No. 100

Kasra nouri

Director General of Public Relations

In today’s global village, survival, dynamism and development of industries and the economy largely depend on international interactions and communications. This issue takes up special significance when it comes to the oil sector and related industries.

Producers, consumers, owners of technology and investment, nations, companies working in the oil, gas, petrochemical and refining sectors would need constructive and reliable communications and interaction.

Iran Petroleum, which is offering its 100th issue, was launched by the Department of Public Relations of the Ministry of Petroleum to respond to these needs. It has done its best over these years to fulfil the mission assigned to it.

In its Constitution, Iran Petroleum is required to elucidate the major strategies of the Ministry of Petroleum with regard to attraction of investment, transfer of technology and introduction of opportunities for cooperation in the oil, gas, petrochemical and refining industries besides familiarizing the audience with technical capabilities and human resources.

Fast and document publication of news about Iran’s petroleum industry and painting a clear image of this industry have been focused upon in the 100 issues printed so far.

Feedbacks from Iran Petroleum readers from across the globe show that this specialized magazine has managed to respond to the taste of its audiences.

We believe that as the largest global industry, oil and gas affect all aspects of social, economic and political life, thereby requiring cooperation and interaction.

Doubtlessly, the most important obligation upon all specialized magazines involved in the oil and energy sector would be to provide precise and reliable information, make efforts for international cooperation between actors in this sector and create stability and security for investment in oil production and supply.

As a substance that keeps the wheels of industry and economy running, oil is directly linked with serenity, welfare and security all across the world.

As journalists we are ethically obligated to warn politicians that oil and energy is not a battlefield for political rivalry. Imposing sanctions on oil producers would amount to imposing sanctions on the entire world and endangering their well-being.

One Decade with Specialized Magazine

Iran Petroleum Releases 100th Issue

Hamid-Reza Shakeri-Rad

Chief Editor

“Iran Petroleum”, the official English-language monthly of Iran’s Petroleum Ministry, is now releasing its 100th issue, having been in ups and downs.

“Iran Petroleum” first appeared some nine years ago under the 10th administration. By that time, Iran’s petroleum industry was, like now, under sanctions. However, after the 11th administration took office, the monthly was rejuvenated on part with the petroleum industry. Since that time on, “Iran Petroleum” pursued three principles: introducing opportunities for investment in Iran’s petroleum industry, reviewing Iran’s petroleum industry events and introducing the capacities and potentials of Iran’s petroleum industry. Due to containing useful information, it received positive feedbacks from foreign readers.

Along with the 11th and 12th administrations, “Iran Petroleum” has witnessed a variety of events pertaining to Iran’s petroleum industry. It has sought over these years to provide information in the best possible manner on all these events.

Some of key events covered widely by “Iran Petroleum” are prioritization and completion of the giant South Pars gas field development phases, leading to Iran outperforming Qatar with which it shares the offshore reservoir; development of oil fields in West Karoun; the Joint Comprehensive Plan of Action (JCPOA) and its positive impacts on Iran’s petroleum industry; the signing of SP11 development agreement with French giant Total; restoration of Iran’s oil output to pre-sanctions levels; Iran’s revival of OPEC oil export share; oil price fluctuations; OPEC+ formation and agreement on market regulation with Iran being exempted; increased presence of foreign companies in Iran’s petroleum industry post-JCPOA; US presidential election and the victory of Donald Trump; the US withdrawal from the JCPOA and the restoration of unlawful and unilateral sanctions on Iran; Total pulling out of SP11 project; departure of foreign investors despite great potential in Iran’s petroleum industry; engagement of Iranian companies and helping them develop E&P capabilities; inauguration and operation of various oil, gas, refining and petrochemical projects; coverage of several rounds of annual Iran Oil Show;  COVID-19 outbreak and the continuation of oil production without any halt in production; and finally the new round of US presidential election and the victory of Joe Biden amid hopes for the US return to the JCPOA.

What was mentioned here was just part of key events in Iran’s petroleum industry that were all covered by “Iran Petroleum” in the form of news, interview, report, analysis, pictorial reports and infographics.

I would like to offer my sincere gratitude to the Editorial Board of “Iran Petroleum” for their significant contribution to the magazine despite all restrictions.

Last but not least, we hope to see bright future for Iran’s petroleum industry.

OPEC+ Reaches Agreement

Zangeneh: OPEC+ Deal Unlikely to Influence Market

OPEC and non-OPEC allies, after days of tense discussions, agreed to increase production by 500,000 b/d starting from January. This will bring the total production cuts at the beginning of 2021 to 7.2 mb/d.

However, Iran’s Minister of Petroleum Bijan Zangeneh said: “I don’t think this decision would have any determining impact on the market.”

Under the agreement, members of the Organization of the Petroleum Exporting Countries (OPEC) along with Russia and other countries will increase production by 500,000 barrels a day in January and, potentially, by a similar amount in the following months. The increase, less than 1 percent of the global oil market, comes while demand is still under pressure emanated from COVID-19 outbreak.

The group will also hold monthly meetings to sign off on further adjustments.

The arrangement was a compromise between countries that wanted to proceed with a much larger increase of two million barrels a day, which had been agreed upon at an earlier meeting, and others, led by Saudi Arabia, that preferred to maintain current production cuts, estimated at 7.7 mb/d, given the uncertainties stemming from the pandemic.

In April, after days of protracted talks, OPEC+ agreed to the largest single output cut in the history. The record cut of 9.7 mb/d started on May 1 but was subsequently scaled back to 7.7 mb/d in August.

Meetings Helpful

For Zangeneh, a 500,000 b/d increase by OPEC+ is not too much to affect the market. He told reporters that due to uncertainties, monthly ministerial meetings would help stabilize the market stability and lead OPEC and non-OPEC towards a fair market price.

He said next ministerial meetings of OPEC+ would decide upon production cut for the months following January in 2021.

“Any decision in this regard will follow supply and demand and it seems that this decision, which was adopted based on consensus, is a reasonable one,” said the minister.

As news has emerged of development of COVID-19 vaccine in recent weeks, global economy is slowly showing signs of recovery. However, it would be premature to talk about global demand for oil as there is still supply glut.

OPEC+ has, in the past year, sought to cut its total production in a bid to shore up prices; however, these nations’ dependence on oil revenues had given rise to speculation about the possibility of extension of the output cut deal into next year.

The oil market experienced a historical day this year, when oil prices slipped into the negative territory. Oil storage tanks were filled and supply had largely overtaken demand. Brent oil prices rallied anew; however, the conditions imposed by the coronavirus on the global economy and oil market pushed rivals to close ranks with OPEC producers in a bid to bring back balance to the oil market.

Long-time rivals- Russia and Saudi Arabia- did not hesitate to engage in a price war in early 2020 to win a bigger share of the oil market. But in April, they had to sit together and reach agreement.

World Oil Supply Cut 1.6bn Barrels

Zangeneh said prior to the 12th ministerial meeting of OPEC+ that the April meeting of OPEC and partners removed 1.6 billion barrels from global oil supply.

Referring to the COVID-19 pandemic’s impact on global economic growth, he said: “Although analyses indicate that the economy shrank 4 percent, it would grow 4% in 2021. But these are all mere estimates and we have to see on the grounds which way the global economic growth would take.”

OPEC+ meetings are normally held after OPEC meetings. This time, OPEC member states failed to reach agreement on cutting output. The videoconference meeting lasted four hours, but it ended inconclusively.

Oil Prices Up

In the run-up to the 180th meeting of the OPEC Conference, crude oil prices soared past $48 a barrel, the highest since March. Algerian Energy Minister Abdelmadjid Attar, holding the rotating presidency of OPEC, said in an opening speech that 2020 was a year of challenge due to the coronavirus which imposed a heavy stagnation on the world.

The ministerial meeting was held against the backdrop of development of effective and safe vaccines by some drug giants across the globe. However, vaccine distribution would take time and any positive impact of such vaccines would be seen only in the second half of next year. Therefore, ongoing conditions will continue well into 2021. However, the global economy would grow 4.4%.

Zangeneh had told reporters that OPC wanted a bigger production cut for the beginning of 2021.

After the meeting, the minister said: “Consensus in decision-making would require patience and negotiations.”

The OPEC/Non-OPEC Joint Ministerial Monitoring Committee (JMMC) had also failed to reach agreement on new policy for OPEC+.

Tough Meeting

Some OPEC member states were opposed to any extension of production cut and had sporadically announced their position to OPEC to that effect. It may be said that OPEC was faced with the United Arab Emirates’ request for an increased share and the challenge of non-compliance by Iraq and Nigeria along with Libya’s 1.2 mb/d oil production. Therefore, any consensus and decision-making had become difficult. Some scenarios were raised on the extension of the current OPEC+ agreement, i.e. 7.6 mb/d for a three-month period.

However, the OPEC ministerial meeting reached no concrete result. Zangeneh had said that some OPEC member states had complained about lack of respect for previous decisions by fellow members, but it could not block an agreement.

Zangeneh said OPEC members were mainly concerned with non-OPEC’s non-compliance. He had said that it would be difficult for most OPEC members to make any decision without non-OPEC.

Iran’s governor for OPEC, Amir Hossein Zamaninia, had said despite opposition by some member states like the UAE against extension of the currently effective agreement, the 180th meeting of the OPEC Conference announced its agreement on maintaining the current level of production.

Meanwhile, during the 180th meeting of the OPEC Conference, Iran’s OPEC governor was elected as chairman for 2021.

OPEC board of governors is the executive wing of the organization and is charged with executing any decision adopted in the OPEC meetings. It also reviews the Secretary General’s reports and offers advice to meetings of the OPEC Conference.

Diplomacy of Silence

 Negar Sadeqi

 The silence diplomacy. That describes the policy Iran’s Minister of Petroleum Bijan Zangeneh adopted after US President Donald Trump quit the 2015 Iran nuclear deal in 2015 and re-imposed oil sanctions on Iran.

Every time he was asked about Iran’s oil production and exports, the minister replied: “I don’t say anything. As long as sanctions continue my silence goes on.”

The two-year silence is still effective about Iran’s oil production and exports data. However, based on statistics, Iran’s oil exports have not been down to zero and Iran’s petroleum products’ exports have increased.

The US re-imposed oil sanctions on Iran in November 2018, thereby slapping an embargo on Iran’s oil exports. Eight major buyers of Iran’s oil were granted waivers which were lifted in May 2019. The US said it was seeking to zero Iran’s oil exports. Two years have passed and the US has failed in its objective of bringing Iran’s oil exports down to zero.

However, Iran has proceeded with its capacity building plans to resume its presence the oil market once the sanctions have been lifted. Gas production in the giant South Pars gas field has increased, while crude oil processing capacity has grown at Iranian refineries. A gasoline importer until eight years ago, Iran is now an exporter of this product. Petrochemicals production has also grown significantly. Iran’s customs data show the bulk of the country’s hard currency revenue comes from oil income.

Over the past two years, the US has resorted to every tool to bring an end to Iran’s oil exports, ranging from threatening buyers of Iran’s oil to monitoring all news about Iran’s oil production and exports. It even imposed sanctions on the Persian Gulf Petrochemical Industries Company (PGPIC) to keep Iran from selling petrochemical products. As soon as news of Iranian petroleum products exports spread, the US did not hesitate to impose sanctions. The US toughened sanctions on Iran’s oil; however, it failed to zero them.

Although the US went on to impose sanctions on Minister Zangeneh, oil industry managers and some offshoots of the Petroleum Ministry, the minister said it “made us more determined”.

The Unimaginable Came True

Under the administration of President Hassan Rouhani, Iran’s petroleum industry has been through ups and downs. Iran’s oil exports had dropped to below 1 mb/d. As soon as Iran struck the 2015 deal with six world powers, the country managed to increase its oil production to record levels in a quite short period of time.

Homayoun Falakshahi, a senior oil analyst at market intelligence firm Kpler, said: “During the days when oil sanctions were lifted on Iran, foreign companies thought Iran would be able to return to the oil market within three years. Nobody imagined Iran could increase its oil production and exports within six months.”

“Certainly, the capacity building during the JCPOA talks were instrumental in this achievement,” he said.

Falakshahi said no foreign company imagined Trump would pull the US out of the JCPOA to reinstate sanctions. French energy giant Total signed the deal for the South Pars development after Trump had taken office.

Shadow of Sanctions

Iran was exporting more than 2.8 mb/d of oil before the US quit the JCPOA with 40% of Iran’s oil destined to Europe. Iran’s oil production capacity had reached 3.9 mb/d.

“What has happened with Iran’s petroleum industry since November 2018 is like a wave; Iran’s oil exports started falling, but gradually we saw unofficial figures that Iran’s oil exports had increased again. Iran never releases any official figure,” he said.

Falakshahi said even oil companies that were willing to cooperate with Iran preferred to remain anonymous for fear of US penalties.

Asked if Zangeneh’s silence had been helpful to Iran’s petroleum industry, he replied: “Yes, to some extent.”

Falakshahi added that the decision by Zangeneh and oil managers to “cover up data on oil production, export designation and petroleum products” has been effective for Iran.

He said Iran managed to keep its oil production and exports data confidential despite technologically sophisticated tools developed in the world to unveil such secrets.

Tanker Tracking Data Challenged

Iran is under sanctions and therefore oil exports are carried out with hardship. However, the main question remains to know whether or not the silence diplomacy has paid off over Iran’s oil.

Falakshahi says: “Sure! Zangeneh’s silence diplomacy challenged the tanker tracking institutes’ effort to have access to Iran’s oil exports data.”

Tanker tracking firms have offered conflicting figures on Iran’s oil exports, ranging from 100,000 b/d to 600,000 b/d.

Even some media in Iran wrote about Iran’s oil products and exports and destinations. That led to tighter sanctions on Iran, but the Petroleum Ministry stuck with its silence diplomacy.

“This policy has made it difficult for the companies tracking Iran’s oil export data. I don’t say their data is incorrect, but it is not complete,” he said.

NIOC Expertise

International oil sanctions that had been imposed on Iran since late 2000s were removed following the implementation of the JCPOA. The National Iranian Oil Company (NIOC) had gained experience in skirting around sanctions by applying complicated mechanisms.

Following the implementation of JCPOA, some companies revealed their secrets on circumventing sanctions and that led to the renewed imposition of US sanction since November 2018. All loopholes had been blocked and NIOC had no option. New methods had to be found and tried for cooperation with foreign companies. The success of such a policy was tied to no media disclosure.

“Iran had complicated oil exports options to the extent that it was difficult to track Iran’s oil exports accurately,”Falakshahi said.

Benefits for Buyers

It is difficult to say whether or not Zangeneh’s silence diplomacy has been successful as there is no accurate data available on Iran’s transactions and customers. But an oil official recently said that this policy would definitely serve buyers of Iran’s oil as they intend to bypass US sanctions. The US is monitoring all oil routes and it will not hesitate to blacklist any company dealing with Iran. Therefore, Iran’s decision to keep secret the name of companies has given assurances to oil buyers.

“For instance we may guess Iran’s major oil buyers, but the point is that nobody knows how much oil has been purchased from Iran. It has made it difficult for the

US in its policy of countering companies dealing with Iran,” said Falakshahi.

News wires and Twitter have been a major source of information for the US to impose sanctions on Iran’s oil sector. Even Mike Pompeo, the US secretary of state, once cited a Twitter story about Iran’s oil. Zangeneh’s silence diplomacy has pushed the Americans to resort to unreliable sources.

No Halt in Iran Oil/Gas Supply

One may ask if the COVID-19 pandemic has had any role in the falling demand for oil. Zangeneh has only said that Iran’s oil and gas production did not stop under COVID-19 conditions and that oil development projects were being pursued.

COVID-19 is a global pandemic affecting the world economy, but the conditions are tougher in Iran because of oil sanctions. Iran has failed to sell oil as it had planned, but it has instead enhanced production from the South Pars gas field 2.5 times. Iran’s gas production capacity from South Pars, which it shares with Qatar, has now reached 700 mcm/d. Mohammad Meshkinfam, CEO of Pars Oil and Gas Company (POGC), has said that South Pars accounts for 40% of Iran’s gasoline needs.

When COVID-19 broke out, Iran was already under sanctions and it was preparing to wean itself off oil income. The country has switched to gas and petroleum products and therefore it did not suffer the oil shock some countries experienced during the first wave of the coronavirus.

“I believe that the coronavirus did not affect Iran’s oil exports too much,” said Falakshahi.

Strong Comeback

Following the victory of Joe Biden in the US presidential election, all eyes are fixed on the White House. Will Biden, a vice president in the Barack Obama administration, lift oil sanctions on Iran? Even so, will the already saturated market absorb Iran’s 2mb/d oil? What would happen to the oil the US supplied to remove Iran and Venezuela from the market? Zangeneh has said he would not speak up as long as sanctions were in effect.

The minister; however, acknowledged during a videoconference meeting of the Gas Exporting Countries Forum (GECF) that due to US sanctions Iran could not combat the coronavirus effectively.

Falakshahi said: “The main question is to know how the sanctions would be lifted. Removing the oil sanctions all at once would not be in the interests of the Biden administration and I don’t think that he would do so. Even if he chooses to lift the oil sanctions he would do it over a 6-month period. They don’t intend to give any new shock to the oil market by letting Iran in to see once again a price slump. However, Iran is willing to return to the oil market as soon as possible.”

Is Iran able to repeat its post-JCPOA experience in oil production? Falakshahi said: “The best and most effective asset for every oil company is its human resources. Iran’s petroleum industry, backed by its skillful manpower in the oil and gas installations, has effectively managed its reservoirs. Nobody imagined that Iran would return to the oil market shortly after the JCPOA. But was back to the market with a stable output. I think that Iran would be able to repeat the same experience although reservoirs are mature.”

“I think that Iran can restore 80-90% of its production level and export shortly after the sanctions have been lifted,” he added.

Long-Standing Sanctions

The Rouhani administration is bowing out in less than a year. Iran’s petroleum industry was sanctions-free only for two years post-JCPOA. It was again placed under sanctions in November 2018. Iranian oil administrators never imagined to experience such US pressure.

During the first round of sanctions, Iran could take some measures, but this time everything is out of the question.However, officials prefer not to share these problems with people. Iran has even increased its oil and gas production in recent years, despite unfair rivalry from neighboring states and oil producers.

“I can’t say that Mr. Zangeneh’s term has been perfect to be free from any criticism. But if I want to give a general assessment by taking into consideration all internal and external problems the Iranian petroleum industry has been faced with, I would say he has fared well,” said Falakshahi.

“Mr. Zangeneh focused on completing South Pars projects and increasing gas production from this gas field. Technically speaking he did well because a market was created for South Pars products, the gas distribution network was extended across Iran and the petrochemical production chain was diversified,” he said.

“Furthermore, completion of the Persian Gulf Star refinery under this administration was one of the most significant and the most strategic petroleum industry projects over the past seven years. Without this refinery, Iran would have seen many problems like condensate storage or gasoline production. The Persian Gulf Star refinery was of great help to that effect,” said Falakshahi.

Iran Ready to Pump Gas to Europe

Veteran Iranian diplomat Ali Majedi has said Iran is always attractive to European firms thanks to its huge energy reserves. Majedi, who has been ambassador to Germany, Japan and Brazil, told "Iran Petroleum" that Iran’s oil, gas and petrochemical sector would receive €15 billion in German investment were it not for US sanctions.

The following is the full text of the interview Majedi, also a former top oil official, gave to "Iran Petroleum".

You served as Iran’s ambassador to Germany, one of the major European economies. How do you evaluate the process of signing of oil, gas and petrochemical agreements with the Germans?

I was named ambassador to Germany exactly when Iran and six world powers had begun talks to reach the JCPOA deal. At the time when the talks were under way and after the JCPOA was stuck I tried my best to remind German officials of the advantages of investment in Iran’s oil and gas sector. I was also serving as Iran’s ambassador to Japan where I had told officials about Iranian crude oil reserves. I did the same in Germany and German company Wintershall agreed to invest in Iran’s ecostream, as well as several oil and gas fields. Talks were held with National Iranian Oil Company and National Iranian Gas Company. Although the talks were 95% done, the US withdrawal from the JCPOA halted everything. BASF, a major shareholder in Wintershall, has significant customers in the US and therefore the project came to a halt. BASF is the largest oil ecostream company in Germany. It is cooperating with Russia’s Gazprom in exporting oil and gas from Russia to Europe. As the largest chemical company in Germany, it has also won international reputation and is involved in widespread activity in the US. Given the fact that Wintershall is largely interested in continued cooperation with Iran while it has been forced to end talks due to opposition from its stakeholders, as talks have neared the stage of signing agreement, in case the Americans stop their negative behavior we can quickly implement the agreement with the Germans. I mean in case the Americans return to the JCPOA our two-year talks may bear fruits, in which case our Ministry of Petroleum and ambassador to Germany should adopt a strong economic diplomacy to inform the Germans once more of the advantages of investment in Iran’s oil and gas fields, as well as other sectors.

You mean that should the US choose to return to the JCPOA, Germany can develop oil and gas fields in Iran.

The ground is already paved. The Ministry of Foreign Affairs, along with the Ministry of Petroleum and National Iranian Oil Company, have made extensive efforts for this cooperation to materialize. Therefore, this agreement is largely likely to come to fruition.

The Germans seem to be interested in Iran’s oil and gas projects, don’t they?

That’s true. We had another project with BASF, and talks were held between this company and the Persian Gulf Holding. Minister Zangeneh welcomed it and necessary facilities were planned to be provided. The project was valued at €5 billion. BASF had a 60% and Persian Gulf Holding a 40% share in the project. Iran, Saudi Arabia, Algeria and Qatar were bidding for BASF’s cooperation. BASF experts chose Iran after 6 months of consultation. The CEO of Persian Gulf Holding also visited Germany several times for talks. However, the project was halted due to President Trump’s withdrawal from the JCPOA. The talks were 50% complete and we had reached the phase of financing. In case the agreement had been signed with the Germans, in addition to financial resources, German technology would be also transferred. Therefore, these projects are significant to us. In addition to oil fields, we also held talks on gas fields. The Germans were even ready to finance the Siraf refining project, which was once again halted due to US sanctions.

Therefore, easing of the sanctions can lead to implementation of major projects with German investment in Iran?

In fact we had three major projects with Germany, which were suspended due to the withdrawal of US from the JCPOA. At the Iranian embassy in Germany, we seriously followed up on the talks. In another case, the ground was prepared for cooperation between an Iranian electricity company and Germany’s Siemens. This one is also suspended. The investment envisaged for the aforesaid projects totals €15 billion, which is significant. As I have already mentioned, our talks with the German side made very good progress, but they have been halted due to the US sanctions. In case the US sanctions are lifted, the Petroleum Ministry, the Persian Gulf Petrochemical Industries Company and the Iranian embassy in Germany would have to adopt a strong economic diplomacy to convince German companies about the advantages of investment in Iran. German companies were also close to cooperating with Petropars.

You were serving as the deputy minister of petroleum for international affairs. What else can you tell us about Iran’s energy advantages?

We have to seriously follow up on the issue of gas exports to Europe. I believe that there is great potential for gas supply to the green continent. The Europeans, particularly the Germans, depend on gas, but it is monopolized by Russia now. As someone who believes in economic diplomacy under any circumstances, I reiterate that gas delivery to Europe would be a successful project in the future.

What do you think of the future prospect of Iran’s oil and gas market in the world?

Our main market lies in East Asian nations like China, Japan, South Korea and India. However, we can also win a toehold in Europe. If we centralize our work we may consider exporting gas to Europe.

The US is Loser in Imposing Sanctions on Iran

 The head of "Committee for Developing Iran’s Economic Cooperation with Iraq and Syria" has said the United States was the loser due to Washington’s failure to zero Iran’s oil and gas exports.

In an interview with "Iran Petroleum", Hassan Danaeifar said despite Europe’s attractive energy market, Iran should be active at easier markets like India and China.

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

The US sanctions against Iran have failed to stop Iran’s energy exports to Iraq. Could it be seen as a success for Iran’s oil and gas activities?

In the energy sector, there is an all-out war under way between Iran and the US over Tehran’s national revenue. Oil, oil products, petrochemicals, gas and electricity constitute a major source of revenue for Iran. The Americans have been trying hard to zero Iran’s oil and gas exports. But their own media say they have failed to achieve their objective. They had set objectives to block our energy exports, but they failed. That does not mean we can export oil and gas as usual. That’s not so. However, despite US efforts, our oil exports were not down to zero.

So you give an upbeat assessment of the measures taken so far.

Our success lies in the fact that they did not succeed; otherwise, we have not realized our own objectives. The figures and data are not the same as they were although they are acceptable.

What about Iran’s petrochemical exports?

Except for Turkey, our neighbors are unwilling to consume petrochemical products. Some of them are end users of petrochemicals, but they show no willingness for raw materials. For instance, fertilizer or urea are attractive in some neighboring countries, but the raw materials used in plastic materials have no buyer. Buyers of Iran’s petrochemical products are mainly extraterritorial ones.

Do you mean that we can still sell petrochemical products despite sanctions in place?

Yes, that’s it. Despite all sanctions we keep selling our products.

What do you think of the sales of Iranian petroleum products to Venezuela in the midst of restoration of unilateral US sanctions on Iran? Iranian oil tankers, except for one, delivered the cargo.

Iran and Venezuela are two oil-rich nations and Venezuela is willing to import petroleum products, technology and refinery parts. In its ties with Iran, Venezuela is seeking such objective. Of course, it would be seen as a step forward when the Americans were threatening other nations about buying Iran’s oil. The important thing would be to take Iran’s oil cargo to its destination. We may choose a specific method every time we want to sell our products. One reason why the Americans are angry is that they failed to disrupt the navigation of Iranian oil tankers in high seas despite exerting maximum pressure.

The Iranian government has largely supported Syria, but it has not managed to win an identical toehold in its energy market as in Iraq’s. Why?

Territorial factors and location are decisive issues. For instance, for electricity transmission we easily installed our posts on the route to Iraq, for gas delivery we laid out a pipeline as far as our shared border. But we are not next-door neighbor with Syria. Besides, Syria was home to heavy unrest until two and a half years ago.

What do you think of cooperation with Turkey in exporting energy products?

Gas exports to Turkey have regularly experienced ups and downs. It has been under way on and off.

As the US has imposed sanctions on the Nord Stream 2 project, the option of Iran’s gas exports to Europe is back on the agenda. US Democrats, like Republicans, do not favor Russia’s presence in the energy market. Has Iran taken any actions to that effect?

Iran has always been concerned with energy exports to Europe. However, it has not materialized due to political parameters. Gas transmission to Europe via Turkey has been discussed for five decades, but nothing has been achieved. I said five decades to highlight the fact that this issue was raised first prior to the [1979] Islamic Revolution. Despite serious talks to that effect, no concrete result was achieved. In my view, energy exports to East would be easier. Given China’s dependence on energy, we'd better invest in this sector.

Do you propose that we invest in energy exports to Southeast Asian nations instead of Western nations?

Yes, of course! But China is the most important and the main country in this sector. I also lay emphasis on this country. India and China can be major consumers of Iran’s gas. The planned gas pipeline from Iran to Pakistan and then India, would be instrumental were it not for political pressure. However, the best option for Iran’s gas transmission is currently through sea.

How do you see the prospect of Iran’s energy activities?

We have to look into the future. I believe that the discovery of new oil and gas fields in the Mediterranean would drastically change the energy market. If the estimates given about Mediterranean energy reserves prove to be true and this region becomes an energy hub, it could be a wakeup call for us as it would overcome the Persian Gulf in some global markets. Due to proximity to European nations, the Mediterranean would change the energy economics equations, which would require shifting attention towards Eastern energy market.

Iran Energy Diplomacy with Iraq

 Iran’s first post-Saddam ambassador to Iraq has said Tehran and Baghdad would tie their economic infrastructure to counter enemies. Hassan Kazemi Qomi told "Iran Petroleum" that the energy diplomacy was the wing of national security.

The following is the full text of the interview he gave to "Iran Petroleum".

Following the US’s re-imposition of sanctions on Iran’s oil sector, Iranian authorities decided to highlight Iran’s regional energy contribution. How do you assess this issue from the standpoint of a diplomat who has been involved in economic diplomacy at the Foreign Ministry?

As a two-time ambassador to Iraq, I would like to explain about the regional extent of Iran’s energy sector. Iran and Iraq are two neighboring countries with huge oil reserves, both being OPEC founding members. In post-Saddam Iraq, Iran’s policy has been to upgrade cooperation in all sectors including but not limited to political, economic and security domains. Unfortunately, due to the two wars imposed on Iran by Baathist-run Iraq and due to post-Saddam terrorist acts, this country has been faced with many challenges. Islamic Republic of Iran has been supporting a stable and peaceful Iraq through extending economic cooperation. Iraq heavily depends on its oil revenues and its petroleum industry is its main driver. Well mindful of this issue, we look for energy cooperation. Furthermore, Iran and Iraq are two founding members of OPEC and have been instrumental in fateful decisions adopted by the Organization. Iran and Iraq also share oil fields, having required them to develop new capacities for cooperation.

Do you think that Iran has held a strategic view of energy supply to Iraq?

Yes, of course. This policy was highlighted in Iran’s energy diplomacy. We also tried our best to meet Iraqi needs. Holding a strategic and deep view, we moved towards building a gas pipeline. Construction of a pipeline to carry gas from Iran to Baghdad and Basra to power plants in these cities was a strategic action that had to be done.Our efforts were focused on tying the economic infrastructure of the two nations in a bid to overcome threats and increase opportunities. It would not be limited to consumer commodities. Iran and Iraq would also try to put their infrastructure in parallel in a bid to pursue their national interests. This infrastructure may be in the oil, gas and energy sector or even dam building, fiber optics, telecommunications and railroads.

Therefore, the Ministry of Foreign Affairs and the Ministry of Petroleum are trying to tie the economic infrastructure of the two nations in a bid to clear the way for Iran and Iraq to proceed with their diplomacy.

That’s true.The energy diplomacy is the arm of state diplomacy and national security. Therefore, I believe that we did right in deciding to build a gas pipeline to Iraq to meet our neighbor’s energy needs. In doing so, we managed to win a toehold in the Iraqi market. In 2004-2005, we signed other agreements and memorandums with Iraq. However, they have not come to fruition due to budget problems and ongoing political and security developments in Iraq. Of course, US pressure aimed at thwarting these projects may not be easily ignored. Washington does not favor any strong Tehran-Baghdad ties in the political, economic, defense and security domains. Iran and Iraq are trying their best to develop closer ties, taking into consideration the two countries' common interests and threats.

You pointed to the oil reservoirs the two nations share. A major challenge is the impossibility of equal recovery from joint reservoirs under conditions of sanctions. How have you raised this issue with the Iraqi side?

We have no problems with the Iraqis in this regard. The two nations share oil fields. Fair talks have been held between them on this issue. Iranian Ministry of Foreign Affairs and Ministry of Petroleum have followed up on very constructive talks and reached important agreements. Operation of joint fields and even establishment of a joint company was pursued. One issue for the Iraqis was that foreign companies were barred by US sanctions on Iran from joining oil projects. This problem may be resolved by applying new methods. To the dismay of the Americans, we have done great job in Iraq.

Is there any other thing in Iraq’s oil, gas and petrochemical sector to highlight?

Yes, we were involved in Iraq’s refining sector. The public and private sectors both stepped in and decided to re-launch some of the Iraqi refineries that had been shut down amid chaos following the downfall of Saddam. But we are not yet involved practically because of US sanctions and internal political rivalry in Iraq. Fortunately, in the energy diplomacy domain, there is ground for cooperation with Iraq. However, we need a strong economic diplomacy based on which we would set our objectives in cooperation with the Iraqi side and follow up on them firmly.

Gas Output Hits 900mcm/d

The CEO of National Iranian Gas Company (NIGC) Hassan Montazer Torbati said the country’s natural gas production has reached 900 million cubic meters (5 mboe).

Torbati referred to the balancing of production and consumption in the country in recent years, saying: "Due to effective measures taken in recent years in South Pars, the country's daily gas production has reached 900 million cubic meters, which is 5mboe.”

Torbati also pointed to the 30-mcm increase in daily consumption of natural gas during the summer compared to the same period in the previous year and said: "Normally, a number of cities and villages have been recently connected to the country's gas network every year and the increase in consumption is partly due to this, but the main reason for this year’s unusual increase was the rise in hot water consumption for sanitary purposes due to the coronavirus pandemic.”

The deputy petroleum minister for gas affairs stated that most of cities in Iran are now connected to the national gas network, noting that the number of villages connected to the gas network in the country has increased from 14,000 villages in the (Iranian calendar year) 1392 (ended on March 20, 2014) to about 32,000 villages in the current year, that means an average of 3,000 villages have been supplied with natural gas every year.

According to Torbati, of the country’s total gas production some 25 percent goes to household consumption, 37 percent is supplied to the power plants, 30 percent is used in the industry sector, four percent used as CNG and four percent is  used in other sectors.

SP5 Platform Renovation Ends

The acting director of production and operations at Pars Oil and Gas Company (POGC) has announced that renovation of the gas platform of Phase 5 of the South Pars gas field has ended.

“Renovation of the platform with a production capacity of 1 bcf/d of gas was implemented within the framework of a commodity purchase and supply, preparation of surface and painting of the three platforms of SPD6, SDP10 and SPD11 as well as the splash zone of platforms of SP1-10,” Sepahdar Abbaszadeh said.

He said corrosion was inevitable in offshore installations given the fact that platforms are installed offshore and naturally exposed to high humidity. “In order to prevent corrosion in installations and repair damaged parts, the surfaces of South Pars offshore structures are regularly inspected and monitored,” he added.

Abbaszadeh said that safety instructions throughout painting were a must, adding: “All throughout the project, concurrently with production, many activities were under way with regard to safety regulations and risk assessment.

Knowledge-Based Firms Central to 2,500 Items

Ahmad Mohammadi the CEO of National Iranian South Oil Company (NISOC) said the company had managed to manufacture 12,000 items it needed over recent years.

“Over recent years, 12,000 items of commodities have been manufactured domestically, 2,500 of which are strategic. They have been manufactured in cooperation with knowledge-based companies,” he said.

Referring to NISOC’s emphasis on support for knowledge-based companies, he said: “Over recent years, in light of the Petroleum Ministry’s policy and national approach towards self-sufficiency, engagement of knowledge-based companies in the manufacturing of strategic oil equipment was put on agenda.”

“These [knowledge-based] companies are currently cooperating with this company in developing technical knowhow for equipment and reforming processes and designing software. NISOC experts also share their knowhow and experience,” he said. 

RIPI Starts IOR Studies in Rag Sefid

The Research Institute of Petroleum Industry (RIPI) has embarked on studies to improve recovery from the Rag Sefid field.

Touraj Behrouz, head of the EOR division of RIPI, said studies were already under way in Bibi Hakimieh and Ahvaz fields.

“We believe that the nature of the Rag Sefid field is totally different from those two and we maintain that IOR methods would be more effective than EOR. Therefore, we have focused on IOR in our packages,” he said.

He added that studying the Rag Sefid field was assigned to RIPI taking into account its past successful experience in the Ahvaz and Bibi Hakimieh fields, which are both very large and sophisticated.

Behrouz said: “The Bibi Hakimieh field holds about 15 billion barrels of oil in place in the Asmari and Bangestan reservoirs. So far, comparative screening studies have been conducted for enhanced recovery.”

“In Phase 1, we have sought to gather data with the cooperation of the client (NISOC and R&D Directorate of National Iranian Oil Company),” he said.

Drilling to Start in Five Exploration Projects

The Directorate of Exploration of National Iranian Oil Company (NIOC) plans to start drilling in five exploration projects in the current calendar year.

Mohammad Nasri, head of the engineering & construction division of the Directorate, said: “Currently, six active projects including wells of Namavaran 1 and 2, Tangu well, Ertedagh well, Hirakan well and Shahini well are under way by the Construction & Engineering Division.”

The Engineering & Construction Division is responsible for road building, drilling residential camp, cellar construction, and site pump, pipeline and drilling mud conduit.

“After the Directorate decided to drill several exploration wells, the HSE, surveying, construction engineering and geology divisions located the well” and each division handled its own task, he added.

Regarding the six projects, he said: “The Namavaran 1 and 2 wells in former Khorramshahr-Ahvaz Road are in the stage of cementing; The Tangu well in Hendijan in Khuzestan Province is under cementing, while road and camp construction is under way.

Goreh-Jask Offshore Section to Start Work in Feb

The head of engineering and construction at Pars Oil and Gas Company (POGC), Rasoul Fallahnejad, has expressed hope that the first stage of commissioning and early production in the Goreh-Jask Pipeline would come online by February.

“In the offshore section of this project, we are faced with very special conditions due to working in the Sea of Oman and connection with the ocean. The conditions are totally different from previous projects built in the Persian Gulf. Under such circumstances, we will be facing such phenomena as tsunami, ocean waves, storms and sea depth. The geological, geophysical, geotechnical conditions and seismic testing are totally different,” he said.

In parallel with construction activities, commodity supply was also on the agenda, said Fallahnejad. “Regarding commodity supply, all necessary equipment particularly SPMs, offshore pipes, valves and joints, metering system and control system have been ordered,” he added.

“Based on our planning, we hope to bring the first phase into operation by February,” said Fallahnejad.

He said that three SPMs would be installed 7 kilometers from the shore and at a depth of 50 meters. He added that the SPMs were twice the size of common ones. He said these new SPMS would handle the loading of 1 mb/d of oil.

The entire project has been awarded to domestic companies, he said, adding that the Iranian Offshore Engineering and Construction Company (IOEC) was behind the construction of SPMs and offshore pipes. IOEC has long experience in SPM and offshore pipe construction.

“The necessary pipes for the first phase have been constructed and delivered. They will be transferred to the site of the project after being coated in Bandar Imam and Khorramshahr offshore installations yard,” he said.

Fallahnejad said necessary preparations had been made for pipe-laying, adding that an SPM had already been tested there as part of arrangements for new SPMs.

He said the first floating SPM would be completed in April or May while the second and third SPMs would be ready two to four months later.

“In the onshore section, the Iranian company Gamma is cooperating with IOEC within the framework of a consortium,” said Fallahnejad.

Gas Storage Record Set

 The volume of natural gas stored in Iran’s storage facilities since the beginning of the current Iranian calendar year (March 20) has 2.87 bcm, the CEO of Iranian Central Oil Fields Company (ICOFC) said.

“This year, 1.856 million cubic meters of gas has been injected into the Shourijeh storage facility, while 1.014 billion cubic meters has also been injected into Sarajeh storage, which is a new record,” Ramin Hatami said.

According to the official, the volume in the current year has increased 28 percent compared to the same period last year, which is an indication of the company’s capability for sustained supply of natural gas to the north and northeastern provinces during the cold season.

Sustainable energy supply in the north and northeast regions which are significantly far from the main centers of gas production in the south of the country and the need to reduce dependence on gas imports has always been one of the main concerns of ICOFC as the only gas producer in these areas.

Meanwhile, the development and expansion of the national gas network and increasing gas consumption in the country has doubled the importance of storage facilities, according to Hatami.

Last year, 869 mcm of gas was stored in Sarajeh facility, and during the current year, this figure has reached 1,014 mcm, which is a record since the beginning of storage in this facility, the official said.

Drilling to Start in Five Exploration Projects

The Directorate of Exploration of National Iranian Oil Company (NIOC) plans to start drilling in five exploration projects in the current calendar year.

Mohammad Nasri, head of the engineering & construction division of the Directorate, said: “Currently, six active projects including wells of Namavaran 1 and 2, Tangu well, Ertedagh well, Hirakan well and Shahini well are under way by the Construction & Engineering Division.”

The Engineering & Construction Division is responsible for road building, drilling residential camp, cellar construction, and site pump, pipeline and drilling mud conduit.

“After the Directorate decided to drill several exploration wells, the HSE, surveying, construction engineering and geology divisions located the well” and each division handled its own task, he added.

Regarding the six projects, he said: “The Namavaran 1 and 2 wells in former Khorramshahr-Ahvaz Road are in the stage of cementing; The Tangu well in Hendijan in Khuzestan Province is under cementing, while road and camp construction is under way. The Ertedagh well in Pars Abad in Ardebil Province is in the stage of yard construction.”

“MAPNA among Top 10 MENA Oil Contracting Firms

Iran’s public power utility MAPNA Group has been ranked by Middle East Economic Digest (MEED) among the top 10 contracting companies in the Middle East and North Africa(MENA) region.

MAPNA has performed well in the domestic market in the oil, gas and petrochemical industries and has succeeded in signing a $876 million contract for the development of Parsi and Paranj oil fields with the National Iranian South Oil Company (NISOC).

In this ranking, the Japanese company JGC for a contract with the Iraqi Ministry of Oil at the Basra refinery and a contract with the Saudi Aramco for the East Saudi gas field, the Korean engineering company Samsung for contracts for a reservoir gas storage project in Saudi Arabia and the Hassi Messaoud refinery project in Algeria, Spanish company Tecnicas Reunidas for a joint contract with Samsung to operate the Algerian Hassi Messaoud refinery and another contract for the installation of a salt water unit at the Aramco refinery were chosen as other top contractors of the MENA region.

China Petrochemical Engineering Company is fourth with seven contracts in Algeria, Iraq and the United Arab Emirates.

Karoun Petchem Supplies 2 New Products

Karoun Petrochemical Company has unveiled two new and widely-used items with the aim of diversifying its production portfolio, while meeting the needs of domestic downstream industries.

Alireza Sediqizadeh, the CEO of Karoun Petrochemical Company, said at a ceremony to unveil the two new products that the plant was the first producer of isocyanates, including TDI and MDI in the Middle East and West Asia.

He said two new grades, MTDA and KMT-10, were introduced by the company in order to diversify its product portfolio, meet the needs of downstream industries, complete the value chain and increase resilience in the face of sanctions.

The official added: “The commercial supply of the new grades, in addition to rendering the country self-sufficient in production of the items, meets the needs of petrochemical downstream industries in the country.”

The CEO of Karoun Petrochemical Company, noting that the firm had an annual production capacity of 2,000 tons of KMT-10 and that the most important application of this product is in the production of cold foam molds with high flexibility for use in the automotive and office and home furniture industries, added: “MTDA production capacity in this company is 1,000 tons to meet the needs of intermediate and downstream manufacturers of paint, resin and polyurethane industries.”

Tabas Methane Feasibility Study Ends

A feasibility study project on methane gas reserves in Tabas in Southern Khorasan province has concluded. The project was sponsored by the Research Institute of Petroleum Industry (RIPI).

Ziba Zamani, director of RIPI Geological Research Group, said: “This project is among the first studies conducted on gas and coal reserves in Iran’s oil and gas industry in Iran. It lasted 15 months starting March 2018. It was sponsored by the RIPI Division of Technology.”

She said over the past five decades much attention has been focused on non-conventional hydrocarbon resources, adding: “In light of conventional resources particularly gas in the country, it is necessary to shift attention to studying and assessing these resources so that the ground would be prepared for further diversification of the country’s energy mix.”

“Although exploration studies take time in both conventional and non-conventional sectors, its results may prove highly effective in accelerating the trend of production,” she said.

Zamani said: “Following studies and negotiations, assessing other conventional hydrocarbon reserves was put on the RIPI agenda and positive results have been achieved in shale gas studies and assessing the hydrated gas resources.”

She also said that Tabas was home to the largest coal and rich gas reserves in Iran, adding that geological, geochemical, petrophysical and reserve studies were underway by applying various lab methods and using various software.

“In collaboration with the University of Aachen, 20% of analyses were carried out abroad, which produced good results. But whereas conducting other analyses was possible in the country, we did so by relying on domestic potential,” said Zamani.

“In light of the results of studies, RIPI researchers managed to identify the standing of cola in the sedimentary sequence of this area and show changes in the thickness and features of coal. On the other hand, in addition to lab studies and combining them with surface studies, effective parameters in gas storage and coal production were identified,” she added.

Zamani said in each tonne of coal, 20-25 cubic meters of methane was seen, half of which is recoverable.

Ab Teimour Up for Investment

 Although ten giant oil fields in Iran account for the bulk of Iran's oil production, they are all in the second half of their lifecycle as inadequate investment in them, over years, has left their recovery rate at a low level.

Therefore, pressure fall-off in these fields is highly likely while they have great potential for higher production. Ab Teimour which was discovered 50 years ago and its current output stands at 60,000 b/d is one of these fields. Bangestan reservoir of this field was one of 12 projects offered for international investment.

Ab Teimour in Khuzestan province is located 25 kilometers west of Ahvaz. It is between Mansouri and Susangerd oil fields. Ab Teimour was discovered in 1961 following implementation of a seismic test. A first well was drilled there six years later to prove the existence of oil. However, production from Ab Teimour began in 1991. Ab Teimour measures 23 kilometers in length and 6 kilometers in width. According to primary calculations, it is estimated to hold at least 15.2 billion barrels of oil in place.

Bangestan's current production stands at 60,000 b/d from 50 wells (29 wells in Ilam formation and 21 wells in Sarvak formation).

Ab Teimour is administered by National Iranian South Oil Company (NISOC), but its production operations are handled by Karoun Oil and Gas Production Company.

In the 130th meeting of the committee of reservoir consultants of National Iranian Oil Company (NIOC), the general plan for the development of Bangestan was discussed in three phases – natural depletion, artificial lifting and water and gas injection.

Given uncertainty of some data and in the light of completing reservoir data, development of Ab Teimour was designed in pre-phase and full-phase stages.

In the pre-phase stage, necessary data is gathered and pilot tests are conducted so that the development project would be updated and finalized. Based on the existing information, the pre-phase flow is forecast at 55,000 b/d and the full-phase flow at 110,000 b/d.

Over recent years, many foreign companies have expressed readiness to develop this field, but due to international sanctions, agreements were terminated. Following the removal of sanctions, several companies including Russia's Lukoil agreed to submit the results of preliminary studies on this field to NIOC in the near future. However, foreign firms had to quit after the United States withdrew unilaterally from the Iran nuclear deal and re-imposed sanctions on the country.

Iran's Petroleum Ministry has given the Ab Teimour data to several companies in order to examine various scenarios by rivals. Each company has submitted a separate proposal to NIOC. Indonesia's Pertamina has suggested 250,000 b/d production and Lukoil 150,000 b/d. Denmark's Maersk plans different scenarios including 200,000 b/d, 300,000 b/d and 450,000 b/d production. Maersk's 450,000 b/d plateau could remain for four decades and this company must operate the field for a longer period of time.

Such output would be achieved in case the recovery rate of Ab Teimour is enhanced from the current 2.27% to 12%.

Technical studies by Iranian experts indicate that the field's output could be increased up to 95,000 b/d. Ab Teimour is estimated to contain 15 billion barrels of oil in place and so far 315 million barrels has been recovered from the Bangestan reservoir. Near this reservoir is erected a production unit with the rated capacity of 55,000 b/d, a desalting unit with the capacity of 55,000 b/d and a gas pressure booster unit with the nominal capacity of 20 mcf/d.

Experts and specialists at NIOC have processed and interpreted 3D seismic test data and identified a new reservoir structure which contains around 2 billion barrels of oil in place.

As the Bangestan reservoir pressure and the wells' stream pressure change, artificial lifting of Ab Teimour in the Bangestan reservoir was planned. This project is now in its final stages and the flow of oil wells from Ab Teimour will be stabilized after artificial lifting system is installed.

Band Karkheh to Undergo Development

West Karoun is a quite vast area on the western bank of Karoun River, extending up to Iran-Iraq border.

West Karoun belongs to oil-rich Khuzestan Province, but during the imposed war in the 1980s and post-war calamities like mined areas, oil exploration and production could not materialize.

However, the valuable oil deposits in this part of Iran are now for certain, a significant part of which lies in the Band Karkheh field which holds heavy crude oil. West Karoun’s fields are mostly shared with neighboring Iraq. National Iranian Oil Company (NIOC) has given priority to the development of these fields for oil production with a view to adding 1 mb/d of oil with an investment of more than $20 billion to national production.

Band Karkheh is an independent oil field, which was introduced by NIOC for investment a couple of years ago.

Measuring 50 kilometers long and 5 kilometers wide, this field is estimated to contain over $4.5 billion with an API gravity of 24 at Ilam and Sarvak geological formations. 

Band Karkheh is administered by the Arvand Oil and Gas Production Company, but its development is upon Petroleum Engineering and Development Company (PEDEC).

2D seismic testing was conducted in the 1960s to examine the existence of oil in Band Karkheh. Later on, the field’s structural plan was identified and a first well was drilled that showed the existence of oil in Asmari Formation. This field lacked any hydrocarbon at that time and therefore exploration operations halted.

In 2007, a well was drilled for the description of the Ilam reservoir, which proved the possibility of recovering at least 1,000 b/d of crude oil from Ilam formation. Sarvak formation is estimated to hold 2.5 billion barrels of oil in place.

In 2012, an agreement was signed between PEDEC and Armed Forces Social Security Investment Company (AFSIC) for the development of Band Karkheh, but the agreement was terminated the following year. Recently a European company has resumed development operations in this field. An agreement is to be signed soon under the Iran Petroleum Contract (IPC) framework for the development of Band Karkheh.

A European firm had discovered oil in Band Karkheh under a deal with NIOC. The company had to leave Iran when international sanctions were imposed on Iran and the development project was halted. Once this company left Iran, PEDEC and AFSIC had signed their memorandum for cooperation.

Drilling of two appraisal wells in the northern and central parts of the field to acquire information about the second phase of development of Band Karkheh in parallel with the drilling of development wells in the southern part are envisaged.

Early production is expected to increase more than 7,500 b/d from this field, but seismic data processing and interpretation will make it clearer.

Oil is expected to be transmitted from Band Karkheh to West Karoun’s pumping station. Meantime, mobile processing facilities are available.

Mansouri, Darquain Up for Investment

 Iran hopes to bring its oil output to over 5 mb/d under its 20-year vision plan through investing in ageing fields. Most oil fields in Iran are already mature with at least 300 mb/d output. Their oil has partly been recovered, but cutting edge technologies are needed to extract the remaining oil.

Thanks to existing technologies, it would be possible to raise oil recovery rate from various reservoirs to over 80%.

One of the reservoirs that Iran has specifically counted on is Bangestan in the Mansouri oil field. Mansouri was among fields proposed for development under the Iran Petroleum Contract (IPC) model, the restructured model of oil contracts.

Over recent years, production from Bangestan reservoir of Mansouri has been studied by Committee of Advisors at the Directorate of Reservoirs of National Iranian Oil Company (NIOC).

According to NIOC Directorate of Corporate Planning, various scenarios envisaged for enhanced recovery from this field include natural depletion, gas injection and water injection with a view to studying various parameters including output flow and downhole pressure.

This field enjoys very good potential for production and development. More studies are needed in the future to gather information on the Bangestan reservoir of Mansouri field. These studies focus on artificial lifting, hydraulic fracturing and enhanced oil recovery (EOR) methods.

Iran’s petroleum industry, particularly National Iranian South Oil Company (NISOC), over recent years, has focused on the development of Mansouri in order to enhance its crude oil output and its processing capacity. The project is 97.5% complete now. The only remaining section from phase 1 of Mansouri field development is the completion of production and desalination plant.

The high rate of recovery from Mansouri has added to the significance of this field. The latest studies indicate that the average rate of recovery from oil fields in Iran is about 28%, while the Asmari reservoir of Mansouri has a recovery rate of 47%, which is indicative of the high potential of this oil field.

Mansouri field is located 60 kilometers south of Ahvaz (the provincial capital of Khuzestan), 50 kilometers west of Mahshahr Port and 40 kilometers east of the Ab Teimour field. Discovered in 1963, Mansouri field started production in 1973.

The first well in the Mansouri field was drilled in 1963 to allow for oil recovery from the Asmari reservoir. Oil production from the Bangestan reservoir began in 1974 after drilling Well No. 2.

After the establishment of the Mansouri production unit in 1979, the processing of the Bangestan oil was transferred from the Ahvaz production unit to the Mansouri production unit.

Mansouri field is administered by Karoun Oil and Gas Production Company that is the largest subsidiary of NISOC with an output of over 1 mb/d.

The Bangestan reservoir has a production unit with a rated capacity of 75,000 b/d, a desalination unit with a rated capacity of 35,000 b/d and a gas compressor unit with a rated capacity of 30 mcf/d.

Bangestan is estimated to hold 15 billion barrels of oil in place with an output of 60,000 b/d that may be increased to 79,000 b/d. So far, 347 million barrels of oil has been extracted from the Bangestan reservoir.

The average production rate from each onshore oil well has fallen to 2,000 b/d, down from 26,000 b/d recorded between 1970 and 1972. There were a total of 270 wells when Iran was supplying its maximum oil output. There are currently over 1,500 oil wells.

According to official data, the average oil production rate in Iran stands at 24%, while in many countries it varies between 45% and 65%.

Iran’s Petroleum Ministry officials say the average recovery rate from oil fields in Iran stands at around 24%, ranging from 7% in the Soroush oil field to 35% in Ahvaz oil field.

Iran targets Maximum Efficient Rate (MER) which means the maximum sustainable daily oil or gas withdrawal rate from a reservoir which will allows economic development and depletion of that reservoir without detriment to ultimate recovery.

If oil is extracted from a reservoir at a rate greater than the maximum efficient rate of recovery, then the natural pressure of the reservoir will decline resulting in a decrease in the amount of oil ultimately recoverable.

MER is also commonly used to denote the rate of field production that can achieve the maximum financial return from the reservoir operation. However, the figures of two rates hardly coincide.

In the 1940s, the average production rate from Iranian oil wells was said to stand at 18,000 b/d. After so many years, the figure is down to 2,000 b/d.

As Iran's oil wells enter their second half of life, between 330,000 and 350,000 barrels per year of oil is lost in onshore wells.

Therefore, enhanced recovery from mature reservoirs like Bangestan is essential for Iran’s petroleum industry.

NIOC Eyes Darquain Phase III

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

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

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

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

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

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

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

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

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

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

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

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

Petropars to Develop Farzad Field

 Negar Sadeqi

 The CEO of Pars Oil and Gas Company (POGC), Mohammad Meshkinfam, says the Rouhani administration has enhanced recovery from the giant South Pars gas field by 420 mcm/d despite tough sanctions in place. In an interview with “Iran Petroleum”, he said that South Pars has not reduced its output despite sanctions and the coronavirus pandemic.

He also announced that Iran’s Petropars would develop the Farzad field after India did not step in despite its interest in this field.

The following is the full text of the interview Meshkinfam gave to “Iran Petroleum”:

How much gas is Iran currently recovering from South Pars?

The South Pars gas production capacity currently stands at 700 mcm/d, up 70 mcm/d year-on-year. This increase has been achieved from SP13, SP14, and SP22-24. SP16 had stopped production after it was damaged, but now it has resumed production.  

Why had it been damaged?

The pipeline had suffered serious corrosion due to sour gas supplied by South Pars. We called in an international consultant to figure out the reason. SP16 lies in the middle of the field and on the border strip. It was very important for us to resolve the problem soon to restart production. However, due to sanctions and the coronavirus, travels have become very difficult and that is why it took longer than normal. Otherwise, it was not so difficult.

You pointed to the coronavirus. Given the fact that South Pars supplies 80% of Iran’s gas, how have coronavirus restrictions affected your performance?

All nations in the world are dealing with the coronavirus. Covid-19 has affected the economy of all nations, but we have sanctions too. Therefore, our problems are doubled. However, as the Minister of Petroleum noted, our oil and gas production did not stop even a single day under such tough sanctions. Respecting health protocols, we did whatever necessary to stabilize production in South Pars. Last calendar year, we operated 26 platforms and we plan to operate another 36 in the current Iranian calendar year to March 2021. Over this period of time, we have overhauled the platforms despite coronavirus-imposed bottlenecks. We also acidized the wells and acidizing is under way in the wells of platforms in SP13 and SP22-24 that have just entered the production phase. That may sound very easy, but given being under sanctions while faced with the coronavirus, you will notice that it has been a tough job, but we have made sure people would not worry about their gas consumption.

How much has the coronavirus affected the SP11 development?

First, let me tell you some points. In late May, the jacket of the 2,200-tonne 11B platform was installed and we are now making preparations to start drilling at this phase. MAPNA is the contractor for drilling in this phase and the drilling rig was recently installed on the location. MAPNA is to drill 12 wells. It would first drill and complete five wells and then we will start production. Drilling each well takes 70 days. Therefore, we hope to start gas recovery from this phase next Iranian calendar year. The coronavirus has already affected this project and it slowed down the work somewhat in the first months following the coronavirus outbreak.

When the agreement for developing this phase was struck with Petropars, early production was set to start in 2021. Now, with the coronavirus, is the same scheduel still applying?

That’s true. When the agreement was signed for SP11 development with Petropars, there was no coronavirus. However, these conditions have been imposed upon everyone, thereby slowing down the project. But we can make up for this delay during drilling. We will ask the contractor to expedite the work.

What have you done to prevent South Pars production loss?

We have not yet seen any tangible loss in the South Pars output. Of course, in one of SP12 platforms we have experienced production loss. We forecast a 28 mcm/d cut in the South Pars output over four years. We started conducting comprehensive studies several years ago to prevent any production loss. We expected Total to bring in technology for pressure booster platforms to SP11, but it is out of the question for the time being. We will use gas from the Farzad, North Pars, Belal, Kish, Golshan and Ferdowsi fields to compensate for the South Pars production loss. In fact, development of these fields and gas production by them would be a counterbalance to the production loss in South Pars. For instance, offshore production from the Farzad and North Pars fields has been done and the gas is transferred to Site 1 and Site 2 refineries of the South Pars. We will no longer build any refinery to process gas supplied by these fields and will use their gas to make up for the South Pars production loss.

Where does Belal field development stand now?

The agreement between POGC and Petropars for the development of this field was signed in September 2019. This agreement, which will be attached to the buyback agreement for the comprehensive and integrated development of SP11-24, will aim at the production of 500 mcf/d (14 mcm/d) of rich gas over 34 months. The gas from Belal will go to the SP12 refinery for treatment. Petropars will drill eight wells for developing this field. It will also install a drilling rig. Necessary studies have been conducted and tender bids have been held.

Where does Farzad field development stand now?

Petropars is currently making

engineering arrangements. This field holds very sour gas and therefore we have to deal with it prudently.

Although the agreement for Farzad development will be finally signed with Petropars, the Indians show willingness from time to time for this field. How likely is the Indians’ return?

We tried our best to bring back the Indians to the negotiating table. However, due to sanctions they are not eager to cooperate. On the other hand, they expect us to remain on standby so that they would come after sanctions have been lifted. They have been in talks with us for the development of the Farzad field for years, but have changed their mind in the last minute. The negotiation process has been prolonged. Now, it is our strategy to assign Farzad development to Petropars. Now, if the Indians are willing to develop this field they may work as a partner with Petropars. We will welcome any foreign investor in developing our oil and gas fields. However, we will not wait for them forever.

When will Farzad start production?

According to schedule, early production from Farzad will start within three years while full production is expected in five years. The gas supplied by this field will be used to make up for production loss in South Pars.

When will the agreement be signed for North Pars?

The gas in this field equals the production of four South Pars phases (4 bcf). There will be four platforms while 48 wells will be drilled. To develop the North Pars field, we are looking for a contractor to finance this project. Domestic companies have applied with National Iranian Oil Company for developing this field. NIOC is reviewing their qualifications for developing North Pars. Some of them are E&P firms and some others have financial capacity for development. We want to choose a contractor for the entire development of the field. But if contractors are not able to finance the entire field, the North Pars development may be divided into four phases.

The 32-inch and 56-inch offshore pipelines of the Kish gas field are now complete. When will this field start feeding the national trunkline?

The pre-commissioning of the 56-inch pipeline has begun. This project is aimed at linking Kish Island with Iran Gas Trunkline 7 (IGAT-7) and deliver gas to the Kish gas power plant. We intend to deliver gas in December. However, Kish gas field will be developed in three phases, which will in four years be supplying 3 bcf/d. Our main objective in the development of Kish gas field is to prepare for four years from now as South Pars will see its output fall. We intend to use this field’s gas to compensate for feedstock losses in eight South Pars refineries that may experience production loss.

NIOC has assigned Jask terminal offshore activities to you. How is it going on now?

The project is among NIOC prioritized projects. Its offshore section includes designing, manufacturing and installing three SPMs, a measurement system and offshore pipelines. The export terminal and three SPMs envisaged in this project would join the production chain by next March when we will be ready for the early startup of this project.

What is the most significant challenge you are faced with now?

As I mentioned, our top priority is to prevent a production loss in order to maximize output from South Pars. Under the current administration, we have made relevant decisions for all phases of South Pars and raised output by 420 mcm/d over the past seven years. But I would like to highlight that we are faced with certain conditions. Officials know how tough our job is in the South Pars, but we do our best to provide people with convenience. Some are criticizing us without taking into consideration the current circumstances. They think we are doing nothing. So how has the South Pars output increased? You know that 80% of our national revenue comes from selling oil. Over the past two years, Iran’s petroleum industry has experienced tough conditions due to the US’s withdrawal from the Joint Comprehensive Plan of Action (JCPOA). We have difficulties in exporting oil, and our revenue has dropped significantly. Nobody asks how oil is providing financial resources. For developing South Pars, about $84 billion has been invested so far. One-third of this sum has come from buyback deals, one-third from NIOC and one-third from National Development Fund of Iran (NDFI). There are no financial resources now, while NIOC and NDFI depend on oil exports. The issue is that the main source of income has been blocked and financial resources are out of reach. What should we do then?

Do you have any problems with financing South Pars now?

We have financial problems at South Pars, but we never quit. The country is faced with financial shortages due to sanctions. Under such conditions we are faced with many problems in implementing projects. We have maximized production from South Pars in the past seven years. We have completed 10 South Pars platforms that had not progressed for years. We increased the South Pars output 2.5 times and completed the South Pars refineries. The only remaining project in South Pars is the offshore section of SP11 and the refinery of SP14.

We have invested more than $25 million in this field over the past seven years. Except for 2.5 years following the JCPOA, we were under sanctions. It’s difficult for us to import equipment. Although 70% of equipment used in South Pars is manufactured domestically, we are faced with untold difficulties for supplying the remaining 30% due to sanctions. We are working under very difficult conditions. I believe that Petroleum Ministry did a great job as the gas flow never stopped. Our people are experiencing very tough conditions due to sanctions and the COVID-19 outbreak. But you must know that the conditions would be tougher if gas stopped flowing. We never let gas production in the South Pars halt. Although we are not exporting gas condensate due to sanctions, we have never reduced gas production rate. We are compared with other regional countries in terms of production and exports while conditions are totally different. I’m sure that Persian Gulf littoral states would not survive if they were to face similar pressures

Iran Raises Gas Exports Despite Covid-19, Sanctions

 Iran’s President Hassan Rouhani has said that the gas industry would be the legacy of his two-time administration for his successor who would be elected next year. Gas exports have doubled since 2013 when his first administration took office.

Minister of Petroleum Bijan Zangeneh has said that Iran would see its exports reach 15-16 bcm in the current calendar year. Hassan Montazer Torbati, CEO of National Iranian Gas Company (NIGC), recently said Iran’s gas exports to neighboring states had increased 2% year-on-year.

Iran ranks the second after Russia in terms of gas reserves with 33tcm of recoverable gas. Meantime, Iran’s enhanced gas recovery from the giant offshore South Pars gas field which it shares with Qatar has further assured Iran about supplying domestic gas needs and planning for gas export.

Iran’s gas production capacity currently stands at 880 mcm/d and would reach 1 bcm/d by March 2020. South Pars, whose output has grown 420 mcm/d in seven years, supplies 700 mcm/d.

“In light of Iran sitting atop recoverable gas reserves of about 33 tcm and total annual production of 0.3 tcm, the current gas reserves would be enough to supply national needs for 50 years and the country would face no crisis in terms of gas production and supply. Furthermore, future gas discoveries would strengthen Iran in supplying fresh needs,” National Iranian Oil Company (NIOC) said in a statement.

Without South Pars development in the past seven years despite all restrictions faced with by the petroleum industry, domestic gas supply would have been now a major challenge for the Petroleum Ministry, not to mention gas exports. However, thanks to capacity building in recent years, Iran has ended its gas imports from Turkmenistan and is now able to deal with any increased gas consumption in the country.

For coming winter, 820 mcm/d of gas is forecast to be fed into the national trunkline. It would include 600 mcm for consumption at households and 70 mcm/d destined for exports. It is noteworthy that Iran is currently producing 700 mcm/d of sweet gas, 300 mcm/d of which is used in the household sector. But the figure is set to rise as temperature falls in most parts of Iran in winter. To deal with this problem, NIGC officials are now finding ways to fill household needs because 97% of Iranian households are connected to the national gas grid.

After the US withdrew from Iran nuclear deal in 2018 and re-imposed oil sanctions on the country, Iran’s petroleum industry faced numerous challenges. Add to them the coronavirus pandemic.

Despite all challenges, Iran is still exporting gas to neighboring countries. The performance of Iran’s gas exports shows that the figure has doubled since 2013.

Minister Zangeneh recently said that Iran’s gas exports had reached a record 80 mcm/d. The figure takes up added significance when we see that Iran-Pakistan gas pipeline has not been fully built due to sanctions and pressure by other nations.

What countries are Iran’s gas buyers? 

Gas Exports Deal Extension

Iran started supplying gas to Turkey in 2001 under a 25-year deal. Under the terms of the agreement, Turkey receives at least 8.5 bcm of gas a year from Iran. In early April, the flow of gas from Iran to Turkey stopped following a blast at the pipeline.

Turkey needs to import 130 mcm/d of gas, supplying its needs mainly from Russia and then Iran and Azerbaijan.  

Iran-Turkey gas deal would expire in 2026. Iranian officials have already embarked on talks to negotiate extension of the deal with Turkish officials. The talks are currently held online due to the coronavirus pandemic.

Montazer Torbati said, in his talks with Turkish officials, he had expressed Iran’s willingness for the extension of the agreement.

No official date has been set for talks about extending the agreement. But Iran hopes to extend the agreement.

Readiness for Exports

Iran embarked on talks for exporting gas to Pakistan during the second administration of Mohammad Khatami. The talks bore fruit under the administration of President Mahmoud Ahmadinejad. The agreement for the “peace pipeline” to carry gas from Iran to India while cutting through Pakistan was to be signed in 2007, but finally an agreement was signed in 2009 between Iranian and Pakistani presidents. The two countries agreed on 1,100 km of pipeline in Iran’s territory and 1,000 km in Pakistan’s for the delivery of 60 mcm/d of gas from South Pars. Iran completed its own part, but Pakistan failed to fulfil its obligations due to pressure from the US and Saudi Arabia, coupled with undesirable economic conditions in Pakistan.

Minister Zangeneh said Iran had expressed its readiness to export gas to Pakistan, “but they are not buying gas from Iran”.

On the issue of Iran’s gas exports to Pakistan, Montazer Torbati said: “This issue is still being followed up on, legally and diplomatically. We have not yet agreed on referring the case to arbitration. We hope that these exports would materialize. Meantime, we are ready to export gas to this country.”

Increased Gas Exports to Iraq

Iran’s Petroleum Ministry signed an agreement with Iraq, based on which natural gas delivery began in 2017. Iran raised the volume of its gas exports to Iraq in 2018. Despite political and economic pressure from the US in the new round of sanctions, Iraq’s gas imports from Iran have not declined; rather the relevant volume has increased. Iran is currently exporting on average 50 mcm/d of gas to Iraq via two pipelines, one carrying 35 mcm/d to Baghdad and one carrying 15 mcm/d to Basra.

It is also noteworthy that commissioning Iran Gas Trunkline-6 (IGAT-6) and IGAT-9 in southwestern and western Iran has helped increase gas exports volume to Iraq.

As US sanctions intensify on Iran, Iraq is the only country to have won waiver in order to meet its growing electricity needs. Therefore, Iran’s gas exports to Iraq continue. Iran’s Petroleum Ministry hopes to increase gas exports to Iraq.

Montazer Torbati said: “Iraq has called for increasing gas imports from Iran, but they are now under the US pressure and they have to obtain waiver.”

“We are ready to increase gas exports volume to Iraq,” he added.

Azerbaijan and Iran are also buyers of Iran’s gas, albeit in small volumes. Iran exports gas to Armenia in return for electricity, while Azerbaijan swaps Iran’s gas for final delivery to the autonomous Republic of Nakhichevan.

Sarajeh Gas Storage Capacity Up 16%

Sarajeh gas storage site near Qom is a strategic facility with an instrumental role in supplying gas to Qom and Tehran provinces, as well as northeastern Iran in cold months. Due to the location of this storage site in a warm and dusty area, the efficiency of turbines and subsequently volume of stored gas declined. But now the turbines’ efficiency has increased 30% thanks to a cooling project.

To learn more about the increased efficiency of turbines and the advent of cold season, "Iran Petroleum" has interviewed Heydar-Ali Sadeqpour, director of Zone 3 of Iranian Gas Transmission Company.

What role does Zone 3 of gas transmission play in Iran’s gas network?

Zone 3 is one of the oldest, the most important and strategic zones among 10 distribution zones of Iranian Gas Transmission Company (IGTC), covering seven provinces. This zone fully serves the provinces of Tehran, Qazvin, Alborz and Qom. Parts of Semnan, Zanjan and Markazi provinces are also covered by this zone. Being located on the way of south-north gas transmission corridor and proximity to the city of Tehran, Zone 3 is currently Iran’s gas hub as it is supplying 47% of national gas needs. There are 11 high-pressure gas transmission installations at this zone, incorporating 40 turbocompressors. We have more than 3,600 kilometers of high-pressure gas pipeline that is operated and maintained by five pipeline operation centers. A major feature of this zone is the existence of the Sarajeh gas storage facility, as there are no such installations in other areas. That exactly highlights the role of Zone 3 in Iran’s gas transmission.

How much natural gas has been transmitted across Zone 3 since March?

More than 57 bcm of natural gas has been handled in this zone since March. This gas has been partly moved to the provincial gas companies in the seven provinces we cover and partly to neighboring areas.

Would you please tell us about overhaul operations and arrangements for welcoming cold season?

Operational zones are like pilots who would not take off before receiving assurances of landing in the destination. In Zone 3, we will not enter winter before making sure our equipment is functioning fully. The arrival of winter is inevitable and therefore we have inevitably to be fully ready. Overhaul operations have been carried out on the equipment in Zone 3 as part of preparations for welcoming cold season. We have repaired all turbines and compressors based on their repair calendar, while all electric and mechanical equipment and instruments were technically inspected. The stations are fully prepared.

In the current calendar year to March 2021, as we would need reliable gas pipes to transmit compressed gas, our colleagues carried out necessary reparation on 700 branches of pipes to remove any defect that had been identified through smart pigging. For this purpose, more than 230 A and B sleeves had to be installed on the pipes to make sure the pipes work properly. Moreover, all spots on the pipeline that needed to be reinforced against flooding and heavy rainfall were secured.

This year, about 970 kilometers of pipes was pigged to be cleaned and also to deliver gas of better quality to consumers. We carried out more than 4,000 km of leak detection on the pipes. Having done so, we are fully ready to enter winter. We hope that like previous years, we would be providing suitable services this year.

With the advent of winter, gas consumption would peak. Could you tell us about the role of the gas storage installations in Sarajeh?

Sarajeh underground gas storage facility plays an inevitably significant role in national gas supply. The facility is of great help to the gas network at peak shaving. As its name suggests, gas storage facilities are used for storing gas in warm seasons when gas consumption stands low to be processed and fed into national gas network for use during cold months. Therefore, storage facilities have two tasks: one is to protect Iran’s national resources in the reservoirs jointly owned with neighbors and another one is to alleviate the peak burden. That is why Sarajeh installations are very instrumental in this regard, particularly because they are located near a big city like Tehran. Fortunately, this year gas storage at Sarajeh hit a record as we managed to store 16.8% more gas year-on-year and 25.5% more; over five years. We recently launched a project to enhance the efficiency of turbines in Sarajeh.

Can you tell us more about it?

The project for enhancing the efficiency of turbines in Sarajeh is done for the first time at National Iranian Gas Company (NIGC) based on our own knowledge. This project has already become operational in power plants, but there is no background at the petroleum industry level. The reason for implementing this project was the location of Sarajeh facility at a spot with unfavorable weather conditions. In the summer, it is too hot and dusty. Sandstorms are common. These two factors, i.e. heat and dust, created serious problems for our turbines. Heat would reduce the efficiency of turbines and they would no longer be able to keep gas compressors running. For this reason, the capacity of each turbine had been limited to 3.5 mcm/d ever since the commissioning of these facilities. Dust also caused damage to the turbine parts very soon. For instance, the components that were supposed to run 20,000 hours had to be replaced after 8,000 to 10,000 hours. Replacing the turbines inflicted heavy costs upon us.

Now, some modifications have been made at the entrance of air into turbines and a filter and cooling system have been installed in order to filter the input air once more while blocking any entry of dust. The air temperature will be decreased before it enters into the turbine so that, to some extent, cooler air would enter. As a result, the turbines’ output will grow and they can provide necessary power to keep the gas compressors running. The new filter will prevent any penetration of dust, and costly components would remain unharmed for a longer period of time. With this project, we have enhanced the efficiency of turbines by 13%. In other words, a turbine that supplied only 14.9MW under 50 degrees centigrade can now supply 17MW. To put it more simply, a compressor that fed 3.5 mcm/d of gas can now easily feed 4.2 mcm/d. Therefore, the timing for the functioning of turbines in injecting a specific amount of gas has declined, subsequently adding to the durability of this costly equipment.

Another important issue is a 5% reduction in the fuel consumption of turbines. In addition to cost-effectiveness, it would reduce CO2 emissions by 250 tonnes, thereby serving the environment. This pilot project has been implemented in one of the turbines. After removing possible problems, it would run on the other two turbines. We hope that this model would be used in the petroleum industry turbines in bad weather conditions.

Iran Turkey Gas Exports: Rivalry or Cooperation

Marjan Ahmadi

                                                                            Hassan Montazer Torbati, CEO of National Iranian Gas Company (NIGC) said recently Turkey’s gas find in the Black Sea would not have any impact on the extension of Iran’s gas deal with Turkey. He said the amount of gas in the newly discovered reservoir was much lower than Turkey’s needs.

Montazer Torbabi expressed hope that talks would begin soon on the extension of the gas deal between Iran and Turkey.

He had earlier stated that Iran and Turkey had agreed during a videoconference meeting to extend the gas agreement.

The issue has become more complicated with the outbreak of the covid-19 pandemic. Furthermore, the US has been imposing sanctions on Iran on a nearly daily basis. Turkey claimed in August it would be recovering from its so-called huge gas reservoir by 2023.

These issues have altogether given rise to rivalry and cooperation at times between the two nations. Turkey said the new gas find would lead to Ankara’s cooperation with Tehran and Moscow. Turkey’s official news agency also announced that Turkey had cut its total gas imports in July by 4.5% and instead raised its Iran gas exports 9.5%. However, some reports say Turkish President Recep Tayyip Erdogan was seeking to cut his country’s dependence on Tehran in order to boost cooperation with Qatar.

Iran-Turkey gas deal took effect in 2001 and will run up to 2026. Under the deal, Iran would export 8.5-10 bcm/y of gas to Turkey. The Take-and-Pay clause in the agreement bars Turkey from importing below 8.5 bcm/y; otherwise, it has to pay the balance.

Iran pumps gas to Turkey via a 2.577-kilometer pipeline, stretching from Tabriz to Ankara.

Iranian officials are still hopeful about the extension of the gas agreement, saying: “There is still time for talks and we are after a win-win agreement.”

In September, Iranian and Turkish presidents laid emphasis on continued cooperation between the two nations in the energy sector and combating terrorist activities along their border. One major issue in their talks was regular pipeline blasts mainly by the separatist PKK group. PKK last blasted the pipeline, causing a 3-month halt in the gas flow.

3-Month Halt

In early April, the flow of gas to Turkey stopped after PKK militants blasted the pipeline on the Turkish side. NIGC said at the time that such incidents had happened in the past, too. According to NIGC, between 2002 and 2020, 36 instances of sabotage and terrorist attacks had struck the pipeline.

Following the bomb blast, gas flow was halted for three months. Turkey’s foot-dragging in repairing the damaged pipeline gave rise to speculation about the future of the agreement.

However, Iranian officials have played down concerns in this regard, saying Turkey has always respected the terms of the agreement. In their view, Turkey enjoys good neighborly ties with Iran and it would not easily ignore a reliable source of energy.

Iran’s foreign minister, Mohammad Javad Zarif, had also visited Ankara in June and discussed the damaged pipeline and the necessity of resumption of gas flow.

Turkey’s Botas Company announced force majeure conditions, saying reparation was taking time because of the covid-19 pandemic and the delay in the delivery of equipment ordered from Italy. Iran rejected Turkey’s initial date proposed for the pipeline to resume gas export.

Meantime, the falling gas demand in the industrial and commercial sectors due to the outbreak of COVID-19 was also to blame for Botas’s delay in the pipeline repair. However, NIGC stressed its contractual rights and even voiced its readiness to repair the damaged line. Finally, gas flow resumed after a three-month hiatus.

Changes in Equations

Amid daily-growing speculation about the extension of Iran-Turkey gas pipeline, Turkey announced the major natural gas find. President Erdogan said the reservoir contained 405 bcm of gas. Turkey’s energy minister also said that his country would reduce gas imports and even become a net energy exporter.

Several days after, Turkey’s finance minister played down concerns about a reduction of Turkey’s gas transactions with neighboring states, saying the gas find would open a new window for cooperation. He said that the gas find would lead to further cooperation between Turkey and Iran and Russia even if Turkey would become a gas producer.

“We have had cooperation with Iran and Russia for years,” he said.

Turkey is spending $41-45 billion on annual gas imports to generate electricity. Due to such high costs, Turkey hopes to reduce dependence on gas imports. Turkey is producing only 400-500 mcm/y of gas and it has to supply 99% of its needs through importing gas from Iran, Russia, Azerbaijan or buying LNG from Algeria, Qatar and the United States.

Turkey is importing about $45 billion worth of oil and natural gas annually, causing a major deficit in its current spending. Therefore, Turkey hopes to diversify its sources of energy in a bid to be less dependent on energy imports.

Despite its internal gas needs, Turkey seems to be dreaming of realizing its dream of presence in the European market. This issue is important for Iran as Turkey lies on the transit route of Iran’s potential gas exports to Europe.

Many EU nations are also willing to reduce their overdependence on Russia’s gas. Therefore, they have raised their gas transmission from the Middle East and Caucasus via Turkey.

Now, one should wait and see where Iran-Turkey gas agreement perspective head for in the future: rivalry or cooperation?

How Will Biden-Led US Change Oil Policy?

 Shuaib Bahman

 Joe Biden is poised to enter the White House. The world is waiting to see what policy he would adopt and follow in various sectors. The broadlines and strategies pursued in the US are almost the same either under a Republican or Democratic president. However, the difference lies in their modus operandi.

In the light of differences in views between Biden and outgoing president Donald Trump, the president-elect is likely to water down the policies adopted by his Republican rival. One sector largely speculated to face changes under Biden is energy.

Biden and Oil Market

The US total oil production hit a record 13.1 mb/d under Trump. This historic record did not hold due to a variety of reasons; however, it is crystal clear that without Trump’s support, the US oil industry could not have experienced such prosperity.

Trump was opposed to clean energies and regularly ignored warnings from environmentalists on the harmful impacts of his policy, little knowing that his policies were influential on the energy market rivalry.

Pulling out of the Paris climate accord and authorizing drilling in protected zones, Trump gave wide rooms for maneuvering to the petroleum industry. That was while he was trying on many occasions to meddle with OPEC decisions throughout his presidency.

His tweets calling on OPEC, particularly Saudi Arabia, to further reduce output in a bid to maintain oil prices was a clear sign of his support for US shale oil producers. Furthermore, US oil sanctions on leading OPEC producers- Iran and Venezuela- was also aimed at giving a bigger chance to US oil companies to get more involved in the global markets.

As Biden prepares to start his presidential term, the question here is to know what policy he would follow in the energy sector. Will he support Trump’s policies or will he have his own policy in this sector? As far as the impact of Biden’s victory in the presidential election on global energy markets is concerned, two general views are presented: the first view is that no fundamental change would materialize in the US energy policies and strategies, while the second one maintains that Biden’s victory would give rise a to U-turn in the US oil policy. Because Democrats are interested in environmental issues Biden would call a halt to shale oil extraction which is damaging the environment. Biden is also likely to levy new taxes on the Gulf of Mexico fields where oil production is damaging the environment. Therefore, the petroleum industry is forecast to slow down in the US, thereby reducing the oil production. That would mean a decline in surplus oil supply on global markets and subsequently a further price balance. Anyway, Biden’s presidential victory had a remarkable impact on the oil market as it drove the prices past $40 a barrel. One reason is most probably Biden’s interest in investment in renewable energies and reduced oil exports, which would definitely impact the US shale oil market in the future.

Furthermore, Biden’s follow-up on some policies would leave behind significant impacts on global markets in the future. For instance, if Biden makes his promise of lifting sanctions true, Iran would see its oil exports grow again. That would definitely affect global markets as other producers will have to regulate their production with Iran’s share of market in order to keep oil prices from a further decline.

Iran’s return to 3.8 mb/d oil production capacity would affect the trend of oil exports in many countries including the US. It is noteworthy that one reason for the Trump administration to impose oil sanctions on Iran was to fill the gap left by the US oil exports. Now, we have to wait and see if Biden would be ready to reverse Trump’s policy of seeking new markets.

US Policy Perspectives

Democrats have not yet presented any specific strategy for the energy sector. But since they traditionally favor clean and renewable energies, they may either abandon Trump’s policy of energy extraction at any price or undermine shale oil recovery projects. Such policy would mean that the US presence in world markets and exports would decline to some extent. Of course, this likelihood could not be strong as Biden may try to pursue the same policy with more delicacy with a view to finding new markets.

Meantime, Biden’s victory is unlikely to bring about any specific change in the US shale oil production as the US administration’s strategy in the energy sector has already taken shape in order to have maximum dependence on domestic production while minimizing energy imports. Therefore, shale oil reserves development will go on particularly because Biden is not willing to offend big oil companies that have invested in shale oil and service oil workers.

Therefore, it would be unlikely to think that Biden’s victory would change US energy strategy. However, Democrats will continue to highlight their environmental concerns and lay emphasis on investment in renewable energies.

Fuel Demand Crisis

 Shuaib Bahman

 Global oil demand has dropped about 10% due to the coronavirus pandemic and subsequent economic crises. Such fall in demand has been accompanied with other problems and challenges. For instance, companies have had to cut investment in production by 25-30%.

Russian Minister of Energy Alexander Novak recently called on all energy market players in the world to make joint efforts to counter the consequences of the coronavirus and falling demand for fuel. However, there is yet no shared understanding of the crisis caused by fuel demand, between energy consumers and producers.

The main reason behind the current fuel crisis in the world is that due to lockdown following the outbreak of the novel coronavirus across the globe, fuel consumption level has fallen in many nations. As transportation vehicles are used less than before, fuel consumption has subsequently dropped.

For instance, when the US government ordered people to stay home, gasoline consumption dropped 30% week-on-week. That reflected similar conditions in Spain and Italy – the two European nations with toughest lockdown and restrictions against covid-19. As a result of fuel consumption cut, refineries had to reduce their output because they could no longer buy oil or gas for processing. That sent prices down to historic lows.

The Organization of the Petroleum Exporting Countries (OPEC) and their partners – known collectively as OPEC+ – have made efforts to restore stability to the oil market, but these efforts have not been sufficient. Restoring stability to world markets would require coordination among producing nations that may be following different policies. That is while consuming nations have not paid due attention to the consequences of reduced energy consumption. Furthermore, some producers do not show much willingness to reduce their production. Therefore, under conditions of demand shortage, excess supply is offered and energy prices decline.

Estimates do not augur any bright outlook for energy markets across the globe. For instance, the International Energy Agency (IEA) forecasts oil demand to fall 2.6 mb/d in 2021 from 2019. For this agency, the covid-19 outbreak would even reduce demand for fossil fuels seven times more, compared with the 2008 financial crisis.

For the IEA, the biggest drop in energy demand since World War II would cause a decline in global oil, gas and coal consumption over several decades.

According to a World Bank report, although demand for jet fuel rose during the third quarter of 2021, global demand would not return to pre-covid levels of 8 mb/d before 2023. Therefore, slowly improving demand for jet fuel would keep global oil demand low for at least two more years. That is because the number of air travels could decline and obligatory lockdowns would keep people from traveling on planes.

If the coronavirus is viewed as a global crisis, the decline in fuel consumption itself would be considered a new crisis. As the coronavirus crisis may be managed via global solidarity, fuel crisis would also require cooperation among all energy market players.

Future Perspective

Several major factors have proven to be instrumental in lowering global demand for fuel and subsequently creating a fuel crisis as follows:

Continued coronavirus pandemic and imposition of new restrictions to fight this virus mainly in European nations that are among the major consumers of energy in the world;
Weakened fuel consumption in the US as one of the largest consumers of fuel and its role as a regulator in the global markets;
The requirement by some producing nations to produce further for higher income, which has resulted in supply glut, lower demand and subsequently price decline;
Lack of supervision on the production ceiling in some countries like Libya where more than one administration is in power; and
The consuming nations’ ignorance of supply-demand balance, making fuel demand crisis a serious challenge for the future of the energy industry.

Therefore, under circumstances where on one hand no significant change is seen in the energy consumption pattern of consumers, while on the other the subsequent waves of the coronavirus would add to lockdowns, as long as no vaccine has been developed to help counter this disease, no important improvement would be seen in demand for fuel.

In case development of a vaccine takes too much time, many energy companies would go bankrupt, which would in turn put many oil and gas service workers out of work, and investment in the energy sector would fall to historic lows.

BOEM Proposes 1st Gulf of Mexico Lease Sale

The Bureau of Ocean Energy Management (BOEM) plans to offer about 78.2 million acres (122,188 sq mi) in a region-wide Gulf of Mexico lease sale scheduled for March 2021.

Lease Sale 257, scheduled to be livestreamed from New Orleans, will be the eighth offshore sale under the 2017-2022 Outer Continental Shelf Oil and Gas Leasing Program.

The sale will include approximately 14,594 unleased blocks – all the available unleased areas in federal waters of the Gulf of Mexico.

In addition, BOEM will hold Lease Sale 256 on Nov. 18. The sale was delayed from its planned August 2020 date to allow time for additional analysis of oil and gas markets in light of the COVID-19 pandemic.

VAALCO Farms Into Offshore Gabon Block

VAALCO Energy has agreed to two license transactions with Sasol offshore Gabon.

The company will acquire Sasol’s 27.8% stake in the Etame Marin block, which it currently operates with a 31.1% interest.

In addition, VAALCO will take on Sasol’s 40% interest in offshore block DE-8, operated by Perenco.

The Etame Marin transaction should raise VAALCO’s production to 9,150 b/d, and will nearly double the company’s reserves, with minimal additions to its overhead costs, according to CEO Cary Bounds.

Energean Applies for Offshore Greece Gas Storage

Energean has submitted a bid to the Greek government for a concession to operate a gas storage facility in the depleting South Kavala field offshore northern Greece.

South Kavala, discovered in 1972, was developed via a single-well jacket tied back to the offshore Prinos field facilities through a 12-in. pipeline. The field’s 1 bcm of sweet, lean gas was used as fuel both at the Prinos field center and at the associated onshore process plant.

During the 1990s wellhead compression was added to the jacket to maintain production, and the field currently has two producer wells. Energean took over as operator in 2007.

Total, Jadestone Quit Philippines License

Total and partner Mitra Energy (SC-56) have decided to relinquish and terminate Service Contract 56 (SC56) offshore the Philippines.

They have notified the Philippines Department of Energy of their intentions.

Jadestone Energy, which owns Mitra, said SC56 was a legacy concession inherited from the previous management.

The recent decision not to drill a well removes any further deepwater frontier exploration commitments, the company added.

However, the partners will be subject to a payment in respect of unfulfilled work commitments. 

Covid-10 cuts Australia Oil and Gas Workforce

The COVID-19 pandemic hit Australia’s already declining oil and gas workforce hard, causing a loss of more than 28,000 jobs this year, equivalent to one-quarter of the country’s total count, according to Rystad Energy.

Some of these jobs will be restored from 2021 onwards, but Australia’s oil and gas workforce will struggle to recover pre-pandemic levels for at least five years – if ever, as the energy transition increasingly alters the global energy mix.

In 2019, Australian oil and gas jobs numbered just over 110,000, a tally slashed by current downturn to just over 82,000, the analyst calculates.

Total Bets Big on Libya Oil Industry

French Total plans to increase its investments in Libya’s oil industry, the National Oil Corporation said, adding it had discussed with the company raising Libya’s production to “the highest levels.”

Total has stakes in several Libyan oil fields, including the nation’s biggest, Sharara. The field, along with many others, was shut down for more than eight months this year after groups affiliated with the eastern government blockade oil export terminals, which pushed Libya’s oil output from above 1 million bpd to less than 100,000 bpd.

In late September, when the Libyan National Army started lifting the blockades from the terminals, production began increasing and has to date topped 1.2 million bpd. However, earlier this month, NOC warned that this level of production may not be sustainable.

“The National Oil Corporation asserts that it may not be able to sustain the current production levels and these levels may be reduced or totally ceased under the reluctance of some entities and their hindering of NOC’s efforts to increase production and restore the prosperity of the national economy,” the company said in a statement.

Even so, Libya has signaled it would not be joining the OPEC+ production control effort, from which it has been exempted due to the frequent production outages caused by the conflict between the eastern-affiliated LNA and the Government of National Accord, which was recognized by the UN.

In fact, NOC's chairman Mustafa Sanalla recently said that Libya might consider joining the cuts only when it reaches a production level of 1.7 million bpd

Oil Search to Start Oil Production in Alaska

Oil Search Ltd aims to start producing oil in Alaska in 2025 and expand Papua New Guinea (PNG) gas exports from 2027, after slashing costs to weather weaker oil prices in the wake of the coronavirus outbreak, its chief executive said.

The Australian-listed company reported an 85% plunge in half-year core profit and scrapped its dividend, hurt by the COVID-19 driven slump in oil prices.

After axing a third of its workforce and raising cash earlier this year, the company is now focused on cutting the break-even cost to well below $40 a barrel at its Alaskan Pikka oil project, where the company has found more oil with recent drilling.

“The last six months have been a catalyst for absolutely looking at every part of our business to be able to position us and grow our company at much lower oil prices,” Keiran Wulff told Reuters in an interview after the results were released.

Oil Search aims to make a final investment decision on the Alaska project in 2021, aiming to start producing in 2025.

In PNG, Oil Search’s growth projects have stalled due to tough bargaining by the government, but the pain of the oil price slump has led to a reopening of talks, Wulff said.

Wulff said he was confident the $13 billion twinned PNG LNG expansion and Papua LNG project, led by partners Exxon Mobil Corp and Total SA, will go ahead in time to meet a window of demand for new LNG forecast from 2027.

Oil Search’s core profit after tax for the six months to June slumped to $24.7 million from $165.2 million a year earlier - far short of a broker consensus forecast of $61 million - as its average realised oil prices dropped 45% and LNG prices fell 15%.

Brazil Emerging As Leading Offshore Oil Producer

Sharply weaker oil prices, the COVID-19 pandemic, and heightened geopolitical uncertainty have done little to blunt Brazil’s epic offshore oil boom. By September 2020 Brazil had soared to be the third-largest supplier of crude oil to China, the world’s second-largest economy.

The scale of Brazil’s deep-water offshore oil boom is underscored by the pre-salt Tupi oilfield which for the third quarter of 2020 reached the impressive milestone of having pumped two billion barrels of accumulated oil production in the decade since commercial oil production began.

A key reason for this is the rapidly growing popularity of the sweet medium crude oil grades produced from Brazil’s pre-salt oil fields, notably Tupi the world’s largest deep-water oilfield, and the Buzios field.

Equinor Sees COVID Accelerating Peak Oil Demand

Slower demand growth due to the pandemic and a drop in global oil supply due to low investments could result in peak oil demand 2-3 years sooner than an earlier view that demand will peak around 2030, Norway’s energy giant Equinor said.   

The oil and gas major, which has just announced its ambition to become a net-zero energy business by 2050, following other major European companies in this pledge, said in its annual Energy Perspectives report that the pandemic and its effect on the way people work and interact could challenge the earlier assumption of peak oil demand around 2030.

India Oil Firms Need to Bring in Foreign Players

India’s oil minister Dharmendra Pradhan asked exploration companies to consider farming out their acreages to global players with advanced technology to expedite development and raise oil and gas output.

India, the world’s third biggest oil importer and consumer, depends on foreign purchases for over 80% of its oil needs. The nation’s oil and gas output has been stagnant for years, forcing it to raise reliance on imports to meet rising fuel demand.

“The government will grant petroleum mining lease rights but the companies should consider a farm-out (of a stake) to get global technology players,” Pradhan said in Hindi

UAE Clarifies Stance on OPEC Membership

Anonymous UAE officials claimed the country was considering breaking away from OPEC, citing the difficulties it is facing due to the stringent production cuts it must adhere to. Now, the UAE’s Energy Minister has officially responded to the allegations.

“As a reliable and longstanding member of OPEC, we have always been open and transparent in all our decisions and strategies in support of OPEC.” UAE Energy Minister Suhail al-Mazrouei told Reuters on Thursday, adding that it had “demonstrated this commitment through our compliance to the current OPEC+ agreement.”

One analyst, however, had argued that the claim was inaccurate before the UAE issued a response, using stronger words.

Exxon’s Deepest Guyana Oil Well Disappoints

 After a series of major oil discoveries offshore Guyana, ExxonMobil and partners found that the deepest well drilled so far offshore the Latin American country did not have commercial potential for a stand-alone development.

The Tanager-1 well has been reported as an oil discovery, which is currently considered to be non-commercial as a stand-alone development, a minority partner on the Kaieteur Block, Westmount Energy, said in a filing to the London Stock Exchange on Tuesday.  

Westmount Energy holds 5.4 percent of Cataleya Energy, the parent firm of Cataleya Energy Limited, which has 25 percent in the Kaieteur Block operated by an ExxonMobil subsidiary.

“The outcome of the Tanager-1 exploration well has proved to be a mixed bag - confirming the extension of the Liza play fairway onto the Kaieteur Block but apparently coming up short at the deeper stratigraphic levels,” Westmount’s Executive Chairman Gerard Walsh said. 

The non-commercial oil discovery at the deepest well drilled so far off Guyana is a rare miss for Exxon and its partners, who have found significant oil resources in recent years.

Exxon announced in early September its 18th oil discovery offshore Guyana, which adds to its previous estimate of more than 8 billion barrels of discovered recoverable resources in the area. 

At the end of September, Exxon said it had made the final investment decision on the Payara offshore field in Guyana, expecting Payara to yield up to 220,000 bpd of crude when commercial production begins in 2024.

China Eyes Stake in Iraqi Oilfield

China’s oil giants China National Petroleum Corp. and CNOOC Ltd. are considering acquiring Exxon Mobil Corp.’s remaining stake in an oil field in Iraq, which could fetch at least $500 million, according to people familiar with the matter.

The Chinese state-owned firms are weighing a potential deal to buy the 32.7% stake in Iraq’s West Qurna 1 field held by Exxon, the people said, asking not to be identified as the matter is private.

A stake sale would mark Exxon’s exit of West Qurna 1 field, where it was once the dominant player and remains the lead contractor. In 2010, it signed an agreement with a company of Iraq’s Ministry of Oil to rehabilitate and redevelop the oil field in the southern part of the country, according to Exxon’s website. Three years later, Exxon struck a deal with PetroChina, CNPC’s listed unit, and PT Pertamina for stakes in the asset.

PetroChina currently holds 32.7% of the West Qurna 1 field, while Itochu Corp. owns about 19.6% and Pertamina and Hindustan Oil Exploration Co. are also among the shareholders, according to Itochu’s website.

No final decisions have been made and there is no guarantee the deliberations will lead to a deal, the people said. Geopolitical risks in Iraq could bring uncertainties to any potential agreement, they added. Representatives for Cnooc, Exxon and CNPC declined to comment.

Iraq awarded a contract to develop the West Qurna oilfield to Exxon and Royal Dutch Shell Plc in 2009. The oilfield is one of the world’s largest with expected recoverable reserves of over 20 billion barrels, according to Itochu’s website.

UK Renewable Giant Suffers Despite Green Energy Push

Energy giant SSE said that profit before tax had fallen a quarter in the first half of the year due to the coronavirus pandemic.

The FTSE 100 company said that the pandemic had cost it £115m over the last six months, with full-year costs between £150m and £250m forecast.

Adjusted profit before tax fell 26 percent to £193.9m over the period, SSE said, while earnings per share fell 34 percent to 11.9p.

At the beginning of the year, the firm sold its household energy business to challenger brand Ovo in order to focus instead on the production of green energy.

It announced plans to treble its renewable power capacity by 2030, with plans to add 1 gigawatt of power a year every year from 2025 onwards.

SSE is already in the process of investing £7.5bn in low-carbon projects, including massive new wind farms off Scotland and in the North Sea.

It has also delivered £1.4bn of a £2bn disposal plan by selling a number of assets in recent months.

Commenting on the results, Donald Brown, senior investment manager at Brewin Dolphin, said: “The £115 million profit hit from Covid-19 aside, SSE has made significant progress in re-shaping its business – the sale of SSE Energy Services, as well as the more recent disposals of stakes in Ferrybridge and Skelton Grange, underline its direction of travel.

“A ‘green recovery’ from the economic impact of Covid-19 and a focus on transitioning the UK economy towards net-zero should play to SSE’s strengths and position it well for the future.”

China Buys Into Mexico Emerging Renewable Energy Sector

A Chinese energy giant has bought the biggest independent producer of renewable energy in Mexico, giving the industry a vote of confidence even as Mexico’s authorities have moved to slow down private investment in renewable energy in the country.

State Power Investment Corp (SPIC) of China, which has more than US$170 billion in energy assets globally, including in solar, wind, and hydrogen power in South America, has acquired Mexico’s leading independent renewables firm Zuma Energia, a spokesman for the Mexican company told Bloomberg in a press release, without disclosing the purchase price.

SPIC is betting on Mexico’s long-term renewable prospects despite the current headwinds to clean energy in the country. The acquisition also adds to other deals that Chinese power companies have recently made in South and Latin America.

The acquisition “signifies our continuous commitment and support for clean and renewable power generation, as well as confidence in the Mexican economy,” Qian Zhimin, Chairman of SPIC, said in the statement provided to Bloomberg.  

While China believes in Mexican green energy, Mexico’s President Andrés Manuel López Obrador is not a huge fan of renewable energy, and his administration has moved to slow down the development of wind and solar projects recently.

Mexico’s current energy policies center on ‘energy independence’ for the oil industry, with support to state oil firm Pemex to reverse the trend of declining crude oil production of the past decade and a half.

Zangeneh Tells GECF Iran Gas Output Capacity at 1bcm/d

Iran’s minister of petroleum, Bijan Zangeneh said during the 22nd ministerial meeting of the Gas Exporting Countries Forum (GECF), which was held via videoconference, that Iran had brought its gas production capacity to 1 bcm/d despite all restrictions imposed by the United States.

Billing US sanctions that have denied Iran access to billions of dollars in revenue from hydrocarbon exports, he said: “Despite all geostrategic challenges, we have made significant progress in the energy sector and Iran’s sustainable gas production capacity has reached 1 bcm/d.”

The minister said 95% of Iran’s 80-million population was connected to national gas network.

The GECF ministerial meeting came against the backdrop of the coronavirus pandemic in the world. As the number of covid+ patients increase all across the world, economic stagnation is forecast to continue. Despite initial hope created by the US drug giant Pfizer’s vaccine development, demand for fossil energies would keep falling.

However, Iran is in totally different conditions. The Iranian economy has been exposed to very tough conditions ever since Donald Trump pulled out of the 2015 Iran nuclear deal in 2018 and re-imposed sanctions on the Islamic Republic. The coronavirus pandemic added to these problems.

However, Minister Zangeneh maintains that despite all challenges imposed on the petroleum industry, Iran has increased its gas production capacity.

The minister added that natural gas would see its share of global mix increase 5% by 2050.

Noting that a new approach had to be adopted to show the global value of gas, the minister said gas producers and consumers had better focus on international cooperation and multilateralism.

Sanctions Nothing but Bullying

Zangeneh said the imposition of unlawful sanctions on Iran by the US had been nothing but bullying vis-à-vis Iran and the global community.

The minister said: “Lack of access to these revenues (revenue from hydrocarbon exports) has prevented my country from combating covid-19 more effectively and protecting people with medical services and socio-economic incentives due to the restrictions caused from the covid pandemic.”

He added: “I believe that the US government has a big share in the daily toll of about 400 covid deaths in Iran.”

Zangeneh also touched on the US’s destructive role in international regulations including climate change conventions, trade war with China and more importantly its withdrawal from the Joint Comprehensive Plan of Action (JCPOA).

Bright Days Awaiting GECF

Zangeneh said Iran took pride in being a founding member of the GECF which is currently enjoying a firm standing.  The GECF was established in 2001.

He said GECF had taken big steps towards specialized and target oriented dialogue with gas producers and consumers, as well as international institutes and organizations.

Zangeneh added that the 2050 Global Outlook report, which is one of the important publications of the GECF Secretariat, showed that despite all obstacles like the covid-19 outbreak, good days were awaiting the GEFC member states and all gas producers.

The minister said that forecasts for long-term gas demand showed that the share of natural gas in the global energy mix would increase from 23% to 28% by 2050.

“However, this amount of growth would not be enough for realizing the objectives of sustainable development and climate change, particularly over the coming 30 years,” he said.

“As I mentioned earlier, in order to achieve a 30% share [in global gas trading], the GECF should adopt a new approach,” he said.

The minister said that development and application of decarbonization technologies in the production and transmission of natural gas and development, clean hydrogen production would be an option for improved gas consumption during the transition period.

“I’m sure you agree today that materializing the GECF’s objectives would depend on cooperation, harmony and depoliticization in the energy sector,” said Zangeneh.

“Following an active diplomacy and compiling analytical reports about the gas market and long-term gas perspective, the Secretariat has created a valuable opportunity for the GECF to be further known. We need to make efforts for the GECF to be a reliable source for gas experts across the globe,” he said.

Zangeneh later told reporters that international cooperation was needed in order to make arrangements for sustainable production in favor of both producers and consumers of gas in peaceful conditions.

“We need to set aside bullying tactics and steer clear of politicizing markets, particularly energy markets,” he said.

Covid-19 Less Effective than Trump

Amir-Hossein Zamani-Nia, Iran’s representative to GECF, said separately that Donald Trump’s sanctions were more adversely effective than the coronavirus on Iran’s gas production.

“Coupled together, the coronavirus and the Trump virus (sanctions) caused over 500 deaths a day,” he said.

Zamani-Nia said the videoconference meeting of the GECF prevented the travel of 200 cars to the airport while 200-300 tickets were unsold.

“Airplanes from across the globe did not have to fly to and back from Algeria and that means a new era,” said Zamani-Nia.  

He said: “In this new era, we are learning new or effective methods for trading. The new circumstances would mean the necessity of paying more attention to the environment and provide for a better knowledge of the role of technology in trade.”

Zamani-Nia said: “As far as Iran is concerned, the coronavirus has been less effective than the Donald Trump virus on our gas trading. The coronavirus had no impact on our gas production.”

“One advantage with the Trump virus or sanctions against us is that we are growingly weaning our national economy off our revenue from fossil fuels,” he added.

Zamani-Nia expressed hope that a change in the behavior of consumers would benefit the gas market development.

Gas Future Brighter

The GECF Secretary General Yury Sentyurin said that the gas supply and demand had been affected by the coronavirus pandemic.

“Natural gas has a brighter future compared with other fossil fuels. GECF has found its standing in the energy market and GECF’s analyses are cited by organizations like the International Energy Forum (IEF) and the Organization of the Petroleum Exporting Countries (OPEC),” he said.

Algeria’s Minister of Energy Abdelmadjid Attar also said that gas prices dropped sharply in 2020 due to the covid-19 outbreak, thereby impacting many economic activities.

He said returning to pre-covid conditions was extremely difficult, adding that a long way lay ahead.

The GECF regroups Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Qatar, Russia, Trinidad and Tobago, and Venezuela. Angola, Azerbaijan, Iraq, Kazakhstan, Malaysia, Norway, Oman, Peru, and the United Arab Emirates have the status of Observer Members.

With the current number of members, the GECF has a strong position on global energy markets and among international energy organizations. Together, the coalition represents 72% of the world's proven gas reserves, 46% of its marketed production, 55% of pipeline, and 61% of LNG exports across the globe.

 West Karoun Oil Output Grows 6 Times

 President Hassan Rouhani recently inaugurated three oil and petrochemical projects worth $1 billion. Addressing the inaugural, Rouhani said that commissioning new projects under conditions of sanctions showed Iran’s economic resilience. Minister of Petroleum Bijan Zangeneh also said that the projects set to come online were in line with resilient economy policies. The minister also said that oil production capacity in West Karoun had increased six times over seven years.

The three projects were the urea/ammonia unit of the Lordegan petrochemical plant, a 50,000-barrel crude oil processing facility in West Karoun and gas condensate storage tanks in South Pars.

Rouhani touched on US sanctions targeting Iran’s petroleum industry, saying they aimed to isolate Iran.

“The inauguration of such projects would be unbelievable for those who had ill intention vis-à-vis us,” said the president.

Ever since the beginning of the current calendar year, Iran has been inaugurating new projects on an almost weekly basis.

Under the Rouhani administration, the Petroleum Ministry has managed to bring recovery from the giant South Pars gas field to more than 700 mcm/d. Meantime, oil production from the West Karoun fields has increased six times.

Rouhani also touched on South Pars gas production capacity, saying the offshore field was the site of Iran’s development. Fifteen development projects in South Pars had come online under Rouhani. That is while the previous administration had seen the development of ten phases only.

Sanctions Didn’t Stop Iran

Iran’s petroleum industry remains under sanctions and no sign has so far emerged of possible lifting of the sanctions. However, Rouhani said that domestic capital along with foreign investment would transform the petroleum industry.

“If we want to experience industrial progress and development we have to focus on the four pillars of domestic and foreign investment, raw materials, technology and market,” he said.

Rouhani referred to oil, gas and petrochemical raw materials as Iran’s relative advantages, saying Iran had brought in foreign technology.

“The US and our enemies failed to keep Iran from bringing in technology although sanctions may have increased costs of technology transfer,” he said.

Rouhani said it was helpful for Iran to cooperate with world nations, while boosting its own power. Referring to Iran’s export potential, he said Iran should be able to export its products.

Value Chain

Minister Zangeneh said Petroleum Ministry was determined to stop selling raw petrochemical substances and rather than that complete the value chain and supply domestic needs.

He said that over the past seven years Iran had enhanced its petrochemical production capacity.

Zangeneh said $3 billion worth of five petrochemical projects had been inaugurated by President Rouhani since the start of the current calendar year.

West Karoun Oil Output 6-Fold

Zangeneh went on to highlight a 50,000-barrel oil processing facility in West Karoun, saying: “This facility was built in the Azadegan field in partnership with a European firm and with a $50 million investment.”

He said it was the first time in Iran’s oil history following oil nationalization that a processing facility was being built by the private sector.

“The government is paying $1.28 for each barrel processing,” he said.

Zangeneh said Iran’s recovery capacity from West Karoun fields had increased from 70,000 b/d in 2013 to 400,000 b/d this year.   

45-Day Management of Condensate Tanks

The minister said centralized tanks for storing gas condensate had been built to hold the South Pars condensate destined to feed the Persian Gulf Star refinery. The tanks can hold 4 million barrels of condensate.

Zangeneh said: “The centralized gas condensate storage tanks at South Pars gas field would help us manage the spare capacity of gas condensate production at this field for 45 days.”

 “Numerous projects are under way in the oil, gas and petrochemical sectors, which would soon become operational,” the minister said.

The condensate storage tanks with a total capacity of 640,000 cubic meters have been ordered by Pars Oil and Gas Company (POGC) to be built, i.e. eight 80,000-cubic meter tanks.

These tanks can supply 480,000 b/d of condensate to the Persian Gulf Star refinery through pumping stations. They can also supply up to 600,000 b/d of condensate to the single-point mooring (SPM).

Reza Forouzesh, manager of the project, said: “In addition to feeding the Persian Gulf Star refinery as well as the Pars refinery of Shiraz, the project can supply up to 600,000 b/d of condensate to two SPMs in Assaluyeh for export.”

He said 360,000 b/d of condensate was being transferred to the Persian Gulf Star refinery.

Mohammad Meshkinfam, CEO of POGC, also said the project in Assaluyeh was aimed at being used as temporary storage of condensate for the 13 treatment facilities of South Pars.

Meshkinfam laid emphasis on the continuous and sustainable supply of feedstock to downstream facilities, saying: “The planned construction of these storage tanks came true with a view to reducing condensate sales in South Pars and generating value-added from this commodity which is equivalent to high-quality light crude oil.”

“South Pars gas condensate is converted at downstream refineries to highly valuable products like Euro-4 high-octane gasoline, which is instrumental in supplying national gasoline needs and ending dependence on imports and exports,” he said.

50,000-Barrel Processing Plant

Touraj Dehqani, CEO of Petroleum Engineering and Development Company (PEDEC), said the first oil processing plant in West Karoun would set a precedent for the construction of more such facilities.

“In West Karoun, there is about 70 billion barrels of crude oil underground, mostly in joint reservoirs. Any effort to accelerate recovery from these resources would be a step ahead,” he said.

 “One of these methods would be to build prefabricated units for crude oil processing with capacity of 50,000 b/d, which has been built in the South Azadegan oil field and which can be developed up to 80,000 b/d. It operates in two 25,000-barrel rows and is fed by 35 wells in South Azadegan,” he said.

Dehqani said this facility had been built by a private foreign firm in less than a year, adding: “Building such facilities in the country would take five years. Meantime, it can earn us about $1 billion in revenue while the project would cost less than $25 million a year.”

“Construction of this facility, due to its unique features, has given rise to a new strategy in oil and we hope to see construction of many such units in the future by upgrading domestic potential,” he said.

experience of the processing facility in South Azadegan.

The ministerial directive was aimed at debottlenecking in production operations, acceleration in the implementation of projects and realization of objectives, supporting transfer of technology, domestic manufacturing and national technological development, reducing the bureaucratic role of National Iranian Oil Company, improving economic indicators and maximum use of the private sector capacity.

The directive notes that the tendering process or signing agreements for production units or onshore desalination plants should no longer be like before.

This approach took effect through such measures drawing up a framework for agreements, drafting HSE requirements and evaluating qualified companies. To that effect, the agreement for the construction of a second mobile processing unit in the South Azadegan field was signed between PEDEC and Academic Center for Education, Research and Culture (AERC) under a build-operate-own (BOO) framework.

Lordegan Petchem to Export 1st Cargo in January

Nadi Saboori

On 26 November 2020, President Hassan Rouhani inaugurated the Lordegan petrochemical plant. The project is among those categorized under the “second jump in the petrochemical industry”.

The Lordegan chemical fertilizer plant is located 55 kilometers far from the city of Lordegan in evergreen Chahar Mahal and Bakhtiari Province, more specifically near the Dena Mountains. This facility can produce more than 1 million tonnes of urea and 677,000 tonnes of ammonia a year.

The inauguration of the Lordegan plant was scheduled to coincide with the commencement of several other projects in Khuzestan and Bushehr provinces.

Addressing the inaugural via videoconference, Rouhani said: “Today, we witnessed another important inauguration. Our people saw that when our enemies wanted to sanction and isolate us or disappoint us about the future of the country, we inaugurated projects worth about IRR 300,000 billion. Such projects are incredible for all those who had ill intentions about Iran.”

The Lordegan petrochemical plant is owned by the Persian Gulf Petrochemical Industries Company (PGPIC).  

Jafar Rabiei, CEO of PGPIC, said €875 million had been invested in this project owing to investment from domestic banks and foreign finance.

PGPIC has 25 projects, worth totally €14 billion for the second petrochemical jump in Iran.

Specter of Sanctions

Mohsen Mahmoudi, CEO of Lordegan Petrochemical Plant, said 2,800 persons were involved in the project, 80% of whom were local residents.

“While in most petrochemical plants, foreign experts were hired, Lordegan was fully launched by Iranians,” he said.

Mahmoudi said Lordegan plant would burn 320 mcm a year of natural gas to operate and would process 429 mcm a year of natural gas.

The inauguration of the Lordegan plant comes against the backdrop of US sanctions on the petrochemical sector, particularly PGPIC.

Rouhani said: “Many wished to eliminate Iran, but this dream would never come true thanks to Iran’s position and history and the resistance of Iranian people.”

He added: “Inauguration of these national projects shows that Iran’s economy is resilient to sanctions.”

Petchem Output Up 80%

Minister of Petroleum Bijan Zangeneh also said the main objective sought by the Petroleum Ministry in the petrochemical sector was to complete the value chain and supply domestic needs.

He said Iran’s petrochemical production capacity would reach 100 million tonnes by 2021, up 80% from 2013 when the Rouhani administration took office.

A total of 19 petrochemical projects, worth totally $11.4 billion, would come online in the current calendar year. These projects would bring Iran’s petrochemical production capacity to 25 million tonnes a year.

Urea/Ammonia Output

With the inauguration of the Lordegan plant, Iran’s urea/ammonia production capacity has increased from 5.6 million tonnes to 6.7 million tonnes. Eighty percent of the output is destined for exports.

While refusing to mention the destination, Mahmoudi said the first cargo would be exported in January.

Rouhani has said that Iran can “supply global needs at high quality and low price”. He said Lordegan’s exports would record a jump in production and exports in Iran.

According to National Petrochemical Company (NPC), the bulk of Iran’s ammonia production came from five plants: Shiraz, Pardis, Razi, Khorasan and Kermanshah. Iran has always had its ammonia buyers although ammonia was subject to sanctions in recent years. However, it is less vulnerable than other products as it is used mainly in agriculture.

Ammonia is often converted to urea due to high costs of production. Global demographic growth always affects demand for urea.

In its latest report, ICIS wrote demand for urea mainly came from East Asia – India, Sri Lanka and Bangladesh.

Regarding the current market, it wrote: “Although Q3 is faced with falling demand for urea mainly because farmers start harvesting, the strong demand this autumn from some nations helped stabilize the urea market.”

Urea was among rare markets with no impact from the coronavirus pandemic with final consumers maintaining their demand.

Nothing to Worry About

In coming months and year, three other urea producing units- Masjid Soleiman, Zanjan and Hengman- are to come online.

Ali Mohammad Bosaqzadeh, director of control and production at National Petrochemical Company (NPC), was asked by “Iran Petroleum” about the possibility of any decline in demand in the future in Iran in light of growing supply. He said: “The cost price of these products for us in Iran is significantly different from the rest of the world. There are few plants whose feedstock is gas. Therefore, due to low cost prices, we have nothing to worry about demand. On the other hand, the use of this product in agriculture would make its embargo difficult.”

Regarding NPC’s role in the current projects, he said: “In fact under the current circumstances we identify and meet the needs of various companies. For instance, specialists from other petrochemical plants like Pardis or Shiraz were involved in the Lordegan plant.”

Regarding the environmentally harmful impacts of petrochemical plants, Bosaqzadeh said: “Without petrochemical plants, flare gas in Assaluyeh would cause too much pollution. Petrochemical plants are basically environmentally friendly.”

An engineer with the electricity section of the Lordegan petrochemical plant has said that the facility created jobs for many local engineers.

2 Petchem Plants to Come Online in 2 Years

 Sepehr Energy Corp. (SECO) runs three petrochemical plants – Sabalan, Dena and Siraf – with a methanol production capacity of five million tonnes a year. SECO is set to become the standard-bearer of methanol production in Iran in the near future. The Sabalan plant project has had 96.3% progress, the Dena plant project is 65.22% complete and the Siraf project has had 47% progress. Davoud Baqeri, CEO of SECO, has told “Iran Petroleum” that Sabalan plant would come online in the current calendar year. SECO comprises three offshoots: SECO International Trading Company (SITCO), SECO Lavan and Lavan Chemical.

The following is the full text of the interview Baqeri gave to “Iran Petroleum”:

One year has passed since the outbreak of the covid-19 pandemic. How has SECO been doing under the shadow of sanctions and covid-19?

During the past fiscal year, we have focused on changing our views of projects and the outcome would be the inauguration of Sabalan petrochemical plant in the current calendar year, restart of the Siraf petrochemical plant after a long hiatus, signing a €100 million memorandum for attracting foreign investment for the Dena petrochemical plant, commissioning  four-start Sepehr Hotel in Assaluyeh, SITCO’s first cargo sale and following up on the removal of legal obstacles of the Lavan Chemical Co.

The Sabalan plant, with a 9% progress in one year, is to come online this year as it is 96.3% complete. Thanks to the attraction of €100 million in foreign investment, I can promise a 25% progress in the Dena Petrochemical Plant in upcoming fiscal year, which would be 90% complete. I would like to say that over the coming 24 months, two petrochemical plants would come online.

How was it possible to attract foreign investment in light of sanctions?

The toughest problem for the Dena Petrochemical Plant in the past years was the lack of resources. Project management was based on reliance on constant resources. Therefore, we found out that if we go ahead individually, we would achieve nothing. While we were seeking financing from the National Development Fund of Iran (NDFI), we pursued two new approaches: attracting investment and securing financing from the capital market. Numerous meetings were held to convince potential domestic and foreign investors. They paid off and we managed to secure €100 million from an investor in one of the powerful economies of the world. In light of unjust sanctions, we had to go through a tough channel. However, as we had devised a comprehensive plan for investment we managed to attract investors. To that end, we signed an agreement with a commissioner and established a specialized working group and currently we are going through the legal process of listing our companies on the stock market with a view to resolving all our problems by relying on these two resources.

How has the Siraf project, which was close to shutdown, gone ahead?

In previous years, the Siraf petrochemical project was unfortunately close to complete shutdown. Rumors also swirled of its possible repurposing. But now it has become active and has made 5% progress in one year. It is now our most promising project because due to its potentialities, it would be possible to make any planning for downstream purposes in it and we have conducted extensive studies in this regard.

Is SECO planning to supply products of higher value-added? What’s the main challenge you are faced with?

SECO plans to join the value chain and the downstream sector of petrochemical industry so that we can convert the methanol supplied by our three companies into more valuable products, while at the same time allaying concerns of future methanol markets. Extensive studies have been conducted in this regard and we are still completing our studies in order to take necessary steps. However, our main challenge and concern today is to complete the three projects of Sabalan, Dena and Siraf. However, we will never neglect the downstream industry.

Aren’t you worried about the future of the methanol market?

We cannot deny the fact that methanol has been focused upon excessively in recent years. Now that we are getting close to the end of the road as we approach the production phase, we have no option but to get along with these conditions. It does not mean that we are not thinking of finding any new way. Focusing on the market in China that is shutting down its coal-to-methanol plants, driving down the price of final product, boosting SETCO and presenting new models of selling, focusing on new markets like East Europe and entering into dialogue with the political allies of the Islamic Republic are all approaches that can help us overcome concerns in the future market. Of course, I see the downstream industry as the most strategic one in this regard. A SECO expert team is regularly monitoring the methanol markets in the world, so that we can learn about the new scientific models of selling products.

Which sectors do you need foreign partners in? How do you choose your partners?

Although it is necessary to use the state-of-the-art technology, we will not let foreign partners dishonor their obligations. We don’t end financing as after the exit of foreign companies we encouraged our domestic companies to join us. We pushed ahead with our projects by supporting them. I can tell you right now that relying on the expertise of the same domestic companies, we will bring the three petrochemical projects into operation. Domestic manufacturing of catalysts for the Sabalan project and the distillation tower of the Siraf project have been done for the first time in the country. Foreign partners are chosen based on their expertise, experience and faithfulness. The absence of these three factors has halted some projects in the previous years.

What has SETCO done over this time? Is it ready to handle your marketing operations?

SETCO has been inactive in previous years. Due to non-operation of the three aforesaid petrochemical projects, SETCO has not had any significant activity. However, we have changed its passiveness to a happy event as we have marketed the first cargo of methanol from other Iranian producers. In doing so, we intended to claim our position as the new player in the petrochemical market while laying the groundwork for selling methanol. We plan to make SECO the main seller of Iran’s methanol. In the near future, about half of Iran’s methanol would be supplied by SECO offshoots. SECO’s sales of the first cargo of methanol shows the company’s firm determination to be involved in global transactions.

What have you done in support of domestic companies?

Supporting domestic producers is a major plan pursued by SECO. It has set up a specialized committee in this regard and I promise that Iranian engineers would help bring the three petrochemical plants into operation. To that end, we have signed a €64 million agreement with Arak Machine Manufacturing Co. to manufacture specialized processing equipment for the Dena and Siraf projects, a €19 million agreement with domestic manufactures for catalyst and refractor making for the Dena and Siraf projects, and built the first integrated distillation tower for the Siraf petrochemical project (the tower weighing 400 tonnes and measuring 7 meters in diameter and 70 meters high has been built by Fateh Sanat Kimia). We have also signed 83 agreements worth totally €50 million for the Sabalan petrochemical plant, 47 agreements worth totally €65 million for the Dena petrochemical plant and other agreements worth €135 million plus IRR 606 billion for the Siraf projects – all with domestic companies. Furthermore, we have held meetings with academics and knowledge-based companies because I believe that petrochemical renaissance would become possible through relying on knowledge-based companies. It is noteworthy that the inauguration of these three plants would create more than 1,000 direct and 3,600 indirect jobs. Due to non-industrial activities like hotel construction, Bushehr Province’s economy will directly benefit.

"Palayesh Naft Abadan" Basketball Team Moving Towards Championship

The basketball team of Palayesh Naft Abadan has defeated "Mes Rafsanjan" in the run-up to pro league matches. The head coach of "Palayesh Naft Abadan" believes that his team is moving in the right direction, hoping to preserve this standing and perform better in future games.

The following is the interview of the head coach of Palayesh Naft Abadan Hamad Sameri's with "Iran Petroleum".

You started the league with a win!

We were away from basketball and matches; however, we showed a good team work. Therefore, I think that our result was not poor at the beginning of the season. Three of our players sustained injuries, but we improved throughout the game and showed better performance. This kind of game for the beginning of the season is natural.

How did you see the rival? Were they stronger in the first quarter?

"Mes Rafsanjan" is a good team and played very well up to the end. They were not strong only in the first quarter. They were strong throughout the match. We were not good in the first quarter and we were caught off guard and lost the first quarter. But we did well in the second quarter and we dominated the match until we achieved our goal, which was victory.

You missed one match, didn’t you?

Yes, we were supposed to play "Aftab Zagros of Ahvaz" in the first match, but several players were covid+ and the match was not held. This team had been formed late and we should see when it intends to join the match. Such planning would put pressure on the league and the teams would be harmed. The League and the Federation should make better planning.

Do you think that Palayesh Naft can take steps towards championship this year, too?

Fortunately, we are moving in the right direction and I hope that we would play better in future games. Our objective is championship, but it’s too early to speak about it now. We are trying to get better results to make our fans happy.

You had a good start in transfers and you were very active. Are you eyeing a new championship?

Yes, we first renewed our contracts with several players including the captain. Then we hired new players to remove weaknesses. The club will follow up on the league issues and absorbing new players. But currently, we are in talks and we have had talks with several players, which we should see if any agreement would be made. Of course, several players left us and it was natural to replace them. The League conditions are currently sensitive because of covid-19. It has made it difficult for the clubs and players to sign contracts.

Last year’s league was not completed and no champion was named. Can "Palayesh Naft Abadan" reserve its championship title?

You know, our conditions are not normal. We need to be careful so that our players would not be infected. Meantime, we are making our best to play in the best possible manner to become the league champion. We’ve got a tough job. It becomes tougher when the games are more centralized and we have to seal the fate in a single game as there would be no return match. However, we will wait to see what would happen. Our goal is to become champion in this tournament.

Has the Club met your demands in absorbing new players?

Yes, thanks God, despite economic hardships which all teams are faced with, the Club managed to meet our needs. I offer my sincere gratitude to the Club management and I hope that we would be able to achieve satisfactory results similar to previous years. It is worth noting that "Palayesh Naft Abadan" is not authorized to hire foreign players, but we are struggling for the championship title by hiring Iranian players.

How can hiring foreign players help the basketball pro league?

Taking benefit from qualified players in the Iranian teams would upgrade the quality of basketball pro league matches. I think that the basketball pro league matches in the current round of the League are much harder compared to previous seasons mainly due to the covid-19 outbreak and matches being held centralized in one city. Meantime, some teams present in the League have hired foreign players as they eye championship. The presence of foreign players has been instrumental both quantitatively and qualitatively. The teams benefitting from foreign players are likelier than those with no foreign players to win matches. Some second-ranking teams have upgraded their status to first-ranking in basketball after hiring foreign players.

Therefore, many teams must be vying for the championship title this year.

In this year’s pro league, six teams with foreign players and qualified domestic players are vying for championship. We have to vie with them in order to win the championship title.

What do you think of centralization of matches?

The matches are all held in Tehran due to covid-19 conditions. That would make the teams tired and would cause physical exhaustion. We’re in a difficult group and it would be difficult for us to advance. However, it would make no difference for our team which group it is classified in. The teams pooled into "Group A" are of the same quality and one may not say which game is easy or difficult. At least three teams hope to win the championship title in this group and they have all foreign players. We miss our fans in this year’s League. Their presence always boosted the quality of matches. Their absence has caused a decline in the enthusiasm for matches.

 4 Decades of Britain Exploitation of Iran Oil

Ali Bahrami

It is common knowledge what Britain did with Iran’s oil asset. Everyone knows the story of a US-UK coup against a democratic government in Iran when the Iranians rose up to save their petroleum industry as their wealth and main source of income. The present piece of writing is to tell the story of four decades of Britain’s pillage of Iran’s oil. That covers the period starting from the discovery of oil until one and a half years preceding petroleum industry nationalization. It would not be hard to calculate how much wealth was plundered up to the 1979 Islamic Revolution. This wealth was very instrumental in Iran’s contemporary history and covered each and every sphere arena. In late May 1908, in the heyday of the purge of constitutionalists in Tehran by Mohammad Ali Shah, the Qajar king, British millionaire William Knox D’Arcy discovered a source of wealth near Masjid Soleiman. Several decades later, the Iranians failed to get this national wealth back from Britain.

There is much evidence about British explorers’ plundering of Iran’s wealth. The evidence shows how the longtime colonialist power enriched itself benefitting from Iran’s petroleum industry (1911-1951). Oil must have been so profitable to drive Britain to do whatever it could do to preserve its standing in Iran.

Documents Speak Out

Over the past decades, many historians have sought to show why Britain did not agree to forego Iran’s petroleum industry profits and resorted to every political and military action for that purpose. One of the most important documents discovered later on is a report from the World Bank about Britain’s forty years of income generation from Iran’s petroleum industry from 1911 to 1951.

Mohammad Qoli Majd has cited this document in his book Reza Shah and Britain, saying: “Much has been written on the history of Iran’s oil, including several volumes on the history of Anglo-Persian Oil Company, which later became BP. However, the main fault with these books is their poor data. In addition to that, some historians have mainly focused on the data and documents provided by Britain, which are not reliable enough. However, the World Bank-drafted confidential document “Nationalization of Iran Petroleum Industry” that was later found in the US Treasury provides reliable data on Iran’s oil from 1911 to 1951. The report dated February 1952 shows that it had been used during the 1951-1953 period of oil crisis and the details in the document indicate to what extent the US government was interested in Iran’s oil.”

The WB report contains very significant and interesting points about development and economy during the Pahlavi I rule in Iran. It sketches out Iran’s economic conditions during the early years of discovery of oil. It becomes clear how the oil wealth could be strategic and vital for Iranians.

“The report contains materials about industrial backwardness under the Reza Shah rule from 1921 to 1941. The World Bank report says over the past 40 years, Iran’s 13-18 million people were mainly involved in agriculture, trade and textile. Despite the abundance of raw materials, manpower and access to sea, there is no heavy industry or production plant or raw materials processing facility. There is only oil. No other country in the world is as economically backward as Iran despite having huge resources. However, this country has the highest coherent oil operations with minimum production costs. But what share does the petroleum industry have in Iran’s economy?”

Comparative Analysis

The interesting point is that the WB’s report also offers a comparative analysis. Their precise view of Iran’s oil and economy is appreciable. The colonialists knew quite well where to look for resources. The WB report draws a parallel  line between progress in Iran and in Turkey whose natural resources were much lower. The Iranian economy had not taken any benefit from oil. Iran started oil production in 1911. From 1911 to 1920, Iran gained about 325,000 British pounds ($1.6 million) in royalties. The figure reached $125 million for 1931-1941 and $250 million for 1941-1951. Under Reza Shah (1921-1941), Iran gained $185 million in royalties. However, there was no evidence of such income in national development.

In his analysis of the WB report, Majid writes: “The royalties gained after 40 years totaled 113 million pounds or $435 million. The Anglo-Iranian Oil Company pocked $5 billion in net profits. It means that Iran had only an 8% share of total profits.”

The last paragraph in the WB report makes everything clear. It explains why Britain refused to abandon Iran to its own fate, why the oil nationalization movement was suppressed violently and why Britain was present in Iran’s petroleum industry for seven decades.

“Based on these estimates, the Company denied Iran more than $1,200 million in revenue by non-compliance with its obligations enshrined in the D’Arcy Concession and by tampering with the terms of the agreement.”

Final Analysis

Majd offers a comprehensive analysis after taking into account all aspects and documents. This analysis is based on statistical data, offering a view of contemporary history and petroleum industry.

“Based on the 1911-1951 standards, for a poor country like Iran, $1.2 billion in revenue was unimaginable. For instance in 1925, the Iranian government’s spending totaled $20 million. The Company puts forward the figure of $1.2 billion for its revenue in Iran, but the real figure is much higher. From 1921 to 1941, Reza Shah stole the bulk of the $185 million paid to Iran and transferred the sum into his bank accounts in London, Switzerland and New York. The 1911-1941 period in Iran’s oil must be named 30 years of pillage,” he writes.