiving stations 1 and 2, pigging, as well as the final terminal.

According to the Petroleum Engineering and Development Company (PEDEC), Ali Jafarzadeh, project manager of the Goureh-Jask crude oil pipeline project, said testing the pumping stations, as well as the final terminal starts in December and ends in early February.

He stated that the purpose of launching the first phase is to transfer 350,000 barrels of crude oil, and added: "So far, this phase has made about 70% physical progress and the executive operations are underway according to the plan."

The project manager of the project stated: “The commissioning of sections of pumping stations 1, 3 and 5 is also on the agenda.”

Jafarzadeh noted that this is for the first time in the Middle East that 42-inch gate valves are produced by an Iranian knowledge-based company, adding the total number of the 42-inch gate valves required by the project was 25, and the raw materials were even supplied by local companies.

New Platform at Alvand Field

Sahar-1 drilling rig has been installed near the DPG platform in the Alvand oil field in the Persian Gulf.

The operation was carried out by Iranian Offshore Oil Company (IOOC) and North Drilling Company (NDC) experts.

Ali Khajavi, technical director of IOOC, said: “In light of the necessity of workover of three wells in Platform DPG in the Alvand field, a drilling rig was needed near this platform.”

“However, as the seabed in this area is such that the jackets are likely to go deeper, the IOOC and NDC experts precisely studied  the location before preloading was done for the transfer of the rig.All technical and safety measures were undertaken,” he said.

Khajavi said: “The existence of a thin and quite hard layer between two sand layers would cause a rupture during preloading and installation of jackets. That is hardly controllable. In case it is not controlled on time, the drilling rig will lose its balance and will get upside down.”

“As the jackets of the previous rig did not match Sahar rig and holes cut here were not commensurate with the spud can, the rig was likely to slip towards Platform DPG during installation of jackets, causing irreparable damage.”

Changuleh Talks Finalized

CEO of Oil Industries Engineering and Construction (OIEC) Gholam-Reza Manouchehri has said talks had been finalized with National Iranian Oil Company (NIOC) for the development of the Changuleh oil field.

“In addition to Phase 1 of development of the Azar field, which has reached the final stage, talks have been finalized with NIOC for the development of the Changuleh field,” Manouchehri said.

He said that Phase 1 development of the Azar field development was about to come online.

“By signing the agreement for the development of Changuleh with OIEC, it would be possible to hire part of labor hired in the Azar project in Changuleh.”

Manouchehri said that Phase 2 of development of the Azar field would focus on preserving the production capacity of the field.

He stressed the need for NIOC to apply diverse contract models for upstream oil industry development. “The capital needed in this sector is significant while minimum investment is made in this sector,” he said.

Iran Holds Annual Oil Confab

 Iran’s first annual oil conference was held on October 14 with a view to introducing projects and achievements in the oil, gas, refining and petrochemical industry. The event hosted actors and veterans of the petroleum industry.

The conference was sponsored by the Ministry of Petroleum, Knowledge-Based Economy Committee of Office of Vice-President for Science and Technology and a group of specialized associations and societies.

It was aimed at creating a suitable venue for introducing the latest projects and achievements related to different sectors of the petroleum industry. Banks, investment companies and holdings were also invited so that they would be encouraged to make investment in petroleum industry projects.

The roadshow for this annual trade event has been completed through studying challenges and opportunities and interacting with the private sector. That would definitely serve the interests of private companies in major decision-making and materialization of production growth and economic resilience.

Sina Sanjari, CEO of International Institute of Iran Industrial Research, said the event was held in full compliance with health protocols, including social distancing requirements.

Morteza Pakravan, chairman of Association of Iranian Oil and Gas Drilling Companies, said: “The drilling industry is a key industry in oil and gas exploration and development. It a major challenge in the petroleum industry and the key pillar of exploration and production when it comes to hydrocarbon reserves. The value chain of oil production in this industry is influenced by the activities of this industry as well as all activities of the upstream sector.”

He said that the achievements of the petroleum industry had to be studied from two aspects: one from the standpoint of client and one from the viewpoint of contractors.   

The participants at the event exchanged views about non-oil exports development, banking system and general services as well as the achievements of the drilling industry and its standing.

South Pars, Source of Honor for Iran

 Minister of Petroleum Bijan Zangeneh has said that thousands of billions of dollars in revenue has been produced from the development of the South Pars gas field, describing the giant field as the source of honor for the Islamic Republic.

Asked about delayed production from the refining unit of SP14, he said development of South Pars phases began in 1997 and until 2005 five phases were developed. He added that five more phases were developed under the administration of Mahmoud Ahmadinejad.

Zangeneh said contracts for the development of SP15&16 and SP17&18 were signed under Ahmadinejad, but the recovery was 280 mcm/d in 2013.

In 2010, he said, National Iranian Oil Company signed an agreement for the development of five phases of South Pars while agreeing to fully finance it.

He said that 35 months for a project that had cost $5 billion required huge effort, noting that no foreign company had ever hit such record.

Zangeneh said the Petroleum Ministry had decided to fully bring into operation all 10 projects, while the contractors chosen for the project were all Iranian but with different qualifications. 

Some of them like Petropars had experience of working in SP5 and SP6 or like OIEC had worked alongside foreign contractors. However, some of them had no experience of such megaprojects.

Karoun Oil Output Target Met

CEO of Karoun Oil and Gas Production Company (KOGPC) Gholamreza Mofidi has said the company's crude oil production plan targets for the first half of the current calendar year were met at 101%.

According to National Iranian South Oil Company (NISOC), Mofidi said his company’s output exceeded its planned production during the period despite the difficulties caused by the sanctions and while observing environmental and safety requirements.

He added: "By carrying out repair measures and intensifying control procedures, another valuable achievement was achieved in collecting associated petroleum gas, and the average amount of gas sent to the flare stacks of the Karoun company in the first half of this year decreased by 80% compared to the same period last year to reach less than 3 million cubic feet per day.”

Mofidi also touched on production logistics, saying 220 items of commodities needed in the production process had been manufactured domestically. Moreover, nearly 4,160 items worth more than IRR 400 billion had been purchased.

Ahmad Mohammadi, CEO of NISOC, also said that the company’s subsidiaries had to be ready to return to maximum production..

Contractor Sought for Tehran Refinery Optimization

CEO of the Tehran Oil Refinery Ahmad Khayeri has said that a local contractor was being sought for the optimization of the oil refinery of Tehran.

He said that the project is aimed at upgrading the quality of gasoline supplied by the facility to Euro-5 grade.

“Acquiring technical knowhow, basic design and receiving environmental license from the Directorate of Engineering of the refinery has been done and potential contractors are being assessed now,” he added.

Khayeri said that the Tehran oil refinery had been producing 7 ml/d of clean gasoline, 5 ml/d of Euro-4 kerosene and about 13 ml/d of Euro-4 gasoil since 2012.

“The project for the optimization of the Tehran refinery was near agreement with a Japanese company in 2017, but due to US sanctions the company did not finalize the deal,” he added.

Khayeri also touched on reduced production of fuel oil at the Tehran refinery, saying: “The preliminary technical and economic studies have been conducted and arrangements have been made for getting environmental license.”

SPGC Gas Supply Share to Hit 82%

Development of the South Pars Gas Complex (SPGC) will increase its share of gas supply in Iran to 82%, director of the third refinery of SPGC said.

Mohammad Shafi Mozzeni said SPGC was a strategic facility in Iran, currently accounting for 75% of Iran’s gas supply. 

“According to forecasts, in the near future, 70% of the country’s energy mix would be supplied by SPGC,” he added.

Mohammad Mehdi Hashemi, director of the 9th refinery of SPGC, also said 14,000 mcm/d of natural gas had been produced at this refinery in the first half of the current calendar year.

“The 9th refinery is getting ready for winter after its overhaul was over despite the coronavirus pandemic,” he said.

Hashemi said the overhaul of SP12 had been carried out by a local contractor, as well as local manpower.

He added: “This year, overhaul was one on due time and the quality of contractor was higher than before.”

Hashemi said that all units of SP12 are currently working under favorable conditions, adding that during the first half of the year, more than 47,200 tonnes of sulfur had been produced

Ilam Oil/Gas Output Capacity Set to Rise

CEO of Iranian Central Oil Fields Company (ICOFC) Ramin Hatami said upstream plans were under way to enhance the crude oil and natural gas output of Ilam Province in western Iran.

Speaking on the sidelines of a meeting with a number of the members of the parliament’s energy committee, Ramin Hatami said more than 12 billion barrels of oil in-place is in the province’s joint oil fields, of which 1.1 billion barrels have been extracted from the province's oil reserves, and more than 75% of its recoverable oil reserves still remain.

He pointed to the joint fields of Azar, Changuleh, Aban, West Paydar and Dehloran, which are located in Ilam province, and added: "The Azar field development plan is about to be put into operation.”

Hatami stated that contract negotiations for the development of Changuleh field have been finalized, adding: "The development of Aban and West Paydar fields in the form of a new model of oil contracts is being implemented by the consortium of the contracting party."

He further said that a gas compressor was under construction in Dehloran and Danan fields, and gas associated gas would provide feedstock for the NGL 3100 project which has so far made 50% progress.

Hatami said that through gathering associated gas at the Danan, Azar, West Paydar, East Paydar, CheshmehKhosh, Dehloran and Dalpari fields, 240 mcf/d of associated gas had been saved. In addition to feeding NGL 3100, 1 million tonnes of cytoplus has been also produced, which is equivalent to one phase of South Pars.

Regarding the Danan field, he said that 800 kilometers had undergone seismic testing by an Iranian contractor.

“In this project, 11 wells have to be drilled while access routes, pipes and 10,000-barrel desalination units must be established. So far, one well has reached production and three other wells are being drilled,” said Hatami.

He also touched on one of the most complicated seismic testing projects in Ilam Province, saying: “The 2D seismic testing in Baba Ghir and Bankul had been completed while the 3D seismic testing of Tang-e Bijar and Delavaran fields had started out on 1,560 square kilometers.”

Describing the results of seismic testing conducted so far as promising, he said: “These results show that there is good gas potential in this area, which can guarantee the sustainable supply of gas needed by the Ilam refinery and petrochemical plant in the future.”

New Petchem Investment Methods

 Iran’s petrochemical industry has managed to independently stay afloat over recent years. The industry has been of great help to government by providing hard currency, as the country has been hit by tough sanctions in the past two years.

The petrochemical industry experienced its first jump thanks to the state support. A large number of petrochemical plants were state-funded. Now, in the middle of its second jump, it has provided independent ground for financing and investment. Over recent years, numerous plants have come on-stream by the private sector, new holdings and new methods of investment. The industry is still seeking new methods of investment and financing of new projects.

A major objective sought in the petrochemical industry would be to attract fresh investment for development in this sector.

Iran’s Minister of Petroleum Bijan Zangeneh has already said that some $30 billion needed to be invested in the petrochemical industry over five years in order to bring incomplete projects into operation. He said there was potential for $40 billion investment in the petrochemical sector.

Zangeneh has recommended that new methods be developed for financing petroleum projects, particularly petrochemical ones, so that they would not be abandoned to their own fate. 

“Although the projects are in progress and investors can provide this financing, if we manage to use unorganized investment in the society, completion of these projects and new projects would become possible,” he said.

$400bn Investment Hoped

Zangeneh said $10 billion to $12 billion of petrochemical projects had been finalized. They include mid-stream and downstream projects or olefin chain projects, each costing up to $5 billion.He said olefin projects were worth $40 billion.

Zangeneh also said up to $20 billion could be invested in petro-refinery projects, new refineries, as well as renovation of the existing refineries.

“Investment in the petrochemical and petro-refining projects is generally done by private sector companies, while semi-private companies would boost them,” he said.

Petrochemical companies, at the moment, are enabled to provide the required capital to finance new projects and support production.

In addition to attracting foreign investment, the petrochemical industry is able to show a stronger presence in investment and financing petrochemical projects. To that end, cooperation between the government and the private sector would be instrumental in developing the petrochemical industry. In other words, although the petrochemical industry is incorporated with effective driving force, state support and assistance would be of significant help.

Modern Investment Awaited

Hossein Ali-Morad, director of investment at National Petrochemical Company (NPC), has said new ways were under way to finance petrochemical projects with focus on optimal use of capital market.

This method, he said, would accelerate the financing of third-jump petrochemical projects.

In a recent meeting with banking and financing companies' managers, he said petrochemical projects would represent big potential for investment.

“We need to make optimal use of opportunities existing in the banking system and the capital market,” Ali-Morad said.

He said that the mechanism of establishing project investment fund, private fund, ETF funds and bonds for financing petrochemical projects was being finalized in cooperation with Iranian banks, as well as investment companies. He added that negotiations were under way to explore the best avenues for the good performance of these funds, noting the effective role of petrochemical holdings’ partnership and interaction.

“We have to adopt a national-scale look to use all the existing capacities for the development of the petrochemical industry. The banking system and the capital market can be more influential than ever, thanks to their capabilities,” he said.

Petchem Investment Fund

Ali-Morad had earlier said investment funds were being studied more than a year ago so that their mechanism would be finalized with the cooperation of a financing company and a top trade firm.

“We are in the process of getting permission to use hard currency revenue from the petrochemical industry for financing petrochemical projects. This method is not particular to any specific project. Such fund could fund every petrochemical project,” he said.

Ali-Morad said: “Of course, the relevant mechanism is quite complicated and we need to wait for it to be finalized. However, it may be said it is fully independent of government mechanisms and guarantees. Furthermore, there is no external dependence and it requires the permit of the government and the Central Bank.”

He had said that prioritized projects would be introduced to the would-be fund whose manager would decide on priority projects for the second jump in petrochemical production.

Noting that there would be legal restrictions, Ali-Morad had said hard currency regulations were preventing such measures which were under way for the first time in the country.

“But outside the country, there have been similar ones and there is good experience to that effect,” he said.

Domestic Investment

Several petrochemical holdings, including Persian Gulf, Petrol and Petro Farhang, have taken big steps for investment in this sector and they have major projects under way. Meantime, a number of petrochemical production projects have invested in the development of new petrochemical plants. Therefore, the petrochemical industry has reached a stage to become endogenous. For instance, despite sanctions and economic restrictions, the Persian Gulf Holding has proceeded with its new development projects. Currently, it has several projects under construction worth $10 billion.

Petrol plans to start building four new petrochemical projects with a view to completing the value chain, preventing raw materials’ sales, developing downstream industries, halting petrochemicals and chemicals imports, creating jobs in underdeveloped areas and developing diverse and strategic products. In fact, this holding hopes to invest more than $100 million in implementing four new projects.

The petrochemical industry that has seen major changes over the past two decades has attracted political and economic attention worldwide. This sector has been of great help to the government during tough days of sanctions.

Now given the continued unlawful sanctions and the coronavirus pandemic, the petrochemical industry continues to be more generative.

New Jumps in Downstream Petchem Sector

 Negar Sadeqi

 The head of Petrochemical Downstream Industries Development Office has stated that the downstream sector has made good progress over recent years, thanks to the development of the petrochemical industry. Citing domestic petrochemical sales on the stock market, Marzieh Tahmasbi said the relevant figure had grown 24% year-on-year.

In an interview with "Iran Petroleum", she assured potential investors in the downstream sector of sufficient and reliable feedstock owing to programs devised by National Petrochemical Company (NPC).

The following is the full text of the interview:

What are the main activities of the Office you are running?

The main activities of the Office include preliminary and final feasibility studies (PFS and FS) on downstream projects and introducing them to potential investors and regulating the petrochemical market. Comprehensive PFS and FS studies have so far been conducted on the economic feasibility of downstream petrochemical projects. In other words, the Office conducts feasibility studies to help the private sector. It aims to provide potential investors with a perspective on investment in this sector. The Office is also monitoring the market regularly to make sure that petrochemical products would be supplied sufficiently in the country to avoid any market disruption. In case of any possible shortages, necessary measures would be undertaken for imports in a bid to maintain the market balance.

In 2006, an assessment of the PFS and FS studies conducted by the Office did not bring about a positive feedback. We have held meetings with elites to review the problem. They said that 90% of the problems related to non-development of the downstream industry stemmed from the supply of raw materials.

Do you mean that the most significant factor leading to non-development of the downstream industry was uncertainty over raw materials supply?

I can’t say if it was 90%, but we decided to get into regulating the market for the same reason. However, other factors including the investors’ expectation to receive free raw materials, domestic shortage of some petrochemical products, differences in the exchange rate, tax relief for petrochemical plants without any concession for the downstream sector and completion of the value chain are referred to as the obstacles for the downstream industry development. Or for instance, due to some legal restrictions, petrochemical products’ exports are tax exempted, but the plants selling products on domestic markets would be subject to only 10% tax break.

Then, do you think it would be economical for petrochemical plants to export products?

Yeah, absolutely true! Regarding market regulation in 2016 and 2017 and more specifically in 2018, a minimum was set for petrochemical plants to list on the stock market, or otherwise they would face penalties. Having implemented the project, we have been relatively ensured to supply raw materials, and petrochemical companies can after meeting domestic needs export the remainder. It is noteworthy that this need would face heavy fluctuations due to inaccurate data and foreign exchange fluctuations.

Is there any supply-demand balance now?

A study was conducted by the Office on the existence of a balance between developing the upstream and downstream sectors of the petrochemical industry. It was aimed at figuring out whether there is sufficient feedstock for the downstream industries. The aim of the study was also finding out which sectors would need more investment,  then it came out that with the existing projects and the permits issued by the Ministry of Industry, Mine and Trade for the downstream sector, there is capacity for consuming 15-20 million tonnes of petrochemicals inside the country. In fact, there are numerous companies in all industrial parks that need petrochemicals, but they are not practically active.

Why not practically active?

There are a variety of reasons for their inactiveness. For example, they applied for license only to benefit from the advantages of petrochemicals when petrochemical products were subsidized. I deeply believe that in case of optimization of demand, the market would no longer see any serious fluctuations and it will reach a state of balance. If the Office gets to know precisely the  figure for demand and consumption volume for every single material it can make required planning for the future production and development of petrochemical units with a view to a establishing  a balanced market.

Does it mean that the current downstream plants can produce more than needed in the country?

That’s absolutely right. It’s not a big deal, as it is the same in many other nations. However, the problem is that under normal circumstances these companies would not purchase commodities on the mercantile exchange, while they would jump into the stock market transactions to benefit from their hard currency quota in the light of the depreciation of the Iranian currency. Consequently, supply of raw materials for the genuinely active downstream industry declines, and it would in turn harm real producers. The petrochemical industry should be involved either in exports or in domestic sales.

Some petrochemical products are commercial, but some of them have not been converted into final product, and they are exported at low prices. For instance, we export methanol at $200-400 and in exchange we import methanol products at more than $1,000. Therefore, the problem is that we do not have plants that would help complete the methanol value chain for the supply of higher-value products.

Has the Office taken any measures to remove this challenge and complete the methanol chain?

I need to emphasize that developing the downstream industry will never stop because it’s part of NPC’s plans and objectives. Iran’s petrochemical industry had been developed with existing feedstock, but petrochemical development became targeted in 2018. FS studies on petrochemical industry development have been reviewed thoroughly and specifically new projects were envisaged to supply market needs. Even in the petrochemical projects proposed to the government, it has been demanded that the tax relief privilege granted to petrochemical exporters be modified so that the downstream sector would also benefit from it. That would encourage producers to help complete the value chain for developing this sector. I believe that if such reforms are made so that the final product would tax-free, development of downstream sector and completion of value chain would be improved. The more we move towards completing the value chain, the higher tax relief would be.

Over the past seven years, Iran’s petrochemical production has increased from 56 million tonnes to more than 70 million tonnes a year. How has such production hike contributed to the development of the downstream sector?

Like the upstream sector, the downstream sector has experienced growth over the past seven years. Petrochemical sales have grown significantly on the stock market in recent years to reach 5 million tonnes last year. But if I want to speak about the growth of downstream petrochemical industries over the past seven years, I have to say that legally speaking, the Ministry of Industry, Mine and Trade is in charge of this sector. NPC does not even have precise data about the number of plants active in the downstream sector and their growth.

What percentage of petrochemical products is sold domestically?

The Ministry of Industry, Mine and Trade has to provide such data, but as long as the petrochemical sector is concerned and NPC is involved, in the first half of the current calendar year, petrochemical sales on the stock market grew 24% year-on-year. If 10% comes from the downstream sector, it would be excellent. Of course, I have to say that some of petrochemical products have seen their domestic sales grow due to sanctions and the Ministry of Industry has imposed restrictions on the import of some products due to the depreciation of the Iranian currency and domestic market needs. For instance, ABS imports were restricted and therefore domestic sales increased as producers preferred to have domestic buyers. Or even during the recent period of sanctions, household appliances imports were banned and naturally demand for ABS, a raw material for household appliances, grew significantly.

How have petrochemical plants contributed to this price hike?

When the market is not competitive, i.e. supply and demand do not determine prices, such issues happen. During the first quarter of the current calendar year, despite hard currency gaining ground, petrochemical sales prices declined. Finally, when petrochemical prices grew 40% in the first half of the current year, hard currencies had grown twice in value. Despite such price hike, some products like benzene which forms the raw material for detergents declined since a year ago, but no change was seen in the price of final products. The Office regularly monitors the process and relays information to the Organization for Supporting Producers and Consumers. For instance, we said that in 2018, the price of each kilogram of PET used in water bottles was at IRR 180,000 while a bottle of water cost IRR 15,000. In 2020, PET was sold at IRR 120,000 to IRR 130,000 to producers of bottles which continued to be supplied at the same price to consumers. In fact, the end-user does not see the whole process for the supply of product in the petrochemical industry and the steps taken to control prices. However, it is up to ministerial experts to speak about the share of PET in the cost price of bottled water. In my view, more precise control is needed in this sector so that end-users would feel it when global prices drop.

Should we wait for a fresh price hike if the rial continues to depreciate?

As foreign currencies keep growing in value and the gap between free market and semi-subsidized exchange rates increases, the buyer is assured of selling at a higher price. Under such circumstances, the market becomes tumultuous.

For instance, over the past six months, the end-user of petrochemical products has experienced price hikes on several occasions. That is while the price of petrochemical products dropped in the first quarter of the current calendar year due to the COVID-19 pandemic before a 40% price hike was seen. In fact, the petrochemical industry through proper policymaking managed to regulate the supply on the market so as to spare many other sectors any harm. But end-users never realized the 50% decline in the price of some commodities. But due to unrealistic supply and demand and forex fluctuations, competition has increased for the products which we are short of.

How will the newly planned projects influence the petrochemical industry and market?

These projects are designed based on the market supply and demand. Definitely, once these projects have been operational we will see a significant jump in the downstream petrochemical sector. The new projects cover methanol, propylene, ethylene and benzene with the focus being on propylene. The reason for the focus on propylene is that we are currently short of acetic acid, H2 and PP, all byproducts of propylene. In the meantime, mid-stream projects that have been neglected would be developed. Following instructions by Minister of Petroleum Bijan Zangeneh for the development of downstream industries and completion of the value chain, NPC presents opportunities for investment in the downstream sector. The Office is tasked with identifying and removing market shortages so that private sector investors would be assured of secure fuel supply. The private sector is smart and it would jump in for investment, as soon as market conditions are ready and sufficient feedstock is ready.

How much will the downstream industry grow?

Any growth in the downstream industry is exponential. For instance, in 2013, about 3,000 tonnes of PP-grade mask layer were produced and producers were in doubt due to the cost-ineffectiveness of this product. However, the coronavirus pandemic aside, the consumption of this product has increased 2.5-fold. Now if the new projects are activated I think that the downstream sector would grow 30-40%, which would create a double or triple value-added. For instance, by implementing these new projects instead of selling methanol, the final product would be sold, whose value would be much higher. If the downstream industry is assured of sufficient feedstock at proper price, investment would be made therein and export markets will be also found. In this way, as the share of the downstream industry increases in the mix of commercial commodities, the value of products would grow at a higher rate.

Aren’t there any problems with technology in this sector?

Yeah, coincidentally, we are in need of technology in most upstream projects, except for PP whose technology has been already mastered by NPC. But as I mentioned before, since developing midstream and downstream industries would need no big investment, the private sector can invest in this sector and achieve its technology.

What incentives has NPC offered to investors?

In order to support these investors, NPC funds PFS and FS studies. Our studies are comprehensive. We have specified the chain of production in our studies. In other words, we conduct necessary studies on ideas and opportunities for investment in the downstream petrochemical industries and provide potential investors with the relevant results. We even provide investors with advice, but we do not finance investors because downstream industries are administered by the Ministry of Industry, Mine and Trade

Iran Petchem Eyes Top Methanol Producer Status

Global data shows that Iran is set to become the world's the top methanol producer in coming years. The country is estimated to lift its production capacity by 30 million tonnes a year by 2022. The United States and China would come second and third with 12 million tonnes and 10 million tonnes, respectively. Current forecasts show that Iran would be accounting for 54% of global production capacity of methanol by 2022. Iran is planning to build 12 new methanol plants as part of its second petrochemical jump, some of which have already become operational and some are ready to go online.

Iran currently enjoys a production capacity of 8.6 million tonnes a year at Zagros, Kharg, Fanavaran, Marjan and Kaveh petrochemical plants. The figure is expected to reach 25 million tonnes in five years. Many experts see it as a bargaining chip for Iran because by supplying 25 million tonnes of methanol on world markets Iran would have a final say on the price of methanol.

During years of sanctions, four key factors – Chinese financing, offshore facilities, low gas prices and availability of technology to convert natural gas to methanol – pushed the petrochemical industry, particularly the private sector, to methanol production in Iran. Capacity building was also done in the sector so that over five years, Iran’s methanol production capacity would reach 25 million tonnes. In case of strategic management of the petrochemical industry, major benefits would go to this sector.

New Methanol Projects

Iran’s petrochemical development projects until recently were mainly in the ethylene sector as due to the abundance of ethane, most products became ethylene-based and downstream industries could grow as much as they could. However, for any further growth of these industries, the ground has to be prepared for propylene production. Propylene creates a widespread chain of downstream industries. Therefore, Iran plans to produce propylene by converting methanol so that the methanol prices in the market would not be broken while the ground would be prepared for propylene production in the downstream sector.

Twelve new methanol projects are under construction. By 2021, 10 projects would have come online to raise Iran’s methanol production capacity beyond 20 million tonnes a year. In addition to that, five other methanol projects – Apadana Petchem, Di Polymer Aryan, Siraf, Phase 2 of Kharg and Lavan Industry – are 25-44 percent complete. These projects are expected to come on-stream by 2022. Meantime, construction of the Arman methanol project with capacity of 1,650 tonnes has stopped at 22% and the Arg Shimi Parsa project with a capacity of 990,000 tonnes is frozen at 12%.

Once all the 12 projects come online, Iran’s petrochemical production would increase by 25 million tonnes a year, in which case Iran would become the world’s largest methanol producer.

Kimia Pars Middle East Methanol Plant

Methanol production has recently been under way at Kimia Pars Middle East Co. The official inauguration of this methanol production unit would soon be held with a capacity of 1.65 million tonnes a year. The project has become operational over four years.

Compliance with HSE standards has led to 14 million persons-hours of safe work. Implementation of Kimia Pars Middle East was faced with some problems due to sanctions and some equipment manufacturers were not cooperative.

This unit annually needs more than 178,000 normal cubic meters per hour of natural gas and 65,729 normal cubic meters per hour of oxygen as feedstock. Launching a petrochemical plant in the country against the backdrop of the Covid-19 outbreak is of high significance. This petrochemical plant located in Assaluyeh has managed to reach production targets despite the outbreak of the coronavirus.

The plant, affiliated with Petro Farhang Holding, has been constructed on 8 ha of land in Assaluyeh Special Petrochemical Economic Zone with an investment of 2.8 billion Yuan plus IRR 10,000 billion.

Historic Record in Petchem Output

With the inauguration of 17 new petrochemical projects in 2020, including Kimia Pars Middle East Petrochemical Plant, the petrochemical production capacity would increase 25 million tonnes. Materialization of the second petrochemical jump by March 2022 would bring the production capacity of the petrochemical industry to 100 million tonnes and the value of petrochemical products to $25 billion. That would be a historic increase in the petrochemical production. 

In a meeting with petrochemical and steel manufacturers and actors, President Hassan Rouhani said that the value chain of the petrochemical production sector had to be completed.

“In this industry, we have distanced ourselves from selling raw materials, leading to a two-fold increase in the petrochemical production in seven years,” he said.

Although the Covid-19 outbreak is likely to delay some projects, the head of National Petrochemical Company (NPC) has said that the current calendar year would be a golden year for the petrochemical sector as 12 projects, worth $11.3 billion, would come on-stream and the petrochemical production capacity would increase by 90 million tonnes a year.

The 17 projects include the Kaveh methanol, Phase 1 of Bushehr Petchem, Lorestan catalyst production, Miandoab Petchem, Kimia Pars Middle East, Bid Boland 2 gas refinery (feeding petrochemical plants), Lordegan urea and ammonia plant, Phase 2 of Ilam Petchem Plant, Hegmataneh Petchem Plant (to produce medical-grade PVC for the first time), Phase 1 of Ibn Sina Petrochemical Plant, Kangan Petro-Refinery Plant, Assaluyeh Exir Solution, Phase 1 of Masjed Soleiman Petchem Plant, Parsian Sepehr refinery, Sabalan, Phase 1 of Arta Energy and Di Arya Polymer. 

The inauguration of aforesaid projects, which would mean the completion of second petrochemical jump, would increase the petrochemical production capacity by 51% and petrochemical income by 66%.

With the second jump, Iran’s petrochemical revenue would increase to $25 billion, up from $12 billion recorded in 2013.

Refinery Projects Unfazed by Sanctions

 The daily growing demand for fuel in Iran’s transportation sector, the necessity of self-sufficiency in fuel production, sitting atop one of the largest hydrocarbon reserves in the world and the refining industry’s urgent need to upgrade refined products production capacity, both quantitatively and qualitatively, have all turned the refining industry into a sensitive sector within the Petroleum Ministry. Iran's refining industry has done its best to blunt the impact of unjust sanctions that have been slapped on the industry. It has also changed threats to opportunities to develop technical knowhow. Proof of such development may be seen in the construction of refineries, development of refining facilities, manufacturing equipment for the refineries and even development of necessary catalysts, all despite sanctions.

Until several years ago, US presidents did not cease to speak about imposing sanctions on Iran’s petroleum products, turning it into an Achilles’ heel of the country. However, with the development of existing refineries and completion of the largest gas condensate facility in the region and the world under the 11th and 12th administrations, the country has become self-sufficient in gasoline and gasoil production. Furthermore, Iran is exporting fuel to its neighbors.

In the light of existing restrictions on selling crude oil, Iran is planning to increase its crude oil and gas condensate refining capacity to about 2.4 mb/d by the end of the current calendar year. The figure has already reached 2.15 mb/d.

Thanks to the planning made in the country, 850,000 b/d of crude oil and condensate that might have been blocked from entering the world markets due to the US sanctions has been refined and converted into valuable products.

Gas condensate delivery to refineries is to increase from 450,000 b/d to 500,000 b/d and crude oil delivery from 1.7 mb/d to 1.9 mb/d.

This policy is a strategy adopted by Iran’s Petroleum Ministry in the face of an economic war launched by the US against Iran.

Investment, Technology

Despite implementation of development projects in recent years at Iranian refineries, the private sector is suffering big losses due to the outdated technology and decrepit structure of oil refining facilities.

Oil refineries are currently receiving crude oil at a 5% discount, but they are not gaining any big profit. Reconstruction and renovation of these refineries would need investment and state-of-the-art technology. In case the refineries are not rebuilt, Iran will lag behind the world, and it would become more difficult for the country to compensate for this loss. The private sector is not much interested in renovation and optimization. Therefore, the government is granting loans and guaranteeing foreign investment in order to help the private sector renovate oil refineries. After Iran struck the 2015 nuclear deal with the six world powers; South Korean and Japanese companies expressed their willingness to renovate Iranian refineries, but the US’s unilateral withdrawal from the nuclear deal and subsequent restoration of sanctions against Iran’s oil sector led foreign firms to pull out of Iran.

Iranian oil refineries produce big volumes of fuel oil due to their outdated technology and decrepit equipment. Therefore, reducing fuel oil production at Iranian refineries topped the agenda. This issue has been taken into consideration with a research-oriented view to acquiring modern technologies and building new refineries. The Persian Gulf Star refinery and the Siraf refining facilities are cases in point.

In light of the approach to use heavy and ultra-heavy oil resources in refining facilities, and given the significance of acceding the latest technology, numerous measures like setting up research institutes in partnership with the Ministry of Science, Research and Technology is under way at the Directorate of Research and Technology. The most important research conducted so far is as follows: setting up a research institute for upgrading the quality of heavy crude oil and its residues including residue fluid catalytic cracking (RFCC), delayed coking unit (DCU), residual crude hydrotreating (RCD), setting up a research institute for naphtha middle distillate desulfurization with a view to developing technical savvy for the process and catalyst (HDS), establishing a research institute for the catalytic conversion of .

naphtha (CCR) to develop technical savvy, setting up an isomerization research institute to develop technical savvy for processing and catalyst and setting up a hydrocracking research institute to develop technical knowhow for the process and catalyst.

The 5th Five-Year Economic Development Plan allocates one percent of budget allocation to National Iranian Oil Refining and Distribution Company (NIORDC)’s investment projects for upgrading technology and reducing energy intensity.

Gasoline Self-Sufficiency

The natural gas produced at the South Pars gas field in the Persian Gulf constitutes a high share in the country’s fuel mix. Enhanced production would naturally continue. Therefore, the policy of feeding the Persian Gulf Star refinery with gas condensate has been on the agenda in recent years and the field keeps producing.

Last February, two key refining projects came online: Phase III of the Persian Gulf gas condensate refinery and Bandar Abbas oil refinery qualitative and quantitative upgrading. The Persian Gulf Star refinery is now producing 45 ml/d of Euro-5 gasoline, thereby supplying 50% of national gasoline consumption. Furthermore, the facility is producing 12 ml/d of gasoil and kerosene, as well as 3 ml/d of liquefied petroleum gas (LPG). That has made Iran a potential exporter of gasoline.

Compared with other refineries, the Persian Gulf Star refinery is supplying products that are more environmentally friendly. The aromatic contents including benzene are in compliance with standard. Issa Kalantari, head of the Department of the Environment, has said that the Persian Gulf Star refinery is fitted with a technology helping remove environmental pollution. The products that include gasoline with an octane number of above 91 and below 1% benzene content are more environmentally friendly. In fact, it may be argued that supply of valuable products at the refinery would encourage car manufacturers to produce cars with better quality. Once required equipment has been installed, the condensate refining capacity of the Persian Gulf Star refinery would reach 480,000 b/d.

17ml/d Gasoline at Shazand

The Persian Gulf Star refinery is followed by the Imam Khomeini refinery with an output of 17 ml/d of gasoline and 11 ml/d of gasoil. The facility was developed to increase its nominal capacity from the current 169,000 b/d to 250,000 b/d, and to increase its gasoline production capacity from 4.6 ml/d to 17 ml/d. In the meantime, its fuel oil share will decline and refined products would be desulfurized.

Another key facility in Iran is the Bandar Abbas oil refinery with an output of 15 ml/d of gasoil and 12 ml/d of gasoline. The objective behind the quality upgrade of refined products at this refinery was to improve the quality of products to meet environmental objectives and to reduce the sulfur content of gasoil to comply with the euro-5 grade. This objective was achieved after the installation of isomerization units and diesel refining facilities. Energy management, cutting fuel consumption and the low API of crude oil were among important factors to be included in this project. Adding 5 ml/d to the refinery’s output, as well as upgrading the quality of gasoline to euro-5 standards has been materialized.

Euro-Grade Gasoil at Isfahan Refinery

The project for process development, upgrading the quality of products and optimizing Isfahan refinery with a view to increasing the gasoline output from 41,000 b/d to 120,000 b/d, as well as upgrading the quality of products to Euro-standard levels has been approved. To that effect, high-octane gasoline and Euro-5 grade diesel fuel was produced. Gasoline production units and associated sections have been completed. After launching the gasoil hydrotreating facility of this refinery, which is currently more than 90% complete, the Euro-grade gasoil production level from this refinery would reach 20 ml/d. Isfahan refinery is currently producing 12 ml/d of gasoil, playing a key role in production and supply of high-quality fuel.

Fuel Production

Tabriz refinery development project came online in August 2019. The facility is now distributing 3 ml/d of high quality gasoline in northern and northwestern areas of the country. The gasoil desulfurization unit of the Tabriz oil refinery came online on a pilot basis in September 2018. With the completion of the production process, Iran’s Euro-5 gasoil production capacity will grow 6 ml/d. The project for the optimization and quality upgrade of Tabriz refinery products including designing and installing the naphtha reforming and installing the gasoil refining section to reduce the sulfur content of gasoil meet Euro-5 standards.

The project is aimed at boosting the quantity and quality of gasoline, and facilitating the production of premium gasoline in compliance with Euro-5 standards, removing MTBE from gasoline, supplying 750 b/d of gasoline to the Tabriz petrochemical plant and producing Euro-5 diesel fuel.

High Quality Gasoil at Tehran Refinery

High quality gasoline and gasoil production at Tehran’s oil refinery officially started in August 2012.The facility is currently producing 7 ml/d of gasoline and 12 ml/d of gasoil up to Euro standards in Tehran. The main idea behind this project is to upgrade the quality of refined products of the Tehran refinery, upgrade the quality of products in line with environmental objectives and reduce the sulfur content of gasoil and kerosene in compliance with Euro-5 standards.

Euro-Grade Gasoline in Lavan

The first cargo of Euro-5 gasoline produced by the Lavan refinery was loaded for delivery to Bandar Abbas. The 8,000-liter cargo is indicative of the refinery’s contribution to quality products. The first phase of optimization project at this refinery came online in 2011 in order to increase capacity from 30,000 b/d to 55,000 b/d. The light naphtha isomerization and hydrotreating unit of this refinery became operational in 2013.

The hydrotreating unit of middle distillate products – kerosene and gasoil – came online in 2015. Two years later, the gasoil and gasoline desulfurization unit became operational.

Kermanshah; Polisher Installed

The Kermanshah oil refining company installed a polisher unit last February. This section is needed to refine the returned gas condensate, which always poses a serious risk to refineries. The polisher package was purchased from a British company some 13 years ago. Despite all restrictions, it was installed by the refinery technicians.

Due to the lack of sufficient data and relevant instructions, experts at the technical and engineering services removed the problems and managed to launch the unit solely with water. In the next stage, acid had to be injected.

Condensate polishers are important systems using the boiling and condensing of water to transport or transform thermal energy. Using technology similar to a water softener, trace amounts of minerals, or removes other contaminants from the system before such contamination becomes concentrated enough to cause problems by depositing minerals inside pipes, or within precision-engineered devices such as boilers, steam generators, heat exchangers, steam turbines, cooling towers, and condensers.

The removal of minerals has the secondary effect of maintaining the PH balance of the water at or near neutral by removing ions that would tend to make the water more acidic. This reduces the rate of corrosion where water comes in contact with metal.

Condensate polishing typically involves ion exchange technology for the removal of trace dissolved minerals and suspended matter. Commonly used as part of a power plant's condensate system, it prevents premature chemical failure and deposition within the power cycle which would have resulted in loss of unit efficiency and possible mechanical damage to key generating equipment.

Sum-up

The Shazand refinery in Arak is procuring 17 ml/d of gasoline, the Isfahan refinery 12 ml/d, the Tabriz refinery 3 ml/d, the Bandar Abbas refinery 12 ml/d, and the Persian Gulf Star refinery 45 ml/d. It totals 90 ml/d of clean fuel.

One of the major projects envisaged for early next calendar year is development of the Isfahan oil refinery. Operation of its gasoil hydrotreating unit would allow for the production of more than 20 ml/d of Euro-grade gasoil (sulfur content below 50 ppm). In total, more than 70 ml/d of Euro-grade in the country, this would be a great achievement for the Iran's Petroleum Ministry

Maximization of Gasoline Exports, a Professional Strategy

 Farzin Savadkoohi

 The implications of implementation of the Petroleum Ministry’s roadmap for the refining industry against the backdrop of sanctions came to fruition sooner than thought. Rather than importing gasoline, for more than two years Iran has been exporting gasoline which indicates the success of a well-planned and professional strategy.

The maximum production approach to be followed by an export-oriented approach in gasoline and other petroleum products defeated the US-led embargo on Iran’s petroleum industry.

Although Iran was a gasoline importer until two years ago, now it has managed to produce euro-standard fuel in the best possible way without having to build any new refineries. The feedstock capacity of refining units was increased through coherent and precise planning to maximize the production of this strategic product. Domestic needs were filled while export was facilitated.

Experience Key to Refining Industry Maturity

This strategy showed that Iran’s oil refining industry was mature enough to benefit from its most favorable relative advantages and upgrade national economy without reliance on foreign companies. The achievement also showed that over these years Iran has gained valuable experience to export its techno-engineering services in the refining industry to other nations.

Ali-Reza Sadeq-Abadi, CEO of National Iranian Oil Refining and Distribution Company (NIORDC), had earlier said that refining capacity building had accelerated in the past three years.

Iran’s refining capacity has increased from 1.175 mb/d before 1979 to 1.947 mb/d in 2018.

During the 1980-1988 imposed war, Iran’s refining capacity was limited to 751,000 b/d. But investments made in 2017 and 2018 brought the figure to 2.3 mb/d.

The figures released earlier showed that Iran was producing roughly 14 ml/d of gasoline from 1978 to 1980, which jumped 5.9-fold between 2017 and 2018.

Iran’s average gasoline production was 51 ml/d in 2012, which grew to 107 ml/d in February this year. A simple review shows that Iran’s current 115 ml/d gasoline production capacity has experienced a 7.5-fold increase from 1979. Therefore, exporting surplus gasoline production was not unexpected as the Petroleum Ministry was seriously following up on this approach.

Gasoline Record

Mehdi Mir-Ashrafi, CEO of Iran Customs Administration, has said over $1 billion worth of gasoline had been exported to other nations via customs over five years. It means that despite US sanctions restricting Iran’s crude oil and petroleum products exports, the country has continued to export products.

He, however, notes that Iran’s trade exchanges with foreign nations totaled $24.6 billion during the first five months of the current calendar year, up $5 billion from the four-month period.

COVID-19 Not Sole Success Factor

The COVID-19 pandemic and subsequent lockdown in some parts of the world reduced travel in cars, which in turn, cut gasoline consumption. However, it was not the only factor that brought Iran success in maximizing gasoline exports. As it was said earlier, after Iran’s oil refining industry managed to benefit from its idle capacity in refining units and increase production, exports increased as well.

Implementation of new projects, as well as incomplete projects has been instrumental in the development of downstream petroleum industry, which led to the generation of foreign currency from petroleum products exports, secure distribution of fuel, as well as feeding petrochemical plants.

Efforts made over the past two years showed that through step-by-step implementation of useful and creative ideas, Iran’s refining capacity has been stabilized owing to the existence of 9 oil refineries and 1 gas condensate treatment facility.

Having a glance at this data shows that implementing production enhancement projects since 2013 at various refineries has increased the refining capacity from 1.7 mb/d to 2.3 mb/d, up 43%.

It has to be kept in mind that until not long ago, despite the operation of nine oil refineries, Iran had to import 27.3 ml/d of gasoline to compensate for shortages. Had this trend continued, millions of dollars would have been spent on gasoline imports rather than financing investment projects.

Gasoline Imports a Memory

But today, with the development of the refining industry in Iran and completion of the Persian Gulf Star refinery, Iran’s crude oil and gas condensate processing capacity has reached 2.3 mb/d. There is no longer any news of setting costs aside for gasoline imports. It may be concluded that gasoline imports has turned into a memory.

The Persian Gulf Star refinery was instrumental in gasoline self-sufficiency, as well as increased gasoline output which facilitated exports. The facility became Iran’s top gasoline producer in 2018.

Furthermore, a 180,000 b/d increase in feedstock injection was another major event that helped Iran’s refining industry move towards new developments.

In 2019, due to financial restrictions and intensified sanctions, it was no longer economical to physically build Phase 4. Therefore, software development replaced physical development.

The refining capacity increased from 120,000 b/d to 180,000 b/d in each of the three phases. The production envisaged for Phase 4 was divided among the three phases, boosting the refinery’s productivity and profitability, increasing strategic gasoline reserves and creating opportunities for exports.

Maximum Accident-Free Output

Mohammad-Ali Dadvar, CEO of Persian Gulf Star refinery, had earlier told "Iran Petroleum" that under the current circumstances, the first step in implementing the refining capacity and debottlenecking of the three phases of the refinery would be taken with a view to reaching 450,000 b/d capacity. The second step would be taken by the end of the calendar year.

However, some maintained that Iran’s Petroleum Ministry has to build new refining plants and boost the gasoline and petroleum products production capacity. Building new refineries would be costly and under conditions where the idle capacity of current refineries may be used, the Petroleum Ministry would not choose a high-risk strategy by reliance on the experience of previous governments.

Various reports are indicative of success in Iran’s refining industry. Now with the implementation and operation of petroleum products quality upgrade sections, the gasoline production capacity has increased from 56 ml/d to 115 ml/d and gasoil production from 94 ml/d to 125 ml/d. Furthermore, Euro-4 gasoline production capacity has increased to 69 ml/d and Euro-4 gasoil production has reached 54 ml/d. The gasoil production capacity would increase 20 ml/d after the commissioning of a gasoil hydrogen refining project. In other words, adding new refining units would accelerate the progressive production of gasoline and petroleum products.

Under conditions where the US regularly calls on Iran’s customers to cut their trade transactions with Tehran, selling products on the Iran Energy Exchange floor continued.

As it was expected, pursuing the policy of prosperity of sales and exports of gasoline and petroleum products, hitting a record in this market was an incentive for NIORDC to cooperate with IRENEX.

Financial Transparency

The Persian Gulf Star refinery’s financial transparency was key to its success in the market. A 330% increase in the number of customers, playing an effective role in the determination of the price of products on IRENEX, a 26-fold increase in the stock market and selling 700,000 metric tons of refined products showed the strong presence of the company in both domestic and foreign markets.

Other important refineries: Tabriz, Isfahan, Shazand, Tehran and Bandar Abbas oil refineries have adapted themselves with NIORDC initiatives in order to reach maximum production without having to incur extra costs.

Iran’s oil refining industry has reached a phase in production growth to no longer depend on external support. Iran’s oil refining has proved once more that it represents a new trend in the global markets.

Oil Transmission Record Smashed

 Negar Sadeqi

The Iranian Oil Pipelines and Telecommunication Company (IOPTC) is marking its 20th year. With 14,000km of pipeline measuring 6-32 inches in diameter, 194 transmission centers, visbreaker and other installations, it is guaranteeing secure distribution of petroleum products. Pipeline accounts for the supply of feedstock and transfer of petroleum products from seven refineries across Iran. Gasoline, kerosene and gasoil are among core products to be transported via oil pipelines. Currently, there are also 17 power plants directly connected to oil pipelines to supply the necessary liquid fuel.

Jafar AlizadehDarbandi, director of pipelines at IOPTC, has said the pipelines laid across Iran are up and running. He told "Iran Petroleum" that last calendar year IOPTC managed to break the record for the distribution of petroleum products by handling the transfer of more than 128 billion liters of products.

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

On average, how much petroleum product is distributed by pipeline a day?

On average, 350 million liters a day of crude oil and petroleum products is distributed by pipelines. In 2019, more than 128 billion liters was transmitted by pipelines, more than 3 billion liters of which was supplied to power plants. Such amount of crude oil and petroleum products distribution is a record in the last two decades. The bulk of this amount of distribution was for development projects. For instance, the possibility of using lubricants and injection into the pipeline has resulted in a higher production capacity. Of course, the capacity of transmission of products fluctuates throughout the year. But in general, due to the enhancement of the consumption of petroleum products over recent years, the volume of transmission has increased, too. In parallel, the capacity of transmission has grown proportionately. For instance, by operating the Persian Gulf Star refinery in recent years, development projects have been implemented in order to deliver refined products from this facility to northern areas.

How much capacity has been built?

Over the past couple of years, Iran has enhanced its petroleum products production capacity. For our part, we have extended our oil pipelines. Last calendar year, the Naein-Kashan-Rey pipeline came on-stream. Currently, the capacity of crude oil and petroleum products pipelines has already increased or is being increased.

Aren't the current pipelines able to respond to the increased production capacity of products?

As I said, we enhance the capacity of our pipelines in parallel with enhancing the capacity of refineries and operating new ones. In fact, we cannot develop one sector while stopping development in another sector. These are all interconnected like the links of a chain. If in parallel with enhancing the capacity of refineries we fail to enhance the capacity of our pipelines and storage sites, the production-transmission-distribution chain will be disrupted. But the chain is still working.

Have COVID-19 had any strains on the volume of petroleum products delivery?

Generally speaking, transmission of crude oil and petroleum products are not affected by certain conditions like hot or cold weather and even the coronavirus. The process is up and running. For instance, when the coronavirus had just emerged, travels were reduced significantly during a period, thereby cutting on gasoline consumption. But it did not mean that our refineries would reduce their output. Nor the transmission capacity was reduced. However, in parallel with reduced consumption, storage of products increased such that the capacity of our storage sites has increased, too. Therefore, if our consumption neither increases nor decreases our storage inventory will change. Any capacity enhancement has caused overconsumption in some seasons, thereby helping us strike a balance between supply and demand.

You have set a record in transmission against the backdrop of oil sanctions. Would you please explain more?

Look! Sanctions have never functioned as obstacles to the transmission of oil and petroleum products in Iran. We don’t say we had ideal conditions, but pipe transmission has been under way and will continue. Since the very beginning of imposition of tough sanctions on the petroleum industry, we focused on the capacity of domestic companies in supplying and repairing equipment. We managed to cooperate with many Iranian companies. Due to our support for domestic manufacturers, they can now repair and overhaul most of our equipment. For instance, the advanced technology used in turbine blades or parts has been indigenized. Therefore, we have ended our dependence on foreign companies in these sectors. Of course, the nature of our activity is such that we should regularly monitor pipelines and transmission centers and have periodic overhauls.

How long is the lifecycle of Iranian oil pipelines?

The average lifecycle for pipelines in Iran is 30 years. Our oldest pipeline is the Ahvaz-Rey pipeline is 63 years old now. We have also the Naein-Rey-Kashan pipeline that came on-stream last year. But all our pipelines are working regularly mainly because we have regularly maintained them through smart pigging.

Are domestic companies implementing smart pigging?

Foreign contractors used to carry out smart pigging for us. We identified our weaknesses based on the smart pigging done earlier to be able to do necessary reparation. Now, all of our pipelines have undergone smart pigging. New pipelines don’t need any pigging now. However, with the start and toughening of sanctions, as we may not be able to benefit from the services of foreign companies, we have been trying to identify qualified domestic companies in this regard.

Siraf Refineries Set to Yield Soon

 Raheleh Safiri

 The economic and social interests created by the value chain in the downstream crude oil and gas condensate industry are too significant to be easily ignored. The Siraf gas condensate refineries complex is among projects that would create a value chain in addition to its myriad benedictions for the country.

The Siraf refineries, with a total capacity of refining 480,000 b/d of condensate, constitute one of the largest condensate treatment projects in the world. The Siraf project started in June 2015.

But since the Petroleum Ministry is legally barred from building refineries, the project had to be awarded to the private sector. Although the project had a good start, sanctions brought it to a halt.

The main idea was to avoid selling raw materials. It was also aimed at creating value-added, creating jobs and guaranteeing maximum output from the giant offshore South Pars gas field. Private entities would build six independent gas condensate refineries in the Pars Special Economic Energy Zone (PSEEZ), more specifically between location of SP13 and SP19.

Siraf Guaranteeing SP Maximum Output

Iran remains the top country in the world in terms of gas reserves. The bulk of Iran’s gas is hidden in the South Pars gas field which is jointly owned with Qatar. Iran can claim owning the largest gas reserves in the world when it can make maximum recovery from this shared field.

Mohammad Meshkinfam, CEO of Pars Oil and Gas Company (POGC), said recently Iran’s production capacity from South Pars had reached 700 mcm/d. However, it is noteworthy that recovery from the South Pars gas field is not optional. Rich gas includes methane, ethane, propane, butane and gas condensate. Therefore, if for any reason whatsoever, gas condensate exports face any problem, Iran would have to cut output in South Pars. But, the Siraf condensate refineries would absorb any surplus production, thereby cutting South Pars production risks.

In the meantime, natural gas constitutes a major element in the Iranian households’ fuel mix. It is also the main feedstock for power plants.

The advantage with condensate refineries is that they need less investment than oil refineries, which is due to their feedstock. Furthermore, condensate refineries do not produce fuel oil which is less valuable than refinery feedstock, and therefore they would be more profitable than crude oil treatment facilities.

The main output of condensate refineries is naphtha. Naphtha can guarantee the safety of feedstock supply to all petrochemical plants running on liquid feedstock, in addition to serving as a driving force in petrochemical production and job creation.

Siraf Economical

It is not necessary to be an economist to prove the profitability of the Siraf project. Qatar’s Ras Laffan gas condensate refinery is yielding about $680 billion a year in revenue (a figure much higher than Iran’s gross national product). Ras Laffan, whose structure is similar to Siraf, is owned by Qatar Petroleum (51%), ExxonMobil (10%), Total (10%), Cosmo (10%), Idemitsu (10%), Mitsui (4.5%) and Marubeni (4.5%).

It means that gas condensate refineries have already proven to be useful and lucrative in the world. Ras Laffan’s shareholders would not have invested in such a project had it not been profitable enough.

According to Nexant marketing reports, demand for light naphtha would overtake supply by 2035. Nexant has forecast demand for light naphtha to reach 355 million tonnes by 2025 when light naphtha supply would stand at 345 million tonnes. The balance would be minus 10 million tonnes mainly from East and Southeast Asia.

On this basis, gas condensate exports from the Persian Gulf would fall sharply to reach near zero. Since the gas condensate needed by splitters in Asia to produce naphtha for the olefin and aromatic units would be supplied mainly by Iran and Qatar, the refined light and heavy naphtha from the Siraf refineries would be the best alternative to the gas condensate purchased by the refineries and petrochemical plants in East Asia.

About 58 percent of Siraf’s output would be naphtha. The remaining products include Euro-5 gasoil and low-sulfur jet fuel.

Outlook

Due to legal barriers prohibiting any state investment in refinery construction, only the private sector would be authorized to supply feedstock to refineries.

The Petroleum Ministry has so far fared well in infrastructure and basic design, license acquisition and feedstock supply.

One of the companies involved in the Siraf project started its activity in 2017 and has reached 35% progress. According to this company, the first phase of the Siraf project would come online by March 2022. Therefore, the private sector is instrumental in the survival of the Siraf project.

Karabakh Dispute and Energy Markets

 Shuaib Bahman

The Nagorno-Karabakh conflict has degenerated into the toughest foreign policy challenge between Armenia and Azerbaijan Republic. Without having a deep knowledge of the Nagorno-Karabakh conflict, it would be impossible to figure out the principles of Armenian and Azeri foreign policy.

Hostility between Armenia and Azerbaijan Republic is not bound to political and territorial issues; rather, it covers ethnic aspects. Throughout ongoing clashes having started 27 September 2020, Nagorno-Karabakh is once more experiencing war.

Earlier, on 12 July 2020,a war broke out between Armenian and Azeri armed forces. Initial clashes occurred near Movses in Tavush Province of Armenia, and Ağdam in Tovuz District of Azerbaijan at the Armenian-Azerbaijani state border. The conflict broke out in an area through which Azerbaijan Republic exports energy to Europe.

However, given the wider aspects of ongoing conflict compared with previous ones, the Nagorno-Karabakh conflict is likely to impact once more strategic energy transition zones, thereby impacting global markets.

The conflict has not significantly affected global energy markets per se. Neither this time nor in previous Azerbaijan-Armenia wars, have global markets been affected significantly. However, the July war affected the energy sector because of the two vital pipelines laid extending into Georgia, Turkey and Europe. These two pipelines are strategic:

Trans-Anatolian Natural Gas Pipeline (TANAP): It is a natural gas pipeline in Turkey. It is the central part of the Southern Gas Corridor, which connects the giant Shah Deniz gas field in Azerbaijan to Europe through the South Caucasus Pipeline and the Trans Adriatic Pipeline. Planned to extend as far as Italy, this pipeline is known as the Energy Silk Road. The $40-billion pipeline was built by 12 companies from 6 nations. TANAP is already operating at the rate of 6 bcm, but Trans-Adriatic Pipeline (TAP) is scheduled to come online in the near future with a capacity of 10 bcm. TAP would cross Turkey and Greece to reach Italy. Furthermore, other Central Asian nations like Turkmenistan and Kazakhstan would pump gas to Europe via TAP.
Baku-Tbilisi-Ceyhan Oil Pipeline: Operational Since 2006, this pipeline carries oil from the Republic of Azerbaijan to an offshore terminal in Ceyhan, while cutting through Georgia. Oil would be then carried on tankers to international markets. The US-backed 1,770-km pipeline has cost $3.9 billion. It has reduced shipping traffic in Turkish straits and is highly strategic as it guarantees safe and unhalted oil supply to West.

Caucasus Energy War

Since Azerbaijan, in the Caucasus region, is the main producer and exporter of oil and gas, any extension of war to oil and gas fields or energy transmission pipelines would harm Baku the most. Turkey and the Zionist Regime, both top importers of Azeri oil and gas, come next. Finally, Europe would face energy challenges. If the Nagorno-Karabakh conflict is viewed from an energy perspective, Armenia may consider attacking Azeri pipelines in a bid to cut off Baku’s economic artery.

A country like Russia that has always sought to safeguard Europe’s market and prevent any extension of pipelines to Europe would benefit from any cut in Azeri oil and gas supply, in which case Russia would make European nations believe that this problem would remain unsolved for a long time in an attempt to persuade them to continue importing oil and gas from Russia.

For its part, the US will also benefit from such upheavals, particularly because the Trump administration has expressed increased willingness to sell liquefied gas to European nations and even Turkey in recent years. Therefore, the Americans have made their best to sideline oil and gas rivals through various methods including imposing sanctions and exerting pressure with a view to guaranteeing an oil and gas market for themselves.

However, most European nations, despite having seen energy imports from Azerbaijan Republic as an option to diversify imports, are unwilling to be drawn into the Azeri-Armenian dispute and pick sides. They are of the opinion that the Republic of Azerbaijan is more than ever magnifying upon the threat of attack on its energy facilities in a bid to win more support in the international community against Armenia.

Neither in June nor now, has the Azeri oil and gas facilities been damaged. Therefore, the Nagorno-Karabakh conflicts have not yet had any significant impact on the world energy markets.

However, in case Republic of Azerbaijan, backed by Turkey and the Zionist Regime, manages to change the balance on the battleground, Armenia is likely to attack energy transmission routes in Baku. That is the only case where one can expect the Nagorno-Karabakh dispute to significantly impact the world energy markets.

Petrobras Offers Campos Basin Fields for Sale

Petrobras has started the opportunity disclosure stage for the sale of all its stakes in the Albacora and Albacora Leste concessions in the deep waters of the Campos basin.

The Albacora field is about 110 km (68 mi) from Cabo de São Tomé in water depths ranging from 100 to 1,050 m (328 to 3,445 ft). The 455-sq km (176-sq mi) field is in the northern area of the Campos basin. In August 2020, Albacora produced 38,700 b/d of oil and 716,000 cu m/d of gas. Petrobras is the operator of the field with 100% participation.

The Albacora Leste field is about 120 km (75 mi) from Cabo de São Tomé in water depths ranging from 1,000 to 2,150 m (3,281 to 7,054 ft). The 511.56-sq km (197.51-sq mi) field is in the northern area of the Campos basin. In August 2020, Albacora Leste produced 33,300 b/d of oil and 707,000 cu m/d of gas. Petrobras is the operator of the field with a 90% stake and the remaining 10% belongs to Repsol Sinopec Brasil.

PetroNor Retains Offshore Gambia License

PetroNor and the government of The Gambia have settled arbitration relating to the offshore A1 and A4 licenses.

Under the terms of the agreement, PetroNor will regain A4, signing a 30-year lease under new terms. The company will also drop any claims related to A1 which has subsequently been awarded to a major oil company.

The license terms are based on The Gambia’s new Petroleum, Exploration and Production License Agreement PEPLA model

Eni Awarded CO2 Capture License in England

Britain’s Oil and Gas Authority (OGA) has awarded Eni UK a carbon dioxide (CO2) appraisal and storage license in the East Irish Sea off northwest England.

It covers an area within Liverpool Bay. Eni plans to repurpose depleted hydrocarbon reservoirs at the Hamilton, Hamilton North and Lennox fields, plus related infrastructure, to permanently store CO2 captured locally in England and North Wales.

Eni aims to be part of a collaboration with industrial companies to capture and transport CO2 from existing industries and future hydrogen production sites for fuel switching, heating, power and transportation, in line with the UK government’s target of net zero emissions by 2050

Indonesia Introduces More Flexible License Terms

 Indonesia’s decision to offer a choice between gross split and cost recovery for new licenses is a positive step, according to Wood Mackenzie.

In 2017 the government announced new gross split terms to production-sharing contracts in an attempt to lessen bureaucracy and improve efficiency in the upstream industry, the aim being to boost investment and oil and gas production.

Under these new terms the government awarded 22 blocks, with $1.2 billion of investment commitments, said to be the highest in a decade.

CHPL Joins 3D Oil in Victoria Concession

Carnarvon Hibiscus Pty Ltd. (CHPL) has completed a farm-in to 50% of the VIC/P74 permit offshore southeast Australia from 3D Oil.

CHPL, an indirect but wholly‐owned subsidiary of Hibiscus Petroleum, has also entered a joint operating agreement with 3D Oil after receiving approval from the Australian National Offshore Petroleum Titles Administrator.

The permit, covering an area of 1,006 sq km (388 sq mi), is adjacent to the Kingfish oil field which to date has produced more than 1 Bbbl of oil.

IEA: Solar the new 'king of electricity

 Solar output is expected to lead a surge in renewable power supply in the next decade, the International Energy Agency said, with renewables seen accounting for 80% of growth in global electricity generation under current conditions.

In its annual World Energy Outlook, the IEA stated in its central scenario - which reflects policy intentions and targets already announced - renewables are expected to overtake coal as the primary energy for producing electricity by 2025.

The combined share of solar photovoltaic (PV) and wind in global generation will rise to almost 30% in 2030 from 8% in 2019, it said, with solar PV capacity growing by an average 12% a year.

“I see solar becoming the new king of the world’s electricity markets,” IEA Executive Director Fatih Birol said. “Based on today’s policy settings, it is on track to set new records for deployment every year after 2022.”

Maturing technology and support mechanisms have cut financing costs for major solar PV projects, the IEA said, helping to bring down output costs overall. Solar PV is now cheaper than new coal- or gas-fired power plants in most countries, it said.

Power generation from renewables is the only major source of energy that continued to grow in 2020, the Paris-based agency added.

A more ambitious scenario, including for instance the adoption of net-zero emissions targets by 2050, would see PV electricity generation perform more strongly still, the report said.

UN Chief Warns Lenders over Fossil Fuels

United Nations Secretary General Antonio Guterres urged development banks to stop backing fossil fuel projects, after a report found the World Bank had invested $12 billion in the sector since the 2015 Paris Agreement to combat climate change.

Environmental campaigners have for years tried to prevent the oil, coal and natural gas industry from producing dangerous levels of the greenhouse gases that cause climate change by persuading commercial banks to stop lending them money.

But the world’s state-backed development banks, whose support is often crucial in determining whether projects in developing countries go ahead, are also facing growing calls to starve the industry of finance.

Guterres urged a coalition of finance ministers and economic policymakers from dozens of countries to ensure development banks end fossil fuel investments and boost renewable energy.

“We need speed, scale, and decisive leadership,” Guterres said in a video message to a virtual meeting of the group.

A report by Berlin-based environmental group Urgewald said that the World Bank had invested more than $12 billion in fossil fuels since the Paris accord, $10.5 billion of which was direct finance for new projects.

That put the World Bank far ahead of other development banks in supporting the sector, said Heike Mainhardt, a senior adviser to Urgewald, who wrote the report.

With the world already on track to produce far more fossil fuels than would be compatible with temperature goals agreed in Paris, the report questioned why the World Bank would back increased oil and natural gas production in countries such as Mexico, Brazil and Mozambique.

Mountain Valley Gas Pipeline Timing Tied to Litigation

Equitrans Midstream Corp said it will evaluate the cost and timing of the completion of the Mountain Valley natural gas pipeline based on ongoing litigation and upcoming federal approvals.

The U.S. Federal Energy Regulatory Commission (FERC) gave Mountain Valley permission to resume some construction on its $5.4 billion-$5.7 billion pipeline, which runs from Virginia to West Virginia.

“As the litigation process progresses and as we receive additional information from FERC regarding potentially releasing the remainder of the route for construction, (Mountain Valley) will continue to evaluate its current construction plans, budget, and schedule,” Equitrans said.

Hygo Energy names new CEO

Hygo Energy Transition Ltd HYGO.O, a joint venture between Golar LNG and U.S. private equity firm Stonepeak Infrastructure Partners, has appointed Paul Hanrahan as chief executive officer after his predecessor, Eduardo Antonello, stepped down amid a Brazilian corruption investigation.

The move is part of Golar’s effort to prevent the probe from disrupting expansion of liquefied natural gas (LNG) use in Brazil.

In the latest phase of Brazil's "Car Wash" corruption probe, two witnesses said the former Hygo CEO was part of a bribery scheme in 2011 when he worked at Seadrill Ltd SDRL.OL, a claim that Antonello has denied through his attorney.

Search warrants were executed based on the witness testimony. A representative for Antonello, who resigned on Sept.

France to Stop Guarantees for Oil/Gas Exports

France will stop providing state export guarantees to projects involving dirty forms of oil such as shale from next year, followed by all types of oil from 2025 and gas from 2035, the finance ministry said.

The French state stopped giving export guarantees, which companies often need to get bank credit, to projects this year where fracking and flaring were involved and also dropped its financial support for coal developments.

In a proposal to parliament, the ministry said guarantees would now also be halted from 2021 for projects involving heavy oil, shale oil and bitumen oil sands, which would affect the creation of up to 700 new jobs.

EU Plans Binding Energy Standards

The European Commission will propose mandatory minimum energy performance standards for buildings across Europe in a drive to cut emissions and create jobs in the renovation sector, according to a draft policy document seen by Reuters.

The European Union’s executive has made its “Renovation Wave” strategy a priority in its plan to cut greenhouse gas emissions across the bloc to net zero by 2050.

The Commission does not comment on draft documents, which are subject to change before publication.

Energy-guzzling buildings, many of which are heated by fossil fuels, produce more than a third of EU carbon dioxide emissions and account for 40% of the bloc’s energy consumption. Most of today’s buildings will still be in use in 2050 - meaning could thwart the EU’s green goals unless they are upgraded.

Poland Fines Nord Stream 2 Project

A Russian Foreign Ministry spokeswoman said a decision by Poland to impose a hefty fine on Gazprom for its part in the Nord Stream 2 gas pipeline project was taken to please Washington, Interfax news agency reported.

Poland fined the Russian gas giant more than 29 billion zlotys ($7.6 billion) for building the pipeline without Warsaw’s approval.

Russia’s energy projects have become increasingly politicized since Moscow’s annexation of Crimea from Ukraine in 2014. Russia accounts for around a third of natural gas supply to Europe.

The criticism against the ongoing Nord Stream 2 project, which critics say will increase Europe’s reliance on Russian gas, has intensified following the alleged poisoning of a prominent Kremlin critic in August.

A spokeswoman for Russia’s Foreign Ministry said the decision to fine Gazprom was driven by an intention to “implement the idea of setting up a gas hub for re-sale of American gas to eastern European countries”, in order “to please Washington”.

The United States has raised its exports of seaborne liquefied natural gas to Europe in recent years.

The spokeswoman also said the fine undermined European energy security, Interfax reported.

Poland’s government and foreign ministry were not immediately available for comment. The Polish anti-monopoly office said it rejected any attempts to discredit it.

“The procedure was carried out in a meticulous and thorough manner...We operate fully independently, on the basis of the law and within the law, ensuring fair competition,” the office said in a statement e-mailed to Reuters.

US Energy Companies Begin Restoring Oil/Gas Output

U.S. energy companies were returning workers and restarting operations at storm-swept production facilities along the U.S. Gulf Coast, two days after Hurricane Delta barreled through the area.

Chevron Corp, Royal Dutch Shell Plc and BHP Group all said workers were headed back to production platforms in the U.S.-regulated northern Gulf of Mexico.

BHP expects to complete the return of workers to its Shenzi and Neptune production platforms, spokeswoman Judy Dane said, adding that resuming flows will depend on how quickly pipelines return to service.

It can take several days after a storm passes for energy producers to evaluate facilities for damage, return workers and restore offshore production. The companies that operate oil and gas pipelines and process the offshore output also shut ahead of the storm.

The U.S. Bureau of Safety and Environmental Enforcement (BSEE) said 91% of offshore crude oil production remains shut in the U.S.-regulated northern Gulf of Mexico following Hurricane Delta.

In addition, 62.2% of natural gas output remains shut in the Gulf following the storm that made landfall near Creole, Louisiana, and weakened into a low-pressure system over Mississippi.

A cumulative total of 8.8 million barrels per day (bpd) of crude oil production and 8.3 billion cubic feet per day of natural gas output from the Gulf has been shut because of Hurricane Delta.

Regulator says 91% of U.S. Gulf crude oil production remains shut after hurricane

The area produces about 17% of total daily U.S. oil production and 5% of daily natural gas production.

Equinor Faces 'Control Problems' in US

A report on Norwegian energy firm Equinor's loss-making investments in the United States detailed significant problems the state-controlled company should have dealt with faster, its chair and chief executive said.

Equinor made a series of acquisitions of onshore and offshore petroleum reserves in the United States in the years before the 2014-2016 oil price crash, eventually leading to accumulated losses and write-offs of $20.4 billion dollars.

In June, Norway’s energy minister said Equinor must be more transparent about its foreign businesses.

“Equinor has recorded large financial losses in the US. These were mainly driven by an ambitious growth strategy and investments that were based on overly optimistic price assumptions,” Equinor’s chairman Jon Erik Reinhardsen said.

“Rapid growth for a period led to significant control problems. The board and management should have seen and addressed this sooner.”

The review, led by a PWC accountant Eli Moe-Helgesen, was based on more than 120 interviews and documents dating back to 2005, Equinor said.

It revealed, among many things, that Equinor bought a turkey at a charity rodeo in Houston for $30,000; just one of many decisions the report criticized.

It referred to Equinor’s “limited onshore competence experience in senior leadership”. It said the company did not properly check if assets would make money at lower prices and key risks were “not sufficiently understood and challenged by decision makers”.

BP Starts Oman's Giant GhazeerGas Field

BP.L has started production at Oman's giant Ghazeer natural gas field, which is set to underpin the company's oil and gas output for years as it shifts to renewables.

The London-based firm said Ghazeer, the second phase of the development of Block 61, started four months ahead of schedule.

BP is in the midst of the largest overhaul in its history after Chief Executive Bernard Looney set out a path to shift rapidly towards renewable power and reduce BP’s oil and gas production by 1 million barrels per day (bpd) by 2030.

But oil and gas is set to help pay for the move.

“It is absolutely central for BP because it generates the funding allowing us to invest in new businesses and transform the company,” Gordon Birrell, BP head of oil and gas operations, told Reuters.

BP shares have lost 54% so far this year due to concerns about a drop in oil and gas demand as a result of the coronavirus epidemic and long-term worries about its strategy.

BP, which wants to sell $25 billion of assets by 2025, is in talks to sell down its Oman stake, industry sources have said.

The first phase, Khazzan, was brought online in September 2017. Total production capacity from the block is expected to reach 1.5 billion cubic feet of gas a day and more than 65,000 bpd of associated condensate.

BP holds 60% of the Block 61 project, Oman’s national oil and gas company has 30% and Malaysia’s Petronas holds another 10%.

Iran-China 25-Year Blueprint; From Dream to Reality with Focus on Energy

Davoud Kiani

Faculty member, Institute for International Energy Studies

Introduction

In June 2020, the Iran-China cooperation draft agreement appeared in media. Drafting the document had started five years ago, but it is yet incomplete and it would take more time to become an official document.

Iran-China ties are not new; rather they are deep-seated. The 25-year planned agreement is not anything extraordinary and is in fact the continuation of previous ties between the two nations. Another point with this document is that no executive bylaw has been drafted on the implementation of the agreement. Even after being finalized, the agreement would need the approval of Iran’s parliament and top constitutional watchdog, i.e. the Guardian Council.

Energy-Based Iran-China Comprehensive Cooperation

The 25-Year Iran-China Comprehensive Cooperation Plan covers a variety of sectors: politics, security, defense, culture, agriculture, economy, science, tourism, oil and energy, telecommunications and IT infrastructure, commerce and health. Furthermore, the Iran-China draft agreement points to China’s Belt and Road Initiative, also known as One Belt, One Road. Iran’s involvement in this initiative, as well as economic benefits; and a loan fund has been highlighted. Upgrading banking, financial and insurance cooperation, opening branches of Iranian banks and establishment of Iran-China Joint Bank are among other areas of cooperation in this document.

Contributing  to development of Iran’s infrastructure and building railroads across Iran, increasing petroleum products exports to China, investing in fossil energy infrastructure, investing strategic corridors crisscrossing Iran, investing for the development  of energy production and exports from Iran to regional nations, partnership in the development of the Makran coasts, helping Iran’s 5G network and upgrading Iran’s national data network, investing for clean energy production in Iran’s desert areas, helping Iran’s civilian nuclear energy and investing in  construction of subway stations in various Iranian cities are among the most significant areas of cooperation between Iran and China.

The areas of cooperation in the energy sector include crude oil (production, transport, refining and secure supply), petrochemicals, renewable energies and civilian nuclear energy. The articles of the agreement are: long-term energy supply, joint efforts to work out a stable mechanism for crude oil imports from Iran, holding talks on partnership in the creation and provision of equipment of oil and gas and petrochemicals storage, China’s partnership in the transfer of technical knowhow, and sharing experience in strategic planning with Iran’s water and electricity.

China Global & Regional Potential

China has its own specifications. It’s a country playing a significant role in modern world. In order to identify the significance of China for Iran and the world, some characteristics of this global power are as follows:

China is the most populated country in the world with a population of 1.4 billion.
China is one of the six world powers, thereby a permanent member of UN Security Council.
China is a member of the World Trade Organization (TWO), Asia-Pacific Economic Cooperation (APEC), Shanghai Cooperation Organization (SCO) and G20.
China is currently the first exporter and the second largest importer of commodities. US-China trade totals $700 billion.
China holds the second largest economy in the world based on GDP.
Nuclear-armed China has one of the largest armies in the world with the second biggest defense spending. The highest military budget in the world belongs to the US: $700 billion.
China’s GDP grew on average 8% annually from 2010 to 2014.
Based on the 2018 Outlook Report of the International Energy Agency, China’s average economic growth was 2.9% from 2000 to 2017, the highest economic growth in the world.
The inflation rate in China stood at 7.5% in 2016 and 2017, which dropped in 2018. The unemployment rate has had a downward trend in China, currently standing at 4.5%.
Based on BP’s 2017 estimates, China’s known oil reserves totaled 7.25 billion barrels, or 5.1% of the world’s total reserves, and China’s proven natural gas reserves totaled 4.5 tcm, or 9.2% of  the world’s total gas reserves.
In 2018, China imported around 10 mb/d of oil to become the second largest oil importer after the US. China’s net oil imports would grow at an average annual rate of 1.2% during the 2016-2040 period to reach 13 mb/d in 2040 from 8 mb/d in 2016.
China is the third largest consumer and importer of natural gas in the world after the US and Russia.
Based on the energy objectives set for the 2016-2020 development plan in China, using non-fossil fuels would increase 15% from 2015. The energy and carbon intensities would drop respectively 15% and 18%, compared with 2015. Promoting clean energies is a policy pursued by the Chinese government.
Coal is the most significant energy carrier in China’s energy mix. However, its share is on the decline in favor of other sources of energy.
By 2040, China would be the world’s most important crude oil refining center with capacity to process 14 mb/d of oil. Based on projections, China’s gas imports would increase from 70 bcm in 2015 to 280 bcm in 2040. That would put China after the European Union in terms of gas imports. China’s gas imports dependence would increase from 35% to 50% by 2040.

China and Long-Term Deals

By the end of 2016, China had partnership deals with 78 nations and five regional organizations from five continents. They covered 24 categories of partnership, ranging from regular to comprehensive strategic partnership.

China cooperates with various nations under various frameworks. In 1996, China for the first time developed a coordinated strategy with Russia, which was promoted to a strategic comprehensive partnership in 2011 in a sign of upgraded ties between them. In 2005, China established strategic cooperation with Pakistan, which has continued. China and Pakistan's “All-Weather” Friendship indicates that the two countries continue their cooperation regardless of environmental changes. Even China and India- two regional rivals- signed Strategic and Cooperative Partnership for Peace and Prosperity in 2014. Recognizing that their respective growth processes are mutually reinforcing, the two nations agreed to leverage mutual complementarities and build a closer developmental partnership.

Historically speaking, China’s first partnership was in 1993 with Brazil. Russia and Pakistan maintain strategic cooperation with China, working in seven sectors. Ireland and Qatar have strategic ties with China. Ireland and China have made clear in their agreement to respect each other’s sovereignty rights and interests. Belgium and Romania are committed only to regular cooperation with China.

What’s unchanged is that economic cooperation and cultural exchanges are always key elements in any partnership deal.

If the number of grounds for cooperation is counted, we would see that comprehensive strategic partnership definitely shows closer ties between permanent members, particularly in political and military cooperation.

Between 2006 and 2016, China signed partnership deals with 50 nations and regional unions. China’s prime minister visited Brussels in 2004 and presented a new definition of his country’s partnership to the European Union. He made it clear that comprehensive relations covered economic, cultural, technological and political aspects. Comprehensive relations mean multilayer ties including state-state and nation-nation diplomacy. Strategy in ties means cooperation between two nations is stable and long-term and overcomes the ideological differences and political systems of partners. Partnership means the parties to such a deal would make efforts for win-win ties based on mutual interests while exercising mutual respect, mutual confidence, equality and balance.

Halegan, Soroush Fields Awaiting Investment

 Halegan which is located in Fars Province in southern Iran is among Iran's dozens of gas fields whose investment plan has been presented over recent years.

The field is 73 kilometers north of Assaluyeh and 25 kilometers south of the Sefid Baghoun gas field. It neighbors the Sefid Zakhour and Dey gas fields from north.

In a bid to gain a 15% share in global gas trading, Iran is implementing gas efficiency plans in the housing, commercial and industrial sectors and is firmly seeking to enhance its gas production capacity. To that effect, onshore fields are in the limelight for domestic and foreign investment due to easy access and low investment needed for their development.

National Iranian Oil Company (NIOC) intends to establish a gas hub in the south of Fars Province. NIOC's gas production and refining plans involve development of Sefid Zakhour, Sefid Baghoun, Halegan and several other gas fields.

Halegan was discovered in 2005 when a 2D seismic test project was carried out on 1,000 square kilometers of land a year earlier in Fars Province. The seismic test ended in the discovery of Halegan and several other gas fields.

Halegan measures 50 kilometers long and 11 kilometers wide. It holds 12.4 tcf of gas, (355 bcm) of gas reserves in place, 8.938 tcf of which is recoverable thanks to a 70% recovery rate. Such high recovery rate is rare for gas fields in Iran.

Furthermore, Halegan is estimated to hold 249 million barrels of gas condensate in place, 98 million barrels of which is recoverable.

Halegan's gas and condensate deposits are estimated to be valued at $83 billion, while discovery of this gas field had cost only $36 million over 2.5 years. Development of Halegan would allow a sustainable output of 50 mcm/d of gas over a 20-year period.

The director of Exploration Directorate at NIOC has said that exploration drilling operations were very tough and slow due to stiff land composed of high-pressure layers. A 4,999-meter deep well was drilled in order to yield better results. Later on, several reservoir layers including Kangan, Upper Dalan, Nar and Lower Dalan, were appraised. In the end, the field was estimated to hold 12,400 bcf of gas. The significant point with the discovery of this gas field is that all geophysical, reservoir and petroleum engineering studies, as well as reservoir layer tests were handled by the Directorate of Exploration of NIOC.

Fars Province is a gas hub in the Middle East region. Some exploration studies in this province have proven the existence of huge gas reserves. Halegan is the latest gas reservoir whose existence was proven there. Compared with gas fields located nearby, Halegan has bigger dimensions.

Iran's efforts to return to its genuine standing among gas exporting countries herald a tough road ahead in coming years.

Soroush Needs Technology

Soroush, which started production in 2001 in partnership with Royal Dutch Shell in 2001, is known as Iran’s largest offshore oil field. Due to natural decline in production, this field needs to be upgraded with modern technology in order to be developed. The main reservoir of this field is Bourgen located in the west of the Persian Gulf.

Soroush is located in Bushehr Province, more precisely 83 kilometers southwest of Kharg Island. Discovered in 1962, the field became operational at a rate of 14,000 b/d after the drilling of the first well. The field was harmed severely during the 1980-1988 imposed war. The field halted production during the conflict. Arrangements for the renovation of this field started in 2000 and development of the field began two years later.

Iran’s Petroleum Ministry introduced Soroush for foreign investment during a conference held a couple of years ago to roll out a new type of oil contract. Iran hopes to lift output from old fields by using major oil companies’ capital and cutting edge technology.

During 15 years of production, Soroush has produced only less than 3% of its reserves, or about 360 million barrels of oil.

Soroush last underwent development under a buyback deal with Shell in 2000. Under this deal, 10 horizontal wells were drilled in the field. In total, there are 32 wells in Soroush, producing oil with an API gravity of 14 to 21. The API gravity of the oil currently being produced is 18.

Soroush remains the largest field owned by the Iranian Offshore Oil Company (IOOC); however, it is among the oldest oil reservoirs in Iran. As a mature and brown field, it needs modern technologies to supply more oil.

The heavy crude oil extracted from Soroush is blended from that of nearby Norouz field to be shipped to the Persian Gulf floating terminal before being sold by the Directorate of International Affairs of National Iranian Oil Company.

A major advantage with the Soroush platform is its simultaneous supply and export of oil and gas. Furthermore, it is among rare platforms where no flaring projects have been implemented. Before Shell, American and Italian companies were developing the field.

Enhanced recovery from Soroush started in the wake of an agreement signed between IOOC and Sahand University of Technology. The agreement was signed by CEO of IOOC and chancellor of Sahand University of Technology.

NIOC officials say Soroush has recovery rate of 5% under normal conditions, which is much lower than that of similar fields. Enhanced oil recovery (EOR) methods would raise the recovery rate to 10 to 15%.

Under the 10-year agreement, universities will be required to carry out EOR studies in a bid to devise short-term and long-term plans for boosting production from Soroush.

NIOC is currently focusing on maximum efficient recovery from oil and gas fields across the country and enhancing oil recovery from Soroush.

Jofair, Doroud Up for Investment

 Jofair oil field is located in hydrocarbon-rich West Karoun area in southwestern Iran. The field is estimated to hold 2.1 billion barrels of crude oil in place. Jofair was one of projects introduced to foreign investors during a Tehran conference which unveiled the new model of Iran’s oil contracts – Iran Petroleum Contract (IPC). Once fully developed, the field would be producing 50 tb/d of oil.

West Karoun is a quite vast swath of land stretching from Karoun River to Iran-Iraq border. West Karoun area lies in oil-rich Khuzestan Province, but no serious exploration and production project has been carried out due to the imposed war in the 1980s and the ensuing devastation and mine-infested areas.

Now, West Karoun area has been proven to be holding huge oil reserves and Jofair field is an important reservoir there.

Iranian mine disposal experts have managed to demine the whole area.

Most fields located in West Karoun are shared with Iraq, but Jofair is an independent one and fully owned by Iran.

Development of West Karoun fields for oil production is part of strategic plans in Iran for enhanced recovery. To that effect, National Iranian Oil Company (NIOC) was assigned with the task to invest more than $500 million in this area several years ago. Over the past two years, West Karoun area has been center of attention. Jofair is expected to start production within the framework of the petroleum industry long-term development plan during the 2025 horizon.

Jofair oil field has also several gas layers. Natural gas production from this field stands at 6.3 mcf/d. Administered by Arvandan Oil and gas Production Company, Jofair development has been assigned to Petroiran Development Company (PEDCO). It means that foreign companies willing to invest in Iran must seek partnership with PEDCO under IPC deals. Four exploration wells were drilled in Jofair through 1975 to 1978. Three reservoirs- Ilam, Sarvak and Gadovan-were identified then.

Jofair oil field is located adjacent to Azadegan, Yadvaran and Ab Teimour fields. It is 14 kilometers long and 70 kilometers wide. Development of this field is in preliminary stage and early production has started at a rate of 3 tb/d.

Of the 2.1 billion barrels of oil in place in Jofair, 89% belongs to Ilam, 6% to Sarvak and 5% to Gadovan. It contains 95% heavy crude oil and 5% light crude. The API of heavy crude oil is 23.

 Early production aside, development of Jofair has three phases. Early production is at the rate of 6 tb/d, the first phase has the rate of 15 tb/d, while the second and the third phases will be 25 tb/d and 50 tb/d, respectively.

Analyzing 3D seismic data, reservoir studies, drilling and completion of two production wells, as well as workover and completion of two wells, laying out 40 kilometers of pipeline and installation of crude oil logging installations are among activities related to early production from Jofair. In addition to formulating master development plan (MDP), PEDCO has to handle workover of wells with downhole pumps. That would raise production from this field without having to spud new wells. Development of Jofair had initially been assigned to Belarus’ state oil company (BNK) under a September 2007 agreement worth half a billion dollars. But the project was halted due to the Belarusian Company’s failure to bring production from Jofair to 3,500 b/d. After four years, it had only brought the output to 2,800 b/d. Since the project is held equally by PEDCO and BNK the foreign entity was expropriated. Currently, PEDCO is doing the job alone.

In the area where Jofair is located it is still possible to discover more reserves because production from the primary layers has started and more precise exploration studies are likely to produce more surprising figures in other layers.

A total of 13 oil fields have been marked in West Karoun area. Chief among them are Azadegan, Yadavaran, Darkhoein, Jofair, Band Karkheh, Sousangerd, Moshtaq, Khorramshahr and Omid.

The main oil production layers in West Karoun are Sarvak with 9.88 billion barrels of oil in place, Kajdomi with 1.26 billion barrels, Gadovan with 370 million barrels and Fahlian with 2.332 billion barrels. The recovery rate from these fields is estimated at 6.15%.

Initial estimates indicate that the value of products from West Karoun area would be at least at 135 billion dollars even if oil price is held at around $45. This figure may justify the significance of focus on and planning for this part of the country.

Iran has so far invested around $4.5 billion in this important area, but it still needs $15 billion more in order to reach the 500 tb/d production target from West Karoun. That objective could be achieved through attracting foreign investment and Iranian oil officials hope that the new model of contracts will provide the required finances for the development of West Karoun area

Doroud Oil Fields Up for Investment

Doroud oil field, which is located in Kharg Island and northwest of the Persian Gulf, is among developed oil fields which the Iranian Offshore Oil Company (IOOC) presented to foreign investors within the framework of IPC.

Nearly 16 years have now passed since an agreement was signed for the development of the Doroud field. Enhanced recovery from the field has not been achieved despite gas injection since 2008.

According to the Department for Economic and Financial Feasibility Studies of National Iranian Oil Company’s Directorate of Corporate Planning, the investment needed in the Doroud field over four years has been calculated, which would be secured through signing F, EPCF and EPDF deals. The project costs will be recouped over a six-year period from the increase in the crude oil production capacity.

The package of investment for the integrated development of IOOC oil and gas fields has been drawn up in line with Iran’s law on removal of barriers to competitive production and upgrading the fiscal system. It will take effect after obtaining necessary permits from NIOC Board of Directors and the Economic Council and signing agreements with investors. The investment package takes into consideration compliance with Iran’s fifth five-year economic development plan for the prioritization of development projects including development of jointly owned oil and gas fields.

Doroud oil field development project is along IOOC-run projects open to investment. IOOC is a leading company in applying ESP to wells and gas lifting in the country. It intends to focus on improving the rate of recovery from hydrocarbon fields nominated for investment.

Over the past four decades, Doroud has been developed twice. It is now ready to undergo the third phase of development.

Doroud is estimated to contain 7.6 billion barrels of oil in place. Due to 33-year recovery from this field and non-timely injection of water and gas, only 1.5 billion barrels of oil was recoverable from this field. But now due to development activities in this field, the recoverable amount is expected to rise to 2.5 billion barrels.

Currently, Doroud is producing on average 15,431 b/d of oil from its offshore wells and 36,500 b/d from its onshore wells. In 1997, 42 wells were drilled in the oil field. Eighteen offshore wells and 23 onshore wells have been drilled and completed.

The crude oil processing installations are used for treating 100,000 b/d offshore and 110,000 b/d onshore.

About 1.6 billion barrels of oil has been recovered from this field over the past four decades. Oil production from Doroud came to a halt during the 1980-1988 imposed war.

The first wave of enhanced recovery from the Doroud field started in 2002 at the rate of 15,000 to 16,000 b/d. In the following years, production increased as new wells were drilled in this oil field.

When Iran signed an agreement with France’s energy giant Total in 1999 for the development of Doroud, oil was $20 per barrel. Total acquired Elf and Agip to make good investment in Iran. The French company failed to inject gas into Doroud on schedule and the project was halted mid-way. But it must be taken into consideration that over recent years as average oil prices have been at $40 a barrel, this project has been profitable for Iran with a quick rate of return on investment.

Before the gas injection section of the Doroud oil field was launched in Kharg Island, many Iranian petroleum industry experts recommended that due to the unprecedented high pressure gas injection (6,000 psi) into the field and its unknown consequences, the gas injection section be transferred from Total to the client after completion of the water injection and oil production process. In the meantime, the geologically complicated structure of the Doroud field and the location of this oil field in Kharg Island slowed down the pace of drilling in the first years of development of this field as simultaneous onshore and offshore work was tough.

NIOC Signs 13 Research Deals with Universities

 National Iranian Oil Company (NIOC) recently signed 13 agreements with Iranian universities and research centers worth €35 million plus IRR 7,160 billion for conducting research on enhanced oil recovery (EOR).

Iran’s Minister of Petroleum Bijan Zangeneh, who was in attendance at the signing ceremony, said currently 50% of oil and gas reservoirs in Iran had been assigned to universities for study.

“If with 1% enhanced recovery, 7.5 billion more barrels are recovered from a reservoir of 750 billion barrels, it would amount to $300 billion with oil price at $40 per barrel. That is while the costs would hardly reach $100 million,” the minister said.

Zangeneh also touched on studies under way for enhancing recovery from the Azadegan oil field, saying: “These studies have now reached a stage where the field’s recovery rate can be improved to generate about $200 billion wealth for the country.”

Upstream Technology Development

Minister Zangeneh said specialized manpower, research, professional capacity and management, systems and implementation regime constituted the four pillars of technological development in the upstream petroleum industry.

“In the manpower, thanks to efforts that commenced in 1998, our universities are in good conditions in the upstream oil sector,” he added.

Zangeneh recalled that in 1998, only five to six university professors were active in the upstream oil sector, but now a large number of graduates are involved in the upstream activities.

“The first pillar of technology development is specialized force, fortunately we have it already,” he said.

Regarding research, the minister said significant investment had been made in equipping laboratories.

“Good progress has been made in this sector and we are moving in a direction where our universities can conduct studies to enhance the recovery rate of reservoirs, and this issue is of high significance to us,” said Zangeneh.

The minister laid emphasis on upgrading the Research Institute of Petroleum Industry (RIPI) and Petroleum University of Technology (PUT) in the research sector, saying: “Both RIPI and PUT have signed agreements to study oil and gas fields, but that is no question of monopoly. Unlike rivalry, monopoly is by no means good.”

Regarding the third pillar, i.e. professional capacity, Zangeneh said there is potential for the development of technology.

“Iranian E&P companies constitute an example of creating professional capacities in Iran,” he added.

The minister emphasized the significance of the professional capacities in E&P, general contractors, EPD contractors, drilling, drilling services and upstream consultants for reservoirs, saying: “We are currently facing shortages in the upstream reservoirs sector and we are making efforts to pave the road for consultants active in other sectors to get involved in the upstream sector.”

As for the fourth pillar, i.e. management, systems and implementation, he said: “I believe that this pillar is the most important one because advanced management is a product of technology and has the biggest role in the development of technology. In other words, it can develop technologies in addition to being itself a product of technology. Some methods of implementation will lead us to naturally prepare the ground for the development of technology, but some methods of implementation would cause problems for the development of technology.”

Oil Sector Open to Researchers

Zangeneh said research had been racing ahead, adding that the Petroleum Ministry would spare no effort in helping universities.

“The petroleum industry’s doors are open to all researchers today,” he added.

The minister also touched on signing agreements with universities in the downstream oil industry, saying important steps had been taken. He, however, said, the conditions have not been as satisfactory in the upstream sector.

“In the downstream sector, our objective is mainly license, i.e. to be able to develop processes for production in widely-consumed areas like urea, ammonia and olefins. That could create many job opportunities,” he added.  

22 Fields under Study

In 2014, nine agreements were signed between NIOC and universities to study ways of enhanced oil recovery. With these 13 new agreements, Iranian universities have been tasked with conducting studies on 22 fields, worth IRR 10,090 billion plus €49 million.

In the first step of this technological interaction, enhanced recovery studies in the Azadegan oil field had been assigned to the Institute of Petroleum Engineering affiliated with the University of Tehran, in the Darquain field to the Amir Kabir University of Technology, in the Soroush oil field to the Sahand University of Technology, in the Ahvaz field to the Petroleum University of Technology, in the Karanj field to the Islamic Azad University, in the Kupal field to the Sharif University of Technology, in the Mansouri field to the Shiraz University, in the Gachsaran field to the Petroleum University of Technology, and in the Bibi Hakimieh field to RIPI.

Based on the new agreements, development of the Yadavaran field was assigned to the University of Tehran, the South Pars field to the Sharif University of Technology, the Alvand field to the Amir Kabir University of Technology, the Rag Sefid field to RIPI, the Masjed Soleiman field to the Sahand University of Technology, the Esfand field to the Shiraz University, the Forouzan field to the Petroleum University of Technology, the Khesht field to Islamic Azad University, the Binak field to Ferdowsi Mashhad, the Doroud field to the University of Science and Technology, the Tang Bijar field to Shahid Chamran University of Ahvaz, the Maroun field to the Isfahan University of Technology and the Norouz field to the Persian Gulf University.

 Addressing the ceremony, Masoud Karbasian CEO of NIOC said that a total of 20 oil fields and 2 gas fields would be studied by universities and research centers across Iran.

He said under the terms of the 13 agreements signed with universities, studies will be conducted over a 10-year period.

Karbasian said the 20 fields which Iranian universities and research studies would study, constitute 50% of Iranian oil reserves in place (53% of total recoverable oil).

He added that the research agreements signed for the South Pars and Tang Bijar gas fields would assign about 40$ of recoverable gas reserves in the country to  be studied by universities. That is worth more than IRR 10,080 billion plus €50 million.

Karbasian said the agreements, in the first phase, would be worth IRR 2,930 billion plus €14 million for a 10-year period.

“Another plan – Fast-Track Study – is under way for a period of 6 to 12 months with a view to estimating in-place hydrocarbon reserves, recoverable deposits and recovery rate, predicting the output of wells in the well-oriented scenarios, presenting scenarios for enhanced production, presenting a final report on production scenarios as well as prioritization and economic estimation,” he said.

Karbasian said the nine fields, whose agreement was signed in 2014, constitute totally 36% of Iran’s oil reserves in place (41% of recoverable oil).

Technology Centers at Universities

Karbasian touched on the achievements of the project, specifying the possibility of enhanced recovery from the fields, developing screening software on enhanced recovery methods, compiling a databank for each reservoir and developing geological and reservoir models for the fields.

“The major step has been taken in this project in the sector of technology and innovation, which is equipping laboratories of universities and setting up innovation centers and taking action for launching research-technology centers at various universities,” he said.

Karbasian said based on the terms of enhanced recovery agreements, a technology center for asphaltene sedimentation studies would be set up at the Amir Kabir University of Technology, an smart water technology center at the Sharif University of Technology, a polymer technology center at the Sahand University of Technology, a digital stones technology center at the University of Tehran, a detection technology center at Amir Kabir University of Technology, a technology center for production mechanisms of fractured reservoirs at the Islamic Azad University and also at RIPI.

Formation of innovative and technological networks inside the country and sometimes in partnership with international companies from France, the Netherlands and Austria, as well as partnership with knowledge-based companies is under review. Five of the universities (University of Science and Technology, University of Persian Gulf, Isfahan University of Technology, Ferdowsi University and Shahid Chamran University) were not involved in the first phase.

CNG Industry Development Guarantees Economic Dynamism

Farzin Savadkoohi

The Iranian petroleum industry has been making efforts for an efficient use of fossil fuels and using mainly compressed natural gas (CNG) in the transportation sector. CNG is abundant in Iran. Compressed natural gas (CNG) (methane stored at high pressure) is a fuel that can be used as an alternative for gasoline, diesel fuel and liquefied petroleum gas (LPG). CNG combustion produces less pollutant gases, compared with the aforementioned fuels. In comparison to other fuels, natural gas poses less of a threat in the event of a spill, because it is lighter than air and disperses quickly when released. Biomethane - refined biogas from anaerobic digestion or landfills - can be used.

Clean and Low-Cost Fuel

Compressed gas would need smaller space, not to mention easier storage compared with gasoline.  The cost of CNG production is one-third of that of gasoline. Furthermore, it is less polluting than gasoline.

Over the past decade, all world nations have moved to manufacture natural gas-fueled vehicles. Italy, Argentina. Brazil, India, Norway, Pakistan, the United States, Thailand and China are among nations favoring CNG instead of gasoline. Given the high number of cars in Iran, the country could not ignore this issue. Iran did not have to deal with myriads problems many countries were faced with.

Despite ups and downs, the CNG industry has found its own place in Iran’s fuel mix. Vehicles in Iran are basically designed to run on gasoline; however, carmakers managed to add an extra fuel tank to the cars in order to make cars dual-fuel.

An important feature of CNG is that unlike fossil fuels it emits less pollutant gases like carbon dioxide, hydrocarbon and carbon monoxide. Furthermore, such advantages as being environmentally friendly, easily combustible and low-cost make it preferable to gasoline for cars, particularly taxis and pick-up trucks.

Fuel for Public Transport

Public transport cars would definitely prefer CNG. At current gasoline and CNG prices in Iran, taxis running on CNG would save IRR 50 million a year.

The environmental aspect of CNG is instrumental. In CNG-fueled cars, compared with gasoline-fueled, carbon monoxide emissions are cut by 25% when traffic is not heavy. In a city like Tehran with heavy traffic, this percentage would reach 35%.

Furthermore, CNG is more secure than other fuels. Due to its natural gas composition, CNG is combined with air in case of any accident to avoid any possible blast.

Such features convinced the Iran's Petroleum Ministry to promote the culture of using CNG as a clean fuel in the country. In 2003, the ministry planned to enhance the share of CNG in the fuel mix of the country. CNG development was taken into consideration, which helped curb gasoline consumption to a great extent. This strategy paid off in those years; however, the envisaged development did not materialize. 

Focus on CNG

The issue was held in abeyance for one decade, until senior oil managers realized that it could not continue. That was why based on the instruction of Minister of Petroleum Bijan Zangeneh, development of CNG took a more serious shape.

Re-acceleration of the CNG project coincided with the involvement of the Economic Council. Last autumn, the Petroleum Ministry and the Planning and Budgeting Organization reached agreement on a proposal to reduce public transport costs and improve air quality in the cities. The Economic Council came up with the idea of “supporting production and converting 1.46 million taxis, vans, pick-up trucks and unlicensed taxis to CNG-fueled”. It was finally adopted.

The Petroleum Ministry, along with other specialized bodies, had reached the conclusion that there was no option but to follow the international trend in a bid to spare the country harm inflicted by the traditional models of fuel consumption.  

The National Iranian Oil Refining and Distribution Company (NIORDC) was authorized to pay up to IRR 65,000 billion to owners of cars or plants that would convert the car engines into CNG-fueled.

According to this decision, 1,464,000 cars would be converted to dual-fuel free of any charge. Eight months after the decision took effect, 72,335 cars registered to benefit from this privilege, only 14,412 of which were qualified. Earlier, 3,266 cars had become dual-fueled.

Job Creation

Development of the CNG industry requires building filling stations. Gas has to be piped to the car’s fuel tank. Gasoline-fueled cars need special equipment. This cycle needs a group of factors including companies and executive units. Nearly 2,500 CNG stations across Iran are feeding more than 4 million gas and dual-fueled cars. That has given rise to 12 fuel supply and more than 4 car equipment supply companies.

Furthermore, six CNG tanks manufacturing companies are operating in the country. A group of 293 gas station operating companies and 63 maintenance firms are also active. It shows that the CNG industry is coupled with job creation, indicating the ministry’s foresight.

Saving Hard Currency

Promoting CNG consumption has also other advantages, which should not be ignored against the backdrop of sanctions. Gasoline imports cost millions of dollars, but now Iran has become self-sufficient in gasoline production.

According to official data, 1.5 million public cars running on CNG are saving the country 10 ml/d of gasoline. That would save Iran about $1.8 billion.

Owing to the numerous advantages of CNG, the Petroleum Ministry has sought to regularly increase the number of CNG stations across the country. 

Iran is currently distributing on average 21 mcm/d of CNG across the nation, but existing infrastructure allows for up to 40 mcm/d of CNG distribution.

Smart Stations

Senior Iranian oil managers agree on the fact that other aspects of CNG development should not be ignored. Making these stations smart in order to avoid accidents during fueling is one of approaches followed up by the Petroleum Ministry.

Mohammad Hassan Baqeri, director of CNG project at National Iranian Oil Products Distribution Company (NIOPDC), said the Economic Council was trying to boost the safety of fuel stations. All 2,500 CNG stations in the country would be covered by this plan.

Noting that accidents at fuel stations could be avoided by making them smart, he said: “When CNG stations become smart, the number plates are read when the cars arrive. The cars whose data are not registered as dual-fuel would be denied services.”

Baqeri had said that almost all accidents recorded at gas stations result from pressure fluctuations. He added that the pressure of CNG pumps would be readjusted in a bid to reduce the likelihood of accidents.

Nearly one million cars have been converted to dual-fuel by the Petroleum Ministry gratuitously. Data show that about three million cars were converted to dual-fuel at car manufacturing plants. Therefore, a total of four million cars are now dual-fueled. However, the figure is said to be much higher. Smart CNG stations would show the exact number of dual-fuel cars.

If pick-up trucks, taxis and other gasoline and gasoil-powered cars cooperate with the Petroleum Ministry and other entities and welcome this clean fuel system, the benefits would be visible sooner.

Fresh Challenge with Young Head Coaches

 Football teams of Iran’s petroleum industry playing in Iran’s pro league have hired young head coaches.

Mojtaba Hosseini, who has already coached the ZobAhan Esfahan football team has been named at the head coach of Naft Masjed Soleyman while Sirous Pour-Mousavi is named head coach at Sanat Naft Abadan.

Hosseini, mainly serving as first assistant so far, is now heading Naft Masjed Soleyman in the 20th league of Iranian football clubs. He has accepted a tough challenge and is expected to lead a team that made brilliant gains under Mehdi Tartar despite numerous financial problems. Naft Masjed Soleyman finished the 8th in the premium league and it even went into the semi-finals of "Playoff Cup".

Hosseini is not 50 yet and therefore the average age of head coaches in the 20th league has declined.

Background

Hosseini first started coaching profession in 2010 when he became an assistant to Yahya Gol-Mohammadi in Nassaji Qaemshahr. Then he joined Saba Qom accompanying Gol-Mohammadi. When in the middle of the 11th league, Gol-Mohammadi left Saba to join Persepolis, he took Hosseini with him to have a new experience with the Reds of Tehran.

Hosseini went on to serve as Gol-Mohammadi’s assistant in Naft Tehran and ZobAhan.

When Gol-Mohammadi left ZobAhan, Hosseini replaced him there temporarily. ZobAhan finished the fourth. Hosseini’s term did not last long. He once more proved his faithfulness to Gol-Mohammadi. Hosseini joined Gol-Mohammadi at Tractor Tabriz.

Gol-Mohammadi stepped down, but Hosseini was asked by the Tractor Club Board of Directors to continue his work as the head coach of the team.

After Tractor hired Turkish ErtuğrulSağlam as head coach, he brought his Turkish assistant to Tabriz. Therefore, Hosseini could no longer stay there and he had to quit. The following season, Hosseini returned to the first league and became head coach of GolReyhan Alborz. His mandate did not last even one year. Last year, he became head coach of Mes Kerman.Mes Kerman was among candidates for the pro league, but due to the less goals scored compared with Aluminum Arak, it failed.

Naft Abadan

Pour-Mousavi’s presence in Sanat Naft Abadan which is being overhauled could be constructed as a major event.

Last season, he was with Pars Jonoubi. But the Board of Directors of Sanat Naft Abadan picked him for the 20th season so that Pour-Mousavi would face a new challenge. Sanat Naft is faced with serious financial problems and has already lost its stars. A tough future is awaiting him.

Good Start

Sanat Naft Abadan had a good start last season in the 19th league and it was even about to secure a berth. However, its head coach left on alleged health grounds and joined Iran’s national soccer team. Sanat Naft Abadan has since been on the declining track and has lost any chance of securing any Asian berth. In the rankings, it dropped heavily to the middle of the table. That is why the Sanat Naft Abadan Board of Directors decided to choose Pour-Mousavi who has already a championship experience with Esteqlal of Khuzestan. Apart from that, Pour-Mousavi was with Foolad Khuzestan and National Youth Team. He took the Youth Team to Asian semi-finals. Now everyone expects the experienced head coach to restore the previous standing of Sanat Naft as expectations have gone up.

Pour-Mousavi has accepted to lead Sanat Naft Abadan while well mindful of losing more and more players under the present circumstances. However, the big advantage with him is his long experience ever since he had led the National Youth team. That could significantly change the standing of Sanat Naft Abadan in the 20th season.

During his cooperation with Esteqlal and Foolad of Khuzestan, Pour-Mousavi believed in academic work and identifying talents. That has resulted in training qualified players. Relying on such background, Pour-Mousavi hopes to fill the void left following the departure of his stars mainly due to financial problems.

Pour-Mousavi: Trust Me!

While Sanat Naft Abadan has been on the downward trend, the choice of Pour-Mousavi may lead them out of this difficult path. A new generation is likely to emerge in Sanat Naft Abadan and keep hopes alive.

Now, everyone is waiting to see how Pour-Mousavi would prepare his team in such short period of time and lead it into the pro league stage.

Oil Telegrams Disclosed

 The history of oil in Iran covers a wide range of sectors. Iran’s oil is not limited to engineering, chemistry and polymer. Oil for Iran means society, culture, economy, art and poetry among other areas. This fossil fuel has given rise to many historical developments. From the Constitutional Revolution to the Pahlavi era, oil has a role in all historical developments. Such enhanced role for oil is owing to some figures whose actions were behind historical documents.

The following is a  brief review of some important oil figures whom may not be enough known  to the Iranians.

From Cambridge to Iran Oil

Aqa Khan Bakhtiari was born in Chahar Mahal and Bakhtiari in 1911. He was sent to London at 19 to study economics at the University of Cambridge. He returned to Iran in 1936 and was immediately hired by the Anglo-Persian Oil Company (AOPC). Several years later, he was elected to the 15th National Consultative Assembly to represent Shahr-e Kord. His involvement with oil was further known when he supported then Prime Minister Mohammad Mossadeq in his campaign for the nationalization of oil in Iran.

Aqa Khan Bakhtiar was named president of Bank Keshavarzi. Later on, he was named minister in the government of Manouchehr Eqbal.

Bakhtiar was back to National Iranian Oil Company (NIOC) in 1961 and was named CEO.

Qobad Fakhimi, author of Thirty Years of Iran’s Oil, believes that Bakhtiar was totally strange to Iran’s petroleum industry. He was just a close relative of Sorayya, the second wife of Mohammad Reza Shah Pahlavi, and he gained this key post.

According to Fakhimi, Bakhtiar had no success in the exercise of his jobs in the banking sector. He was strongly backed by the British government and had become a member of secret circles. He was also reported to have committed financial fraud during his tenure as CEO of NIOC.

In the aftermath of the 1979 Islamic Revolution, he fled to Britain and joined Shapour Bakhtiar, the last prime minister of the Shah regime, to act against Iran. He died in 1981.

Strange Volte-Face

Mozaffar Baqaei was born in Kerman in 1912. His father was a constitutionalist and MP. He was 17 when he was sent to France. After getting his PhD, he was back to Iran. He started studying literature at the University of Tehran. Several years later, he was named director of Kerman Culture Office. He entered politics when the second Pahlavi ascended to the throne. He joined the Democratic Party led by Qavam as-Saltaneh. He was elected into the 15th National Consultative Assembly from the Kerman constituency. Baqaei stepped into Iran’s petroleum industry when he opposed the Gass-Golshayan agreement. Opposition to this agreement paved the way for the nationalization of the petroleum industry. Baqaei joined Mossadeq in protesting against massive fraud in the 16th legislative poll and joined a sit-in. Baqaei was a member of Mossadeq-led delegation that went to The Hague court to defend Iran’s oil activities in 1951.

A year later, Baqaei made a volte-face and joined Ayatollah Kashani, standing against Mossadeq. The strange point that makes Baqaei’s character more ambiguous is his support of the Shah during the anti-Mossadeq coup following which he was described in media as the leader of “national uprising”.

After that, Baqaei went into ups and downs. He was jailed and sent into exile. After the Islamic Revolution, he sought to justify his past record, but he failed. He was arrested first in 1980 and then in 1987 on charges of spying. He died in November 1987 in Tehran.

Oil Telegrams

Shamseddin Amir-Alaei was born in Tehran in 1900. He went to Europe to study administrative and financial science. After his return to Iran, he was appointed to several posts. He first joined the Ministry of Post and then entered the Ministry of Justice.

In the government of Qavam as-Saltaneh, he was named acting minister of agriculture. That was the starting point for his involvement with politics. He was a founder of the Party of Iran. His involvement with oil started under the Mossadeq administration where he was named minister of national economy.

The Ministry of National Economy was closely associated with the petroleum industry. Amir-Alaei also served as provincial governor of oil-rich Khuzestan under Mossadeq.

After Zahedi resigned from the ministry of interior, he did an important job by taking telegrams sent by Pahlavi the first about corruption in the petroleum industry to Mossadeq to boost his case against corruption in the 1919 oil deal.

Alaei also served for some time as advisor to Mossadeq about oil developments. He served as Iran’s ambassador to Belgium. But upon his return to Tehran following the coup against the Mossadeq government, he was arrested.

In the 1960s, he went to France to get a PhD in political sciences. After the Islamic Revolution, he was also Iran’s ambassador to France for some time. He died in Tehran in 1994. Two of his major works are “Expropriation of Anglo-Iranian Oil Company” and “Oil Cold War”.