Energy Diplomacy

By:Akbar Neatollahi

Director General Of The Public Relations

 

The position and potentials of Iran’s petroleum industry are no secret to anyone and world powers, particularly industrialized countries, cannot easily ignore a major holder of oil and gas reserves. Meantime, Iran’s economy relies on petrodollars and it would be impossible to wean the country’s economy off oil in the short-term. The government and the parliament are unlikely to be able to diversify Iran’s economy away from oil revenues any time soon.

Naturally, Iranian oil officials are mainly concerned with enhancing the country’s production capacity and maintaining Iran’s status within the Organization of the Petroleum Exporting Countries (OPEC). Iran’s position has faced challenges due to international sanctions imposed against the country’s energy sector.

However, Iran is making a comeback to the world oil market following the country’s nuclear deal with world powers. The only option for Iran to strengthen its position in the OPEC would be to enhance its production capacity. To that effect, Iran’s Petroleum Minister Bijan Namdar Zangeneh said recently that Iran has to exercise energy diplomacy to win its position back.

Since taking office last August, the administration of President Hassan Rouhani opted for diplomatic solution to the scourge of sanctions. Under the aegis of an interim deal with the world powers, sanctions against Iran have been eased, and Iran’s petroleum industry has opened doors to potential foreign investors.

In line with the government’s policy, Petroleum Ministry is practicing energy diplomacy in order to raise its production to the level determined by OPEC.

Zangeneh recently said that the world would be willing to negotiate with Iran as long as the country’s oil and gas production stands at a significant level. To that effect, Petroleum Ministry and Ministry of Foreign Affairs are required to work shoulder-to-shoulder with one another.

The important point is that acceleration of energy diplomacy requires changes in Iran’s petroleum industry. The first step taken by Zangeneh was to modify the terms of oil contracts in order to make them attractive for foreigners. For that purpose, Zanganeh established a committee to define new terms for oil contracts because buy-backs are no longer attractive. There must be a kind of integration between exploration, development and production so that foreign contractors would be encouraged to invest in Iran.

Another relevant plan followed up on by Iran’s Petroleum Ministry is to make efforts for Iran to be elected as secretary general of OPEC. However, Zangeneh maintains that Iran’s priorities are enhanced recovery and winning back position in the energy market.

With the prospect of sanctions relief looking brighter, Iran is likely to get back its position in the energy market in the near future.

New Chapter in Iran-Pakistan Relations

 

Pakistani Prime Minister Nawaz Sharif travelled to Tehran heading a high-ranking delegation. During his two-day stay in Tehran, Sharif was received by Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani.

Ayatollah Khamenei highlighted the broad cultural and religious commonalities between the Iranian and Pakistani people and expressed regret over the decrease in the level of bilateral economic cooperation.

He expressed hope that Tehran and Islamabad would further improve bilateral relations.

The Pakistani Prime Minister, for his part, pledged to make every effort to help restore the two countries’ trade ties to its previous level of three billion dollars and even improve on that figure.

 

Load Shedding Challenge

 

In a meeting with President Rouhani, Sharif asked Iran to help his country tackle its rolling power cut problem.

Sharif requested the Islamic Republic to help Pakistan in power supply.

The Pakistani prime minister said his government is determined to revive the gas pipeline project between the two countries.

Rouhani said Iran has made huge investment in this project and has met its obligations in the gas project.

The Iranian president expressed hope that development of “power transmission network” between the two countries would increase economic cooperation between them.

The Iran-Pakistan pipeline is designed to help Pakistan meet its growing energy needs and resolve its load shedding problem.

Iran has already built more than 900 kilometers of the pipeline on its own soil and is waiting for the 700-kilometer Pakistani side of the pipeline to be constructed.

In a separate meeting, Iran’s First Vice-President Es’haq Jahangiri said that Pakistan must fulfill its commitments regarding the multi-billion-dollar gas pipeline projected to carry natural gas from Iran to its eastern neighbor.

“The gas pipeline has reached near the Pakistani border and given the investment made, we expect that Pakistan will fulfill the commitments and agreements signed in this regard,” Jahangiri told Sharif.

He added that the Iran-Pakistan gas project represents the symbol of cooperation between the two countries.

Sharif underscored the significance of the project, saying Pakistan welcomes multilateral cooperation in oil and gas sectors.

 

No Differences

 

Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi said Pakistan and Iran are on same page pertaining to Iran-Pakistan (IP) gas pipeline project and there is no difference between the two countries in this regard.

While briefing a sub-committee of the Senate Standing Committee on Petroleum and Natural Resources, he said that international sanctions against Iran is the only hurdle in laying of gas pipeline, otherwise Pakistan has completed all the necessary work to this effect.

He said that to deal with the energy demand and supply situation in the country, IP initially will bring 750 mcf/d of gas at an estimated cost of $13 per mmbtu and could be extended to 1 bcf/d, which is essential for Pakistan.

He said that during Sharif's visit to Iran, leaders of both the countries discussed the IP issue in and Iranian leadership has no complaints against Pakistan, as they fathom Pakistan's position in this regard.

He told the committee that discovered local oil/gas reservoirs are gradually depleting and to deal with the energy crisis, the government has to speed up the exploration activities.

 

Iran Urges Asia to Envisage Joint Investment

 

Iran’s President Hassan Rouhani has called on Asian countries to consider joint investment plans in order to boost their economies.

Rouhani made the remarks in his address to the fourth summit of the Conference on Interaction and Confidence Building Measures in Asia (CICA) in Shanghai, China, on May 21.

 “Bolstering economic ties and joint investment schemes between CICA members can effectively help with regional convergence in a globalized economy. Joint economic projects and investment schemes can bolster greater Asian integration,” he said.

“The first step on the road to convergence is to choose issues and actions that can readily be agreed upon, that are, expansion of transit and transport corridors, energy cooperation, direct banking cooperation, water resource management and other economic collaborations,” he added.

The Iranian president once again reiterated the importance of cooperation and joint measures to fully demolish weapons of mass destruction to promote global peace and security.

He said that the “only way to remove the threat of these weapons is their full demolition.”

He called on member states of the UN General Assembly to stabilize Asia’s effective role in achieving the goal of having a nuke-free world.

“Based on its defense doctrine and moral and religious principles, the Islamic Republic of Iran opposes atomic weapons but considers peaceful use of nuclear technology as its right and that of all countries,” the Iranian president said.

“The Islamic Republic of Iran believes that the ongoing negotiations over Iran’s nuclear energy program can reach a final agreement through a win-win approach and avoidance of extremism and threat,” Rouhani added.

Iran and the five permanent members of the UN Security Council- Russia, China, France, Britain and the US-plus Germany wrapped up their latest round of nuclear talks in the Austrian capital of Vienna on May 16.

CICA groups 24 countries, among them Afghanistan, Azerbaijan Republic, China, Egypt, India, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Russia, Turkey and the United Arab Emirates.

Nine countries and four international organizations, including the United Nations, have the observer status.

The CICA summit is convened every four years in order to conduct consultations, review the progress of the forum and set priorities for its activities.

The Iranian president also warned against the humanitarian crisis in Syria which has been caused by certain countries that have provided extremist groups with weapons and information.

 

OPEC Ready for More Iran Exports

 

Iran’s petroleum minister has said the country has brought its crude oil exports to 1.5 million barrels per day (bpd).

“Currently, Iran is exporting on average 1.5 million bpd of oil,” Bijan Namdar Zanganeh told reporters on the sidelines of the International Energy Forum (IEF) in the Russian capital, Moscow.

He said member states of the Organization of the Petroleum Exporting Countries (OPEC) would make room for Iran’s oil production, adding, “I think they will do it, I am sure they will do it. They have told me directly face-to-face that they will go along with us and make room for Iranians.”

The Iranian oil minister also stated that OPEC is unlikely to decide big changes in the member states’ quota when it meets in Vienna next month.

“I don’t think we’ll have any important substantial change because the market is good and its business as usual,” Zanganeh said.

 

Iran, Turkmenistan Plan Gas-for-Goods Deal

 

Iran’s Petroleum Minister Bijan Namdar Zangeneh has said the country is envisaging gas-for-goods deal with neighboring Turkmenistan.

“Iran intends to prepare the grounds for exporting goods [to Turkmenistan] in return for gas purchase from Turkmenistan,” Zangeneh said in a meeting with Turkmen Vice President Khoja Muhammad Muhammadov in Tehran.

He called on Iranian manufacturing companies to make the required arrangements for exporting more items to Turkmenistan.

Zangeneh also said Iran will continue to import natural gas from Turkmenistan at the current level.

Last February, Iran’s Minister of Industry, Mine and Trade Mohammad Reza Nematzadeh said Iran and Turkmenistan have the capacity to double their trade exchanges to 10 billion dollars.

Iran is Turkmenistan’s second largest trade partner after Russia.
 

 

Iran to Export 40mcm/d Gas to Iraq

 

Iran has raised the volume of its planned gas exports to Iraq to 40 mcm/d from the initially agreed 25 mcm/d, an Iranian deputy petroleum minister said.

Ali Majedi, deputy minister for International Affairs and Commerce said Iran will start supplying natural gas at 5 to 7 mcm/d after the completion of structures.

He said Iran has already constructed 80 percent of its gas pipeline to Iraq, adding that Iran's gas delivery to Iraq is expected to start in March 2015.

Majedi said Iraq has completed 95 percent of its section of the pipeline.

He said Iran-Iraq gas contract was initially for a period of four years, but the two countries recently prolonged it to ten years.

Majedi said the project has been delayed due to security problems in Iraq, as well as sanctions imposed on Iran's energy sector.

In July 2013, Iranian and Iraqi officials agreed for 25 million cubic meters of Iranian gas to be delivered to Iraqi power plants in Sadr, Baghdad and al-Mansouryah through a 270-kilometer (167-mile) pipeline.

The pipeline will stretch from Assalouyeh, near the massive offshore South Pars oil and gas field in southern Iran, into neighboring Iraq to feed Iraqi power plants running on gas.

The South Pars gas field is located in the Persian Gulf on the common border between Iran and Qatar. The field is estimated to contain 14 trillion cubic meters of gas and 18 billion barrels of condensates.

Iran, which sits atop the world's largest natural gas reserves, is making efforts to up its gas production by increasing foreign and domestic investments, especially in South Pars gas field.

 

IPF Forum due June 7-8

 

Iran Petrochemical Forum (IPF) will hold its 11^th annual gathering June 7-8 in Tehran, a deputy petroleum minister said.

Abbas Sheri-Moqaddam, who is also managing director of National Petrochemical Company (NPC), said this round of IPF will be more significant due to the strong presence of foreign companies and Iran’s petrochemical industrialists.

He said this gathering would provide a good chance for negotiations between Iranian and foreign petrochemical industries, adding that new investment opportunities will be also presented.

“This forum was founded with the objective of mutual acquaintance and introducing the capacities of Iran’s [petrochemical] industries. It also facilitates constructive interaction with technology companies,” Sheri-Moqaddam said.

During the 11^th IPF, Iranian and foreign petrochemical managers and experts will discuss options for Iran’s petrochemical industry to reach 100 million tons of production.

Sheri-Moqaddam said new technical developments, environmental issues; safety concerns as well as international trading will be the main topics of discussion in the forum.

For further information visit the forum's site: www.ipf2014.com.

South Korea Crude Oil Imports from Iran Up 8.9%

 

South Korea's imports of Iranian crude in April increased 8.9% year on year to 552,884 mt, or an average 135,088 b/d, from 507,821 mt a year ago, preliminary data released by the Korea Customs Service showed.

Its April Iranian crude imports more than doubled from March imports of 274,808 mt.

South Korea paid $418.4 million for Iranian crude imports in April, up from $375.2 million a year earlier and $208 million in March.

The country's Iranian crude imports fell 50.6% year on year to 64,065 b/d in March, after doubling to 290,714 b/d in February. The February imports marked the first increase after declines for four months in a row.

The customs data also shows that South Korea imported 9.518 mt, or 2.33 million b/d, of crude last month, up 1.9% from 9.342 mt in April 2013. This marked two consecutive months of year-on-year increases after seven straight months of declines.

South Korea paid $7.69 billion for all its crude imports in April, up from $7.36 billion a year ago, but down from $8.22 billion in March.

South Korea's final trade data for April will be released later this month by state-owned Korea National Oil Corporation.

 

European Firms Ready to Drill in Iran

 

Global Petro Tech Kish Company (GPTKISH) has held talks with two European companies for cooperation in drilling in Azar oil field and Lavan gas field.

National Iranian Oil Company (NIOC) announced that one of the European companies has already conducted seismic operations in Iran. Without naming the company, it said the European firm is currently spudding oil and gas wells across the world with its 50 drilling rigs.

It said this European company has voiced interest for investment in Lavan and Azar fields.

The foreign company has also said that it would use its technologies for the development of the oil layer of South Pars gas field.

Cooperation between this European firm and GPTKISH is widely expected to start in the near future, given the background of this company’s operations in Iran and its willingness for cooperation with Iranian companies.

 

Georgia Welcomes Iran Gas Plan

Iran will have a promising prospect in gas transportation, Georgian Energy Minister Kakha Kaladze said.

He made the remark responding to a question about the possibility of Iranian gas transit via Georgia to Europe.

"We will take part in any important international project on gas transportation," he said.

"We have frequently proved that Georgia is a reliable partner. Meanwhile, we have already taken into account important projects like Shah Deniz and Baku-Ceyhan. Georgia is also set to participate in Shah Deniz 2 project which will begin in 2014."

Kaladze went to add that the additional gas will be transported via Georgia to Turkey and other European countries.

"As for a gas storage facility construction, the relevant operations are underway," he said.

"We will present an action plan in the near future," Kaladze said. "But I want to highlight that construction of a gas storage facility is in our interest," he said.

 

RIPI Launches Quadrilingual Portal

 

Iran’s first quadrilingual portal has been launched by the Research Institute of Petroleum Industry (RIPI).

The portal, available at www.ripi.ir is available in English, Persian, Arabic and Russian.

Akbar Nematollahi, Iran’s Petroleum Ministry Public Relations General Director, told the inauguration ceremony of the portal that communications and information are a must for presenting Iran’s real identity in different research, cultural and industrial domains.

He said communications are needed in Iran’s petroleum industry as the country has adopted new energy diplomacy.

Nematollahi also proposed the establishment of Researchers’ Club for conducting more research activities.

Hamid-Reza Katouzian, director of RIPI, said the new portal is aimed at upgrading communications, offering better information and benefitting from the state-of-the-art technologies in the world.

Iran Co. Repairs Oman Refinery

 

Iran’s Rampco engineering construction and maintenance company has overhauled the biggest oil refinery of Oman Sultanate, the company’s manging director said.

Iraj Masrouri said Rampco sent 200 of its technicians to repair the refinery in the last Iranian year which ended on March 20.

He said Rampco was established in 1992 by National Petrochemical Company (NPC).

Masrouri said the company also repaired two petrochemical boilers in the Iraqi city of Basra last year.

“We have also maintenance contracts with 10 petrochemical complexes and this company is ready to enhance the level of its cooperation with petrochemical companies,” he said.

Masrouri said Rampco is also building a power plant, generating electricity from wastewater, in the central city of Isfahan with a capacity of 1.5 megawatts.

 

Iran to Resume Oil Activities in Venezuela

 

Iran’s oil company, Petropars, is willing to restart its activities in Venezuela when the present situation is changed, CEO of Petropars Ltd. (PPL) said.

Mohammad Javad Shams voiced PPL readiness to resume a project to develop the Dobokubi oil field in Venezuela.
The project aimed at increasing the oil field’s production from its present 14,000  b/d to 40,000  b/d.
Due to some circumstances set by the Venezuelan side, we were unable to complete the project, therefore it was suspended, said the official adding that the Petropars mission has not ended in Venezuela yet.
“Since US is the major importer of Venezuelan oil, Caracas fears to be the target of Washington’s pressures if the former continues its cooperation with Tehran,” Shams said.
He added that based on the agreement signed between PPL and its Venezuelan counterpart, Iran was to hold 20 percent of shares in Dobokubi oil field project and was considered as a partner of the project.

 

Oil Supply to South Africa, Sri Lanka Starts

 

Iran has started exporting crude oil to South Africa and Sri Lanka following the easing of sanctions against Tehran as a result of the Geneva nuclear deal, a senior Iranian oil official said.

Oil exports to the two countries are carried out under “spot cargo” contracts for the time being, said Mohsen Qamsari, director for international affairs at the National Iranian Oil Company (NIOC).

Nevertheless, he added, “Iran has no problem with signing long-term contracts with Sri Lanka and South Africa on oil exports.”

The Iranian official also said that major Asian oil refineries, including those in India, China, South Korea, Japan and Turkey have renewed their oil import contracts with Iran.

Before the sanctions were imposed upon Iran, South Africa would import one hundred thousand barrels of Iran crude oil on a daily basis, which made it the largest consumer of Iran crude oil in Africa and ninth in the world.

South Africa would import twenty five per cent of its needed oil from Iran but intensifying the sanctions by the European countries and the US which lead to hard transportation of financial resources, the oil export to Africa reduced.

World oil giants, including Royal Dutch Shell, British Petroleum (BP), Malaysia’s Petronas, Spain’s Repsol, Russia’s second largest oil producer Lukoil, France’s Total and Italy’s Eni, have expressed interest in returning to Iran following the partial sanctions relief.

 

 

 

Investment Security Guaranteed in Iran

 

Iran’s Vice-President for Legal Affairs Elham Aminzadeh says the country’s petroleum industry is seeking to boost the level of security of investment in Iran.

Aminzadeh, who talked to reporters at Tehran Oil and Gas Show, said Iran has been following a new foreign policy since President Hassan Rouhani took office last year.

Here is the transcript of questions posed to Aminzadeh as well as her answers.

 

Q: Tehran’s 19^th Oil and Gas Show attracted much more Iranian and foreign companies than the previous ones. What do you think was the main reason?  

A: It stems from political and economic developments in Iran following the election of Hassan Rouhani as president [last August]. The new administration in Iran is pursuing a new approach in foreign policy resulting in constructive and positive interaction in recent months. The Western governments have welcomed this approach and have agreed to enter international trading activities within legal frameworks. Every country is entitled to trade and development and we intend to exercise this right through constructive interaction at the international level. To that effect, since Iran holds the first largest hydrocarbon reserves in the world, it would be in the interest of other countries to join Iran in these constructive interactions and of course the concerned parties have to respect each other’s sovereignty.

 

Q: How do you think Iran’s Petroleum Ministry will deal with the presence of foreign companies in projects inside Iran?

A: In line with the approach of the administration, Petroleum Ministry has opened its doors to foreign investors and welcomes their presence in its projects. In the meantime, many foreign companies are willing to be present in Iran’s petroleum industry. The important point here is the issue of security of investment. Foreign companies need to be assured about their investment.

 

Q: Will the presence of foreign companies not cause restrictions for Iranian companies?

A: Not at all! On the contrary, domestic companies will have the chance to compete with foreign companies. Iran’s Petroleum Ministry will benefit from both foreign and domestic companies and will set the stage for cooperation between them.

 

Q: Do you think that the conditions are currently appropriate for foreign companies to invest in Iran?

A: Iran envisages attractive laws for companies willing to invest in Iran. We are also making efforts to reconsider laws in order to guarantee more investment security.

 

Q: Will you seek assistance from other countries?

A: We will if it is needed, of course in line with the policies of the Iranian government.

 

Q: Petroleum Ministry is revising oil contract terms in a bid to attract foreign investment in oil and gas projects. How do you assess the new model of contracts?

A:  Revision of the oil contracts is definitely the most important event in the oil sector under this new administration. Iran’s petroleum industry has experienced different models of contracts like concessions, production sharing and oil services. But after the [1979] Islamic Revolution, buy-backs were defined to pursue Iran’s interests. Buy-back is an appropriate model in terms of domestic security, but it is not attractive enough for foreign investors. So we have to define a type of contract which will secure Iran’s national interests and attract foreign investors at the same time. After the new administration took office, Petroleum Minister Bijan Namdar Zangeneh established a committee for revising oil contracts. The committee is drawing up a new model in cooperation with National Iranian Oil Company (NIOC) and the Office of Vice-President for Legal Affairs. A specific model of contract is not to be presented. Countries and foreign companies will be presented with several types of contracts to choose based on their financial and technical capacities.

 

Q: And how is Iran following up on its share of the Caspian Sea?

A: Regarding Caspian Sea’s legal status, we are simultaneously conducting several activities. We are in talks with the leaders of the Caspian littoral states, recovering oil and gas from the Caspian Sea, following up on the issue of the lake’s environment as well as division of its resources. Revision of oil contracts by Iran will have positive effects on cooperation between Iran and the Caspian littoral states. However, recovery from oil reservoirs should not be delayed due to talks.

Environmental concerns are also important in the Caspian Sea. This land-locked lake has long been a place where people breathe fresh air, but pollutants have been spilling into this sea. Any country behind pollutants has to remain responsible and we will follow up on this issue.

 

Q: What do you think of the sanctions? Are you optimistic about sanctions relief?

A: I think that sanctions pose a challenge to Iran’s petroleum industry, but valuable results have been achieved since the new Iranian government started nuclear talks with the world powers with a view to striking a permanent deal for the final lifting of the sanctions. But the important point which we should not be ignored is that some of these sanctions have not been approved separately and they are included in other sanctions. For example, we are not under medication and food sanctions, but we are practically under embargo due to banking and financial restrictions. The Iranian government is focusing on these points, too.

 

Q: Are there any plans to boost the legal knowledge of managers about energy issues?

A: Undoubtedly, Iran’s petroleum industry will be spared any harm if petroleum managers are trained on the legal aspects of energy issues. It is necessary for petroleum industry managers to get familiar with oil contracts, investment rights and negotiation methods. The Center for Energy Rights Studies, established at Tehran University several years ago, can be of great help in this regard.

I Pin Hope On The Future Of Iran's Petroleum Industry; Zangeneh

 

Iran’s Petroleum Minister Bijan Namdar Zangeneh delivered an opening speech to Tehran’s Oil and Gas Show in Tehran on May 6.

In his address, he spoke about the necessity of general contractors in oil projects as well as Iran’s future plans to raise its oil and gas production.

The full transcript of his speech is as follows: 

 

 

The holding of this [oil and gas] show and the gathering of contributors to Iran’s petroleum industry, including Iranian industrialists, manufacturers, contractors and engineers and foreign companies cooperating with Iran’s petroleum industry, provide me with a very good chance to explain the most significant policies and fields of activities of Iran’s petroleum industry. Throughout my speech, I will try to be outspoken.

Here, I will explain the views of the Administration of Prudence and Hope in the oil sector under three main chapters. I hope that with your serious cooperation and contribution we will be able to create an atmosphere of hope, dynamism and entrepreneurship in the country similar to that of the past, in order to put Iran back on the track which every Iranian would take pride in.

As the first pivotal topic I would like to focus on the serious determination of the Petroleum Ministry and the Government to support domestic manufacturing and upgrading national technology along with focus on the necessity of competition in quality, time and price.

The policies of Economy of Resistance, instructed by Iran’s Supreme Leader Ayatollah Ali Khamenei, require the promotion of use of domestically manufactured commodities with planning for quality upgrade and competition in manufacturing.

In late last calendar year [March], the Supreme Leader instructed the policies of the Economy of Resistance in continuation of Iran’s 2025 Vision Plan, as well as the policies of Article 44 of the Constitution. In my view, the implementation of these policies will make all of our wishes come true in the economic and industrial sectors.

The economy of resistance does not imply an introspective and isolated economy; on the contrary, the economy of resistance sketches out policies for the realization of an endogenous economy.

The economy of resistance promises the honor of being Iranian to every Iranian and heralds national strength in the economic sector based on the activities of the private sector, knowledge-based entities and economic entrepreneurs. My colleagues and I feel obliged enthusiastically to spare no efforts for putting these policies into practice.

By determination of Petroleum Ministry and the Government for supporting domestic manufacturing, I mean the concept of domestic manufacturing in general not just the physical structure. To that effect, we will support knowledge-based companies.

In my view, it is necessary to pay attention to the export of commodities and services by Iranian companies while focusing on the supply of domestic needs. Meantime, we underscore constructive interaction between domestic manufacturers and contracts and foreign companies with the objective of boosting national technology and winning a foothold in regional and international markets.

Like before, I still believe that general contractors, who have been misunderstood in recent years and inflicted irreparable traumas in recent years, have to be revived. No country and industry can grow unless under the aegis of a wider and better organized movement for designing, developing and financing sophisticated systems.

Assume that a small item like a pump, valve or joint is manufactured. As long as a GC is not using them and there is no link between smaller and bigger companies, these activities will plunge into crisis. Therefore, GCs should be taken into account as an element contributing to national technology upgrade.

To wrap up this part of my speech, I have to mention something; I will wholeheartedly support all of those who are making honorable efforts for domestic manufacturing and boosting national technology. But I will by no means help those who try to live on rake-offs. Apparently, the issue of rake-off had become common in recent years for better livelihood. In certain cases, I have noticed that companies have cheated on the government by overcharging it twice or thrice the real price. That’s bad because it pertains to domestic industry and will ruin and isolate the main industrialists while letting a bunch of rent-seekers grow. We should not let it happen.

I’m not afraid of hue and cry created by them [rent-seekers] and God willing I will stand against them. I will support an honest industry in Iran so that it would grow.

The second part of my speech is about allaying concerns of professional activists working for the Petroleum Ministry. Over the past eight months, I have had meetings with professional associations and industrialists. They expressed their concerns to me. I will try to assuage their concerns. Some of these concerns could be easily allayed, but some of them are really difficult to be relieved, requiring a method or procedure.

I have summarized the main concerns. Of course, I have plans for them.

One logical request raised by them was equal terms in domestic and foreign contracts for the supply of commodities and services. That means that there should be no discrimination in commissioning a project to an Iranian or foreign company. That’s a rational request.

Transparency

Another point was about the transparency of tender bids. I have always believed that the process of tender bids must be transparent.

In 2001, I signed off on a directive requiring that the participants in a tender bid should be present when the envelopes of their proposals are opened. Some disagreed, but later on they agreed. Those vying for tender bids could even change their proposals on the final day. Everything was done in the presence of companies and everything was noted. I will promulgate this directive again and I will confront any violation in this regard.

Another issue which has so far been ignored is fair examination of complaints filed against the process of tenders. Of course, it’s not difficult but it would require time.

The fourth case which was more complicated pertained to the establishment of a fair arbitration body for the contracts. We really don’t have a fair arbitration body; it is not just the case for the petroleum sector because we don’t have such a body in the country. The arbitration body in the country, which is the Supreme Technical Council, is not impartial. Arbitration should be fair. It must be such that the arbiters view all parties to a contract impartially, but we don’t have such a body.

I said in the meeting with professional associations that they had to offer proposals for the establishment of arbitration bodies. But they should not expect the establishment of an arbitration body favoring them. Such a body should be dominated by professional arbiters as it is common in the world. We are not the first country deciding to do so. We need a fair arbitration body to behave fairly without taking sides for any party.

Another issue pertained to modification of the terms of contracts. When foreigners are vying for a project, the price could be calculated in foreign currency so that the contractors would not be affected by fluctuations in the foreign exchange rate. But we should do so in a way not to cause corruption. Whenever an individual is assigned with the task of deciding about the contract, you would be laying the foundation of corruption. Why should we do something to facilitate corruption?

Our procedures must be such that we would not give authority to people to decide as they wish. I don’t like it. We should not develop methods which would let a group put pressure on others.

The sixth point, for which I will shortly issue a directive, is that if a commodity is being put to tender in the presence of Iranians and foreigners, the prices must be assessed so as customs rights are included.

And finally, a vendor list is needed for the petroleum industry. The qualifications of the companies must be verified before they are included in the vendor list. All companies would be required to invite those in the vendor list. In this way, no individual decision would affect the process and everything would be easier. We can prepare these vendor lists with the cooperation of professional associations for the purchase of commodities and services.

Fortunately, I have been informed that the Department for Technology and Research of Petroleum Ministry has provided the required infrastructure for that purpose. Quality certificates will be issued for Iranian commodities by Petroleum Ministry. It would temporarily replace API before a professional organization would verify qualities.

Future Plans

The third and the final part of my speech is about the future plans of Petroleum Ministry. What I am going to say would be definitely interesting for you because you would hear about new opportunities for investment and supply of commodities and services.

In South Pars, we will forcefully push ahead with our development activities and we will manage to finish the remaining 17 development phases of South Pars in three to three and a half years, and God willing, we will complete seven phases in two years.

We will start extensive activities in the coming months for a one-million-barrel increase of the onshore crude oil production capacity. That would be a big job for drillers, manufacturers of wellhead and down-hole equipment, pipes, joints, valves, pumping facilities and providers of other services. We intend to reach our objectives in less than four years. In fact, I have to say that if we, Iranians, manage to do so, that would be the biggest bargaining chip registered in the history of Iran’s petroleum industry; we will add one million barrels to Iran’s oil production capacity from shared fields within four years.

Meanwhile, several LNG units are also to become operational. That would also create a big volume of activities. I have told Kala Naft Company to arrange activities related to domestic manufacturers of commodities. There are some commodities which we need urgently. We need tubing and casing pipes, down-hole equipment, wellhead valves, drilling equipment, valves for some pumps, chemicals and rotary machinery. We are ready to sign contracts with domestic manufacturers of these items through Kala Naft Company, but it does not mean that one can come and ask us to pay one billion dollars for a contract. Several days ago, someone came to me and proposed a 1.2-billion-dollar contract and then demanded 500 million dollars in advance. It’s not a contract. You want me to do everything for you and you can get rich with my money. But we will help manufacturers as much as we can. You cannot come and demand us money for 40 years of manufacturing. You have also to spend money.  I believe we have to cooperate. We buy from you and we help you improve your business.

God willing, we start the construction of eight 60,000-barrel gas condensate mini-refineries this year. All eight refineries are to be commissioned to the private sector. This 480,000-barrel refining capacity will bring us to the point that we will have no longer to export our gas condensates and we will be able to process all our gas condensate production, which is more than one million barrels, inside the country. That is a good opportunity for the private sector. We have planned small units so that the private sector would come forward. We have also won agreement for loans from the National Development Fund (NDF). The private sector would be required only to provide 30 percent of the costs because the remaining 70 percent will be provided by NDF. The infrastructures like water, electricity and access to ports are constructed by the petroleum industry in South Pars and some units could be built jointly.

Development of LNG Units

Another effective sector for our industry is the establishment of small LNG units. We follow two objectives through these small units. I don’t want to determine any capacity for these units, but that could vary between 50,000 and 200 to 300,000 barrels a year. We have two objectives behind the construction of these units. If the private sector builds these units we will guarantee the purchase of LNG. We follow two objectives. One is to establish sharing facilities near power plants and main pressure booster stations for gas supply to them eight months of the year so that the gas would be converted into LNG and stored. For the remaining four months of the year, we will receive LNG whose prices rise due to wide use of liquefied oil products.

Another objective is to deliver fuel to remote villages and cities. They would be effective in remote regions.

By constructing these units, we will activate three businesses related to LNG: conversion of natural gas to LNG, transportation of LNG and storage of LNG. Coincidentally, LNG storage costs higher than its production.

Energy efficiency

For energy efficiency, we have submitted a proposal to the parliament and the lawmakers have given us a free hand more than we expected and we appreciate them. Petroleum Ministry has been authorized to sign buy-back contracts up to 100 billion dollars. It means that we can do whatever we want for efficient energy use. We are authorized to pay back the investor through revenues from energy efficiency projects. For instance, currently, we have more than 20 million gas-fuelled heaters at homes. Besides, we have more than two million heating facilities. The heaters in the residential sector burn 1,000 to 1,200 cubic meters per year of gas and they are often of low efficiency. If we replace them with energy-efficient heaters, the consumption will fall below 600 cubic meters. Even if we distribute energy-efficient heaters among people gratuitously it will be compensated in one year.

Our intention is to activate the companies and factories working in this sector so that when they start manufacturing new heaters to replace substandard heaters we will pay them 100 to 150 dollars per heater. In this way, a 3.5-million-rial heater would be sold for 400,000 to 500,000 rials to people. Everyone, the industrialist, people and the government – would be winner. The government will be able to export gas at a good price. Our transportation fleet can be renovated within the same framework. Gas supply to villages and small cities could be also done and many problems regarding distribution of oil products and liquefied gas would be resolved. Currently, nearly 10 million liters of oil products are used for heating and cooking in cities and villages. They cost 9 to 10 billion dollars a year. I always tell my colleagues at Petroleum Ministry that we should not always wait for projects to be defined and commissioned to us for implementation. You can define projects about energy efficiency. CHP units which can enhance energy efficiency by up to 80 percent at homes are an option. We have so many other ways of saving oil products. All of us have to feel obliged to work hard for the youth and give hope to our nation. Thanks to our experience, we can run the affairs, but we need the cooperation of our nation.

Another point which I need to mention here is that we urgently need to build gas pressure booster stations. It would be of no help if we build a station in 3.5 to 4 years. We should be able to build one in six months. We have already done so. I also say that packaging units must be built instead of production units or desalination units. We can do so in eight or nine months. It has been done in the world, but we are still following our traditional methods. When the construction of a desalination unit lasts four years, a manager prefers to spud one well because it would be six or eight months later. Then the well will be salted and the manager will abandon it because its production unit is no longer working. But if we construct desalination units which would become operational in nine months that would be of great help to Iran and the entire region.

About sanctions

We are at the center of gravity of the world oil. The present conditions will change. Thanks to God, we will get rid of these sanctions. These sanctions are a scourge imposed on the Islamic Republic by enemies of Iran. We have to save the nation from these sanctions and God willing we will. Whatever I said is not based on the assumption that the sanctions are lifted. Some people tell me that we hope for the lifting of the sanctions before we move ahead. No, we have proven that we can work even under the most difficult conditions. However, it would make no sense to offend the Iranian nation and ourselves. Yes! We can also move ahead in a rugged and treacherous road. But a wise man will go in a car or by air if he can. We have no reason to bother ourselves. To realize our objectives, we have made plans even for the most difficult conditions. But we will try to make the conditions easier in order to accelerate our progress and success.

As I said we need to drill many wells in the shortest possible time. Of course, the number of our onshore drilling rigs is good and we are increasing the number of our offshore drilling rigs. But I would like to say that the opportunities created in the drilling sector are due to our own forces. I recently expelled a Chinese company which did not do its job as expected. We really don’t need money. We have money. We have every capacity, but they have kept us waiting for three years just for installing 10 to 15 rigs. We will install 25 to 30 rigs there in five to six months to accelerate development work.

Numerous Petrochemical Projects

Another thing I would like to explain is that we have numerous petrochemical projects. We will finance them with the help of NDF, through Chinese investment and international finance in order to attract over 70 billion dollars in investment for the country’s petrochemical industry.  But one of the petrochemical units, equipped with modern technology, is where natural gas is converted into propylene.

Since the bulk of our petrochemical products are expected we have established our petrochemical units mainly in ports. But we can also build these units in the country without having to build them necessarily in ports. Each unit creates 30,000 to 40,000 job opportunities and each can develop a region.

These units need investment because the government is not supposed to invest. I even oppose a 20-percent share of the government in petrochemical projects. I believe that people should make investment. But a domestic company may not be able to do so; therefore companies need to team up. In the meantime, we are preparing the grounds for attracting investment. An entrepreneur is required to know how to manage the project without having to prepare all the money. We can provide 70 percent of the required finance for a project through stock market. We are also close to introducing a new version of oil contracts. But it does not mean that we would do nothing as long as these contracts are not effective. We are already doing our job and making progress.

In conclusion, I ask all of you all of my dear colleagues in the petroleum industry to close ranks and push ahead with state affairs based on prudence, moderation and wisdom. I offer my gratitude to dear colleagues at the Petroleum Ministry Public Relations Office which manages the oil show and also the Trade Development Center and the International Exhibitions Company for organizing the event. I also offer my gratitude to lawmakers and other friends who have always been of help to us. I hope that this year would be a fruitful one and we would be able to resolve the problems.

I pin hope on the future of the country and the future of the petroleum industry. I really see no financial shortages for the development of the petroleum industry. We have only to make endeavors. We have management problems for development, but I see no financial problem. We can resolve the financial resources problems. We have to help one another to improve this industry. We can create jobs for tens of thousands of youths. So we have to make efforts.

As someone with management responsibility, I am ready to listen to proposals for the development of the country and this industry. We can then put in practice those which match our conditions so that we would develop the country together.

I Pin Hope On The Future Of Iran's Petroleum Industry; Zangeneh

 

Iran’s Petroleum Minister Bijan Namdar Zangeneh delivered an opening speech to Tehran’s Oil and Gas Show in Tehran on May 6.

In his address, he spoke about the necessity of general contractors in oil projects as well as Iran’s future plans to raise its oil and gas production.

The full transcript of his speech is as follows: 

 

 

The holding of this [oil and gas] show and the gathering of contributors to Iran’s petroleum industry, including Iranian industrialists, manufacturers, contractors and engineers and foreign companies cooperating with Iran’s petroleum industry, provide me with a very good chance to explain the most significant policies and fields of activities of Iran’s petroleum industry. Throughout my speech, I will try to be outspoken.

Here, I will explain the views of the Administration of Prudence and Hope in the oil sector under three main chapters. I hope that with your serious cooperation and contribution we will be able to create an atmosphere of hope, dynamism and entrepreneurship in the country similar to that of the past, in order to put Iran back on the track which every Iranian would take pride in.

As the first pivotal topic I would like to focus on the serious determination of the Petroleum Ministry and the Government to support domestic manufacturing and upgrading national technology along with focus on the necessity of competition in quality, time and price.

The policies of Economy of Resistance, instructed by Iran’s Supreme Leader Ayatollah Ali Khamenei, require the promotion of use of domestically manufactured commodities with planning for quality upgrade and competition in manufacturing.

In late last calendar year [March], the Supreme Leader instructed the policies of the Economy of Resistance in continuation of Iran’s 2025 Vision Plan, as well as the policies of Article 44 of the Constitution. In my view, the implementation of these policies will make all of our wishes come true in the economic and industrial sectors.

The economy of resistance does not imply an introspective and isolated economy; on the contrary, the economy of resistance sketches out policies for the realization of an endogenous economy.

The economy of resistance promises the honor of being Iranian to every Iranian and heralds national strength in the economic sector based on the activities of the private sector, knowledge-based entities and economic entrepreneurs. My colleagues and I feel obliged enthusiastically to spare no efforts for putting these policies into practice.

By determination of Petroleum Ministry and the Government for supporting domestic manufacturing, I mean the concept of domestic manufacturing in general not just the physical structure. To that effect, we will support knowledge-based companies.

In my view, it is necessary to pay attention to the export of commodities and services by Iranian companies while focusing on the supply of domestic needs. Meantime, we underscore constructive interaction between domestic manufacturers and contracts and foreign companies with the objective of boosting national technology and winning a foothold in regional and international markets.

Like before, I still believe that general contractors, who have been misunderstood in recent years and inflicted irreparable traumas in recent years, have to be revived. No country and industry can grow unless under the aegis of a wider and better organized movement for designing, developing and financing sophisticated systems.

Assume that a small item like a pump, valve or joint is manufactured. As long as a GC is not using them and there is no link between smaller and bigger companies, these activities will plunge into crisis. Therefore, GCs should be taken into account as an element contributing to national technology upgrade.

To wrap up this part of my speech, I have to mention something; I will wholeheartedly support all of those who are making honorable efforts for domestic manufacturing and boosting national technology. But I will by no means help those who try to live on rake-offs. Apparently, the issue of rake-off had become common in recent years for better livelihood. In certain cases, I have noticed that companies have cheated on the government by overcharging it twice or thrice the real price. That’s bad because it pertains to domestic industry and will ruin and isolate the main industrialists while letting a bunch of rent-seekers grow. We should not let it happen.

I’m not afraid of hue and cry created by them [rent-seekers] and God willing I will stand against them. I will support an honest industry in Iran so that it would grow.

The second part of my speech is about allaying concerns of professional activists working for the Petroleum Ministry. Over the past eight months, I have had meetings with professional associations and industrialists. They expressed their concerns to me. I will try to assuage their concerns. Some of these concerns could be easily allayed, but some of them are really difficult to be relieved, requiring a method or procedure.

I have summarized the main concerns. Of course, I have plans for them.

One logical request raised by them was equal terms in domestic and foreign contracts for the supply of commodities and services. That means that there should be no discrimination in commissioning a project to an Iranian or foreign company. That’s a rational request.

Transparency

Another point was about the transparency of tender bids. I have always believed that the process of tender bids must be transparent.

In 2001, I signed off on a directive requiring that the participants in a tender bid should be present when the envelopes of their proposals are opened. Some disagreed, but later on they agreed. Those vying for tender bids could even change their proposals on the final day. Everything was done in the presence of companies and everything was noted. I will promulgate this directive again and I will confront any violation in this regard.

Another issue which has so far been ignored is fair examination of complaints filed against the process of tenders. Of course, it’s not difficult but it would require time.

The fourth case which was more complicated pertained to the establishment of a fair arbitration body for the contracts. We really don’t have a fair arbitration body; it is not just the case for the petroleum sector because we don’t have such a body in the country. The arbitration body in the country, which is the Supreme Technical Council, is not impartial. Arbitration should be fair. It must be such that the arbiters view all parties to a contract impartially, but we don’t have such a body.

I said in the meeting with professional associations that they had to offer proposals for the establishment of arbitration bodies. But they should not expect the establishment of an arbitration body favoring them. Such a body should be dominated by professional arbiters as it is common in the world. We are not the first country deciding to do so. We need a fair arbitration body to behave fairly without taking sides for any party.

Another issue pertained to modification of the terms of contracts. When foreigners are vying for a project, the price could be calculated in foreign currency so that the contractors would not be affected by fluctuations in the foreign exchange rate. But we should do so in a way not to cause corruption. Whenever an individual is assigned with the task of deciding about the contract, you would be laying the foundation of corruption. Why should we do something to facilitate corruption?

Our procedures must be such that we would not give authority to people to decide as they wish. I don’t like it. We should not develop methods which would let a group put pressure on others.

The sixth point, for which I will shortly issue a directive, is that if a commodity is being put to tender in the presence of Iranians and foreigners, the prices must be assessed so as customs rights are included.

And finally, a vendor list is needed for the petroleum industry. The qualifications of the companies must be verified before they are included in the vendor list. All companies would be required to invite those in the vendor list. In this way, no individual decision would affect the process and everything would be easier. We can prepare these vendor lists with the cooperation of professional associations for the purchase of commodities and services.

Fortunately, I have been informed that the Department for Technology and Research of Petroleum Ministry has provided the required infrastructure for that purpose. Quality certificates will be issued for Iranian commodities by Petroleum Ministry. It would temporarily replace API before a professional organization would verify qualities.

Future Plans

The third and the final part of my speech is about the future plans of Petroleum Ministry. What I am going to say would be definitely interesting for you because you would hear about new opportunities for investment and supply of commodities and services.

In South Pars, we will forcefully push ahead with our development activities and we will manage to finish the remaining 17 development phases of South Pars in three to three and a half years, and God willing, we will complete seven phases in two years.

We will start extensive activities in the coming months for a one-million-barrel increase of the onshore crude oil production capacity. That would be a big job for drillers, manufacturers of wellhead and down-hole equipment, pipes, joints, valves, pumping facilities and providers of other services. We intend to reach our objectives in less than four years. In fact, I have to say that if we, Iranians, manage to do so, that would be the biggest bargaining chip registered in the history of Iran’s petroleum industry; we will add one million barrels to Iran’s oil production capacity from shared fields within four years.

Meanwhile, several LNG units are also to become operational. That would also create a big volume of activities. I have told Kala Naft Company to arrange activities related to domestic manufacturers of commodities. There are some commodities which we need urgently. We need tubing and casing pipes, down-hole equipment, wellhead valves, drilling equipment, valves for some pumps, chemicals and rotary machinery. We are ready to sign contracts with domestic manufacturers of these items through Kala Naft Company, but it does not mean that one can come and ask us to pay one billion dollars for a contract. Several days ago, someone came to me and proposed a 1.2-billion-dollar contract and then demanded 500 million dollars in advance. It’s not a contract. You want me to do everything for you and you can get rich with my money. But we will help manufacturers as much as we can. You cannot come and demand us money for 40 years of manufacturing. You have also to spend money.  I believe we have to cooperate. We buy from you and we help you improve your business.

God willing, we start the construction of eight 60,000-barrel gas condensate mini-refineries this year. All eight refineries are to be commissioned to the private sector. This 480,000-barrel refining capacity will bring us to the point that we will have no longer to export our gas condensates and we will be able to process all our gas condensate production, which is more than one million barrels, inside the country. That is a good opportunity for the private sector. We have planned small units so that the private sector would come forward. We have also won agreement for loans from the National Development Fund (NDF). The private sector would be required only to provide 30 percent of the costs because the remaining 70 percent will be provided by NDF. The infrastructures like water, electricity and access to ports are constructed by the petroleum industry in South Pars and some units could be built jointly.

Development of LNG Units

Another effective sector for our industry is the establishment of small LNG units. We follow two objectives through these small units. I don’t want to determine any capacity for these units, but that could vary between 50,000 and 200 to 300,000 barrels a year. We have two objectives behind the construction of these units. If the private sector builds these units we will guarantee the purchase of LNG. We follow two objectives. One is to establish sharing facilities near power plants and main pressure booster stations for gas supply to them eight months of the year so that the gas would be converted into LNG and stored. For the remaining four months of the year, we will receive LNG whose prices rise due to wide use of liquefied oil products.

Another objective is to deliver fuel to remote villages and cities. They would be effective in remote regions.

By constructing these units, we will activate three businesses related to LNG: conversion of natural gas to LNG, transportation of LNG and storage of LNG. Coincidentally, LNG storage costs higher than its production.

Energy efficiency

For energy efficiency, we have submitted a proposal to the parliament and the lawmakers have given us a free hand more than we expected and we appreciate them. Petroleum Ministry has been authorized to sign buy-back contracts up to 100 billion dollars. It means that we can do whatever we want for efficient energy use. We are authorized to pay back the investor through revenues from energy efficiency projects. For instance, currently, we have more than 20 million gas-fuelled heaters at homes. Besides, we have more than two million heating facilities. The heaters in the residential sector burn 1,000 to 1,200 cubic meters per year of gas and they are often of low efficiency. If we replace them with energy-efficient heaters, the consumption will fall below 600 cubic meters. Even if we distribute energy-efficient heaters among people gratuitously it will be compensated in one year.

Our intention is to activate the companies and factories working in this sector so that when they start manufacturing new heaters to replace substandard heaters we will pay them 100 to 150 dollars per heater. In this way, a 3.5-million-rial heater would be sold for 400,000 to 500,000 rials to people. Everyone, the industrialist, people and the government – would be winner. The government will be able to export gas at a good price. Our transportation fleet can be renovated within the same framework. Gas supply to villages and small cities could be also done and many problems regarding distribution of oil products and liquefied gas would be resolved. Currently, nearly 10 million liters of oil products are used for heating and cooking in cities and villages. They cost 9 to 10 billion dollars a year. I always tell my colleagues at Petroleum Ministry that we should not always wait for projects to be defined and commissioned to us for implementation. You can define projects about energy efficiency. CHP units which can enhance energy efficiency by up to 80 percent at homes are an option. We have so many other ways of saving oil products. All of us have to feel obliged to work hard for the youth and give hope to our nation. Thanks to our experience, we can run the affairs, but we need the cooperation of our nation.

Another point which I need to mention here is that we urgently need to build gas pressure booster stations. It would be of no help if we build a station in 3.5 to 4 years. We should be able to build one in six months. We have already done so. I also say that packaging units must be built instead of production units or desalination units. We can do so in eight or nine months. It has been done in the world, but we are still following our traditional methods. When the construction of a desalination unit lasts four years, a manager prefers to spud one well because it would be six or eight months later. Then the well will be salted and the manager will abandon it because its production unit is no longer working. But if we construct desalination units which would become operational in nine months that would be of great help to Iran and the entire region.

About sanctions

We are at the center of gravity of the world oil. The present conditions will change. Thanks to God, we will get rid of these sanctions. These sanctions are a scourge imposed on the Islamic Republic by enemies of Iran. We have to save the nation from these sanctions and God willing we will. Whatever I said is not based on the assumption that the sanctions are lifted. Some people tell me that we hope for the lifting of the sanctions before we move ahead. No, we have proven that we can work even under the most difficult conditions. However, it would make no sense to offend the Iranian nation and ourselves. Yes! We can also move ahead in a rugged and treacherous road. But a wise man will go in a car or by air if he can. We have no reason to bother ourselves. To realize our objectives, we have made plans even for the most difficult conditions. But we will try to make the conditions easier in order to accelerate our progress and success.

As I said we need to drill many wells in the shortest possible time. Of course, the number of our onshore drilling rigs is good and we are increasing the number of our offshore drilling rigs. But I would like to say that the opportunities created in the drilling sector are due to our own forces. I recently expelled a Chinese company which did not do its job as expected. We really don’t need money. We have money. We have every capacity, but they have kept us waiting for three years just for installing 10 to 15 rigs. We will install 25 to 30 rigs there in five to six months to accelerate development work.

Numerous Petrochemical Projects

Another thing I would like to explain is that we have numerous petrochemical projects. We will finance them with the help of NDF, through Chinese investment and international finance in order to attract over 70 billion dollars in investment for the country’s petrochemical industry.  But one of the petrochemical units, equipped with modern technology, is where natural gas is converted into propylene.

Since the bulk of our petrochemical products are expected we have established our petrochemical units mainly in ports. But we can also build these units in the country without having to build them necessarily in ports. Each unit creates 30,000 to 40,000 job opportunities and each can develop a region.

These units need investment because the government is not supposed to invest. I even oppose a 20-percent share of the government in petrochemical projects. I believe that people should make investment. But a domestic company may not be able to do so; therefore companies need to team up. In the meantime, we are preparing the grounds for attracting investment. An entrepreneur is required to know how to manage the project without having to prepare all the money. We can provide 70 percent of the required finance for a project through stock market. We are also close to introducing a new version of oil contracts. But it does not mean that we would do nothing as long as these contracts are not effective. We are already doing our job and making progress.

In conclusion, I ask all of you all of my dear colleagues in the petroleum industry to close ranks and push ahead with state affairs based on prudence, moderation and wisdom. I offer my gratitude to dear colleagues at the Petroleum Ministry Public Relations Office which manages the oil show and also the Trade Development Center and the International Exhibitions Company for organizing the event. I also offer my gratitude to lawmakers and other friends who have always been of help to us. I hope that this year would be a fruitful one and we would be able to resolve the problems.

I pin hope on the future of the country and the future of the petroleum industry. I really see no financial shortages for the development of the petroleum industry. We have only to make endeavors. We have management problems for development, but I see no financial problem. We can resolve the financial resources problems. We have to help one another to improve this industry. We can create jobs for tens of thousands of youths. So we have to make efforts.

As someone with management responsibility, I am ready to listen to proposals for the development of the country and this industry. We can then put in practice those which match our conditions so that we would develop the country together.

I Pin Hope On The Future Of Iran's Petroleum Industry; Zangeneh

 

Iran’s Petroleum Minister Bijan Namdar Zangeneh delivered an opening speech to Tehran’s Oil and Gas Show in Tehran on May 6.

In his address, he spoke about the necessity of general contractors in oil projects as well as Iran’s future plans to raise its oil and gas production.

The full transcript of his speech is as follows: 

 

 

The holding of this [oil and gas] show and the gathering of contributors to Iran’s petroleum industry, including Iranian industrialists, manufacturers, contractors and engineers and foreign companies cooperating with Iran’s petroleum industry, provide me with a very good chance to explain the most significant policies and fields of activities of Iran’s petroleum industry. Throughout my speech, I will try to be outspoken.

Here, I will explain the views of the Administration of Prudence and Hope in the oil sector under three main chapters. I hope that with your serious cooperation and contribution we will be able to create an atmosphere of hope, dynamism and entrepreneurship in the country similar to that of the past, in order to put Iran back on the track which every Iranian would take pride in.

As the first pivotal topic I would like to focus on the serious determination of the Petroleum Ministry and the Government to support domestic manufacturing and upgrading national technology along with focus on the necessity of competition in quality, time and price.

The policies of Economy of Resistance, instructed by Iran’s Supreme Leader Ayatollah Ali Khamenei, require the promotion of use of domestically manufactured commodities with planning for quality upgrade and competition in manufacturing.

In late last calendar year [March], the Supreme Leader instructed the policies of the Economy of Resistance in continuation of Iran’s 2025 Vision Plan, as well as the policies of Article 44 of the Constitution. In my view, the implementation of these policies will make all of our wishes come true in the economic and industrial sectors.

The economy of resistance does not imply an introspective and isolated economy; on the contrary, the economy of resistance sketches out policies for the realization of an endogenous economy.

The economy of resistance promises the honor of being Iranian to every Iranian and heralds national strength in the economic sector based on the activities of the private sector, knowledge-based entities and economic entrepreneurs. My colleagues and I feel obliged enthusiastically to spare no efforts for putting these policies into practice.

By determination of Petroleum Ministry and the Government for supporting domestic manufacturing, I mean the concept of domestic manufacturing in general not just the physical structure. To that effect, we will support knowledge-based companies.

In my view, it is necessary to pay attention to the export of commodities and services by Iranian companies while focusing on the supply of domestic needs. Meantime, we underscore constructive interaction between domestic manufacturers and contracts and foreign companies with the objective of boosting national technology and winning a foothold in regional and international markets.

Like before, I still believe that general contractors, who have been misunderstood in recent years and inflicted irreparable traumas in recent years, have to be revived. No country and industry can grow unless under the aegis of a wider and better organized movement for designing, developing and financing sophisticated systems.

Assume that a small item like a pump, valve or joint is manufactured. As long as a GC is not using them and there is no link between smaller and bigger companies, these activities will plunge into crisis. Therefore, GCs should be taken into account as an element contributing to national technology upgrade.

To wrap up this part of my speech, I have to mention something; I will wholeheartedly support all of those who are making honorable efforts for domestic manufacturing and boosting national technology. But I will by no means help those who try to live on rake-offs. Apparently, the issue of rake-off had become common in recent years for better livelihood. In certain cases, I have noticed that companies have cheated on the government by overcharging it twice or thrice the real price. That’s bad because it pertains to domestic industry and will ruin and isolate the main industrialists while letting a bunch of rent-seekers grow. We should not let it happen.

I’m not afraid of hue and cry created by them [rent-seekers] and God willing I will stand against them. I will support an honest industry in Iran so that it would grow.

The second part of my speech is about allaying concerns of professional activists working for the Petroleum Ministry. Over the past eight months, I have had meetings with professional associations and industrialists. They expressed their concerns to me. I will try to assuage their concerns. Some of these concerns could be easily allayed, but some of them are really difficult to be relieved, requiring a method or procedure.

I have summarized the main concerns. Of course, I have plans for them.

One logical request raised by them was equal terms in domestic and foreign contracts for the supply of commodities and services. That means that there should be no discrimination in commissioning a project to an Iranian or foreign company. That’s a rational request.

Transparency

Another point was about the transparency of tender bids. I have always believed that the process of tender bids must be transparent.

In 2001, I signed off on a directive requiring that the participants in a tender bid should be present when the envelopes of their proposals are opened. Some disagreed, but later on they agreed. Those vying for tender bids could even change their proposals on the final day. Everything was done in the presence of companies and everything was noted. I will promulgate this directive again and I will confront any violation in this regard.

Another issue which has so far been ignored is fair examination of complaints filed against the process of tenders. Of course, it’s not difficult but it would require time.

The fourth case which was more complicated pertained to the establishment of a fair arbitration body for the contracts. We really don’t have a fair arbitration body; it is not just the case for the petroleum sector because we don’t have such a body in the country. The arbitration body in the country, which is the Supreme Technical Council, is not impartial. Arbitration should be fair. It must be such that the arbiters view all parties to a contract impartially, but we don’t have such a body.

I said in the meeting with professional associations that they had to offer proposals for the establishment of arbitration bodies. But they should not expect the establishment of an arbitration body favoring them. Such a body should be dominated by professional arbiters as it is common in the world. We are not the first country deciding to do so. We need a fair arbitration body to behave fairly without taking sides for any party.

Another issue pertained to modification of the terms of contracts. When foreigners are vying for a project, the price could be calculated in foreign currency so that the contractors would not be affected by fluctuations in the foreign exchange rate. But we should do so in a way not to cause corruption. Whenever an individual is assigned with the task of deciding about the contract, you would be laying the foundation of corruption. Why should we do something to facilitate corruption?

Our procedures must be such that we would not give authority to people to decide as they wish. I don’t like it. We should not develop methods which would let a group put pressure on others.

The sixth point, for which I will shortly issue a directive, is that if a commodity is being put to tender in the presence of Iranians and foreigners, the prices must be assessed so as customs rights are included.

And finally, a vendor list is needed for the petroleum industry. The qualifications of the companies must be verified before they are included in the vendor list. All companies would be required to invite those in the vendor list. In this way, no individual decision would affect the process and everything would be easier. We can prepare these vendor lists with the cooperation of professional associations for the purchase of commodities and services.

Fortunately, I have been informed that the Department for Technology and Research of Petroleum Ministry has provided the required infrastructure for that purpose. Quality certificates will be issued for Iranian commodities by Petroleum Ministry. It would temporarily replace API before a professional organization would verify qualities.

Future Plans

The third and the final part of my speech is about the future plans of Petroleum Ministry. What I am going to say would be definitely interesting for you because you would hear about new opportunities for investment and supply of commodities and services.

In South Pars, we will forcefully push ahead with our development activities and we will manage to finish the remaining 17 development phases of South Pars in three to three and a half years, and God willing, we will complete seven phases in two years.

We will start extensive activities in the coming months for a one-million-barrel increase of the onshore crude oil production capacity. That would be a big job for drillers, manufacturers of wellhead and down-hole equipment, pipes, joints, valves, pumping facilities and providers of other services. We intend to reach our objectives in less than four years. In fact, I have to say that if we, Iranians, manage to do so, that would be the biggest bargaining chip registered in the history of Iran’s petroleum industry; we will add one million barrels to Iran’s oil production capacity from shared fields within four years.

Meanwhile, several LNG units are also to become operational. That would also create a big volume of activities. I have told Kala Naft Company to arrange activities related to domestic manufacturers of commodities. There are some commodities which we need urgently. We need tubing and casing pipes, down-hole equipment, wellhead valves, drilling equipment, valves for some pumps, chemicals and rotary machinery. We are ready to sign contracts with domestic manufacturers of these items through Kala Naft Company, but it does not mean that one can come and ask us to pay one billion dollars for a contract. Several days ago, someone came to me and proposed a 1.2-billion-dollar contract and then demanded 500 million dollars in advance. It’s not a contract. You want me to do everything for you and you can get rich with my money. But we will help manufacturers as much as we can. You cannot come and demand us money for 40 years of manufacturing. You have also to spend money.  I believe we have to cooperate. We buy from you and we help you improve your business.

God willing, we start the construction of eight 60,000-barrel gas condensate mini-refineries this year. All eight refineries are to be commissioned to the private sector. This 480,000-barrel refining capacity will bring us to the point that we will have no longer to export our gas condensates and we will be able to process all our gas condensate production, which is more than one million barrels, inside the country. That is a good opportunity for the private sector. We have planned small units so that the private sector would come forward. We have also won agreement for loans from the National Development Fund (NDF). The private sector would be required only to provide 30 percent of the costs because the remaining 70 percent will be provided by NDF. The infrastructures like water, electricity and access to ports are constructed by the petroleum industry in South Pars and some units could be built jointly.

Development of LNG Units

Another effective sector for our industry is the establishment of small LNG units. We follow two objectives through these small units. I don’t want to determine any capacity for these units, but that could vary between 50,000 and 200 to 300,000 barrels a year. We have two objectives behind the construction of these units. If the private sector builds these units we will guarantee the purchase of LNG. We follow two objectives. One is to establish sharing facilities near power plants and main pressure booster stations for gas supply to them eight months of the year so that the gas would be converted into LNG and stored. For the remaining four months of the year, we will receive LNG whose prices rise due to wide use of liquefied oil products.

Another objective is to deliver fuel to remote villages and cities. They would be effective in remote regions.

By constructing these units, we will activate three businesses related to LNG: conversion of natural gas to LNG, transportation of LNG and storage of LNG. Coincidentally, LNG storage costs higher than its production.

Energy efficiency

For energy efficiency, we have submitted a proposal to the parliament and the lawmakers have given us a free hand more than we expected and we appreciate them. Petroleum Ministry has been authorized to sign buy-back contracts up to 100 billion dollars. It means that we can do whatever we want for efficient energy use. We are authorized to pay back the investor through revenues from energy efficiency projects. For instance, currently, we have more than 20 million gas-fuelled heaters at homes. Besides, we have more than two million heating facilities. The heaters in the residential sector burn 1,000 to 1,200 cubic meters per year of gas and they are often of low efficiency. If we replace them with energy-efficient heaters, the consumption will fall below 600 cubic meters. Even if we distribute energy-efficient heaters among people gratuitously it will be compensated in one year.

Our intention is to activate the companies and factories working in this sector so that when they start manufacturing new heaters to replace substandard heaters we will pay them 100 to 150 dollars per heater. In this way, a 3.5-million-rial heater would be sold for 400,000 to 500,000 rials to people. Everyone, the industrialist, people and the government – would be winner. The government will be able to export gas at a good price. Our transportation fleet can be renovated within the same framework. Gas supply to villages and small cities could be also done and many problems regarding distribution of oil products and liquefied gas would be resolved. Currently, nearly 10 million liters of oil products are used for heating and cooking in cities and villages. They cost 9 to 10 billion dollars a year. I always tell my colleagues at Petroleum Ministry that we should not always wait for projects to be defined and commissioned to us for implementation. You can define projects about energy efficiency. CHP units which can enhance energy efficiency by up to 80 percent at homes are an option. We have so many other ways of saving oil products. All of us have to feel obliged to work hard for the youth and give hope to our nation. Thanks to our experience, we can run the affairs, but we need the cooperation of our nation.

Another point which I need to mention here is that we urgently need to build gas pressure booster stations. It would be of no help if we build a station in 3.5 to 4 years. We should be able to build one in six months. We have already done so. I also say that packaging units must be built instead of production units or desalination units. We can do so in eight or nine months. It has been done in the world, but we are still following our traditional methods. When the construction of a desalination unit lasts four years, a manager prefers to spud one well because it would be six or eight months later. Then the well will be salted and the manager will abandon it because its production unit is no longer working. But if we construct desalination units which would become operational in nine months that would be of great help to Iran and the entire region.

About sanctions

We are at the center of gravity of the world oil. The present conditions will change. Thanks to God, we will get rid of these sanctions. These sanctions are a scourge imposed on the Islamic Republic by enemies of Iran. We have to save the nation from these sanctions and God willing we will. Whatever I said is not based on the assumption that the sanctions are lifted. Some people tell me that we hope for the lifting of the sanctions before we move ahead. No, we have proven that we can work even under the most difficult conditions. However, it would make no sense to offend the Iranian nation and ourselves. Yes! We can also move ahead in a rugged and treacherous road. But a wise man will go in a car or by air if he can. We have no reason to bother ourselves. To realize our objectives, we have made plans even for the most difficult conditions. But we will try to make the conditions easier in order to accelerate our progress and success.

As I said we need to drill many wells in the shortest possible time. Of course, the number of our onshore drilling rigs is good and we are increasing the number of our offshore drilling rigs. But I would like to say that the opportunities created in the drilling sector are due to our own forces. I recently expelled a Chinese company which did not do its job as expected. We really don’t need money. We have money. We have every capacity, but they have kept us waiting for three years just for installing 10 to 15 rigs. We will install 25 to 30 rigs there in five to six months to accelerate development work.

Numerous Petrochemical Projects

Another thing I would like to explain is that we have numerous petrochemical projects. We will finance them with the help of NDF, through Chinese investment and international finance in order to attract over 70 billion dollars in investment for the country’s petrochemical industry.  But one of the petrochemical units, equipped with modern technology, is where natural gas is converted into propylene.

Since the bulk of our petrochemical products are expected we have established our petrochemical units mainly in ports. But we can also build these units in the country without having to build them necessarily in ports. Each unit creates 30,000 to 40,000 job opportunities and each can develop a region.

These units need investment because the government is not supposed to invest. I even oppose a 20-percent share of the government in petrochemical projects. I believe that people should make investment. But a domestic company may not be able to do so; therefore companies need to team up. In the meantime, we are preparing the grounds for attracting investment. An entrepreneur is required to know how to manage the project without having to prepare all the money. We can provide 70 percent of the required finance for a project through stock market. We are also close to introducing a new version of oil contracts. But it does not mean that we would do nothing as long as these contracts are not effective. We are already doing our job and making progress.

In conclusion, I ask all of you all of my dear colleagues in the petroleum industry to close ranks and push ahead with state affairs based on prudence, moderation and wisdom. I offer my gratitude to dear colleagues at the Petroleum Ministry Public Relations Office which manages the oil show and also the Trade Development Center and the International Exhibitions Company for organizing the event. I also offer my gratitude to lawmakers and other friends who have always been of help to us. I hope that this year would be a fruitful one and we would be able to resolve the problems.

I pin hope on the future of the country and the future of the petroleum industry. I really see no financial shortages for the development of the petroleum industry. We have only to make endeavors. We have management problems for development, but I see no financial problem. We can resolve the financial resources problems. We have to help one another to improve this industry. We can create jobs for tens of thousands of youths. So we have to make efforts.

As someone with management responsibility, I am ready to listen to proposals for the development of the country and this industry. We can then put in practice those which match our conditions so that we would develop the country together.

Foreign Firms’ Presence Up 300%

 

Director of Tehran’s 19^th Oil and Gas Show Akbar Nematollahi said that the number of foreign companies which attended the recent exhibition was three times as much the foreign companies that participated in the 18^th one.

“This exhibition was set up based on the country’s economic policies and pursuing the objective of dynamic growth with a view to realizing the objectives of Iran’s 2025 vision plan, founding knowledge-based economy in a flexible, endogenous and extrospective manner,” Nematollahi said in his opening address to the energy exhibition.

He said the motto of the 19^th show was promoting energy diplomacy and boosting domestic production. “This exhibition is being held at a time that Iran, having entered a new round of interaction and cooperation, is seeking to change the international conditions in the country’s favor by benefiting from diplomatic techniques particularly energy diplomacy,” he said.

Nematollahi said Tehran’s Oil and Gas Show is the best change for Iranian engineers, contractors and industrialists active in the petroleum industry to show off their competence and capabilities for more extensive activities at national and regional levels.

 

$50b Market

 

Nematollahi said the high-profile presence of international companies in this energy exhibition indicated their understanding of the attractive opportunities for investment in Iran’s 50-billion-dollar market.

“In its new roadmap, Iran’s petroleum industry is envisaging options to increase its export of commodities, services, equipment and products to international markets and getting more value-added in favor of Iran’s non-oil economy and it has devised plans to that end,” said Nematollahi who is also Public Relations director of Iran’s Petroleum Ministry.

 

 

One of Top Five

 

Nematollahi said Tehran’s 19^th Oil and Gas Show has become one of top five big energy exhibitions in the world.

“The number of foreign companies stood at 195 in the previous round, but this year it reached 600. Moreover, the number of Iranian companies participating in this year’s exhibition was 1,200, versus 850 in last year,” he said.

Nematollahi also said that the number of countries showcasing their achievements rose from 15 to 33.

 

60 Foreign Brands

 

Nematollahi said 60 brands from 32 countries put their products on display in this exhibition.

“Several countries had exclusive pavilions in order to present a general perspective of their oil, gas and petrochemical industries,” he said.

Nematollahi said the main objectives behind this industrial and economic event was to put on display the latest achievements in the oil and gas industries, as well as broadening interaction with other countries and competing with oil companies in the world, boosting domestic manufacturing through exchange of technical data and attraction of investment, transfer of the state-of-the-art technology and interaction with the industrialized countries.

“The familiarity of oil, gas and petrochemical industrialists with modern achievements, signature of commercial contracts on the exchange of commodities, services and technical information, creating job opportunities in the oil, gas and petrochemical industries, facilitating the presence of international businessmen and industrialists in the exhibition for improving exports and creating valuable opportunities for industrialists favoring international activities are among other objectives of this exhibition,” said Nematollahi.

He said Australia, Austria, Germany, Belgium, Albania, Algeria, Canada, US, China, France, India, Hong Kong, Iraq, Italy, Japan, North Korea, South Korea, Malaysia, Poland, Romania, Russia, Singapore, Spain, Switzerland, Taiwan, Thailand, Turkey, United Arab Emirates, Ukraine and Afghanistan were represented in the oil show.

Nematollahi said Organization of the Petroleum Exporting Countries (OPEC) and Gas Exporting Countries Forum (GECF) were also active in the 19^th show and distributed their publications among visitors in their stands and provided them with their latest achievements .It is noteworthy that this was the third time that OPEC represented in Iran's Oil Show, while GECF participated in the exhibition for the first time.

Iranian Firms Show Off

 

An exhibition which started work with two pavilions is now one of the five biggest oil shows in the world. Such a progress would not have happened without endeavors by Iranian engineers and industrialists.

Tehran’s 19^th Oil and Gas Show was attended by more than 1,200 Iranian and 600 foreign companies. Such a strong presence of Iranian companies had made the exhibition more attractive than ever. These Iranian companies put on exhibit their achievements in the manufacturing of equipment for the petroleum industry.

 

Self-Sufficiency in Compressor Manufacturing

 

Iran’s petroleum industry, under the country’s Fifth Five-Year Economic Development Plan (March 2010-March 2015), seeks to boost the capacity of gas transmission pipelines, construct pressure booster stations and develop rotary machinery like pumps and turbocompressors as the main components of pressure booster stations as well as compressors and turbocompressors. At present, a few countries are equipped with this technology and Iran is one of them. Self-sufficiency in the manufacturing of rotary machinery will be of great help to the petroleum industry and that would happen under the aegis of benefiting from the potentials of knowledge-based companies as well as state-of-the-art technologies.  During the 19^th International Oil, Gas, Refining and Petrochemical Exhibition, leading Iranian companies like Iran Power Plant Projects Management Company (MAPNA) and Iran’s Oil Turbo Compressor Company (OTC) put on display valuable achievements.

Kavosh Sanat Tous Company, an Iranian manufacturer of pumps and compressors, participated in the oil show. It is the first manufacturer of pumps and compressors of high rotation speed and has managed to master technology for designing and manufacturing rotary machinery.

This company is currently working on the manufacturing of air compressor full package, Mc Quay compressor chiller package as well as cooling towers’ gearbox.

Kavosh Sanat Tous Company’s directors say this company’s products can rival foreign ones.

This company started manufacturing pumps and compressors only three years ago ; therefore technical problems naturally exist. The products of this company are 50 percent less expensive than high-quality foreign ones.

Maintenance of rotary equipment and procurement of spare parts in South Pars Gas Complex, and repair and manufacturing of pumps for National Iranian South Oil Company (NISOC) are among projects operated by Kavosh Sanat Tous Company for Iran’s oil sector.

 

Oil Platforms

 

Marine structures are widely used for oil exploration and production. Iran shares 28 oil and gas fields with its neighbors. They include 15 offshore and 13 onshore fields. The offshore fields are in the Persian Gulf. Iran, which has prioritized development of these shared oil and gas fields, needs facilities like marine structures.

Iranian Offshore Engineering and Construction Company (IOEC) and Iran Industrial Marine Company (IIMCO) are the most active companies in the construction of offshore structures and oil platforms. There are also other Iranian companies working in this sector.

Mobin Sazeh Gostar Design & Construction Offshore Structures, a subsidiary of Iran Shipbuilding & Offshore Industries Complex Co. (ISOICO), is one of them. Mobin Sazeh Gostar, which attended Tehran Oil and Gas Show, is active in designing, building and installing platforms, derricks and jacket, in laying subsea pipeline, building docks and bridges.

Mobin Sazeh Gostar has great potentials in basic and detailed designing, building offshore and onshore oil and gas structures, mechanical tests, weighing and lifting operations, onshore and offshore pre-commissioning and commissioning as well as installing and launching offshore structures.

Mobin Sazeh Gostar has so far been present in phases 6, 7, 8, 9, 10 and 16 of the offshore giant South Pars gas field.

 

 

 

Storage Tanks in Neighboring States

 

Refining and petrochemical plants always need facilities to store raw materials and oil products before equalizing their quality and loading them for sale. They also need pressure vessels to conduct chemical processing on fluids or gases.

Designing and building such equipment would be dangerous without following designing standards.

Masnouat Felezi Sangin Company is a supplier of equipment for oil, gas and petrochemical industries. This company specializes in designing and building pressure vessels, storage tanks, thermal transducers, tubes and separators. It has also managed to develop deaerator.

Masnouat Felezi Sangin has so far supplied pressure vessels to Phase 19 development of South Pars.

Besides being a supplier of products to projects in Iran, the company has also built storage facility for hydrocarbon liquids in Yemen.

 

Valves

 

Industrial valves are among the highly consumed equipment in the oil, gas and petrochemical industries. Self-sufficiency in their manufacturing would save the country hard currency to a large extent. Godakhtar Company is a manufacturer of industrial valves. It put on exhibit its products; mainly plug valves and ball valves at Tehran Oil and Gas Show. It is also offering repair services for valves as well as providing the necessary training to buyers of these valves.

Godakhtar is currently capable of producing more than 70 types of plug valves in different sizes and classes. With 15 years of experience in the oil and gas industries, Godakhtar is the top manufacturer of valves in Iran.

A ball valve is a valve with a spherical disc, the part of the valve which controls the flow through it. The sphere has a hole, or port, through the middle so that when the port is in line with both ends of the valve, flow will occur. When the valve is closed, the hole is perpendicular to the ends of the valve, and flow is blocked.

Plug valves are valves with cylindrical or conically tapered "plugs" which can be rotated inside the valve body to control flow through the valve. The plugs in plug valves have one or more hollow passageways going sideways through the plug, so that fluid can flow through the plug when the valve is open. Plug valves are simple and often economical.

Godakhtar has so far supplied more than 200,000 valves to Iran’s petroleum industry. The quality of its products is comparable with the quality of valves produced by foreign companies.

 

Process Packages

 

Process packages are largely used in the oil and gas industries. Iran used to purchase them from foreign companies before sanctions were imposed on the country’s oil sector. After sanctions were slapped on Iran, it was impossible to buy them. Some Iranian companies moved to develop process packages in order to resolve this problem.

Chamaan Engineering and Fabrication Company is an Iranian company developing process packages for the oil, gas and petrochemical companies. Its products are used in the oil and gas facilities, oil refineries, and petrochemical plants, offshore and onshore facilities as well as in power plants.

The company started its activity by designing and fabricating packages for chemical injection, but later on it moved to design and develop packages for oil and gas desalting, direct and indirect heating.

Designing and manufacturing air and gas drying packages for the gasoline production unit of Isfahan refinery, design and fabrication of direct-fired heater package for Sarvestan and Saadatabad oil fields as well as designing and fabricating a refining package for Perisan Gulf Star Refinery are among the latest measures taken by Chamaan Engineering and Fabrication Company.

The company has recently struck a deal with Iranian Central Oil Fields Company (ICOFC) for designing and fabricating a package for oil waste treatment. Future projects of this company include design and fabrication of more specialized packages like reformers and incinerators.

The products of this company cost 25 percent lower than foreign products.

 

Technical Service Exports to ME

 

Since it is important to measure hydrocarbons with high precision and in conformity with international standards, oil and gas industries have to take into account more than ever metering systems and updating technology for these systems. Metering systems are developed by knowledge-based companies. Today, there are Iranian companies active in metering gases and liquids. Experts have given a positive assessment of their products.  

Asia Instruments Co., which recently attended Tehran Oil and Gas Show, is the first manufacturer of metering systems in Iran and in the Middle East.

The first project of this company has been designing, fabricating and installing 18 metering systems for Mobin Petrochemical Plant. At present, the products of this company are used in more than 40 projects including in several phases of South Pars gas field, Yadvaran oil field and Persian Gulf Star Refinery.

Asia Instruments Company gets 75 percent of its raw materials from Iranian manufacturing companies. The metering systems manufactured by this company could rival foreign products in terms of price and quality. This company is concentrating its attention on Iran’s market because the country would have capacity for metering systems up to 2025. However, the company keeps an eye on foreign markets. It is involved in oil projects in Iraq, Turkey and Azerbaijan.

 

Petchem Plants

 

While attention is focused on the upstream oil sector, the downstream sector should not be ignored. The only way to stop crude oil selling will be to develop downstream industries. To that effect, Iranian oil officials have underscored the need for the construction of petrochemical plants and location of petrochemical hubs in Lavan, Chabahar and Iranshahr in the coming years. These regions have significant potentials for investment. Some Iranian companies are capable of building petrochemical plants and supplying the necessary equipment to them. Petrosakht Chehelsotoun is one of them. The company can build isopropanol and ethylhexanol plants.

The company has already cooperated with Farsa Petrochemical Plant, Tabriz refinery and Petro Imen Seaphan in the construction of petrochemical plants. National Iranian South Oil Company (NISOC), National Iranian Gas Company (NIGC) and Kala Naft Company are among other clients of Petrosakht Chehelsotoun.

The presence of numerous Iranian companies at Tehran’s 19^th Oil and Gas Show was indicative of the fact that Iran’s petroleum industry has been paying due attention to domestic manufacturing in order to meet growing needs in this industry. But the important point that must be taken into account while the number of Iranian manufacturers is rising is the quality of equipment and components compared with foreign products. The use of domestically manufactured equipment in recent years has shown that the good quality of these products; however, more supporting policies are still needed to boost the quality of Iranian products. To that effect, Iran’s Petroleum Ministry can offer facilities and guarantee purchase by Iranian industries.    

  

 

60 Brands at Tehran Oil Show

 

Amid hopes of sanctions relief under the aegis of Iran’s talks with six world powers for a final deal on the Islamic Republic’s nuclear program, Iran’s Petroleum Ministry moved to revise oil contract terms in a bid to persuade international oil companies to invest in Iran’s oil and gas projects.

Tehran’s 19^th Oil and Gas Show coincided with nuclear talks between Iran and the world powers – the United States, France, UK, Russia, China and Germany. 

The major difference between this year’s Oil, Gas, Refining and Petrochemical Exhibition with the previous year’s events was the growing number of foreign companies. In this year’s exhibition, 600 foreign companies attended, up three times from a year ago. Moreover, 60 foreign brands from 32 countries showcased their products at Tehran show. Some of these foreign companies experienced their first ever presence in Iran, but some others which had already participated in this event were looking for opportunities for investment, as sanctions are hoped to ease.

 

First-Time Participants

 

Numerous German companies attended Tehran Oil and Gas Show for the first time. A large pavilion housed German companies. Avi Kamp was one of the companies attending the show for the first time, although it has been active in South Pars gas field for five years. A supplier of advanced control systems to Iran’s petroleum industry, Avi Kamp took part in the exhibition with a view to winning chances for investment in Iran.

“Iran may receive control systems from many other suppliers, but our machinery incorporates sophisticated technology and they are economical for any consumer,” said Wolfram Schaunet, managing director of the company.

“The technology used in this machinery is very sophisticated and their purchase costs one tenth lower than their letting,” he said.

He expressed hope that sanctions would be lifted against Iran’s petroleum industry. “That is why we have attended the exhibition,” he said. “We have already had activities in the petroleum industry of many countries including China, Africa and Malaysia, but Iran will definitely be an exceptional opportunity for us and we will be happy with presence in Iran.”

He said his company has enjoyed presence in the gigantic offshore South Pars gas field in southern Iran.

He gave a positive assessment of his cooperation with Iranian outsourcers. “Given Iran’s background in the petroleum industry, Iranian experts are very accurate. Therefore, we have to be precise in our service-providing to them. Technical safety and reputation are very important for the Iranians,” he said.

The German industrialist said the sanctions imposed on Iran’s energy sector are useless, adding that the Western governments should not resolve the dispute over Iran’s nuclear program through sanctions.

“The West must understand that Iran is full of economic and trade opportunities, and a country enjoying such benedictions always thinks of broader constructive cooperation with the world,” he said.

Duchting Pumpen which is a privately held company specializing in the design and manufacture of centrifuge pumps was another German company present in the oil show.

The representative of this company said it has attended the show seeking opportunities for cooperation with Iranian companies.

The products of this company have already been used in a water desalination project in the southeastern port city of Chabahar, as well as at Shiraz petrochemical plant.

The product range of Duchting Pumpen primarily comprises numerous single- and multi-stage centrifugal pumps that have been designed and constructed according to the individual needs and requirements of the market.

 

Talks under Way for Pump Selling

 

Vogelsang, which manufactures crude oil pumps is to open its Tehran office within months, is a German company that experienced its first ever presence at Tehran Oil Show.

The director of the company said two pumps manufactured by this company are already operating in Shazand Petrochemical Plant, adding that Jam Petrochemical Plant is also in talks to purchase pumps from Vogelsang.

He said that better international conditions and sanctions relief for Iran’s petroleum industry persuaded the company to attend the oil show and envisage transfer of technology for pump manufacturing to Iran. 

Vogelsang’s IQ series pumps have been specifically designed to reduce the number of spare parts and maintenance time, compared to any other lobe pump in the industry. The ability to pump highly viscous liquids, pulsation-free combined with unmatched design flexibility, makes IQ the next revolution of pumping technology.

The XRipper XRS Twin Shaft Grinder is designed for inline liquid-borne solids handling applications. The XRipper effectively reduces large solids to a manageable size for further solids reduction or for downstream pumps and equipment to process without clogging or damage.

 

Poland Gas Giant in Tehran

 

Poland's dominant gas firm PGNiG attended Tehran Oil and Gas Show for the first time. Amid hopes of sanctions relief, this company has decided to invest in the development of some fields in Iran.

He said that company is ready to train Iranian engineers at North Drilling Company (NDCO).

PGNiG Capital Group is a leader in the natural gas market in Poland. The core activity of the PGNiG Capital Group encompasses field exploration and production of natural gas and crude oil, as well as import, storage, trade and distribution of gas and liquid fuels. Polish Oil and Gas Company is one of the largest and oldest companies in Poland.

PGNiG business is divided into exploration and production, trade and storage, distribution as well as power generation.

The exploration and production segment covers the entire process of oil and gas production starting from geophysical surveys prior to the exploration phase until field operation and product preparation for marketing.

Two of PGNiG’s branches, the Zielona Góra Branch and the Sanok Branch, produce natural gas and crude oil in Poland.

 

PGNiG companies implement natural gas and crude oil exploration and drilling projects in Poland and many countries all over the world, including: Denmark, Egypt, Germany, Hungary, India, Yemen, Kazakhstan, Pakistan and Ukraine.

 

Total Countdown for Return

 

Like previous years, France’s energy giant Total occupied a large pavilion in Iran's oil show and put on display industrial and engine lubricants. Although it lost the chance to operate oil projects in Iran under pressure from sanctions imposed by the Western governments, it awarded the license for its products to Iranian partners.

“Transfer of shares to Iranian partners is an important signal showing that Total is still ready to return to Iran as soon as sanctions have been lifted,” the representative of this French company said.

“France is strongly willing to start its activities in Iran. In other words, we are numbering the days for return to Iran’s oil and gas projects,” he said, adding that Total is willing to establish gas stations in Iran.

Total has constantly played down warning messages from US officials regarding investment envisaged by French companies in Iran after the lifting of sanctions.

Total CEO Christophe de Margerie has on many occasions voiced the readiness of the company to resume work in Iran.

A 116-delegation of French businessmen travelled to Tehran from February 3 to 5 to explore trade opportunities in light of the prospect of sanctions relief on Iran following the implementation of the November 2013 nuclear deal between Iran and world powers - Russia, China, France, Germany, the US and the UK.

 

Long-Time Participants

 

Many foreign companies have long attended Tehran’s annual oil and gas show. Canadaoil Group is one of them. It has so far participated in all 19 oil and gas exhibitions held in Tehran.

As a global provider of integrated piping solutions, Canadaoil provides full range of products and services including: pipes, fittings, pressure vessels, spooling, and coating.

It is an integrated manufacturer and supplier of customized pipes, fittings, products, and solutions to major industry players across the energy and environmental value chain. It manufactures a complete range of welded steel pipes, butt weld fittings, and pressure vessels.

The group has a significant global presence, with 10 manufacturing facilities and 11 sales offices across 4 continents. It is strategically located close to end-markets enabling it to offer products and services effectively across regions.

Canadoil has established an excellent track record of successfully executing and integrating green field projects and acquisitions.

 

From Mud to Black Gold

 

Deep Blue, a Dutch company, has also participated in Tehran Oil Show for many years. It manufactures centrifugal pumps based on API standards as well as low-temperature pumps. It experienced its 15^th presence at Tehran Oil and Gas Show.

The director of the company said he has come to the “land of black gold” from the
land of mud”.

Over the past eight years, Deep Blue has had a joint venture with an Iranian company and is willing to transfer the technology for manufacturing centrifugal pumps to Iran’s petroleum industry.

“This company first starts transferring simple technologies for pump manufacturing,” he said.

 

China Active

 

China’s Zhongman Petroleum and Natural Gas Group Co (ZPEC), with 12 subsidiaries, manufacture onshore drilling rigs.

Hassan Mohammadi-Moqaddam, the Iranian representative of this company, said ZPEC has been active in Iran’s petroleum industry for the past eight years. Iran has so far purchased 7 onshore drilling rigs from ZPEC.

ZPEC, an ideal combination of drilling contractor and petroleum equipment manufacturer, has the advantage of integrated business lines on both upstream and downstream, which enhance the innovative strength of technology with competitive sales and marketing strategies.

ZPEC has provided more than 100 drilling rigs to both domestic and international markets including the US, Uzbekistan, Saudi Arabia, Sudan, and Ethiopia, in over 10 countries on five different continents. 

Topland Oilfield Supplies Ltd., also a Chinese company, attended the event as well. It has been engaged into designing and development, manufacture, supply and distribution of oilfield equipment and rig components.

 

Italy’s Pavilion

 

A large number of Italian companies attended Tehran Oil and Gas Show. FCE was the organizer of Italian companies participating in the exhibition. FCE also holds oil shows in Italy and in the world. In 2007, it set up the mostly visited oil and gas exhibition in Italy.

Fabio Casiraghi, manager of FCE, said he managed to convince the Italian companies to attend Tehran Oil Show due to historic affinities between Iran and Italy.

He said that he would try to encourage more companies to attend Tehran exhibition after sanctions are lifted against Iran.

“Iran’s oil market is very strong and important, that is why the Italians are encouraged to be present in this exhibition,” said Casiraghi.

He promised to persuade 100 Italian companies to attend Tehran Oil and Gas Show next year if sanctions are lifted.

He said that the chief executive of Eni Paolo Scaroni had told Iran’s petroleum minister about his willingness to operate oil projects in Iran.

Last December, Scaroni said: “We plan to continue to be in Iran and possibly increase the level of our activity as soon as the sanctions regime is lifted.”

 “There are so many opportunities in Iran both in oil and gas that we will certainly find a common area of interest,” Scaroni said.

He described his meeting with Iran’s petroleum minister, Bijan Namdar Zanganeh, as “fairly long and very warm.”

 “Considering that, to us Iran is really a legacy country - we have been in Iran since 1955 - we never abandoned the country, not even in the last difficult years,” Scaroni said.

KGT Group, also Italian, is among five manufacturers of flanges in the world. It has already supplied products to South Pars and Iranian Oil Pipeline and Telecommunications Company.

A representative of KGT said presence in Iran’s petroleum industry is of great significance, as projects are centralized.

GE.CO, which manufactures turbine parts, also attended the energy exhibition.

This company is strongly present in the oil market of many countries in the region, but Iran’s petroleum industry has been more attractive than other oil-rich countries in the region for this company.

 

Rotary Machinery

 

The United Arab Emirates’ PHM and its German partners are involved in designing and manufacturing rotary machinery.

Amir Alaqemand, of PHM, said the company was working in Iran before the Western governments enforced sanctions against Iran’s energy sector. But its offices have since been closed. Now, PHM officials are willing to resume work in Iran as sanctions are hoped to be lifted. 

He said the administration of President Hassan Rouhani has created attractive conditions for foreign companies.

Alaqemand said Iran, sitting atop the world’s largest hydrocarbon reserves, has the potential to make other countries dependent on its energy.

He said Iran’s geographical position and particularly its access to high seas and holding huge oil and gas reserves provide a good chance for foreign companies to operate in full safety in Iran.

60 Brands at Tehran Oil Show

 

Amid hopes of sanctions relief under the aegis of Iran’s talks with six world powers for a final deal on the Islamic Republic’s nuclear program, Iran’s Petroleum Ministry moved to revise oil contract terms in a bid to persuade international oil companies to invest in Iran’s oil and gas projects.

Tehran’s 19^th Oil and Gas Show coincided with nuclear talks between Iran and the world powers – the United States, France, UK, Russia, China and Germany. 

The major difference between this year’s Oil, Gas, Refining and Petrochemical Exhibition with the previous year’s events was the growing number of foreign companies. In this year’s exhibition, 600 foreign companies attended, up three times from a year ago. Moreover, 60 foreign brands from 32 countries showcased their products at Tehran show. Some of these foreign companies experienced their first ever presence in Iran, but some others which had already participated in this event were looking for opportunities for investment, as sanctions are hoped to ease.

 

First-Time Participants

 

Numerous German companies attended Tehran Oil and Gas Show for the first time. A large pavilion housed German companies. Avi Kamp was one of the companies attending the show for the first time, although it has been active in South Pars gas field for five years. A supplier of advanced control systems to Iran’s petroleum industry, Avi Kamp took part in the exhibition with a view to winning chances for investment in Iran.

“Iran may receive control systems from many other suppliers, but our machinery incorporates sophisticated technology and they are economical for any consumer,” said Wolfram Schaunet, managing director of the company.

“The technology used in this machinery is very sophisticated and their purchase costs one tenth lower than their letting,” he said.

He expressed hope that sanctions would be lifted against Iran’s petroleum industry. “That is why we have attended the exhibition,” he said. “We have already had activities in the petroleum industry of many countries including China, Africa and Malaysia, but Iran will definitely be an exceptional opportunity for us and we will be happy with presence in Iran.”

He said his company has enjoyed presence in the gigantic offshore South Pars gas field in southern Iran.

He gave a positive assessment of his cooperation with Iranian outsourcers. “Given Iran’s background in the petroleum industry, Iranian experts are very accurate. Therefore, we have to be precise in our service-providing to them. Technical safety and reputation are very important for the Iranians,” he said.

The German industrialist said the sanctions imposed on Iran’s energy sector are useless, adding that the Western governments should not resolve the dispute over Iran’s nuclear program through sanctions.

“The West must understand that Iran is full of economic and trade opportunities, and a country enjoying such benedictions always thinks of broader constructive cooperation with the world,” he said.

Duchting Pumpen which is a privately held company specializing in the design and manufacture of centrifuge pumps was another German company present in the oil show.

The representative of this company said it has attended the show seeking opportunities for cooperation with Iranian companies.

The products of this company have already been used in a water desalination project in the southeastern port city of Chabahar, as well as at Shiraz petrochemical plant.

The product range of Duchting Pumpen primarily comprises numerous single- and multi-stage centrifugal pumps that have been designed and constructed according to the individual needs and requirements of the market.

 

Talks under Way for Pump Selling

 

Vogelsang, which manufactures crude oil pumps is to open its Tehran office within months, is a German company that experienced its first ever presence at Tehran Oil Show.

The director of the company said two pumps manufactured by this company are already operating in Shazand Petrochemical Plant, adding that Jam Petrochemical Plant is also in talks to purchase pumps from Vogelsang.

He said that better international conditions and sanctions relief for Iran’s petroleum industry persuaded the company to attend the oil show and envisage transfer of technology for pump manufacturing to Iran. 

Vogelsang’s IQ series pumps have been specifically designed to reduce the number of spare parts and maintenance time, compared to any other lobe pump in the industry. The ability to pump highly viscous liquids, pulsation-free combined with unmatched design flexibility, makes IQ the next revolution of pumping technology.

The XRipper XRS Twin Shaft Grinder is designed for inline liquid-borne solids handling applications. The XRipper effectively reduces large solids to a manageable size for further solids reduction or for downstream pumps and equipment to process without clogging or damage.

 

Poland Gas Giant in Tehran

 

Poland's dominant gas firm PGNiG attended Tehran Oil and Gas Show for the first time. Amid hopes of sanctions relief, this company has decided to invest in the development of some fields in Iran.

He said that company is ready to train Iranian engineers at North Drilling Company (NDCO).

PGNiG Capital Group is a leader in the natural gas market in Poland. The core activity of the PGNiG Capital Group encompasses field exploration and production of natural gas and crude oil, as well as import, storage, trade and distribution of gas and liquid fuels. Polish Oil and Gas Company is one of the largest and oldest companies in Poland.

PGNiG business is divided into exploration and production, trade and storage, distribution as well as power generation.

The exploration and production segment covers the entire process of oil and gas production starting from geophysical surveys prior to the exploration phase until field operation and product preparation for marketing.

Two of PGNiG’s branches, the Zielona Góra Branch and the Sanok Branch, produce natural gas and crude oil in Poland.

 

PGNiG companies implement natural gas and crude oil exploration and drilling projects in Poland and many countries all over the world, including: Denmark, Egypt, Germany, Hungary, India, Yemen, Kazakhstan, Pakistan and Ukraine.

 

Total Countdown for Return

 

Like previous years, France’s energy giant Total occupied a large pavilion in Iran's oil show and put on display industrial and engine lubricants. Although it lost the chance to operate oil projects in Iran under pressure from sanctions imposed by the Western governments, it awarded the license for its products to Iranian partners.

“Transfer of shares to Iranian partners is an important signal showing that Total is still ready to return to Iran as soon as sanctions have been lifted,” the representative of this French company said.

“France is strongly willing to start its activities in Iran. In other words, we are numbering the days for return to Iran’s oil and gas projects,” he said, adding that Total is willing to establish gas stations in Iran.

Total has constantly played down warning messages from US officials regarding investment envisaged by French companies in Iran after the lifting of sanctions.

Total CEO Christophe de Margerie has on many occasions voiced the readiness of the company to resume work in Iran.

A 116-delegation of French businessmen travelled to Tehran from February 3 to 5 to explore trade opportunities in light of the prospect of sanctions relief on Iran following the implementation of the November 2013 nuclear deal between Iran and world powers - Russia, China, France, Germany, the US and the UK.

 

Long-Time Participants

 

Many foreign companies have long attended Tehran’s annual oil and gas show. Canadaoil Group is one of them. It has so far participated in all 19 oil and gas exhibitions held in Tehran.

As a global provider of integrated piping solutions, Canadaoil provides full range of products and services including: pipes, fittings, pressure vessels, spooling, and coating.

It is an integrated manufacturer and supplier of customized pipes, fittings, products, and solutions to major industry players across the energy and environmental value chain. It manufactures a complete range of welded steel pipes, butt weld fittings, and pressure vessels.

The group has a significant global presence, with 10 manufacturing facilities and 11 sales offices across 4 continents. It is strategically located close to end-markets enabling it to offer products and services effectively across regions.

Canadoil has established an excellent track record of successfully executing and integrating green field projects and acquisitions.

 

From Mud to Black Gold

 

Deep Blue, a Dutch company, has also participated in Tehran Oil Show for many years. It manufactures centrifugal pumps based on API standards as well as low-temperature pumps. It experienced its 15^th presence at Tehran Oil and Gas Show.

The director of the company said he has come to the “land of black gold” from the
land of mud”.

Over the past eight years, Deep Blue has had a joint venture with an Iranian company and is willing to transfer the technology for manufacturing centrifugal pumps to Iran’s petroleum industry.

“This company first starts transferring simple technologies for pump manufacturing,” he said.

 

China Active

 

China’s Zhongman Petroleum and Natural Gas Group Co (ZPEC), with 12 subsidiaries, manufacture onshore drilling rigs.

Hassan Mohammadi-Moqaddam, the Iranian representative of this company, said ZPEC has been active in Iran’s petroleum industry for the past eight years. Iran has so far purchased 7 onshore drilling rigs from ZPEC.

ZPEC, an ideal combination of drilling contractor and petroleum equipment manufacturer, has the advantage of integrated business lines on both upstream and downstream, which enhance the innovative strength of technology with competitive sales and marketing strategies.

ZPEC has provided more than 100 drilling rigs to both domestic and international markets including the US, Uzbekistan, Saudi Arabia, Sudan, and Ethiopia, in over 10 countries on five different continents. 

Topland Oilfield Supplies Ltd., also a Chinese company, attended the event as well. It has been engaged into designing and development, manufacture, supply and distribution of oilfield equipment and rig components.

 

Italy’s Pavilion

 

A large number of Italian companies attended Tehran Oil and Gas Show. FCE was the organizer of Italian companies participating in the exhibition. FCE also holds oil shows in Italy and in the world. In 2007, it set up the mostly visited oil and gas exhibition in Italy.

Fabio Casiraghi, manager of FCE, said he managed to convince the Italian companies to attend Tehran Oil Show due to historic affinities between Iran and Italy.

He said that he would try to encourage more companies to attend Tehran exhibition after sanctions are lifted against Iran.

“Iran’s oil market is very strong and important, that is why the Italians are encouraged to be present in this exhibition,” said Casiraghi.

He promised to persuade 100 Italian companies to attend Tehran Oil and Gas Show next year if sanctions are lifted.

He said that the chief executive of Eni Paolo Scaroni had told Iran’s petroleum minister about his willingness to operate oil projects in Iran.

Last December, Scaroni said: “We plan to continue to be in Iran and possibly increase the level of our activity as soon as the sanctions regime is lifted.”

 “There are so many opportunities in Iran both in oil and gas that we will certainly find a common area of interest,” Scaroni said.

He described his meeting with Iran’s petroleum minister, Bijan Namdar Zanganeh, as “fairly long and very warm.”

 “Considering that, to us Iran is really a legacy country - we have been in Iran since 1955 - we never abandoned the country, not even in the last difficult years,” Scaroni said.

KGT Group, also Italian, is among five manufacturers of flanges in the world. It has already supplied products to South Pars and Iranian Oil Pipeline and Telecommunications Company.

A representative of KGT said presence in Iran’s petroleum industry is of great significance, as projects are centralized.

GE.CO, which manufactures turbine parts, also attended the energy exhibition.

This company is strongly present in the oil market of many countries in the region, but Iran’s petroleum industry has been more attractive than other oil-rich countries in the region for this company.

 

Rotary Machinery

 

The United Arab Emirates’ PHM and its German partners are involved in designing and manufacturing rotary machinery.

Amir Alaqemand, of PHM, said the company was working in Iran before the Western governments enforced sanctions against Iran’s energy sector. But its offices have since been closed. Now, PHM officials are willing to resume work in Iran as sanctions are hoped to be lifted. 

He said the administration of President Hassan Rouhani has created attractive conditions for foreign companies.

Alaqemand said Iran, sitting atop the world’s largest hydrocarbon reserves, has the potential to make other countries dependent on its energy.

He said Iran’s geographical position and particularly its access to high seas and holding huge oil and gas reserves provide a good chance for foreign companies to operate in full safety in Iran.

Tehran Oil Show Achievements

 

 

At the first glance, Tehran’s annual Oil and Gas Show may be viewed like any other energy exhibition introducing oil firms and companies manufacturing equipment for the petroleum industry. But the exhibition has always had other advantages. This year, due to the strong presence of domestic and foreign companies, the oil show was of great significance.

Given the approach of Iran’s Petroleum Ministry for further interaction with foreign companies along with support for competent domestic companies, this year’s exhibition turned out to be a venue for interaction and attraction of domestic and foreign investment.

Besides domestic companies, foreign companies also negotiated deals and signed heads of agreement with a view to striking contracts with Iranian companies in the future. 

 

Talks with Foreign Firms

 

National Iranian Oil Company (NIOC) held talks with 22 Asian and European countries for investment in Iran’s petroleum industry, an NIOC official said.

Abdorreza Assadi, deputy head of NIOC for consolidated planning said the talks were held on the first and second days of Tehran’s Oil and Gas Show.

He mentioned that 12 of them said they are ready to supply such equipment as compressors, turbines, turbogenerators, pressure storage facilities, cables and communications systems to Iran’s companies.

Assadi said a Japanese and a Swiss-Iraqi company have voiced their readiness to invest in 41 projects introduced by NIOC.

He said the Japanese company, whose name was not revealed, is ready to develop Kish gas field, North Pars gas field and Phase 11 of South Pars, build gas and NGL factories and operate energy efficiency projects in Iran.

He said talks were also held with companies from Germany, Norway, England, Iraq, Turkey, Poland, Italy, Kazakhstan and Sweden on sulfur and LPG projects.

Assadi said a British company is ready to invest in Iran’s exploration and production projects.

 

RIPI, HEDCO Sign HRU Deal

 

The Research Institute of Petroleum Industry (RIPI) and Hampa Energy Engineering & Design Co. (HEDCO) have signed an agreement for the manufacturing of hydrogen recovery packages.

The agreement was signed on the second day of Tehran Oil and Gas Show.

The RIPI and HEDCO are to cooperate in the manufacturing of hydrogen recovery units (HRU).

RIPI is experienced in the fabrication of industrial membranes for gas purification units.

HEDCO is also a qualified company with experience in designing and construction of industrial packages.

 

Iranian Firm Supplies Pumps to KEPCO

 

Electropumps used by Khazar Exploration and Production Company (KEPCO) are manufactured by an Iranian company, a KEPCO director said.

Mohammad Kamalian, director for engineering and construction, said the 550-kilowatt electropumps used by KEPCO in Amir-Kabir drilling platform are manufactured by an Iranian company.

He said that the ongoing Tehran Oil and Gas Show can let such Iranian companies put their achievements and capabilities on display.

Kamalian said National Iranian Oil Company (NIOC) and other companies need to accept risks in their efforts for domestic manufacturing.

He said communications which take shape at Tehran oil show would be profitable for NIOC and its subsidiaries in the long-term.

 

SPEC Develops Catalysts

 

Iranian petrochemical engineers have managed to develop five new catalysts used in petrochemical plants.

The catalysts have been produced by Engineering and Supplying Petrochemical Industries Parts Equipment and Chemical Company (SPEC).

SPEC Managing director Jalil Sobhani said the catalysts are ready to be supplied to petrochemical plants.

“These catalysts were already monopolized by a big industrialized country,” he told reporters at Tehran Oil and Gas Show.

He said the catalysts are to be supplied to Bandar Imam, Isfahan, Bou Ali and Nouri petrochemical plants, as well as Abadan oil refinery.

 

RIPI, Iran Co. Sign Deal

 

The Research Institute of Petroleum Industry (RIPI) has signed a deal with an Iranian company for the establishment of a gas-to-liquids (GTL) facility.

The deal, worth 180 to 200 million dollars, was signed between RIPI and Saff-Rosemond Engineering and Management Company at Tehran’s Oil and Gas Show.

Based on the agreement, a GTL factory will be established in Qeshm Island with a capacity of 3,000 b/d.

Gas to liquids (GTL) is a refinery process to convert natural gas or other gaseous hydrocarbons into longer-chain hydrocarbons such as gasoline or diesel fuel. Methane-rich gases are converted into liquid synthetic fuels either via direct conversion—using non-catalytic processes that convert methane to methanol in one step—or via syngas as an intermediate.

 

PETCO Ready to Overhaul Downhole Pumps

 

An Iranian company has voiced its readiness to overhaul downhole pumps operated by National Iranian South Oil Company (NISOC).

Pump and Turbine Company (PETCO) said it has been involved in designing and manufacturing downhole pumps for three decades.

“PETCO has so far operated more than 30 desalting, production and transfer projects for NISOC,” the company’s chief Masoud Tajrishi said at Tehran’s Oil and Gas Show.

“This company is ready to overhaul all downhole pumps of NISOC free of charge,” he said.

Tajrishi also said that domestic capacities need to be used more than before.

 

NDCO Expects High-Quality Rigs

 

North Drilling Company (NDCO) will commission rig construction to Iranian companies capable of building rigs up to international standards, the company’s chief said.

“If domestically constructed rigs have only 60 percent of the quality of foreign ones, this company will support their constructors,” Hedayatollah Khademi said.

He added that the equipment currently used in domestically constructed rigs are substandard materials purchased from India and China.

Khademi said Iranian companies should think they are constructing rigs for exports and should not wait for orders from NDCO or National Iranian Drilling Company (NIDC).

He said that 20,000 items of equipment used in drilling rigs have been indigenized by NDCO.

“Drill watch, PMS, pump piston and valve have been used in drilling rigs constructed by this company, while being sold to other companies involved in drilling activities,” said Khademi.

He said NDCO is in talks for steering four rigs in Turkmenistan and transfer of one drilling rig to Tunisia in the current Iranian year to March 2015.

 

IOPTC Eyes 3,000-Item Manufacturing

 

Iranian Oil Pipeline and Telecommunications Company (IOPTC) plans to manufacture 3,000 items of commodities by March 2015, an IOPTC official said.

During a visit to Tehran Oil and Gas Show Parviz Salehvand said that 964 items have so far been domestically manufactured.

He said domestic manufacturing of 29,000 items valued at 450 billion rials would save the country 29 million dollars.

Salehvand said the manufacturing of turbine, pump and chemical equipment spare parts is accelerating, adding that domestic manufacturing of these items has saved the country 19 million dollars over the past ten years.  

He said conducting domestic overhaul activities by IOPTC have saved Iran 63 million dollars over the past ten years.

Salehvand said good steps have been taken regarding manufacture of rotary equipment such as gas turbines and driers.

 

Foreign Firms Interested in Iran Oil/Gas

 

The strong presence of foreign companies in Tehran Oil and Gas Show is indicative of their interest in cooperating with Iran’s oil and gas industries, a deputy head of Pars Oil Company said.

Navid Khasseh-Baf said at the oil show that foreign companies have been impressed by the achievements of Iranian companies.

He said Pars Oil Company is the first producer of lubricants in Iran and the top producer of grease in the region.

Khaaseh-Baf also echoed Petroleum Minister Bijan Namdar Zangeneh’s call for focus on exploration from joint oil and gas fields. 

 

Kala Naft Signs Technology Transfer Accords

 

Tehran Kala Naft Company has signed heads of agreement with a Dutch and a Hungarian company with a view to transferring technology.

The agreements were assigned on at Tehran Oil and Gas Show.

The agreement with the Hungarian firm is about procurement of commodities and equipment needed for upstream and downstream oil sectors.

Moreover, the foreign company agrees to offer consultation services to Kala Naft for two years.

The agreement with the Dutch IPS company is about procurement of commodities along with transfer of technology.

 

 

Iran Oil Sector to Offer $200b Investment Opportunities

 

Iran’s petroleum industry will see its capacity for investment exceed 200 billion dollars in the coming years, a deputy petroleum minister said.

Emad Hosseni said at Tehran Oil and Gas Show that the private sector will make great contribution to this investment capacity.

He also called on Iranian manufacturing companies to boost the quality of their products in order not to be replaced by foreign products.

“We are looking for approaches to boost Iranian petroleum industry standards,” said Hosseini.

Hosseini said the strong presence of foreign and domestic companies in the energy exhibition is indicative of a change following the election of President Hassan Rouhani last year.

 

China Firm Seeks More Iran Business

 

China’s leading drilling services company Keri Group is willing to broaden its activities in Iran’s oil sector, its representative said.

Ali Delavar was talking to reporters on the last day of the four-day Tehran Oil and Gas Show.

“This company has been in Iran for five years and it has since cooperated with National Iranian Drilling Company, North Drilling Company and other private companies involved in drilling,” he said.

Delavar said Keri Group is China’s second largest oil company manufacturing drilling rigs and providing drilling services.

He said the Chinese entity plans to offer drilling services to Iranian companies and contribute to enhanced recovery from Iran’s mature oil wells.

“Iran’s Petroleum Ministry’s newly appointed officials seem to be able to revamp Iran’s petroleum industry and they have positive view of broader cooperation with foreign companies,” he said. “We hope that we will see better conditions in this country’s oil and gas industries.”

 

IDRO Open to Cooperation in Oil/Gas Sectors 

 

Iran’s Industrial Development and Renovation Organization (IDRO) is ready to cooperate with foreign companies willing to invest in Iran’s oil and gas sectors, chairman of IDRO Board of Directors said.

“IDRO welcomes foreign companies willing to invest in the oil and gas sectors and is ready to cooperate with these companies in the manufacturing of equipment,” Gholam-Reza Shafei said.

He said that IDRO has developed technologies for the production of bio-implants, catalysts and GTL.

“IDRO is ready to export its technical knowhow and hi-tech industries to developing countries,” he added.

Shafei also said that Iran’s auto products are exported to neighboring countries like Iraq.

He said Algeria, Turkmenistan and Kazakhstan are also willing to buy Iranian cars.

 

Iran Oil Sector Needs High-Quality Commodities

 

The representative of South Korea’s Keiswel in Iran has said that high-quality commodities would be of great help to Iran’s petroleum industry.

Ali-Reza Nik-Khou said the South Korean company has been represented in Iran over the past 15 years.

The company is mainly involved in welding in the oil, gas and petrochemical industries.

“In my view, Korean commodities are of higher quality than Chinese and Indian ones,” he said.

Nik-Khou said the recent sanctions relief on Iran has partly resolved problems of importation of Korean commodities into Iran.

The Western sanctions eased against Iran after Tehran reached a nuclear deal with six world powers.  

 

Foreign Firms Can Help Manage Iran Oil

 

A deputy petroleum minister said foreign companies can help manage Iran’s petroleum industry projects.

“Iran’s main problem in the petroleum industry is project management and foreign companies can help Iran in this regard,” Rokneddin Javadi said.

“Project management is a major problem in the petroleum industry and it requires more investment,” he told Shana at Tehran Oil and Gas Show.

Javadi, who is managing director of National Iranian Oil Company, said top foreign companies can be of help to Iran in project management.

Tehran Oil Show Achievements

 

 

At the first glance, Tehran’s annual Oil and Gas Show may be viewed like any other energy exhibition introducing oil firms and companies manufacturing equipment for the petroleum industry. But the exhibition has always had other advantages. This year, due to the strong presence of domestic and foreign companies, the oil show was of great significance.

Given the approach of Iran’s Petroleum Ministry for further interaction with foreign companies along with support for competent domestic companies, this year’s exhibition turned out to be a venue for interaction and attraction of domestic and foreign investment.

Besides domestic companies, foreign companies also negotiated deals and signed heads of agreement with a view to striking contracts with Iranian companies in the future. 

 

Talks with Foreign Firms

 

National Iranian Oil Company (NIOC) held talks with 22 Asian and European countries for investment in Iran’s petroleum industry, an NIOC official said.

Abdorreza Assadi, deputy head of NIOC for consolidated planning said the talks were held on the first and second days of Tehran’s Oil and Gas Show.

He mentioned that 12 of them said they are ready to supply such equipment as compressors, turbines, turbogenerators, pressure storage facilities, cables and communications systems to Iran’s companies.

Assadi said a Japanese and a Swiss-Iraqi company have voiced their readiness to invest in 41 projects introduced by NIOC.

He said the Japanese company, whose name was not revealed, is ready to develop Kish gas field, North Pars gas field and Phase 11 of South Pars, build gas and NGL factories and operate energy efficiency projects in Iran.

He said talks were also held with companies from Germany, Norway, England, Iraq, Turkey, Poland, Italy, Kazakhstan and Sweden on sulfur and LPG projects.

Assadi said a British company is ready to invest in Iran’s exploration and production projects.

 

RIPI, HEDCO Sign HRU Deal

 

The Research Institute of Petroleum Industry (RIPI) and Hampa Energy Engineering & Design Co. (HEDCO) have signed an agreement for the manufacturing of hydrogen recovery packages.

The agreement was signed on the second day of Tehran Oil and Gas Show.

The RIPI and HEDCO are to cooperate in the manufacturing of hydrogen recovery units (HRU).

RIPI is experienced in the fabrication of industrial membranes for gas purification units.

HEDCO is also a qualified company with experience in designing and construction of industrial packages.

 

Iranian Firm Supplies Pumps to KEPCO

 

Electropumps used by Khazar Exploration and Production Company (KEPCO) are manufactured by an Iranian company, a KEPCO director said.

Mohammad Kamalian, director for engineering and construction, said the 550-kilowatt electropumps used by KEPCO in Amir-Kabir drilling platform are manufactured by an Iranian company.

He said that the ongoing Tehran Oil and Gas Show can let such Iranian companies put their achievements and capabilities on display.

Kamalian said National Iranian Oil Company (NIOC) and other companies need to accept risks in their efforts for domestic manufacturing.

He said communications which take shape at Tehran oil show would be profitable for NIOC and its subsidiaries in the long-term.

 

SPEC Develops Catalysts

 

Iranian petrochemical engineers have managed to develop five new catalysts used in petrochemical plants.

The catalysts have been produced by Engineering and Supplying Petrochemical Industries Parts Equipment and Chemical Company (SPEC).

SPEC Managing director Jalil Sobhani said the catalysts are ready to be supplied to petrochemical plants.

“These catalysts were already monopolized by a big industrialized country,” he told reporters at Tehran Oil and Gas Show.

He said the catalysts are to be supplied to Bandar Imam, Isfahan, Bou Ali and Nouri petrochemical plants, as well as Abadan oil refinery.

 

RIPI, Iran Co. Sign Deal

 

The Research Institute of Petroleum Industry (RIPI) has signed a deal with an Iranian company for the establishment of a gas-to-liquids (GTL) facility.

The deal, worth 180 to 200 million dollars, was signed between RIPI and Saff-Rosemond Engineering and Management Company at Tehran’s Oil and Gas Show.

Based on the agreement, a GTL factory will be established in Qeshm Island with a capacity of 3,000 b/d.

Gas to liquids (GTL) is a refinery process to convert natural gas or other gaseous hydrocarbons into longer-chain hydrocarbons such as gasoline or diesel fuel. Methane-rich gases are converted into liquid synthetic fuels either via direct conversion—using non-catalytic processes that convert methane to methanol in one step—or via syngas as an intermediate.

 

PETCO Ready to Overhaul Downhole Pumps

 

An Iranian company has voiced its readiness to overhaul downhole pumps operated by National Iranian South Oil Company (NISOC).

Pump and Turbine Company (PETCO) said it has been involved in designing and manufacturing downhole pumps for three decades.

“PETCO has so far operated more than 30 desalting, production and transfer projects for NISOC,” the company’s chief Masoud Tajrishi said at Tehran’s Oil and Gas Show.

“This company is ready to overhaul all downhole pumps of NISOC free of charge,” he said.

Tajrishi also said that domestic capacities need to be used more than before.

 

NDCO Expects High-Quality Rigs

 

North Drilling Company (NDCO) will commission rig construction to Iranian companies capable of building rigs up to international standards, the company’s chief said.

“If domestically constructed rigs have only 60 percent of the quality of foreign ones, this company will support their constructors,” Hedayatollah Khademi said.

He added that the equipment currently used in domestically constructed rigs are substandard materials purchased from India and China.

Khademi said Iranian companies should think they are constructing rigs for exports and should not wait for orders from NDCO or National Iranian Drilling Company (NIDC).

He said that 20,000 items of equipment used in drilling rigs have been indigenized by NDCO.

“Drill watch, PMS, pump piston and valve have been used in drilling rigs constructed by this company, while being sold to other companies involved in drilling activities,” said Khademi.

He said NDCO is in talks for steering four rigs in Turkmenistan and transfer of one drilling rig to Tunisia in the current Iranian year to March 2015.

 

IOPTC Eyes 3,000-Item Manufacturing

 

Iranian Oil Pipeline and Telecommunications Company (IOPTC) plans to manufacture 3,000 items of commodities by March 2015, an IOPTC official said.

During a visit to Tehran Oil and Gas Show Parviz Salehvand said that 964 items have so far been domestically manufactured.

He said domestic manufacturing of 29,000 items valued at 450 billion rials would save the country 29 million dollars.

Salehvand said the manufacturing of turbine, pump and chemical equipment spare parts is accelerating, adding that domestic manufacturing of these items has saved the country 19 million dollars over the past ten years.  

He said conducting domestic overhaul activities by IOPTC have saved Iran 63 million dollars over the past ten years.

Salehvand said good steps have been taken regarding manufacture of rotary equipment such as gas turbines and driers.

 

Foreign Firms Interested in Iran Oil/Gas

 

The strong presence of foreign companies in Tehran Oil and Gas Show is indicative of their interest in cooperating with Iran’s oil and gas industries, a deputy head of Pars Oil Company said.

Navid Khasseh-Baf said at the oil show that foreign companies have been impressed by the achievements of Iranian companies.

He said Pars Oil Company is the first producer of lubricants in Iran and the top producer of grease in the region.

Khaaseh-Baf also echoed Petroleum Minister Bijan Namdar Zangeneh’s call for focus on exploration from joint oil and gas fields. 

 

Kala Naft Signs Technology Transfer Accords

 

Tehran Kala Naft Company has signed heads of agreement with a Dutch and a Hungarian company with a view to transferring technology.

The agreements were assigned on at Tehran Oil and Gas Show.

The agreement with the Hungarian firm is about procurement of commodities and equipment needed for upstream and downstream oil sectors.

Moreover, the foreign company agrees to offer consultation services to Kala Naft for two years.

The agreement with the Dutch IPS company is about procurement of commodities along with transfer of technology.

 

 

Iran Oil Sector to Offer $200b Investment Opportunities

 

Iran’s petroleum industry will see its capacity for investment exceed 200 billion dollars in the coming years, a deputy petroleum minister said.

Emad Hosseni said at Tehran Oil and Gas Show that the private sector will make great contribution to this investment capacity.

He also called on Iranian manufacturing companies to boost the quality of their products in order not to be replaced by foreign products.

“We are looking for approaches to boost Iranian petroleum industry standards,” said Hosseini.

Hosseini said the strong presence of foreign and domestic companies in the energy exhibition is indicative of a change following the election of President Hassan Rouhani last year.

 

China Firm Seeks More Iran Business

 

China’s leading drilling services company Keri Group is willing to broaden its activities in Iran’s oil sector, its representative said.

Ali Delavar was talking to reporters on the last day of the four-day Tehran Oil and Gas Show.

“This company has been in Iran for five years and it has since cooperated with National Iranian Drilling Company, North Drilling Company and other private companies involved in drilling,” he said.

Delavar said Keri Group is China’s second largest oil company manufacturing drilling rigs and providing drilling services.

He said the Chinese entity plans to offer drilling services to Iranian companies and contribute to enhanced recovery from Iran’s mature oil wells.

“Iran’s Petroleum Ministry’s newly appointed officials seem to be able to revamp Iran’s petroleum industry and they have positive view of broader cooperation with foreign companies,” he said. “We hope that we will see better conditions in this country’s oil and gas industries.”

 

IDRO Open to Cooperation in Oil/Gas Sectors 

 

Iran’s Industrial Development and Renovation Organization (IDRO) is ready to cooperate with foreign companies willing to invest in Iran’s oil and gas sectors, chairman of IDRO Board of Directors said.

“IDRO welcomes foreign companies willing to invest in the oil and gas sectors and is ready to cooperate with these companies in the manufacturing of equipment,” Gholam-Reza Shafei said.

He said that IDRO has developed technologies for the production of bio-implants, catalysts and GTL.

“IDRO is ready to export its technical knowhow and hi-tech industries to developing countries,” he added.

Shafei also said that Iran’s auto products are exported to neighboring countries like Iraq.

He said Algeria, Turkmenistan and Kazakhstan are also willing to buy Iranian cars.

 

Iran Oil Sector Needs High-Quality Commodities

 

The representative of South Korea’s Keiswel in Iran has said that high-quality commodities would be of great help to Iran’s petroleum industry.

Ali-Reza Nik-Khou said the South Korean company has been represented in Iran over the past 15 years.

The company is mainly involved in welding in the oil, gas and petrochemical industries.

“In my view, Korean commodities are of higher quality than Chinese and Indian ones,” he said.

Nik-Khou said the recent sanctions relief on Iran has partly resolved problems of importation of Korean commodities into Iran.

The Western sanctions eased against Iran after Tehran reached a nuclear deal with six world powers.  

 

Foreign Firms Can Help Manage Iran Oil

 

A deputy petroleum minister said foreign companies can help manage Iran’s petroleum industry projects.

“Iran’s main problem in the petroleum industry is project management and foreign companies can help Iran in this regard,” Rokneddin Javadi said.

“Project management is a major problem in the petroleum industry and it requires more investment,” he told Shana at Tehran Oil and Gas Show.

Javadi, who is managing director of National Iranian Oil Company, said top foreign companies can be of help to Iran in project management.

 

US Sanctions Unravel

 

At least five companies with US government contracts were in Tehran to attend Iran’s Oil Show, a several day event that enables international corporations to hobnob with top Iranian officials and plan for a full return to Tehran’s lucrative energy market, according to an analysis of the 600 companies that attended the oil expo by the Washington Free Beacon.

At least 20 of the companies in attendance at the oil show maintain a US presence or have contracts with the US government, eliciting concern from watchdog groups that these companies could be helping Iran breach US sanctions.

The overwhelming attendance at this year’s Iran Oil Show—a reported 300 percent increase over past years—serves as another sign that the Obama administration’s recent rollback in sanctions on Iran has been viewed as a green light to reenter the Iranian marketplace.

“It is a telling indication of the weakening of the international sanctions regime when firms with US presence and US government contracts openly publicize their attendance at an exhibition for Iran’s most heavily sanctioned sector,” said Matan Shamir, research director for the advocacy group United Against Nuclear Iran (UANI), which has been closely tracking and publicly admonishing those companies seeking to do business with Iran.

Energy and electrical giant Siemens, which maintains a large US presence, and the French energy company Total, which also has a large US presence, were both reportedly in attendance.

165th Meeting OPEC for Convergence

 

 

By Heshmatollah Razavi

 

The Organization of the Petroleum Exporting Countries (OPEC) is holding its first 2014 Conference in Vienna on June 11. Like the previous two years, OPEC is unlikely to face any serious challenges with regard to the level of oil production.

In their meetings since 2012, OPEC ministers have maintained the body’s production ceiling at 30 mb/d. It implies that OPEC has been happy with production level and prices over the past two years.

A review of developments shows that the average oil price has always stood above 100 dollars since 2012. Such a price has been satisfactory for OPEC member states in terms of revenues and has provided them enough capital to finance development of their oil fields.

Oil production in some OPEC countries stands at a very low level, but the production costs do not set the only yardstick for viewing 100 dollars as fair price.

OPEC supplies only 30 percent of the world oil with non-OPEC accounting for the rest, but production costs are high in non-OPEC countries. It is noteworthy that shale oil and gas extraction in the US would not be cost-effective should prices remain below 100 dollars a barrel.

Oil prices have so far satisfied both consumers and producers and such a relative satisfaction facilitates decision-making in the OPEC.

Although OPEC has maintained production ceiling at 30 mb/d and has shown satisfaction with the prices, some OPEC states have experienced severe fluctuations in oil production and exports, which may lead to price volatility, market turbulence and jeopardizing energy security.

Arab Spring revolts have hindered oil production and exports by OPEC and non-OPEC countries in the Middle East, including Libya, Egypt and Syria. In some cases, oil prices surged significantly.

Egypt is not a leading oil exporter, however political unrest in this North African country raised concerns about energy security supply as the Suez Canal is a major oil transit route. Syria also faced disruption in its oil production due to war. Syria is not a big oil exporter either.

But Libya, an OPEC member state, also experienced disruption in oil production and exports after the country plunged into political instability. Libya was more influential than Syria and Egypt on oil markets.

OPEC is now preparing to hold its 165^th Conference, while unrest goes on in Libya, Egypt and Syria, albeit their impact has been blunted. However, Libya is facing challenges in bringing back its oil production to 1.6 mb/d when Muammar Gaddafi was still in power.

For its part, Iran has been under sanctions over the past two years; nevertheless the conditions are changing thanks to a new administration and the return of Bijan Namdar Zangeneh to the Petroleum Ministry.

OPEC has maintained its production ceiling, while Iran has had to reduce its production and exports due to the sanctions.

Since President Hassan Rouhani took office last August, Iran has made efforts to raise its oil exports in order to win back its status in the OPEC. Iran’s nuclear deal with the six world powers has been of help.

After two consecutive years of reduction, Iran’s oil exports are expected to grow this year.

Zangeneh told the last December OPEC Conference that Iran’s priority in the world market would be to enhance its oil production and exports. Zangeneh made it clear that the post of OPEC secretary general and oil price come second in priority.

The 164^th OPEC Conference was overshadowed by the news regarding Zangeneh’s meetings with the chief executives of oil giants willing to resume work in Iran.

An issue which has remained unresolved in the OPEC is its secretary general.

Abdalla Salem El-Badri of Libya continues to serve as OPEC secretary general up to the end of 2014. He has been in post since 2007. Iran, Iraq and Saudi Arabia have nominated candidates for the top post, but lack of consensus has not allowed the election of a successor to El-Badri.

The election of a new secretary general for OPEC may be influenced by Saudi Foreign Minister Prince Saud al-Faisal’s invitation to Iranian Foreign Minister Mohammad-Javad Zarif for an official visit to the kingdom.

Improve political ties between Tehran and Riyadh would facilitate election of a new secretary general for OPEC. We should keep in mind that Iran’s improved relations with member states of the Gas Exporting Countries Forum (GECF) facilitated the election of a secretary general for this forum. In its last November Ministerial Meeting in Tehran, GECF elected Iran’s Mohammad-Hossein Adeli as secretary general.

Turning to OPEC production, an analysis of OPEC policies in the past two years indicates that the oil body would keep its production ceiling at 30 mb/d.

OPEC’s satisfaction with the oil market and its share of the world markets have made officials from the 12 member countries to express less about the oil market or demand changes in the OPEC policies.

Views heard from time to time from OPEC officials about the oil market are indication of their happiness with the status quo.

Addressing the 14^th IEF Ministerial Meeting, Plenary Session One in Moscow on May 15, El-Badri said that the oil market is quite stable and that the conditions will not change throughout 2014.

He said the world market is facing sustainable growing demand and the market is well-supplied to meet the soaring demand.

El-Badri also gave a positive assessment of the oil prices, saying they are acceptable for both producers and consumers. 

Based on El-Badri’s remarks, one can expect that OPEC would again set its production ceiling at 30 mb/d as a sign of its happiness with the 100 dollars a barrel.

Offshore Congo Well to Test Litchedjilj Extension

 

SOCO International has issued an update on its exploration and development programs offshore West Africa and Vietnam.

Off Republic of Congo (Brazzavaille), preparations are under way to secure a rig to drill the Litchendjili LXM-101 well in late June or early July. This will test the extension of ENI’s Litchendjili oil and gas discovery on the Marine XII block into SOCO’s Marine XI concession.

Following SOCO’s acquisition of a 60% interest in the Mer Profond Sud block, the transaction remains subject to regulatory approval before the partners can enter the third and final period of the license. Discussions include a clear definition of the block boundary.

Two More Floaters for Santos Basin

 

BG Group has provided an update on its offshore activity in its latest results statement.

In the Santos basin offshore Brazil, operator Petrobras expects to install FPSO 4 (Sapinhoá North) during 3Q 2014 and FPSO 5 (Iracema South) by the end of the year.

Both vessels are in Brazil for completion of their topsides facilities, which include hydrocarbon processing capabilities. Both are currently around 90% complete.

FPSO 6 (Iracema North), due to enter service in 4Q 2015, is 60% complete.

In March, the partners received the installation license for the deepwater scope of the Cabiúnas gas pipeline, and expect to receive the shallow water license soon. The pipeline will be the next major phase of gas export infrastructure.

ABB Wins Orders for Offshore Vessels

 

ABB has won contracts worth in excess of $20 million to supply electrical power and propulsion systems for two next-generation offshore vessels.

The first vessel, of ULSTEIN SX165 design, is being constructed at Ulstein Verft in Norway for Island Ventures 11, the joint venture set up in 2012 by the leading US and Norwegian owners Edison Chouest Offshore and Island Offshore.

At 28 m (92 ft) wide by 145.7 m (478 ft) long and with accommodation for 200 people, the SX165 will be the largest vessel constructed by Ulstein Verft and is due for delivery in 3Q 2015. It is equipped with two cranes that can lift 400 tons and 140 tons, respectively, and has three separate engine rooms for reliability.

ABB is to supply an advanced complete power and diesel electric system package comprising medium-voltage generators, switchboards, transformers, frequency converters, and motors to provide reliable and fuel-efficient propulsion. Health, safety, and the environment have been a key focus in the design of the vessel, and ABB’s scope of supply reflects this through its advanced power system, which is capable of achieving the requirements needed to run the system in closed ring in DP-3.

Qatar Petroleum to Invest in Bul Hanine

 

Qatar Petroleum (QP) has announced plans to invest over 40 billion Qatari riyals ($11 billion) in the redevelopment of the existing Bul Hanine offshore oil field located about 120 km (75 mi) east of the Qatari coastline.

The project, at the pre-FEED stage, is one of the largest to be managed and executed by QP, and it is designed to prolong the field’s life and double its current oil production rate.

His Excellency Dr. Mohammed bin Saleh Al-Sada, Qatar’s minister of energy and industry and also QP chairman, said, “This important project is part of a development and production strategy based on maximum recovery of reserves through the longest possible plateau of sustainable production levels.

 

Australia Awards Offshore Exploration Permit

 

Australia has awarded Neon Energy Ltd. the WA-503-P offshore petroleum exploration permit, as operator and 100% working interest holder. It is the company’s first exploration permit in Australia, and is a result of Neon Energy’s expanded new ventures effort that began in mid-2013.

Block WA-503-P is awarded with a six-year term. The initial three-year primary term includes a work commitment to license 80 sq km (31 sq mi) of new broadband 3D seismic data and complete various geological and geophysical studies. Neon anticipates that the new seismic data will be acquired by early 2015.

Global oil and Asian product market, May

Marker crude prices diverge over the month of May

By Zakiye Bahrami, Leila Sadr

 

Crude market moved in different directions within different areas over the reporting month. In America, WTI fell. In Europe, the market sentiment was strong and Brent prices rose. Western sanctions against Russia caused higher prices in Europe. Meantime, Dubai crude marker in Asia was mostly unchanged (see graph).

There were combinations of factors in Asia, drawing market shape. Some of the bullish and bearish factors are mentioned as follows:

• Iraqi crude loadings on the spot market went up during April, limiting Asian crude market strength.
• According to data released by Chinese official customs, April crude imports rose to an all-time high of 6.7 million b/d, some 100,000 b/d higher than the prior high reached in January. Despite china’s strong buying, Asian crude market remained relatively weak on the back of refining maintenance and substantial CDU shutdowns in Japan.
• According to OPEC Monthly Oil Market Report, rising supply from Iran and Iraq in the past few months coupled with lower demand in Asia due to seasonal refinery maintenance has weighed on the Asian crude oil market.

 

Asian Product Markets

In Singapore product market- leader product market in Asia- the changes in mean of prices were roughly flat (see graph). Some of the changes in product prices are because of crude price changes. Hence, in order to investigate product market fundamental, it is necessary to look at product price changes in comparison with crude price changes. Market fundamentals at light and also end of barrel improved over the reporting month. Asian gasoline and naphtha market strengthened considerably while fuel oil market moved up slightly. At the middle of the barrel, gasoil and jet fuel performed weak during May.

 

 

Products market fundamentals in brief

	Light Distillates Products		Middle Distillates Products		Heavy Products
	gasoline	Naphtha	Gasoil	Jet Fuel	Fuel Oil 180	Fuel Oil 180
May 2014	↑	↑	↓	↓	↑	↑

(Upward arrow: strength, downward arrow: weakness)

 

Light Distillates (gasoline, naphtha)

Although increasing West to East movements of LPG cargoes during April caused the shipping rate for Very Large Gas Carriers to increase, the market has been relatively quiet in East of Suez during first weeks of May. This made The Baltic VLGC Index to decline dramatically. It has dropped from the peak at US$ 137.5 on April 25th to less than half. The main reason is that a number of vessels are ready to cover the tonnage shortage in the Atlantic basin. The Baltic Exchange is the world's independent source of maritime market information for the trading and settlement of physical and derivative shipping contracts.

As a result of falling shipping rate, spot prices of LPG decreased and made propane competitive against naphtha for petrochemicals feedstock usage. This has limited the naphtha market strength. Meanwhile, Japanese naphtha stocks remained well below last year’s level, which means that the country had to boost imports.

Moving to gasoline market, the Singapore gasoline crack –differential between gasoline market and Dubai price- rose. On the demand side, requirements of Indonesia - the region's largest gasoline buyer - for upcoming Ramadan supported the market. Gasoline imports in the month prior to Muslim fasting month usually grow on average by 10,000 b/d. On the other hand, Supply of Japanese refiners reduced to build stock for summer driving season. Moreover Indian gasoline exports reduced due to outage at Essar’s catalytic reformer. Besides, it is expected for Asia’s gasoline inventories to reduce considerably due to ongoing refinery turnarounds.

 

Middle Distillates (gasoil, jet fuel)

Gasoil and jet fuel, two middle distillate products lost some ground over the reporting month. Seasonally weaker implied demand and elevated supplies in the region caused weakness in Asian gasoil market. Moreover, weakness in the US and European markets kept the arbitrage to the West closed.

Abundant supply of jet fuel in Asia cause the market to be weaker in May compared to the previous month. The market was weak despite some cargoes being sent to the US West Coast.  

Fuel Oil

Fuel oil market in both grades- 180 & 380 cst- improved over the reporting month. Fuel oil strength stemmed from a tightening arbitrage from America and Europe. Moreover, Japan’s fuel oil output was last reported at lower figures.

On the demand side, Middle East requirements for power generation were expected to increase during summer months. In addition, bunker sales in Singapore rose strongly in April. In contracts to all bullish mentioned factors, declining demand from China’s teapot refineries limited the market improvement. This is expected to be continuous over the reporting period.

Iran has two exportable type of fuel oil- 280 cst and 380 cst-. The fuel oil 380 cst is mostly used for bunkering. According to MD Mostafa Kashkouli, Iran is going to provide 4 million tones (roughly 70,000 b/d) of fuel to ships visiting Iranian ports in the current Iranian year to March 2015. NIOPDC began bunkering in 2007 when it sold 1 million tones. Iran’s bunker ports are Bandar Abbas, Kharg, Bushehr, Qeshm, Assaluyeh and Chabahar. Fujairah is the Persian Gulf’s key bunkering hub.

Lukoil to Drill for Tight Gas in Saudi Desert

 

Russia's Lukoil is set to drill deep for unconventional gas in Saudi Arabia's challenging "Empty Quarter" desert region early next year after a decade-long hunt for conventional deposits that has proved futile.

The world's top oil exporting nation invited international oil companies (IOCs) - such as Lukoil, Royal Dutch Shell and Sinopec - to find and pump gas in its southeast Empty Quarter, known as Rub al Khali, more than 10 years ago.

Saudi wants natural gas to help it cover subsidized domestic power demand so it can save oil for more lucrative exports.

The IOCs, which formed joint ventures with state oil firm Saudi Aramco, failed to find commercially viable deposits and while the others have abandoned the search, Lukoil has not.

It plans, with Saudi Aramco, to drill two, very deep evaluation wells at depths of up to 19,000 feet in the Mushaib tight gas field in the Empty Quarter, two industry sources said.

A Lukoil Overseas official said the joint venture will drill the first well in the first quarter of 2015 and the second during the last six months. Saudi Aramco declined to comment.

"The cost will be very high compared to unconventional reservoirs in the United States," said one industry source.

Tight gas is found in reservoirs formed by rocks of low permeability and low porosity typically at depths ranging between 8,000 to 10,000 feet and thus needs to be fracked. Another and more commonly known type of unconventional gas is shale, which is trapped within sedimentary rock.

"Drilling two wells shows that they are serious and positive about the region - and most importantly, that they are more committed than the other IOCs who already left," said Sadad al-Husseini, a former top executive at Saudi Aramco.

"But they will have to find some Natural Gas Liquids and condensate to increase their profits and spread their costs."

Inspired by a shale gas surge in the United States, which has transformed it from the world's largest gas importer to an exporter, the Kingdom has begun investigating its large unconventional deposits and their potential for fuelling long-term growth for its booming population.

 

Congo Republic Set to Raise Oil Output

 

Congo Republic is set to reverse a decline in production and climb to become sub-Saharan Africa's third-largest oil producer within three years as investors plough billions of dollars into new projects.

Geologists have drawn parallels between the West African coastline and the geology of offshore Brazil, where billions of barrels in oil reserves are tucked beneath a submerged salt crust layer.

In February, Eni said it had struck so-called "pre-salt" oil in Congo's Nene Marine fields and estimated total reserves at 1.2 billion barrels of oil and 30 billion cubic meters of gas.

While oil from new pre-salt finds may not come onstream for many years, a series of multi-billion dollar projects will allow Congo to leapfrog the current number 3 producer Equatorial Guinea by 2017, Reuters calculations show.

"The international oil companies with the deep pockets have all opted for Congo," said Ecobank's Lagos-based Energy Research Analyst Dolapo Oni. "There are interesting opportunities in pre-salt and in shallow water and onshore."

Ecobank also expects Congo to become the region's number three producer.

Production in Congo, a Central African nation of 4 million people, is below the peak of around 310,000 bpd in 2010, according to data from U.S. Energy Information Administration.

 

Kazakhstan Eyes H/C Hike

 

Kazakhstan, which is ranked in the top 15 countries worldwide for proven oil reserves and top 20 for natural gas, would like to see increased development of its hydrocarbon sector.

State-owned KazMunayGas, which represents the interests of Kazakhstan in the oil and gas sector, is looking to increase the nation’s hydrocarbon reserves through exploration. Despite the unfulfilled hopes for the Kashagan project, Kazakhstan will continue its search for new oil and gas fields, both on land and at sea. The Eurasia Project aims to develop a vast area in the Trans-Caspian Lowland in Kazakhstan and Russia. The question is over the exploration of the deep and hard to reach Horizons field, which requires use of the most modern methods and technologies.

According to Minister of Oil and Gas Uzakbai Karabalin, the Eurasia Project can double the country’s hydrocarbon potential, which would allow Kazakhstan to gain permanent status as one of the top 10 hydrocarbon holders in the world.

Today, the volume of “black gold” produced in the country is just under 82 million tons per year.

 

Azerbaijan Oil Exports Down 11%

 

The share of crude oil in Azerbaijan’s overall export made up 85.92% in Jan-Apr 2014 against 84.44% in 2013, 84.6% in 2012, 86.62% in 2011 and 86.53% in 2010. The share of oil in export made up 81.57% in 2009.

The State Customs Committee (SCC) informs that in Jan-Apr 2014 oil export reached 11,281,350.7 tons (in accordance with control and measuring instruments data) that was by 0.62% lower than the index for the same period 2013 (11,351,977.5 tons). In Jan-Apr only 7,467,140.3 tons for $6.148 bn passed official registration on cargo custom declarations, that means the proceeds reduced by 12.59% against Jan-Apr 2013 and physical export reduced by 11.05%.

Average export price of Azeri oil, according to customs statistics, still makes up $823.41 per ton in 2014 including $835.15 for January $912.7, for February, $820.68 for March and $815.57 for April.

In Jan-Apr 9.199 million tons were carried via Baku-Tbilisi-Ceyhan (BTC) named after Heydar Aliyev, 1,438,362 tons - via Baku-Supsa pipeline, 339,203 tons - via Baku-Novorossiysk pipeline and 304,636 tons - by rail via Baku-Batumi route.

For comparison, in 2013 oil export reached 34,245,147.5 tons including 3.019 million tons in May (last year’s best index for month). Only 24.855 million tons for $20.244 bn passed official registration on cargo custom declarations. Last year export proceeds grew only by 0.06% against 2012 ($20.232 bn).

Average export price of Azeri oil, according to customs statistics reached $814.46 per ton in 2013 including $1,435 in September (the best price in 2013).

In 2013 27.424 million tons were carried via Baku-Tbilisi-Ceyhan (BTC) named after Heydar Aliyev, 4.028 million tons - via Baku-Supsa pipeline, 1.75 million tons - via Baku-Novorossiysk pipeline and 991,992 tons - by rail via Baku-Batumi route.

 

Nigeria Pan Ocean Shortlisted

Nigerian independent producer Pan Ocean, has been short-listed as the preferred winner of the bid for the Shell operated onshore oil block Oil Mining Lease 24 in the Niger Delta, sources close to the deal said Monday.

OML 24 is one of the four onshore acreages in the eastern division of the Niger Delta from which Shell, Eni and Total are divesting.

"Pan Ocean has been selected as the preferred bidder for OML24," a Shell source said. 'Details of the bidding exercise are not out yet because it still has to be scrutinized by the ministry of petroleum,' the source added.

The sources were unable to say what Pan Ocean has agreed to pay, but officials had previously estimated three of the oil blocks on offer -- OMLs 18, 24 and 25 to worth between $500 million and $1 billion. The three assets could deliver around 25,000 b/d 800,000 Mcf/d of gas.

The fourth block OML 29, the priciest of the assets, is valued at over $1.5 billion by Shell and its partners, who own 45% of the asset. State-owned Nigerian National Petroleum Corp. holds the remaining 55%. Pan Ocean declined to comment as did his counterpart at Shell.

 

Iraq Backs Basra-Aqaba Oil Pipeline

 

Iraq's parliament fully supports a project to build an $18 billion pipeline to export crude oil from Basra to Jordan's port city of Aqaba, Adnan Al Janabi, chairman of its energy committee, said.

"We are very supportive of this strategic project with Jordan, which will greatly help Iraq increase its oil exports across the world," Janabi told The Jordan Times on the sidelines of the Iraq Future Energy Forum, attended by representatives from several international companies in the field of oil and gas.

The 1,680-kilometre double pipeline will pump one million barrels of oil a day from Basra on the Persian Gulf to Aqaba Port, and around 258 million cubic feet of gas.

The Basra-Aqaba oil pipeline, which is expected to be operational late in 2017, will provide Jordan with 150,000 barrels of- oil per day, while the rest will be exported through Aqaba, generating an estimated $3 billion a year in revenues for the kingdom.

Approximately 100 million cubic feet of natural gas will fulfill Jordan's gas requirements and the rest will be used in pumping stations along the double pipeline.

Janabi said negotiations are under way between Iraq and Jordan to build a refinery in Aqaba to be jointly financed by the public and private sectors in the two countries.

"The refinery will help facilitate the export of the oil and bring great benefits to the two countries," he said.

Baghdad has recently shortlisted 12 international companies to build the pipeline, according to Iraqi officials and the State Company for Oil Projects is expected to invite these firms to submit their offers by November or December.

 

Iran Energy Exchange Facilitates Mideast Oil/Gas Transactions

 

Zohreh Getabi /  Kianoush Amiri

 

Chris Cook, former director of the International Petroleum Exchange and an energy consultant, is known as the originator of the Iranian Oil Bourse project.

He says the start of oil trading at Iran Energy Exchange is a positive step ahead in promoting the idea across the Middle East.

 

Here is the full text of Mr. Cook’s interview with Iran Petroleum: 

 

Q: As you know, Iran has recently started trading oil at its Energy Exchange. Was it a good idea or you think that Iran should have a separate oil bourse?

A: Oil and gas are currently the most globally important sources of energy, and it makes complete sense for them to be listed on the same exchange network alongside other energy sources so that energy users may access all of them on a common platform.

 

Q: Do you have any proposals for risk management in the oil and energy transactions?

A: Indeed I do. I pointed out ten years ago in the feasibility report for the Iran Oil Bourse, firstly that conventional Western risk management derivatives are operated by cartels of middlemen against the interests of producers and consumers alike; and secondly that derivatives are not only extremely dangerous to the financial system but are fundamentally in conflict with Iran's ethical values.

In addition to this criticism of the problem, however, I also propose a solution, and that is to introduce new (although based on ancient and well understood credit instruments) 'prepay' energy credit instruments which may be listed as an asset class by exchanges.

In simple terms I propose that energy producers should create and issue to investors - probably at a discount - energy credits which are returnable in payment for production. The holder of such a credit would have no right to demand delivery (as with a futures contract) but any customer of the issuing producer would be able to use the credits - instead of (say) dollars - against supply received.

This technique - known as 'prepay' - is a financially advanced (but simple) technique increasingly in use globally: for instance Russia's Rosneft has recently signed an $85billion prepay agreement with China's Sinochem for crude oil.

Prepay credit essentially not only replaces the need for debt finance, but also the need for derivative risk management,

 

Q: How can international stock exchanges promote the status of oil and energy exchanges in the world, particularly in Iran?

A: The reason for my long explanation concerning prepay instruments is that in my view international stock exchanges can and will be the forum within which such prepay energy credits may be made available to the public (electricity, gasoline, natural gas). This opens up the possibility that subsidies could be paid using such energy credits instead of inflationary distributions of rials, and the possibility that recipients may wish to invest these credits via the stock exchange in energy projects.

The energy exchange on the other hand would be the forum for 'wholesale' investors in crude oil, petrochemicals, and other commodities which are not typically used directly by the public.

In this context, I am pleased to say that I am currently in the process of reactivating a joint venture in Kish Island with the Tehran Stock Exchange Services Company aimed at kick-starting new product development.

 

Q: As the originator of Iran Oil Bourse, how do founders of international exchanges find opportunities for investment in the energy sector?

A: For the most part, exchanges have historically been created by market members in response to an identified need.  I take the view that I am simply facilitating market participants in meeting their needs. But my experience is that what participants want is not necessarily what they need. As Henry Ford said concerning his hugely successful 'Model T' Ford car, if he had asked his customers what they wanted they would have asked for a faster horse!

 

Q: How can Iran Energy Exchange affect oil transactions in the Middle East region?

A: Iran energy exchange can facilitate the creation of regional, open and transparent auctions and benchmarks in physical oil and gas. Oil and oil products are a very sensitive subject because it is an existing market with many domestic and international vested interests, and that is why I recommend as a first step the creation of new benchmarks in the Caspian, both for natural gas and electricity.

 

Q: What are the advantages of oil trading at Iran Energy Exchange for the economy of Iran and other oil-rich countries?

A: A well-regulated, open and transparent market accessible to all, and not dominated by any particular interest group – particularly rent-seeking Western financial interests - will be of benefit to all, I believe.

 

Q: Which potentials does Iran enjoy to reach a position to benchmark oil price in the Persian Gulf?

A: I believe the potential is there to create a regional benchmark oil price, possibly involving a benchmark or matrix of physical oil prices. Indeed I recommended to  former Governor of CBI Mohsen Nourbakhsh (may he rest in peace) in 2001 that Iran should lead the formation of a Middle East exchange, and this eventually led to commencement of the Iran Oil Bourse project in 2004.

The need for liquidity is paramount, and this requires a commitment to sell crude oil production on the open market which historically few producer nations have been willing -for understandable reasons - to make. So this would not be an easy undertaking.

 

Q: Do you think Iran’s economic structure is sufficient to trade oil in Energy Exchange?

A: The simple answer is that while Iran is frozen out of the global financial system, conventional trade settlement is impossible. That is why the creation and listing of energy credits is so important, because it offers a way in which transactions may be PRICED in (say) dollars but SETTLED with asset swaps of energy credits.

There is nothing new about such energy swaps: the Caspian oil swap saw Caspian crude oil exchanged for prepaid rights to Persian Gulf crude oil: Iranian gas is swapped for Armenian electricity and so on. I am merely proposing to extend and deepen the use of the technique via the creation of an 'energy clearing union'.

 

Q: Given your knowledge of Iran’s banking, financial, insurance, customs, economic and commercial infrastructure, do you think Iran is ready to join global energy transactions?

A: To be frank, Iran's wish to re-join the broken global dollar economy is a mistake. In my view the sanctions currently being applied by the US on Russia creates an opportunity for Russia, Iran and China to create the basis for a Eurasian energy clearing union, which could rapidly be expected to include the EU.

 

Q: What opportunities does Iran have for presence in exports markets?

A: Naturally, Iran has potential to increase exports. But I think that this will serve only to depress the oil price to Iran's disadvantage.

The cheapest oil and gas is oil and gas saved, and I point out that one liter of domestic gasoline saved means that up to three liters of crude oil is saved, while one kilo watt hour of electrical heat saved may save up to ten times that amount of energy equivalent in gas production at the well head.

In other words, Iran should be importing oil and gas savings (in the form of uncontroversial technology and skills) not exporting valuable oil and gas.

 

Q: How do you think Iranian banks and financial institutes contribute to further activities of energy exchange in oil trading?

A: Under no circumstances should Iranian banks and financial institutions or anyone else act as intermediary middlemen in Iranian markets. Such participants extract value at the expense of producers and consumers and indeed this is the dysfunctional Western market model which in my view broke irretrievably in 2008.

The future role of financial market participants lies in service provision in areas such as risk management, financial advice, introduction of buyers to sellers etc, on a partnership basis of a stake in the outcome.

Such a surplus value sharing role is in fact in the interests of these financial participants because their capital requirement is limited only to operating costs.

Iran Gas Ready to Go to Europe

 

Iran’s Parliament Spokesman Ali Larijani reaffirmed the readiness of the country to supply gas to Europe.

“In line with its policy of development of trade and economic ties, the Islamic Republic of Iran is ready to pump gas to European countries including Slovenia,” Larijani said in a meeting with his visiting Slovenian counterpart Yanko Weber in Tehran.

He said there are no obstacles to further trade and industrial ties between the two countries, adding that the private sectors in two countries can upgrade ties.

Larijani said Iran’s nuclear deal with six world powers could contribute to broader economic and trade relations.

For his part, the Slovenian official said Iran and Slovenia are stable countries in the Middle East and Central Europe.

He said the Slovenian parliament is willing to broaden cooperation with Iran in the energy, IT and steel industries.

The Slovenian parliament spokesman highlighted the role of each country’s parliament in expanding relations, saying that people expect the parliaments to pave the way for the increase of cooperation.

 He said that he was present in the business conference held in chamber of commerce on Saturday.

 The situation of Slovenia in Central Europe can provide Iranian corporations with good opportunities, he added.

 In a meeting with Iranian Ambassador to Ljubljana Morteza Darzi Ramandi on April 28, Weber said that his country’s corporations are willing to do business in Iran.

 Larijani noted that the Slovenian parliament spokesman will meet with the Iranian economy minister and other economy officials during his visit to Tehran.

 

Sharing Technology with Ghana

 

Larijani in a meeting with Abdul Rashid Hassan Pelpuo, the Ghanaian Minister of State at the Presidency, voiced Tehran's readiness to export technical and engineering services to Ghana in a bid to help development of the African country.

"Iran enjoys various capacities and capabilities in different industrial, oil and gas, petrochemical sectors and in area of modern technologies and we are ready to help Ghana in this regard," Larijani said during the meeting.

Larijani noted that the Iranian parliament welcomes any proposal or initiative with the purpose of enhancing the political, economic, trade and cultural relations between Iran and Ghana.

Pelpuo, for his part, pointed to Iran as an important and influential country in the Middle East and the world, and said, "Iran with its rich culture and civilization enjoys an important status in region and other parts of the world and Ghana is willing to further expand its relations with Iran in different areas."

The Ghanaian minister called on the Iranian government and private sectors to help development of his country's economic infrastructures.

Iran and Ghana signed a memorandum of understanding (MoU) on mutual cooperation in exploration and extraction of gold projects in the African country.

The MoU was signed by the heads of the Iranian and Ghanaian chambers of commerce in a meeting in Tehran.

The MoU paves the way for Iranian companies and contractors to invest in gold mine exploration and extraction projects in the African country.

Head of Iran's Chamber of Commerce Gholam-Hossein Shafeyee said Iran and Ghana signed the MoU subsequent to their previous talks on development projects and export of technical and engineering services.

Iranian and Ghanaian officials also inked several other MoUs to further develop ties and cooperation between the two countries in other fields of economy.

Ghana is Africa’s second largest gold producer, and hosts more estimated reserves than such prolific gold producing nations as Peru and Papua New Guinea.

Tehran has prioritized promotion of its economic and political ties with the African states, and the country is now considered as one of the African Union's strategic partners.

Tehran's efforts to boost ties and cooperation with Africa have led to its acceptance as an observing member of the African Union (AU), where it has shown an active presence in the AU summit meetings.

 

Europe Must Seize Chance

 

President Hassan Rouhani’s chief of staff called EU to grasp the ‘strategic opportunity’ to expand ties with Iran.

In a meeting with a Belgian economic delegation to Iran, Mohammad Nahavandian also denounced what he called as ‘illegitimate measures against Iranian people.’

“Sanction and threat are not solutions to the issues; since they are bound to failure, and in a new situation, both sides would achieve a win-win situation through display of good will,” said Nahavandian.

He said that mingling political issues with those of the economy was sheer error of judgment, believing that Islamic Republic was a good and trusted partner for the EU companies.

 

Tehran Offers Gas to Europe

 

Iran is ready to supply natural gas to Europe as relations warm up following Tehran’s nuclear deal with world powers, Petroleum Minister Bijan Namdar Zangeneh said.

“As a country capable of supplying gas in very big volumes, Iran is always willing to be present in Europe’s market, either through pipeline or in LNG form,” Zangeneh said.

He said Iran and European countries started gas talks nine years ago, adding, “As far as I know, these talks have been halted and no chance was provided for the continuation of these talks in recent years.”

Zangeneh said European countries have always shown interest in diversifying their gas resources.

The minister said that Iran would be able to meet domestic demand and have extra gas for exports once new phases of the gigantic South Pars gas field have come on-stream.

Zangeneh said more than 34 billion dollars has been invested in prioritized phases of South Pars.

He added that phases 12, 15&16 and 17&18 are expected to start gas production in the coming years.

Iran shares the offshore South Pars field with Qatar.

An Iranian deputy petroleum minister also voiced Iran’s readiness for exporting gas to Europe.

“Iran is ready for gas exports to Europe and if the required conditions are provided, this objective is realizable,” Ali Majedi said in a meeting with French Senate's Finance Committee Philippe Marini in Tehran.

“We are willing to put [the option of] gas exports to Europe via Turkey or other routes on the agenda,” he said.

Majedi, who is deputy minister for international affairs and commerce, said Iran is looking to diversify its gas exports destinations.

 

Lift Bans on LPG

 

Managing director of Persian Gulf Petrochemical Holding Company Adel Nejad Salim called on Iranian nuclear negotiators to request six world powers to remove ban on liquefied petroleum gas (LPG) sales.

Nejad Salim said that unlike petrochemicals and polymer products, LPG is still on the list of sanctions.

Nearly six percent of the country's petrochemical products are exported to the European markets, he said.

Iran exported about $3.392 billion worth of LPG in Iranian calendar year to March 2012, but the figure dropped to $2 billion in the next year, according to Iran's customs data.

Exports of propane and butane fell by 31 percent and 18 percent, respectively, in the first eight months of the year ending in March 2014, before a nuclear deal between Iran and the world powers, but rose during the next four months of the year.

In January, Platts quoted an EU Council spokeswoman as saying that the EU's six-month suspension of its ban on insurance for shipments of Iranian oil and lifting of curbs on petrochemicals trade does not include natural gas and gas products such as LPG.

"LPG - as in butane and propane - is considered gas product by the EU; therefore remains banned under EU sanctions imposed on natural gas and gas products in 2012," the spokeswoman said.

"Only petrochemicals listed in Annex V of the EU sanctions imposed in 2012 are affected by the suspensions."

Industry sources told Platts that LPG, typically considered a petrochemical or refined oil product, is still banned from transports and imports as part of the EU sanctions as it is categorized as a gas product in the EU sanctions list.

Iran exported 1,385 tons of propane, worth $1.212 billion during the last fiscal year (March 2013-March 2014), indicating a 6.68 percent increase in value compared to the previous year, while the butane exports reached 1,159 tons, worth $1.014 billion, indicating a 17 percent increase in value during the mentioned time.

 

Profit Sharing, Optimum Model for Iran Oil Projects

Amir Hosein Hashemi Javid

 

 

Managing-Director of Iranian Offshore Engineering and Construction Company (IOEC) Gholam-Reza Manouchehri suggest “profit sharing agreements” as a new model of contracts to replace unattractive buy-backs.

In an interview with Iran Petroleum, Manouchehri said introduction of profit sharing contracts requires amendments to certain directives and regulations.

Manouchehri, PhD holder in civil engineering from Germany’s Technische Hochschule Aachen, earlier served as managing-director of Petropars Company.

Here is the full text of the interview he gave to Iran Petroleum.

 

Q: You have always talked about the need for technical and technological upgrade in Iran’s petroleum industry. Does access to a higher level of technology depend on modifying the contracts?

A: Development projects in the upstream oil sector are not 3D physical projects like construction and road building. These projects need maintenance, but what’s important is their construction. But development of a field is a dynamic project which is subject to constant developments. Oil and gas must be extracted from deep layers underground and this operation may even take more than one century. Therefore, such operation requires special precision and attention and the reservoir needs to be dealt with like a living creature.

The physical conditions of reservoirs like fluid stream, fluid viscosity, and ratio of water, oil and gas are constantly changing. Therefore, entry into the reservoir through drilling wells varies for different layers. To that effect, throughout the development of the reservoir which may take more than several decades, drilling equipment needs to be replaced as the reservoirs’ properties change. We have to acknowledge that what has already happened in Iran has been first recovery from the most reachable layers. For example in South Pars gas field, there are four layers. We may say that pressure in the first layer is good and production from it could be done appropriately by applying natural pressure and when we reach the second layer we will get better results.

The geological structures in southern Iran have different layers. In most of them, production has been low and proper recovery has not been made from them due to the existence of heavy crude and water as well as low pressure. In some of these layers, recovery can be increased through drilling directional wells in order to maximize recovery from the layers.

Another point is to release oil and gas from the reservoir rock. These rocks may be sedimentary limestone or sandstone. Porosity and recovery factors are also important elements in reservoirs. Depending on the nature of the reservoir, methods of drilling and the technology used for enhanced recovery, different methods like water, gas and oil injection or explosion method are used.

Today, intelligent drilling is a well-known phenomenon in the world. Throughout operation and development of the reservoir, different sections of the reservoir need to be searched intelligently. We need to conduct advanced 3D studies to explore oil layers. They need to be done in more than one period of time because the reservoir experiences changes throughout development and operation.

If drilling operations are successful in the first stage of development of the reservoir and reliable reserves are acceded, the reservoir may be abandoned with its remaining potentials. Sometimes, in case of incorrect production, secondary recovery may not be economical. The reservoir must be handled based on physical, chemical and seismic models. To that end, advanced geological and geophysical technology and advanced tools are important.

There are methods for enhancing recovery from a reservoir. These methods are partly related to drilling methods (like slant drilling) and partly to lab models which clarify how more fluid could be released from a reservoir by using chemical and microbial methods and gas injection.

Iran’s petroleum industry has not set any significant record in horizontal drilling (around 700 meters) while Qatar has already drilled 10 kilometers in the oil layers of its own sector of South Pars gas field, known as North Dome, and is now recovering 400,000 b/d. But unfortunately Iran has failed to achieve this technology.

Therefore, access to updated technical knowledge as well as correct management throughout recovery from reservoirs under the aegis of attractive oil contracts would be instrumental in maximizing production from hydrocarbon fields.

 

Q: What role does investment play here?

A: Another important point with regards to development of reservoirs is continued investment. Oil production cost may be five dollars per barrel in the beginning of recovery, but this figure would soar to 35 dollars a barrel when the reservoir reaches the second half of its life. However, this investment is acceptable for a 100-dollar-barrel oil. Moreover, this 35-dollar cost is spent on acquiring technology, modern equipment, trained manpower and working capital.

Development of a hydrocarbon reservoir could not be compared with a construction project, because a hydrocarbon field development is a long-term project and needs studies and research.

Every big field needs to have an academic, lab and research backup. This responsibility has so far been upon production companies and state management. Therefore, the desired goals have not been achieved. National Iranian Oil Company (NIOC) and its subsidiaries have so far been only tasked with production and have failed to find a proper approach to resolve these problems.

Petroleum industry is an industrial industry when it comes to expertise, research and equipment. The latest technological findings about petroleum industry equipment need to be used. These findings are owned by international oil companies (IOCs) which do not reveal their secrets unless they receive a share of revenues from the development of fields. Knowledge is not sold in a package. The only way to acquire knowhow is that they are involved in a project in the country and then they provide the host government with the technology for the development of hydrocarbon fields.

Iran’s oil production capacity reached a maximum 4.3 mb/d in recent years, but this capacity would be raised to 10 mb/d, given the reserves and capacities of Iran’s petroleum industry. Gone is period of easily operated and low-cost oil. The main oil reservoirs in Iran are in the phase of second recovery and preserving their production requires modern approaches and advanced knowledge and tools.

Development, operation and management of a reservoir is a continued and long-term activity. In order to achieve favorable results, it would need signature of contracts with qualified companies. To that effect, experience has shown that buy-back contracts are not helpful.

 

Q: Do you mean that the buy-backs are no longer useful for the development of fields?

A: Yes, that’s it.

 

Q: Why?

A: Preserving production from a reservoir is tied to continued investment in the field. It is possible only through companies possessing advanced technology and state-run companies lack enough motivation for this purpose.

Along with IOCs, oil service companies are also active and they are experienced in recovery equipment technology. There are companies that invest two billion dollars a year to boost their drilling knowledge. In the world, hundreds of billions of dollars is spent every year on second recovery from oil fields.

Second recovery from a field is time-consuming and a long-term project. Therefore, the terms of contracts for development and production must be drafted so that qualified international companies would stand by Iranian companies and NIOC up to the end of recovery from hydrocarbon fields so that we can acquire their technologies. Hopefully, Iran’s private sector is now involved in the upstream oil sector. Therefore, a model of contracts must be defined so that Iranian companies would learn from foreign companies throughout their interaction and acquire knowhow for development of and recovery from reservoirs.

 

Q: Does the Iranian Constitution authorize such an activity?

A: The Constitution has banned foreign companies’ ownership of oil and gas reservoirs in Iran. These reservoirs are integral part of Iran’s national sovereignty and the law has nothing beyond this. The Fifth Development Plan says ownership of downhole and wellhead equipment and refineries could be transferred to competent private companies. The law says the fluid is owned by the government and therefore a portion of revenues from oil selling covers production, exploration, long-term preservation as well as research and development costs.

Iran’s Petroleum Ministry and NIOC authorize qualified companies to develop reservoirs for a long period of time and then compensate them with revenues from production. These companies would be allowed to apply modern engineering methods to preserve production.

In the model envisaged in our law, investors, developers and qualified oil companies can contribute to development of oil and gas reservoirs for a long and renewable period of time in return for a share of revenues from production and based on their investment, application of technology and creativity they will receive incentives to enhance production.

 

Q: Is it not the same as production sharing?

A: No, it’s not production sharing. It’s profit sharing and its main objective is to motivate the private sector and qualified companies for long-term presence throughout recovery from the reservoir.

 

Q: Would you explain more?

A: You must keep in mind that profit sharing does by no means mean sharing ownership of reservoirs with Iranian or foreign companies. The question here is to share profits achieved from investment, technology, research, development and production. It is necessary for preservation of the reservoir and has been highlighted in the Fifth Development Plan as well as the new Petroleum Law.

If the petroleum industry decides firmly to maximize and optimize recovery from oil and gas reservoirs through profit sharing method, it may be able to activate 30 percent of the country’s capacities in this sector over a 10-year period, because it is a big and time-consuming activity.

 

Q: It seems that the firm determination you are talking about is taking shape at the NIOC. Some managers have implicitly talked about it and there are sporadic supporters and opponents. Do you think that the conditions have forced the NIOC to opt for production sharing agreements or it is a necessity which is being taken into account so late?

A: The conditions have so far rather affected and disrupted the sale of oil and some of its derivatives. Contractors have been hired in the development of fields within the framework of engineering, procurement and construction (EPC) and engineering, production, construction and finance (EPCF) and buy-back deals. In recent years, some oil development projects have been hastily awarded to Iranian companies. In fact, some projects were commissioned to contractors that had inadequate experience and compete and they caused delay in the projects.

Under the fourth development plan, Iran’s oil production was expected to reach 5 mb/d and the Fifth Development Plan was supposed to bring it to 5.5 mb/d. But finally, it reached 4.1 mb/d.

 

Q: Do you think that these figures were predicted based on realities? Should missing the 5-million-barrel target be blamed on natural production fall-off and lack of timely investment?

A: If the latest approaches and methods are used for production enhancement, oil and gas production objectives are achievable. Potentials for oil production in Iran are much more than 5 mb/d.

 

Q: Is this amount of production realizable by enhancing recovery and compensating for natural decline?

A: Yes, this amount of production is achievable. Of course, oil production in Iran depends on the horizon of global production as well as the country’s economic macropolicies.

We have to take into account the fact that Iran is among the largest holders of oil and gas reserves. Some countries whose reserves are less than ours, but their production is higher than ours. For example our neighboring Iraq speaks determinedly about its plans to reach 12-million barrel a day production in the coming years. So how come Iran, whose reserves are not less than Iraq’s, could not? We have knowledgeable and experienced engineers and manpower.

 

Q: Iraq and Qatar are currently applying a sort of production sharing contracts in developing their fields? What’s the difference between profit sharing agreement that you already mentioned and the model these countries are using?

A: The contract preferred by NIOC is similar to oil contracts in Iraq, but the main framework in Iraq is service contract. Currently, international companies providing such services as development management, production and financing are cooperating with Iraqi companies in Iraqi fields. These [international] companies receive a specifically determined pay per barrel of oil for their long-term activity. Of course, Iraq pays more for border fields or the fields whose oil production is difficult.

 

Q: What do you propose for joint fields?

A: For the development of joint fields, we have to consider more attractive incentives in order to motivate domestic or foreign developers to operate these fields.

 

Q: Do you mean that the oil contracts could be drawn up so as to give more profits to the host government?

A: Yes, that’s it. To that end, we have to benefit from the knowledge of qualified jurists and sympathetic managers. The framework or name is not the main principle in a contract. The important factor is the essence of the contract.

 

Q: Do you think that service contract drafted within the framework of profit sharing is the best model for the development of Iranian oil fields? Can these contracts replace buy-backs without any legal restrictions?

A: Service contracts should be signed for a long-term period in order to preserve the long-term interests of investors too. The petroleum industry is dominated by the input-output principle and international companies and owners of technology and capital will not give anything to oil-rich countries for free. Therefore, more incentives must be given to foreign companies in order to persuade them to cooperate. Meantime, profit sharing contracts should protect our national interests.

 

Q: Is it possible for Iranian and foreign companies to team up under these contracts?

A: Coincidentally, a paragraph in these contracts is that domestic companies can have foreign partner, but the Iranian party should have a more than 51-peretn share so that we would be the main decision-maker.

 

Q: Some critics say contractors are taking advantage of the sanctions imposed on Iran in order to persuade Iran to reconsider its oil contract terms so that international companies would guarantee their long-term presence in an oil-rich country. What do you think?

A: I reject this attitude. This attitude is the cultural obstacle which I have already talked about. I believe that we should persuade the Iranian private sector to step in and cause development under the aegis of competition.

If an international union takes shape, Iranian companies would be able to indigenize oil-related standards and knowledge with the help of big international companies.

Iran has good technical potential and experts, and enjoys the capacity for manufacturing equipment for the petroleum industry. If proper legal and management mechanisms are worked out and legal obstacles are removed, big objectives would be achieved in this industry. Due to its technical, scientific and engineering capabilities, Iran can revamp itself and start from scratch. A country’s progress is tied to national understanding and organic communications between the state-run and private sectors.

 

Q: Do you think it would be possible to discuss the development of joint fields with a foreign party so that agreements could be reached for the integrated development of a field based on a win-win approach?

A: The companies sharing a reservoir should obey international protocols written for that purpose. For instance, one party is not entitled to infringe upon its partner’s reserves by horizontal drilling. Integrated development of a joint reservoir depends on the level of interactions and quality of relations between the two countries sharing the reservoirs. For example, Britain and Norway have signed a protocol to develop the fields they share in North Sea.

If successful talks took place with Iraq, integrated development and management of some fields they share would have better served the interests of the two sides and every party benefited from the capabilities of the other one.

Profit Sharing, Optimum Model for Iran Oil Projects

Amir Hosein Hashemi Javid

 

 

Managing-Director of Iranian Offshore Engineering and Construction Company (IOEC) Gholam-Reza Manouchehri suggest “profit sharing agreements” as a new model of contracts to replace unattractive buy-backs.

In an interview with Iran Petroleum, Manouchehri said introduction of profit sharing contracts requires amendments to certain directives and regulations.

Manouchehri, PhD holder in civil engineering from Germany’s Technische Hochschule Aachen, earlier served as managing-director of Petropars Company.

Here is the full text of the interview he gave to Iran Petroleum.

 

Q: You have always talked about the need for technical and technological upgrade in Iran’s petroleum industry. Does access to a higher level of technology depend on modifying the contracts?

A: Development projects in the upstream oil sector are not 3D physical projects like construction and road building. These projects need maintenance, but what’s important is their construction. But development of a field is a dynamic project which is subject to constant developments. Oil and gas must be extracted from deep layers underground and this operation may even take more than one century. Therefore, such operation requires special precision and attention and the reservoir needs to be dealt with like a living creature.

The physical conditions of reservoirs like fluid stream, fluid viscosity, and ratio of water, oil and gas are constantly changing. Therefore, entry into the reservoir through drilling wells varies for different layers. To that effect, throughout the development of the reservoir which may take more than several decades, drilling equipment needs to be replaced as the reservoirs’ properties change. We have to acknowledge that what has already happened in Iran has been first recovery from the most reachable layers. For example in South Pars gas field, there are four layers. We may say that pressure in the first layer is good and production from it could be done appropriately by applying natural pressure and when we reach the second layer we will get better results.

The geological structures in southern Iran have different layers. In most of them, production has been low and proper recovery has not been made from them due to the existence of heavy crude and water as well as low pressure. In some of these layers, recovery can be increased through drilling directional wells in order to maximize recovery from the layers.

Another point is to release oil and gas from the reservoir rock. These rocks may be sedimentary limestone or sandstone. Porosity and recovery factors are also important elements in reservoirs. Depending on the nature of the reservoir, methods of drilling and the technology used for enhanced recovery, different methods like water, gas and oil injection or explosion method are used.

Today, intelligent drilling is a well-known phenomenon in the world. Throughout operation and development of the reservoir, different sections of the reservoir need to be searched intelligently. We need to conduct advanced 3D studies to explore oil layers. They need to be done in more than one period of time because the reservoir experiences changes throughout development and operation.

If drilling operations are successful in the first stage of development of the reservoir and reliable reserves are acceded, the reservoir may be abandoned with its remaining potentials. Sometimes, in case of incorrect production, secondary recovery may not be economical. The reservoir must be handled based on physical, chemical and seismic models. To that end, advanced geological and geophysical technology and advanced tools are important.

There are methods for enhancing recovery from a reservoir. These methods are partly related to drilling methods (like slant drilling) and partly to lab models which clarify how more fluid could be released from a reservoir by using chemical and microbial methods and gas injection.

Iran’s petroleum industry has not set any significant record in horizontal drilling (around 700 meters) while Qatar has already drilled 10 kilometers in the oil layers of its own sector of South Pars gas field, known as North Dome, and is now recovering 400,000 b/d. But unfortunately Iran has failed to achieve this technology.

Therefore, access to updated technical knowledge as well as correct management throughout recovery from reservoirs under the aegis of attractive oil contracts would be instrumental in maximizing production from hydrocarbon fields.

 

Q: What role does investment play here?

A: Another important point with regards to development of reservoirs is continued investment. Oil production cost may be five dollars per barrel in the beginning of recovery, but this figure would soar to 35 dollars a barrel when the reservoir reaches the second half of its life. However, this investment is acceptable for a 100-dollar-barrel oil. Moreover, this 35-dollar cost is spent on acquiring technology, modern equipment, trained manpower and working capital.

Development of a hydrocarbon reservoir could not be compared with a construction project, because a hydrocarbon field development is a long-term project and needs studies and research.

Every big field needs to have an academic, lab and research backup. This responsibility has so far been upon production companies and state management. Therefore, the desired goals have not been achieved. National Iranian Oil Company (NIOC) and its subsidiaries have so far been only tasked with production and have failed to find a proper approach to resolve these problems.

Petroleum industry is an industrial industry when it comes to expertise, research and equipment. The latest technological findings about petroleum industry equipment need to be used. These findings are owned by international oil companies (IOCs) which do not reveal their secrets unless they receive a share of revenues from the development of fields. Knowledge is not sold in a package. The only way to acquire knowhow is that they are involved in a project in the country and then they provide the host government with the technology for the development of hydrocarbon fields.

Iran’s oil production capacity reached a maximum 4.3 mb/d in recent years, but this capacity would be raised to 10 mb/d, given the reserves and capacities of Iran’s petroleum industry. Gone is period of easily operated and low-cost oil. The main oil reservoirs in Iran are in the phase of second recovery and preserving their production requires modern approaches and advanced knowledge and tools.

Development, operation and management of a reservoir is a continued and long-term activity. In order to achieve favorable results, it would need signature of contracts with qualified companies. To that effect, experience has shown that buy-back contracts are not helpful.

 

Q: Do you mean that the buy-backs are no longer useful for the development of fields?

A: Yes, that’s it.

 

Q: Why?

A: Preserving production from a reservoir is tied to continued investment in the field. It is possible only through companies possessing advanced technology and state-run companies lack enough motivation for this purpose.

Along with IOCs, oil service companies are also active and they are experienced in recovery equipment technology. There are companies that invest two billion dollars a year to boost their drilling knowledge. In the world, hundreds of billions of dollars is spent every year on second recovery from oil fields.

Second recovery from a field is time-consuming and a long-term project. Therefore, the terms of contracts for development and production must be drafted so that qualified international companies would stand by Iranian companies and NIOC up to the end of recovery from hydrocarbon fields so that we can acquire their technologies. Hopefully, Iran’s private sector is now involved in the upstream oil sector. Therefore, a model of contracts must be defined so that Iranian companies would learn from foreign companies throughout their interaction and acquire knowhow for development of and recovery from reservoirs.

 

Q: Does the Iranian Constitution authorize such an activity?

A: The Constitution has banned foreign companies’ ownership of oil and gas reservoirs in Iran. These reservoirs are integral part of Iran’s national sovereignty and the law has nothing beyond this. The Fifth Development Plan says ownership of downhole and wellhead equipment and refineries could be transferred to competent private companies. The law says the fluid is owned by the government and therefore a portion of revenues from oil selling covers production, exploration, long-term preservation as well as research and development costs.

Iran’s Petroleum Ministry and NIOC authorize qualified companies to develop reservoirs for a long period of time and then compensate them with revenues from production. These companies would be allowed to apply modern engineering methods to preserve production.

In the model envisaged in our law, investors, developers and qualified oil companies can contribute to development of oil and gas reservoirs for a long and renewable period of time in return for a share of revenues from production and based on their investment, application of technology and creativity they will receive incentives to enhance production.

 

Q: Is it not the same as production sharing?

A: No, it’s not production sharing. It’s profit sharing and its main objective is to motivate the private sector and qualified companies for long-term presence throughout recovery from the reservoir.

 

Q: Would you explain more?

A: You must keep in mind that profit sharing does by no means mean sharing ownership of reservoirs with Iranian or foreign companies. The question here is to share profits achieved from investment, technology, research, development and production. It is necessary for preservation of the reservoir and has been highlighted in the Fifth Development Plan as well as the new Petroleum Law.

If the petroleum industry decides firmly to maximize and optimize recovery from oil and gas reservoirs through profit sharing method, it may be able to activate 30 percent of the country’s capacities in this sector over a 10-year period, because it is a big and time-consuming activity.

 

Q: It seems that the firm determination you are talking about is taking shape at the NIOC. Some managers have implicitly talked about it and there are sporadic supporters and opponents. Do you think that the conditions have forced the NIOC to opt for production sharing agreements or it is a necessity which is being taken into account so late?

A: The conditions have so far rather affected and disrupted the sale of oil and some of its derivatives. Contractors have been hired in the development of fields within the framework of engineering, procurement and construction (EPC) and engineering, production, construction and finance (EPCF) and buy-back deals. In recent years, some oil development projects have been hastily awarded to Iranian companies. In fact, some projects were commissioned to contractors that had inadequate experience and compete and they caused delay in the projects.

Under the fourth development plan, Iran’s oil production was expected to reach 5 mb/d and the Fifth Development Plan was supposed to bring it to 5.5 mb/d. But finally, it reached 4.1 mb/d.

 

Q: Do you think that these figures were predicted based on realities? Should missing the 5-million-barrel target be blamed on natural production fall-off and lack of timely investment?

A: If the latest approaches and methods are used for production enhancement, oil and gas production objectives are achievable. Potentials for oil production in Iran are much more than 5 mb/d.

 

Q: Is this amount of production realizable by enhancing recovery and compensating for natural decline?

A: Yes, this amount of production is achievable. Of course, oil production in Iran depends on the horizon of global production as well as the country’s economic macropolicies.

We have to take into account the fact that Iran is among the largest holders of oil and gas reserves. Some countries whose reserves are less than ours, but their production is higher than ours. For example our neighboring Iraq speaks determinedly about its plans to reach 12-million barrel a day production in the coming years. So how come Iran, whose reserves are not less than Iraq’s, could not? We have knowledgeable and experienced engineers and manpower.

 

Q: Iraq and Qatar are currently applying a sort of production sharing contracts in developing their fields? What’s the difference between profit sharing agreement that you already mentioned and the model these countries are using?

A: The contract preferred by NIOC is similar to oil contracts in Iraq, but the main framework in Iraq is service contract. Currently, international companies providing such services as development management, production and financing are cooperating with Iraqi companies in Iraqi fields. These [international] companies receive a specifically determined pay per barrel of oil for their long-term activity. Of course, Iraq pays more for border fields or the fields whose oil production is difficult.

 

Q: What do you propose for joint fields?

A: For the development of joint fields, we have to consider more attractive incentives in order to motivate domestic or foreign developers to operate these fields.

 

Q: Do you mean that the oil contracts could be drawn up so as to give more profits to the host government?

A: Yes, that’s it. To that end, we have to benefit from the knowledge of qualified jurists and sympathetic managers. The framework or name is not the main principle in a contract. The important factor is the essence of the contract.

 

Q: Do you think that service contract drafted within the framework of profit sharing is the best model for the development of Iranian oil fields? Can these contracts replace buy-backs without any legal restrictions?

A: Service contracts should be signed for a long-term period in order to preserve the long-term interests of investors too. The petroleum industry is dominated by the input-output principle and international companies and owners of technology and capital will not give anything to oil-rich countries for free. Therefore, more incentives must be given to foreign companies in order to persuade them to cooperate. Meantime, profit sharing contracts should protect our national interests.

 

Q: Is it possible for Iranian and foreign companies to team up under these contracts?

A: Coincidentally, a paragraph in these contracts is that domestic companies can have foreign partner, but the Iranian party should have a more than 51-peretn share so that we would be the main decision-maker.

 

Q: Some critics say contractors are taking advantage of the sanctions imposed on Iran in order to persuade Iran to reconsider its oil contract terms so that international companies would guarantee their long-term presence in an oil-rich country. What do you think?

A: I reject this attitude. This attitude is the cultural obstacle which I have already talked about. I believe that we should persuade the Iranian private sector to step in and cause development under the aegis of competition.

If an international union takes shape, Iranian companies would be able to indigenize oil-related standards and knowledge with the help of big international companies.

Iran has good technical potential and experts, and enjoys the capacity for manufacturing equipment for the petroleum industry. If proper legal and management mechanisms are worked out and legal obstacles are removed, big objectives would be achieved in this industry. Due to its technical, scientific and engineering capabilities, Iran can revamp itself and start from scratch. A country’s progress is tied to national understanding and organic communications between the state-run and private sectors.

 

Q: Do you think it would be possible to discuss the development of joint fields with a foreign party so that agreements could be reached for the integrated development of a field based on a win-win approach?

A: The companies sharing a reservoir should obey international protocols written for that purpose. For instance, one party is not entitled to infringe upon its partner’s reserves by horizontal drilling. Integrated development of a joint reservoir depends on the level of interactions and quality of relations between the two countries sharing the reservoirs. For example, Britain and Norway have signed a protocol to develop the fields they share in North Sea.

If successful talks took place with Iraq, integrated development and management of some fields they share would have better served the interests of the two sides and every party benefited from the capabilities of the other one.

$500b Investment Opportunity

 

Iran’s Research Institute of Petroleum Industry (RIPI) hosted the first international seminar on oil and gas technology opportunities on May 4. Sponsored by Iran’s Petroleum Ministry and Ministry of Foreign Affairs, the event hosted senior Iranian oil managers as well as foreign experts.

Mohammad-Reza Moqaddam, Iran’s deputy petroleum minister for research and technology, said Petroleum Minister Bijan Namdar Zangeneh has given the go-ahead for a shift in the petroleum industry consumption model to technology-based development.

He said that the petroleum industry will see major changes in the technology sector and a good opportunity would be provided for research activities in the oil sector.

Moqaddam said all structural changes in the oil and gas research projects will be based on technology.

He said that petroleum industry depends on technology in developed countries.

 

Knowledge-Based Companies

 

Hamid-Reza Katouzian, director of RIPI, said paying attention to technological opportunities will help nations create values.

“This seminar can be a beginning for further interaction between RIPI and research centers in knowledge-based countries because knowledge is spreading in the world and research centers cannot rely on their research activities and they need to be in interaction with one another,” he said.

Katouzian referred to the RIPI activities in the upstream and downstream, energy and environment sectors, saying: “This seminar will create the necessary opportunities for investors and knowledge-based companies to prepare grounds for the exchange of information pertaining to technological opportunities for both sides.”

Katouzian said: “This seminar can be a beginning for more precise talks so that RIPI’s relations with research institutes in different countries would expand for more benefit from technological opportunities.”

He said the RIPI’s new approach in establishing satellite knowledge-based companies would accelerate this trend.

 

4-MW Turbines

 

Deputy Minister of Industry, Mine and Trade Gholam-Reza Shafei said Industrial Development and Renovation Organization (IDRO) has expanded its research activities with regards to natural gas liquefaction and bagasse -to-ethanol with the cooperation of Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) as well as manufacturing of 4-megawatt turbines.

Shafei, who is also the managing director of IDRO, said IDRO is currently active in phases 14, 17 and 18 of South Pars gas field.

“Based on plans, more than 500 billion dollars has to be invested in the oil and gas industries by 2025, 65 percent of which will be in the equipment sector. In other word, 300 billion dollars is needed for the procurement of equipment,” he said.

During the seminar, RIPI presented 40 technological research projects including designing and construction of condensate refineries with different capacities, boosting the quality of oil products, comprehensive studies on the development of fields, sophisticated technologies for enhanced recovery, curbing environmental pollution, monitoring and preventing microbial corrosion in natural gas pipelines and distribution networks.        

 

EAGE Completes Iran Upstream Puzzle

 

The European Association of Geoscientists and Engineers (EAGE) has opened an office in Tehran and the Society of Petroleum Engineers (SPE) is enhancing the level of its activities in Iran. The presence of these two international bodies heralds close cooperation between Iranian and foreign petroleum engineers and geologists.

Hydrocarbon reserves in Iran are geologically sophisticated and Iran’s petroleum industry would need the cooperation of international scientific centers in order to be able to preserve and enhance its oil and gas production.

Ali Emadi, director of research and technology at National Iranian Oil Company (NIOC), told Iran Petroleum that the EAGE’s activities will be similar to SPE which has long been active in Iran.

(SPE) is a not-for-profit professional organization whose mission is to collect, disseminate, and exchange technical knowledge concerning the exploration, development and production of oil and gas resources and related technologies for the public benefit and to provide opportunities for professionals to enhance their technical and professional competence.

SPE provides a worldwide forum for oil and natural gas exploration and production (E&P) professionals for the exchange of technical knowledge and a professional home for more than 124,000 engineers, scientists, managers, and educators.  

The mission assigned to SPEC is to collect, disseminate and exchange technical knowledge concerning the exploration, development and production of oil and gas resources, and related technology for public benefit; and to provide opportunities for professionals to enhance their technical and professional competence.

SPE’s vision is to enable the global oil and gas E&P industry to share technical knowledge needed to meet the world’s energy needs in a safe and environmentally responsible manner.

SPE's technical library contains more than 50,000 technical papers, products of SPE conferences and periodicals, made available to the entire industry.

The SPE Foundation, established in 1977 by former SPE presidents, is dedicated to raising funds to support key SPE programs. It helps to ensure excellence in SPE Programs through a partnership among individuals, industry and the Society. It is made up of all living past SPE presidents and is directed by an executive committee.

Emadi said the SPE faced restrictions with regards to training services in Iran after international sanctions toughened against Iran.

He said the EAGE has been more open to Iran and it has held talks with NIOC for opening a branch office in Tehran. Raymond Cahill, EAGE Middle East regional manager has recently travelled to Iran for talks about opening an office in Iran. The association has been given the nod to open an office in the building of NIOC Department for Research and Technology. Iranian engineers and students will be able to attend workshops organized by the EAGE in the Middle East region.

Emadi said EAGE held a conference in Iran’s southern Fars province and tens of prominent geologists attended the gathering held in 2010. He said EAGE hopes to hold another conference there due to the diversity of geological structures in Iran.

The European Association of Geoscientists and Engineers (EAGE) is a multi-disciplinary professional association for geoscientists and engineers. It was founded in 1951 and has a worldwide membership. The association is intended for persons that are studying or otherwise professionally involved in geophysics, petroleum exploration, geology, reservoir engineering, mining, and civil engineering. The head office of EAGE is located in the Netherlands, with regional offices in Moscow, Dubai, and Kuala Lumpur.

Every year, EAGE organizes a large number of conferences, exhibitions and lecture tours for geosciences engineers and professionals. The largest of these events is the EAGE Annual Conference and Exhibition, attracting almost 6,000 visitors from all over the world. Throughout the year, many different and more informal workshops are scheduled on various topics such as: Passive Seismic, Tar Mats, Tight Gas, Borehole Geophysics, Land Seismic, CO2 storage, and more.

 

Granting Loans to Private Research Companies

 

Emadi said an agreement has been signed between Pardis Park of Science and Technology, the Office of Vice-President for Technology and NIOC for the establishment of a fund to grant low-interest loans to private oil and gas companies. Based on this agreement, Pardis Park of Science and Technology and the Office of Vice-President for Technology have agreed to contribute 150 billion rials to the fund in favor of oil and gas research projects. National Iranian Gas Company (NIGC) and NIOC will also contribute 50 and 100 billion rials, respectively to the fund.

Emadi said knowledge-based companies willing to get loans from this fund should work on manufacturing equipment and providing services for the petroleum industry.

 

Impetus for Iranian Researchers  

 

Emadi said Iranian researchers and engineers will be allowed to receive loans from the 51-percent share of knowledge-based companies in this fund in order to be motivated for work.

“Iranian researchers can buy stocks from these companies in order to directly get involved in these projects. Therefore, motivational systems have to be envisaged for researchers so that they would feel that any progress in commercialization would earn them profits,” he said.

He added that this issue has been approved within a law by parliament, and Iranian specialists are getting loans.

Knowledge-based companies have seen their revenues increase significantly in recent years. For example, Stanford University is earning more than 60 billion dollars every year through its 2,000 knowledge-based companies selling technical knowhow. Knowledge-based companies are capable of promoting the status of Iran’s petroleum industry.

Fabrication of nano-based drilling mud and four chemical additives for enhanced oil and gas recovery are successful examples of cooperation between NIOC and private research and technology companies. Iranian researchers have so far managed to find valuable scientific solutions to such problems as corrosion of facilities, crude oil lightening, and water/oil separation.

West Karoun; Future of Iran Oil

 

Three decades ago, Iran was experiencing the golden period of oil reservoirs. Experts say oil production from wells in southern Iran exceeded 40,000 b/d from each well. But today, at least 40 wells are needed to produce this volume of oil. Production from Iranian oil fields is on the decline and Iranian oil officials have had to focus on the development of untapped huge fields in the west of Karoun River in the southwestern Khuzestan province so that the country’s production would exceed 5 mb/d. By developing North Azadegan, South Azadegan and Yadavaran, Iran will see its oil production capacity rise by 1mb/d. This region, known as West Karoun, holds at least 60 billion barrels of oil in place and will be able to produce for at least five decades. That might be why experts believe that the fate of Iran’s oil is tied to West Karoun.

Azadegan, which Iran shares with Iraq, is among the largest oil fields in the world. Discovered in 1991, the field was initially estimated to contain 33 billion barrels of crude oil in place with 1.881 billion barrels being recoverable. Studies conducted on Azadegan field indicated in 2007 that the field holds 42 billion barrels of oil in place. The 900-square-kilometer field is divided into North Azadegan and South Azadegan. South Azadegan started production in 2007 and drilling started in North Azadegan in June 2011.

The primary contract for the development of South Azadegan was signed with a Japanese company in 2003 when then President Mohammad Khatami visited Japan. But the Japanese contractor pulled out of Iran after tough sanctions were slapped on the Islamic Republic. In 2009, the project was awarded to China National Petroleum Corporation International (CNPCI) under a 2.5-billion-dollar contract.

CNPCI agreed to bring production from South Azadegan to 320,000 b/d in three years. The western onshore oil field was due to produce 320,000 b/d of oil and 197 million cubic feet/d of gas within 52 months.

Iran finally decided to remove CNPC from the major Azadegan oil field project due to lack of commitment stipulated in the terms and conditions of the contract.

This followed an order from Petroleum Minister Bijan Namdar Zangeneh.

“Following repeated verbal and written warnings, a written warning issued and sent to the contractor last winter, and CNPC promised to move the project forward,” Rokneddin Javadi, managing director of National Iranian Oil Company, said.

 

“Even though one month extra was given to this company after the 90-day ultimatum, no effective work has been done by this contractor. Therefore, since this Chinese contractor did not fulfill its commitments during this period, the order to terminate the company's contract in the development of South Azadegan will be issued,” Javadi said.     

He stressed that the Petroleum Ministry does not intend to "weaken or expel" contractors but it does expect them to abide by project timetables.

According to the Iranian contractor involved in the project, only seven of the originally planned 185 wells have been drilled so far.

Iranian drilling companies soon voiced their readiness to replace the Chinese contractor in South Azadegan.

 

NIDC

 

National Iranian Drilling Company (NIDC) has voiced its readiness to resume work in an oil field from which a Chinese oil firm was expelled due to its weak performance and lack of commitment.

“NIDC is ready to install 10 drilling rigs in South Azadegan field to accelerate drilling operations,” NIDC managing director Hamid-Reza Golpayegani said.

He said that four drilling rigs operated by NIDC have already been installed in South Azadegan.

He said that NIDC has drilled 19 development wells in North and South Azadegan fields since 2007.

He said six appraisal and exploration wells were also drilled between 2000 and 2003 in this field.

 

NDCO

 

Hedayatollah Khademi, managing director of North Drilling Company (NDCO), highlighted the capability of private companies active in drilling activities in Iran.

“Following the Islamic Republic of Iran Petroleum Ministry’s decision for the presence of Iranian companies in the development of South Azadegan field, NDCO has made widespread arrangements and is fully ready to cooperate in the development of this field,” he said.

Khademi said NDCO is ready to accelerate drilling in South Azadegan with its 12 new rigs.

“We will flock to South Azadegan to serve the development of the largest heavy crude oil field in the country,” he said.

Mostafa Khoei, managing director of Dana Energy Group, also said that six drilling rigs are to be dispatched to South Azadegan for drilling.

“After the imposition of restrictions and the ensuing exit of foreign companies from Iranian oil projects, Iranian companies accepted this important responsibility. Dana Oil Services, a subsidiary of Dana Energy, has managed to go ahead with cementing and acidizing oil wells. This company will soon take delivery of a special acidizing and cementing vessel designed to meet domestic needs,” he said.

 

Using all Capacities

 

Bahman Soroushi, managing director of Global Petro Tech Kish, said this company is now ready to handle at least 30 percent of the development of South Azadegan field in drilling and downstream sector.

Over the past years, relying on the approach of the Iranian Petroleum Ministry to prioritize domestic capacities, Iranian contractors managed to take control of major oil projects in the country, but the end of cooperation with CNPCI should not be interpreted as the lack of willingness on the part of Iranian oil officials to cooperate with foreign contractors.

The expulsion of the Chinese company implies the serious determination of Iran’s Petroleum Ministry to develop oil and gas fields particularly those shared with neighboring countries as soon as possible.

To that effect, Iran’s Petroleum Ministry is ready to use all its capacities. But it feels obliged to make decision about continuing to cooperate with contractors, whether domestic or foreign, failing to fulfill their obligations.

Offshore Capabilities

 

Energy experts say the future of Iran’s petroleum industry is tied to offshore reserves. Iran holds more than 90 billion barrels of recoverable hydrocarbon reserves in the Persian Gulf. By using new technology for recovery enhancement and applying new methods of production in offshore oil and gas fields, this figure can be significantly raised. A significant factor in the development of offshore hydrocarbon reserves is access to advanced technology for offshore operations.

Due to the significance of offshore reservoirs, Iran’s petroleum industry is focusing on the development of offshore fields like South Pars gas field in the Persian Gulf.

Implementation of offshore development projects has entered a new phase with the entry of Iranian companies into offshore sector and their capability in relevant development projects.

Iranian Offshore Engineering and Construction Company (IOEC) was established two decades ago to benefit from domestic capabilities for offshore projects. This company managed to master technical knowhow for offshore industries in a short period of time. It is now responsible for 70 percent of offshore projects in the Persian Gulf, including South Pars gas field.

 

South Pars

  

IOEC is present in the offshore sections of all development phases of South Pars gas field which Iran shares with Qatar.

Production from Platform A of Phase 12 of South Pars has increased from 500 mcf to 1 bcf, adding that platforms B and C of this phase will be loaded in early June for installation.

The platforms B and C have been successfully tested at Khorramshahr Yard. Sour gas production from Phase 12 will reach 2.5 to 3 bcf in October or November.

Phase 12 development of South Pars targets 75 mcm/d of gas production as well as 120,000 b/d of gas condensate and 750 tons a day of sulfur.

Phase 12 of South Pars consumes 15,000 cubic meters of water and 100 megawatts of electricity a day. It houses 600,000 tons of metal structures, 62,000 tons of equipment, 1,200 kilometers of cable and 400,000 tons of concrete.

 

Phases 17/18 Platforms Ready for Launch

 

The platforms of phases 17 and 18 of South Pars have been installed on the site.

Currently, Abouzar 1200 vessel of IOEC is carrying out hook-up operations with 300 service workers before the start-up of Phase 18 of South Pars.

Another IOEC vessel is conducting hook-up operations on the platform of Phase 17 of South Pars.

Once all platforms have been installed, production from South Pars will rise 100 mcm/d.

Phases 17&18 of South Pars are expected to produce 50 mcm/d of gas, 80,000 b/d of gas condensate and 400 tons/d of sulfur. Development of these phases started in 2007.

Nearly 35 months ago, a contract was signed for the construction of satellite platforms in these phases. The platforms are expected to be ready soon.

 

Phases 15&16

 

Construction of offshore pipeline and installation of two platforms in phases 15&16 of South Pars have been also commissioned to IOEC.

At present, Abouzar 110 vessel has docked at Khorramshahr Yard for loading the platforms which will be installed in the Persian Gulf on schedule.

Iranian engineers have for the first time erected 45,000 tons of metal structures, installed 2,500 kilometers of electricity cable and laid 2,000 kilometers of instrument cables on 160 ha of land.

Basic, detailed and complementary engineering has been handled by Iranian engineers.

 

Phase 19

 

platforms for Phase 19 of South Pars are 64 percent complete and will be installed 120 kilometers off Persian Gulf coasts.

Phase 19 development of South Pars is located between Phases 11 and 12 in the Pars Special Economic Energy Zone. The onshore facilities of this phase sprawl on 218 ha of land.

In the gas refinery of Phase 19 of South Pars, around 57 mcm/d of mixture of sour gas, gas condensate, water and other substances will be received from offshore facilities to be processed.

Phase 19 development was awarded in June 2010 by Pars Oil and Gas Company (POGC) to a consortium of Petropars Limited, Petropars Iran and IOEC under the leadership of Petropars within the framework of an engineering, procurement and construction (ECP) contract.

 

Phases 20&21

 

Platforms for Phases 20 and 21 are still under construction, adding that some commodities and equipment have been delivered to the site.

The current position of these phases does not allow the installation of platforms.

In case the surveys and tests prove to be negative, the location of these platforms will change.

Inappropriate conditions for the installation of platforms in these phases will delay the development of the offshore section of this phase.

Two advanced drilling rigs have been installed in the offshore jackets of these phases, leading to a 45-percent progress in drilling operations.

Phases 20 and 21 of South Pars development are aimed at producing 50 mcm/d of natural gas for injection into national pipeline, 77,000 b/d of gas condensate, 400 tons a day of sulfur for exports, 1.1 mt/year of liquefied gas for exports as well as one million tons a year of ethane for feeding petrochemical plants.  

Calculations show that phases 20 and 21 development of South Pars would earn the country six billion dollars a year.

Moreover, this amount of gas production will replace 50 million liters a day of oil products, saving the country eight billion dollars a year.

 

    

MAPNA, Iran Oil Sector’s Helping Hand

 

The tough international sanctions slapped on Iran’s petroleum industry in recent years left the country with no option but to support domestic manufacturing. Under the aegis of Iranian Petroleum Ministry’s support for Iranian companies, the equipment needed in the petroleum industry has been largely indigenized. However, a main challenge in recent years has been the shortage of general contractors mainly due to the pullout of foreign companies under pressure from sanctions. The issue of general contractors was highlighted by Iran’s Petroleum Minister Bijan Namdar Zangeneh in his opening address to Tehran’s 19^th Oil and Gas Show.

There have been some companies that firstly manufactured equipment and components before identifying themselves as general contractor in petroleum industry projects.

Petroleum Ministry seeks interaction with major oil companies in order to attract foreign investment in the oil sector, but it has also plans to benefit from the capabilities of competent Iranian companies that filled the void during recent years due to the absence of foreign companies. To that effect, Petroleum Ministry can commission projects to them or prepare the grounds for Iranian and foreign companies to team up and operate oil and gas projects.

One of these Iranian companies is Iran Power Plant Projects Management Company known as MAPNA. The company is now a general contractor for the petroleum industry. With its 39 subsidiaries, MAPNA is involved in constructing thermal power plants as well as operating engineering, procurement and construction (EPC) projects and making private investment.

Since its establishment two decades ago, MAPNA has operated nearly 100 projects valued at more than 30 billion Euros. MAPNA is currently manufacturing turbocompressors for gas transmission pipelines and is extensively active in operating such projects as offshore and onshore field development, downstream and upstream processing, utility as well as construction of storage tanks.

Vahid Moayer, director for oil and gas affairs of MAPNA, told Iran Petroleum that MAPNA has been involved in the oil and gas sectors for eight years.

“MAPNA started its industrial activities in the energy sector with power plant projects and then it started designing and manufacturing equipment for power plants. The company is currently the only manufacturer of this equipment in the Middle East and West Asia,” he said.

MAPNA is currently operating projects in the upstream and downstream oil sectors. Under an 825-million-euro contract with National Iranian Gas Company (NIGC), MAPNA plans to design and manufacture one hundred 25-megawatt turbocompressors, 35 of which have so far been delivered.

Moayer said the turbocompressors manufactured in Iran cost lower than German ones. He said MAPNA transferred technology from a European company to replace Russian and Ukrainian equipment.

Due to the experience of MAPNA in turbocompressor manufacturing, 25-megawatt turbocompressors for pressure booster stations in Hamedan and Bijar have been commissioned to this company.

Before MAPNA started manufacturing turbocompressors, German Siemens used to supply 25-megawatt turbocompressors to Iran’s petroleum industry. But it quitted its supply after the imposition of international sanctions on Iran’s energy sector.

Turbocompressor is the main unit of a gas-turbine jet engine, consisting of a compressor and an aircraft gas turbine that are mechanically coupled. Turbocompressors are sometimes used for the supercharging of piston engines; in this case the engine exhaust gases expand in the turbine, and the turbine rotates the compressor, which enhances the pressure of the air supplied to the cylinders.    

 

MAPNA in South Pars

 

A downstream oil and gas project MAPNA is involved in is the development of different phases of the supergiant offshore South Pars gas field in southern Iran. This company has already contributed to the utility section of Phase 1 of South Pars. It is currently involved in the utility, SRU and gas-to-propane of Phase 13 of South Pars. Compared with other members of the consortium involved in this project, MAPNA is well ahead.   

 In Phase 14 of South Pars, MAPNA is also in charge of utility, turbocompressors and SRU. MAPNA is also operating utility projects in phases 15 and 16 of South Pars.

MAPNA has been also commissioned the manufacturing and installation of eight turbocompressors in phases 13 and 22-24 of South Pars.

Shared by Iran and Qatar, South Pars gas field is estimated to contain 14 trillion cubic meters of gas and 18 billion barrels of gas condensate. It covers an area of 9,700 square kilometers, 3,700 square kilometers of which lie in Iran's territorial waters in the Persian Gulf.

 

International Projects

 

Moayer said MAPNA operated its first project overseas in 1998 by building a 40-megawatt power plant in Oman. MAPNA completed the project 15 days ahead of schedule and was awarded by the Omani Sultan. Then, MAPNA operated two power plants in Iraq. One of them is a 500-megawatt power plant in the holy city of Najaf.

Construction of two power plants in two Syrian cities is among other international projects already operated by MAPNA. The company also plans to build a third power plant in Syria once the war in that country has ended.

Competition with Siemens and wining a tender bid for the renovation of two 160-megawatt turbines in a power plant in Indonesia as well as negotiations for the construction of a gas-fuelled power plant in Lebanon are among honors of MAPNA.

 

Drilling Industry

 

Operating upstream projects particularly drilling oil and gas wells are among other activities of MAPNA in Iran’s petroleum industry. MAPNA started its drilling activities after buying two onshore and one offshore drilling rigs. It has already spudded an exploration well in Sepehr Block and two development wells in Koupal and Maroun oil fields.

Moayer said MAPNA recently purchased a 2,000-horsepower offshore rig and is in talks with Iranian Offshore Oil Company (IOOC), Pars Oil and Gas Company (POGC) and several other Iranian oil companies for offshore drilling.

Upstream projects already operated by MAPNA include letting a vessel for 3D seismic operations and conducting seismic testing on thousands of square kilometers of Iran’s territorial waters in the Persian Gulf.

More Exports Handled at Iran Oil Terminals

 

With the start of its oil diplomacy, Iran is making the required preparations for a strong presence in the world crude oil market. To that effect, Iran is determined to boost its exports capacity at oil terminals.

Pirouz Mousavi, managing director of Iran Oil Terminals Company (IOTC), says Iran is determined to raise crude oil exports at its terminals to 7 million barrels in the current calendar year to March 2015.

He told Iran Petroleum that oil exports reached 6 million barrels at Kharg terminal last year.

“Over the past years, an opportunity was created for the reconstruction and renovation of crude oil loading facilities at Iran’s largest oil terminal in Kharg Island,” said Mousavi.

 

Jask, Iran New Oil Terminal

 

While renovating its oil terminals, Iran is also considering building a new terminal in its coasts off the Sea of Oman. Jask Port is to serve as a terminal for crude oil and oil products exports, as well as a bunkering center for vessels and oil tankers. Crude oil exports from Jask would be done by three single-point moorings (SPM). After Neka-Jask pipeline is laid and an oil terminal is built in Jask, 1 mb/d of oil could be transported from Neka Port to Jask, while oil-rich regions in southern Iran could also supply 1mb/d of oil to Jask terminal for swap.

Mousavi said establishment of an exports terminal in Jask Port will cost 2.5 billion dollars. Moreover, 20 million barrels of crude oil would be stored in this port which is near the strategic Strait of Hormuz, a major transit route for crude oil.

Located on the western side of the Strait of Hormuz, the small city of Jask is set to become a new oil exports hub in Iran. It is noteworthy that due to its proximity to the Strait of Hormuz, Jask is of strategic importance.

Iran’s Persian Gulf neighbors benefited from Western sanctions against Iran’s energy industry in recent years to win over customers of Iran’s oil and gas. Now, Iran intends to win back its oil buyers by launching an exports terminal in Kharg.

All foreign tankers willing to purchase oil from Iran can dock at Iran’s export terminals without facing any restrictions. However, National Iranian Tanker Company (NITC) makes a big contribution to Iran’s oil exports due to its capacities and fleet.

 

Crude Oil Storage

 

Iran will see its crude oil storage capacity rise by 20 percent, or 4 million barrels, in the coming two months, Mousavi said.

Iran’s crude oil storage capacity currently stands at 24 million barrels.

Mousavi said four new storage facilities are to become operational.

International standards require crude oil storage tanks to be filled and emptied twice a month. If the number of filling and emptying increases, the storage facility will be damaged.

Mousavi also said that nearly 300 kilometers of an oil pipeline in Kharg Island was examined by a well-known foreign company last year.

He said running smart pigs are to start in crude oil pipelines around Kharg Island.“This year, with the cooperation of Research Institute of Petroleum Industry (RIPI), a mechanized system for mixing crude oil and gas condensate is to be launched,” he said.

“The crude oil produced in the country will be blended with a specific amount of gas condensate before being exported. Therefore, this type of crude oil has specific features. By launching a mechanized blending system, crude oil exports will pick up speed in this island,” said Mousavi.

Two jetties in Kharg - Azarpad and T –have had 40 percent and 75 percent physical progress. Six Iranian contractors are working on them.

 

Caspian Sea Ready for Oil Swap

 

Iran is ready to swap around 500,000 b/d of crude oil at Neka Terminal. Mousavi said with the construction of new facilities in Neka, the capacity of crude oil swap will enhance. He said new docks are under construction for 14,000-ton oil tankers to berth.

In the first phase of construction of a new pool at Neka, 12,000-ton vessels can dock. So far, only 5,000-ton vessels have been able to dock.

“Over the coming six months, the final activities will be done on Neka terminal’s oil pool. Moreover, this pool will effectively support oil production in the Caspian Sea,” said Mousavi.

He said new equipment is being installed in Neka in order to facilitate the berthing of tankers.

“Meeting the logistical needs of drilling fleet in the short-term, increasing crude oil transfer to 150,000 b/d and domestic production in the mid-term and raising crude oil transfer to 250,000 b/d in the long-term are among the important objectives pursued in the construction of Neka pool,” he said.

After the construction of Neka pool, the number of docks will increase from three, with 4 to 5-meter draft, to 14 with 14-meter draft.

The Neka pool will also increase swap, facilitate transfer of crude oil from Neka to Jask and provide logistical services to oil recovery in the Caspian Sea.

North Oil Terminal gives Iran a strategic position among Caspian Sea littoral states. Given the recent discoveries, it is the only terminal for the transfer of oil and gas from the land-locked lake.

Mousavi said Iran’s access to high seas also provides a strategic chance for North Oil Terminal to be involved in crude oil swap operations. Due to this advantage, the crude oil from Caspian Sea states can enter high seas and potential buyers would be able to receive their crude oil in the Persian Gulf.

Crude oil swap through North Oil Terminal would enable countries to purchase crude oil in the high seas.

GPTKISH , a Leading Drilling Firm

 

Drilling has a long history in Iran. The story of drilling in Iran started when William Knox D’Arcy who was looking for oil in the southwestern city of Masjed Soleyman. Over the past 105 years, drilling industry has witnessed ups and downs in Iran, but it has seen its major changes every time major oil companies have quitted their activities in Iran under the pressure of sanctions. Over the past years, new companies involved in drilling have emerged to work shoulder-to-shoulder with National Iranian Drilling Company (NIDC). Global Petro Tech Kish Company (GPTKISH) is a private company specializing in oil and gas drilling. It started work with only two onshore drilling rigs. But now, it has onshore and offshore drilling rigs. Such a big volume of drilling operations requires project management, preventive maintenance, quality programs, logistics, HSE and human resources management. Due to its capabilities, GPTKISH currently holds more than two-thirds of offshore drilling rigs in Iran. GPTKISH is currently known as a leading drilling entity in Iran.

Bahman Soroushi, managing director of GPTKISH says the company prioritizes human assets and their safety and health.

“We respect our employees; and by creating a competitive atmosphere and offering incentives, we have tried to create attractive job opportunities and safe working conditions. This policy has led to the attraction of experienced and committed manpower,” he said.

GPTKISH provides a variety of services in the upstream oil and gas industries, particularly in onshore and offshore drilling.

 

Drilling in Azar Oil Field

 

Soroushi said GPTKISH is drilling 10 wells in Azar oil field, two of which will be completed in three months.

He added that the company is to operate one more rig in a bid to accelerate its drilling operations.

National Iranian Oil Company (NIOC) has commissioned GPTKISH to drill 10 development, appraisal and work over wells on engineering, procurement and drilling services (EPDS) basis in Azar field. The drilling operations are to be conducted with three onshore drilling rigs.

Azar oil field, one of the fields in Anaran block, is located 20 kilometers southeast of the city of Mehran in the western Ilam province. Shared with Iraq, the field holds 2.5 billion barrels of oil in place. The hydrocarbon reservoir in this field is very deep, requiring sophisticated drilling in its different formations.

Soroushi said difficult and complex geological structures make Azar field a very difficult project, adding that drilling of ten wells in this field is to be over in 2.5 years.

Based on preliminary talks with Iran’s Petroleum Industry Pensions Fund, five 2,000-horsepower onshore drilling rigs are to be cleared by Iran’s customs soon to join GPTKISH’s drilling fleet. One of these new fields will be used in Azar field because of being shared with Iraq.

Iraq plans to produce 90,000 b/d of oil from Badra, which is the complementary section of Iran’s Azar field.

Russia’s Gazprom, Malaysia’s Petronas, a South Korean and a Turkish company are currently operating Iraq’s Badra field. All these companies are not so much ahead of GPTKISH in drilling operations.

 

GPTKISH in Azadegan

 

Soroushi said GPTKISH is currently ready to handle at least 30 percent of drilling and downstream operations of development of South Azadegan field after Iran expelled a Chinese contractor for its weak performance.

He said NIDC has spudded 19 wells in North and South Azadegan fields since 2007, adding that six exploration and appraisal wells had been drilled from 2000 to 2003.

In late April, Iran’s Petroleum Ministry said it will remove China National Petroleum Corp from the major Azadegan oil field project due to "lack of commitment".

CNPC signed the $2.5 billion buyback deal with NIOC in October 2009 to develop the South Azadegan field under a two-phase plan with a target of 600,000 b/d of crude oil production. The western onshore oil field was due to produce 320,000 b/d of oil and 197 million cubic feet/d of gas within 52 months.

According to the Iranian contractor involved in the project, only seven of the originally planned 185 wells have been drilled so far.

Soroushi said GPTKISH has held preliminary talks with a Chinese and two European oil companies to get drilling rigs for operation in Azadegan and Azar oil fields.

He said that expert teams from these foreign companies are to travel to Tehran soon to know about the details of these two fields.

GPTKISH drilling rigs are already operating in Hengam and Forouzan oil fields as well as in phases 14, 17 and 18 of South Pars gas field.

West Dreams Run Aground in Suez

 

The Suez Canal (is an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea and the Red Sea. Opened in November 1869 after 10 years of construction, it allows ships to travel between Europe and eastern Asia without navigating around Africa. When built, the canal was 164 km (102 mi) long and 8 m (26 ft) deep. After several enlargements, it is 193.30 km (120.11 mi) long, 24 m (79 ft) deep and 205 meters (673 ft) wide.

It consists of the northern access channel of 22 km (14 mi), the canal itself of 162.25 km (100.82 mi) and the southern access channel of 9 km (5.6 mi).

Soon after the outbreak of World War Two, Italy, Germany’s ally, sent forces to invade Egypt from Libya. A British and Commonwealth counter-offensive in December 1940 drove the Italians out of Egypt, but in March 1941 the Italians, reinforced by the German Afrika Korps, attacked again and pushed the Allied forces back.

Anglo-American relations were strained by the Suez Crisis, but as Cold War Allies in the North Atlantic Treaty Organization (NATO) they continued to cooperate, and by 1962 Britain had adopted the US Polaris missile system. Nonetheless, the real balance of power in the post-World War Two world had been starkly demonstrated and Britain's prestige was dealt a severe blow.

Due to the Egyptian overtures towards the Soviet Union, the United Kingdom and the United States withdrew their pledge to support the construction of the Aswan Dam. Egyptian President Gamal Abdel Nasser responded by nationalizing the canal in 1956 and transferring it to the Suez Canal Authority, intending to finance the dam project using revenue from the canal. This led up to the Suez Crisis, known in the Arab World as the "Tripartite Aggression", in which the UK, France, and Israel invaded Egypt. According to the pre-agreed war plans under the Protocol of Sèvres, the Israelis invaded the Sinai Peninsula, forcing Egypt to engage them militarily, and allowing the Anglo-French partnership to declare the resultant fighting a threat to the canal and enter the war on Israel's side.

The Suez Crisis of 1956 has its roots in the post-war upsurge of nationalism in Egypt. In 1951, Nahas Pasha leader of the recently-elected nationalist Wafd party revoked the Anglo-Egyptian Treaty of 1936.

 

Attacks on the British garrison soon followed and in January 1952 the British government authorised an operation to disarm the Egyptian paramilitary police force in Ismailia which was orchestrating the violence. This was successful, but the violence continued. Riots in Cairo of an unprecedented scale followed, culminating in attacks on Saturday 26 January on British property and the expatriate community, thereafter known as Black Saturday.

British threats to occupy Cairo prompted King Farouk of Egypt to dismiss Nahas Pasha, but in July 1952 Farouk was overthrown in a military coup and General Mohammed Neguib seized power. Rather than insist on Britain's rights under the 1936 Treaty, Anthony Eden, the British foreign secretary tried to negotiate with the new government.

In 1954, Colonel Gamel Abdul Nasser replaced General Neguib. He had three goals: to make Egypt independent by ending British occupation; to build up Egyptian forces for a successful attack on Israel; to improve Egypt’s economy by constructing a high dam at Aswan to irrigate the Nile valley.

On 19 October 1954 a treaty was signed by Nasser and by Anthony Nutting, British minister of state for foreign affairs. The agreement was to last for seven years.

British troops were to be withdrawn from Egypt by June 1956, and the British bases were to be run jointly by British and Egyptian civilian technicians. Egypt agreed to respect the freedom of navigation through the canal, and it was agreed that British troops would be permitted to return if the Suez Canal was threatened by an outside power.

 

Kerman; Conflicting Natures

Parisa Sadeqieh

 

The city of Kerman always reminded me of deserts and hot weather.  But when I arrived there, the image in my mind changed completely. Tourism attractions in Kerman are often neglected and everyone considers this southern Iranian city to be a desert. Everyone visiting Kerman will definitely have a new experience due to the city’s conflicting nature.

 

Geography

 

Kerman is located on a high margin of Kavir-e Lut (Lut Desert) in the central south of Iran. The city is surrounded by mountains. Kerman is also located along the Saheb Al Zman mountain .The city is 1,755 m (5,758 ft) above sea level that makes it the third capital city(of a province) in Iran with the highest Elevation. Winter has very cold nights in Kerman. Mountains in the South and South East Jftan Joopar and Plvar and Kerman are covered with snow all year round. Kerman is located at latitude 30.29 and longitude 57.06 .

 

History

 

Kerman is counted as one of the oldest cities and its name is derived from the Germaniol race listed by Herodotus, and its construction is attributed to Artaxerxes I of Sassanid Dynasty in 3^rd century CE.

Kerman was ruled by Turkmens, Arabs and Mongols after the 7th Century CE and was expanded rapidly during the Safavid Dynasty. Carpets and rugs were exported to England and Germany during this period. As it also is a major hand woven carpet production center of the country, and hundreds of small workshops scattered through the city.

Kerman has had a long turbulent history. It was only during the rule of the Qajar Dynasty that security was restored in this city under the Central Government. Kerman has a small Zoroastrian minority. Most of the ancient Kerman was destroyed in a 1794 earthquake.

 

Climate

 

The city's many districts are surrounded by mountains which bring variety to Kerman's year round weather pattern, thus the northern part of the city is located in an arid desert area, while the highland of the southern part of the city enjoys a more moderate climate. The mean elevation of the city is about 1755 m above sea level.

Kerman city has a moderate climate and the average annual rainfall is 135 mm. Because it is located close to the Kavir-e Lut, Kerman has hot summers and in the spring it often has violent sand storms. Otherwise, its climate is relatively cool.

 

Shazdeh Garden

 

Shazdeh Garden meaning Prince’s Garden is a historical Persian garden located near (6km away from) Mahan in Kerman province.

The garden is 5.5 hectares with a rectangular shape and a wall around it. It consists of an entrance structure and gate at the lower end and a two-floor residential structure at the upper end. The distance between these two is ornamented with water fountains that are powered by the natural incline of the land. The garden is a fine example of Persian gardens that take advantage of suitable natural climate.

This remarkable garden was made in the 1890s by the Governor of Kerman. It is a rectangular green oasis surrounded by brown desert. There are pavilions and a central canal. The residence for which it was built is now derelict. The design looks best in an aerial photograph.

Shazdeh Garden with a collection of pools leading to a large palace (once was the summer residence of a prince whom now is unknown). The palace is partly now converted to a nice restaurant.

Other than the main residential building, at its entrance the garden also consists of a two-story building for which the second floor was used as living quarters and for receiving guests. Other smaller utility rooms are situated along the sides of the garden. Amongst them a few side entrances also connect the garden to the outside.

The garden itself consists of a variety of pine, cedar, elm, buttonwood and fruit trees which benefit from the appropriate soil, light breezes and qanat water enable such an environment in contrast to its dry surroundings. The water enters the garden at the upper end and while irrigating the trees and plants along its way, flows down through a series of steps and falls. On the two ends of the water path, meaning at the main entrance and the residential structure, there’s a pool that collects and subsequently redistributes the water. All together from top to bottom there are 8 levels/falls along the water path.

In 1991, the premises were completely renovated on the occasion of the commemoration ceremony of Khaju Kermani. A traditional guesthouse has been constructed in the city center for the use of tourists and visitors. Some damage to the garden was caused as a result of Kerman’s 2004 earthquake. In 2005 experts of the Research Center for Historical Sites and Structures were preparing documents to register Shazdeh Garden, amongst other gardens, on the UNESCO World Heritage List and the garden was finally inscribed in June 2011.

 

Masjed-e Jame (Jame Mosque)

 

Masjed-e Jame or Muzaffari is one of the historical monuments of the 14th century CE, famous for its magnificent portal, its mihrab and mosaic-tile decorations, and its historic inscription, which bears the date 1349 CE.

On the western side of the mosque, there is an ivan which originally dates from the times of Ali Muzaffar. It has a wonderful blue faience featuring shades of blue from turquoise to ultramarine, creating a vertical horizon of smooth shimmering tiles.

However, the mosque has been repaired in later periods, including repairs of the main part of its mihrab, carried out in the reign of Shah Abbas II of Safavid Dynasty. The wall of the Mihrab (altar) and the central dome are also decorated with admirable geometric compositions. The altar is open to the public.

The south-western portal of the mosque also belongs to the Safavid period. The minaret and the Muadhin`s cage of the Masjid have been repaired under Karim Khan of Zand Dynasty, and its mihrab is one of the outstanding parts of this monument.

 

Ganjali Khan Bath

 

Ganjali Khan was one of the famous rulers during the reign of Shah Abbas of Safavid. As the ruler of Kerman province he constructed many monuments and buildings. Ganjali Khan Complex is composed of a school, a square, a caravanserai, a public bath, a water reservoir, a mint house, a mosque and a bazaar. A number of inscriptions laid inside the complex indicate the exact date when these places have been built.

Out of Ganjali Khan complex, the Khan public bath located in the grand bazaar of Kerman serves as an anthropology museum today and attracts an increasing number of Iranian and foreign tourists. This is a unique work of architecture with beautiful tile works, paintings, stuccos, and arches.

The bath rendered service no later than 60 years ago. In the closet section and main yard of the bath there are many life-like statues. These statues were designed at Tehran University's faculty of fine arts in 1973 and then transferred to this museum.

This complex has been built during the Safavid era (1501 - 1722 CE) enjoying a modern architectural style of the time. This bath is an association of architecture and application of an array of constructional materials in an appropriate space with totally popular approaches. The architect of the bath and the complex is a master from Yazd city named Mohammad Sultani.

 

Lut Desert, the Hottest Spot on Earth

 

The big desert of Lut is situated in the eastern region of Iran. It is part of the northern of the two deserts belts which encircle the Earth. The Sun heats these two belts of land more than any other part of Earth and creates deserts. A NASA satellite recorded surface temperatures as high as 71 °C (159 °F), the hottest surface temperature recorded on Earth.

There are reports that no living creature can survive for long in this region, with Lut generally considered an abiotic zone, being so forbidding that not even bacteria can live. Research groups took sterilized milk into the Lut desert, stored it uncovered in temperatures in excess of 71 °C (159 °F) in the shade and yet, the milk remained sterile.

The Lut Desert consists of several large basins separated by worn mountains and ridges, covering an area of about 200 by 100 miles, with the western part containing wind-swept corridors separating high ridges. The east is a sea of sand, described by Alfons Gabriel, one of the first explorers, in 1938, as “a confused mass of impassable tangled dunes.” Winds pile the sand into dunes up to 500 feet high, as tall as Washington's monument.

The uniqueness of the desert is assured by an abundance of typical phenomena. The longest widespread system of yardangs in the world (120 km long in 80 km wide), the hottest point in the world, as detected by satellite data and the tallest sand pyramid of the world (500 meters high) are only a fraction of the wonders this desert has to offer.

 

Culture

 

Kerman has an abundance of architectural relics of antiquity.

Kerman is among several cities in Iran with a strong cultural heritage, which is expressed in the local accent, poetry, local music, handicrafts and customs that Kerman has introduced to the world of culture.

The only anthropology Iran museum of Zoroastrians in the world, which showcases the ancient history of Zoroastrians, is in Kerman’s Fire Temple. The idea of launching the museum along with the library of Kerman’s Zoroastrian Society came to light in 1983, when the head of the society, Parviz Vakhashouri, and the former head of library, Mehran Gheibi, collected cultural heritage artifacts of Kerman’s Zoroastrian community. These two officials added many other objects to this collection. The museum was officially inaugurated during Jashn-e Tirgan in 2005 by Iran’s Cultural Heritage, Handicrafts and Tourism Organization.

Jashn-e Tirgan or Tiregan is an ancient Iranian rain festival observed on July 1. The festivity refers to archangel Tir (literally meaning arrow) or Tishtar (lightning) who appear in the sky to generate thunder and lightning for providing the much needed rain.

Sadeh ceremony is celebrated every year in Kerman.

Also the archeological ancient area of Jiroft and Tappe Yahya Baft are located south of Kerman. Rayen Castle is also located on Rayen town, south east of Kerman.

 

Zoroastrian Fire Temples

 

Kerman city has two fire temples, of which we are aware, an old temple that houses a wood fire and a newer temple opened in 2001, and one that uses a gas fire. The newer temple was constructed about 350 meters from the older temple, and its construction was made possible by donations from Farzaneh Hormozyar Oshidari and Mahindokht Siavashian.

In an unusual move the new temple and its inner sanctum has also become home to an anthropological museum devoted to Zoroastrianism (rather than a separate room) and the Kerman Zoroastrian Society's library. The museum was inaugurated during Jashn-e Tirgan in 2005. Among its display collection are different types of fire braziers and lanterns, women's clothing such as coats, dresses, headscarves and pants decorated with floral patterns,  which are all between 50 and 150 years old. The museum also displays manuscript hand-written in Germanic Gothic script, and published in 1828 CE.

 

Historic Dome

 

Jabaliyeh Dome is one of the other tourist attractions of Kerman, which is enlisted among the most beautiful architectural works of Iran.

Its architecture shows it was a Zoroastrian temple built by the Sassanid Dynasty.

The dome is octagonal, with a 20-meter altitude. It has gateways, each of which is two meters wide.

Enlisted among Iran’s national monuments in 1937, the dome was renovated in 2004.

Also, the smallest gravestone discovered in Kerman province is kept in this monument.

There are magnificent and outstanding gardens in Kerman, among which Harandi Garden is highly popular in this city, because it is home to the museum of archeology and traditional musical instruments.

This garden dates back to late 13th century AH and has been registered on Iran’s National Heritage List in 1975.

Currently, the ground floor of the building is the museum of traditional musical instruments, while its first floor houses the museum of archeology.

The goal behind the construction of archeology museum is the introduction of the province’s ancient civilizations and its historical bonds with neighboring regions.

Historical works of Shahdad civilizations and Kerman province are displayed in this museum.

Moreover, the archeology museum has displayed gray-colored porcelain works with unique patterns, which date back to at least 5,000 years.

Also, a number of historical works, dating back to the rule of Achaemenian Dynasty, are displayed in this museum.

The musical instruments museum was inaugurated in 2002. The goal behind the establishment of this museum is to familiarize visitors with Iran and its neighboring countries’ traditional musical instruments.

About 250 musical instruments are kept in this museum in three sections, namely national, local and international.

These musical instruments are unique and have been made by the most skillful experts in this domain.

 

Gas Supply Structures

 

Kerman receives gas from Harat in neighboring Yazd province. The gas is pumped through a pipeline stretching from the city of Babak. At the moment, the most important gas supply project in the Kerman province is the construction of a 180-kilometer pipeline stretching from the city of Mahan to the proximity of the historic city of Bam. The project was started a year ago and is predicted to take one year to be completed. The pipelines are of 16-inch diameter.

Within ten years, all villages in the Kerman province will have access to natural gas.

Kerman; Conflicting Natures

Parisa Sadeqieh

 

The city of Kerman always reminded me of deserts and hot weather.  But when I arrived there, the image in my mind changed completely. Tourism attractions in Kerman are often neglected and everyone considers this southern Iranian city to be a desert. Everyone visiting Kerman will definitely have a new experience due to the city’s conflicting nature.

 

Geography

 

Kerman is located on a high margin of Kavir-e Lut (Lut Desert) in the central south of Iran. The city is surrounded by mountains. Kerman is also located along the Saheb Al Zman mountain .The city is 1,755 m (5,758 ft) above sea level that makes it the third capital city(of a province) in Iran with the highest Elevation. Winter has very cold nights in Kerman. Mountains in the South and South East Jftan Joopar and Plvar and Kerman are covered with snow all year round. Kerman is located at latitude 30.29 and longitude 57.06 .

 

History

 

Kerman is counted as one of the oldest cities and its name is derived from the Germaniol race listed by Herodotus, and its construction is attributed to Artaxerxes I of Sassanid Dynasty in 3^rd century CE.

Kerman was ruled by Turkmens, Arabs and Mongols after the 7th Century CE and was expanded rapidly during the Safavid Dynasty. Carpets and rugs were exported to England and Germany during this period. As it also is a major hand woven carpet production center of the country, and hundreds of small workshops scattered through the city.

Kerman has had a long turbulent history. It was only during the rule of the Qajar Dynasty that security was restored in this city under the Central Government. Kerman has a small Zoroastrian minority. Most of the ancient Kerman was destroyed in a 1794 earthquake.

 

Climate

 

The city's many districts are surrounded by mountains which bring variety to Kerman's year round weather pattern, thus the northern part of the city is located in an arid desert area, while the highland of the southern part of the city enjoys a more moderate climate. The mean elevation of the city is about 1755 m above sea level.

Kerman city has a moderate climate and the average annual rainfall is 135 mm. Because it is located close to the Kavir-e Lut, Kerman has hot summers and in the spring it often has violent sand storms. Otherwise, its climate is relatively cool.

 

Shazdeh Garden

 

Shazdeh Garden meaning Prince’s Garden is a historical Persian garden located near (6km away from) Mahan in Kerman province.

The garden is 5.5 hectares with a rectangular shape and a wall around it. It consists of an entrance structure and gate at the lower end and a two-floor residential structure at the upper end. The distance between these two is ornamented with water fountains that are powered by the natural incline of the land. The garden is a fine example of Persian gardens that take advantage of suitable natural climate.

This remarkable garden was made in the 1890s by the Governor of Kerman. It is a rectangular green oasis surrounded by brown desert. There are pavilions and a central canal. The residence for which it was built is now derelict. The design looks best in an aerial photograph.

Shazdeh Garden with a collection of pools leading to a large palace (once was the summer residence of a prince whom now is unknown). The palace is partly now converted to a nice restaurant.

Other than the main residential building, at its entrance the garden also consists of a two-story building for which the second floor was used as living quarters and for receiving guests. Other smaller utility rooms are situated along the sides of the garden. Amongst them a few side entrances also connect the garden to the outside.

The garden itself consists of a variety of pine, cedar, elm, buttonwood and fruit trees which benefit from the appropriate soil, light breezes and qanat water enable such an environment in contrast to its dry surroundings. The water enters the garden at the upper end and while irrigating the trees and plants along its way, flows down through a series of steps and falls. On the two ends of the water path, meaning at the main entrance and the residential structure, there’s a pool that collects and subsequently redistributes the water. All together from top to bottom there are 8 levels/falls along the water path.

In 1991, the premises were completely renovated on the occasion of the commemoration ceremony of Khaju Kermani. A traditional guesthouse has been constructed in the city center for the use of tourists and visitors. Some damage to the garden was caused as a result of Kerman’s 2004 earthquake. In 2005 experts of the Research Center for Historical Sites and Structures were preparing documents to register Shazdeh Garden, amongst other gardens, on the UNESCO World Heritage List and the garden was finally inscribed in June 2011.

 

Masjed-e Jame (Jame Mosque)

 

Masjed-e Jame or Muzaffari is one of the historical monuments of the 14th century CE, famous for its magnificent portal, its mihrab and mosaic-tile decorations, and its historic inscription, which bears the date 1349 CE.

On the western side of the mosque, there is an ivan which originally dates from the times of Ali Muzaffar. It has a wonderful blue faience featuring shades of blue from turquoise to ultramarine, creating a vertical horizon of smooth shimmering tiles.

However, the mosque has been repaired in later periods, including repairs of the main part of its mihrab, carried out in the reign of Shah Abbas II of Safavid Dynasty. The wall of the Mihrab (altar) and the central dome are also decorated with admirable geometric compositions. The altar is open to the public.

The south-western portal of the mosque also belongs to the Safavid period. The minaret and the Muadhin`s cage of the Masjid have been repaired under Karim Khan of Zand Dynasty, and its mihrab is one of the outstanding parts of this monument.

 

Ganjali Khan Bath

 

Ganjali Khan was one of the famous rulers during the reign of Shah Abbas of Safavid. As the ruler of Kerman province he constructed many monuments and buildings. Ganjali Khan Complex is composed of a school, a square, a caravanserai, a public bath, a water reservoir, a mint house, a mosque and a bazaar. A number of inscriptions laid inside the complex indicate the exact date when these places have been built.

Out of Ganjali Khan complex, the Khan public bath located in the grand bazaar of Kerman serves as an anthropology museum today and attracts an increasing number of Iranian and foreign tourists. This is a unique work of architecture with beautiful tile works, paintings, stuccos, and arches.

The bath rendered service no later than 60 years ago. In the closet section and main yard of the bath there are many life-like statues. These statues were designed at Tehran University's faculty of fine arts in 1973 and then transferred to this museum.

This complex has been built during the Safavid era (1501 - 1722 CE) enjoying a modern architectural style of the time. This bath is an association of architecture and application of an array of constructional materials in an appropriate space with totally popular approaches. The architect of the bath and the complex is a master from Yazd city named Mohammad Sultani.

 

Lut Desert, the Hottest Spot on Earth

 

The big desert of Lut is situated in the eastern region of Iran. It is part of the northern of the two deserts belts which encircle the Earth. The Sun heats these two belts of land more than any other part of Earth and creates deserts. A NASA satellite recorded surface temperatures as high as 71 °C (159 °F), the hottest surface temperature recorded on Earth.

There are reports that no living creature can survive for long in this region, with Lut generally considered an abiotic zone, being so forbidding that not even bacteria can live. Research groups took sterilized milk into the Lut desert, stored it uncovered in temperatures in excess of 71 °C (159 °F) in the shade and yet, the milk remained sterile.

The Lut Desert consists of several large basins separated by worn mountains and ridges, covering an area of about 200 by 100 miles, with the western part containing wind-swept corridors separating high ridges. The east is a sea of sand, described by Alfons Gabriel, one of the first explorers, in 1938, as “a confused mass of impassable tangled dunes.” Winds pile the sand into dunes up to 500 feet high, as tall as Washington's monument.

The uniqueness of the desert is assured by an abundance of typical phenomena. The longest widespread system of yardangs in the world (120 km long in 80 km wide), the hottest point in the world, as detected by satellite data and the tallest sand pyramid of the world (500 meters high) are only a fraction of the wonders this desert has to offer.

 

Culture

 

Kerman has an abundance of architectural relics of antiquity.

Kerman is among several cities in Iran with a strong cultural heritage, which is expressed in the local accent, poetry, local music, handicrafts and customs that Kerman has introduced to the world of culture.

The only anthropology Iran museum of Zoroastrians in the world, which showcases the ancient history of Zoroastrians, is in Kerman’s Fire Temple. The idea of launching the museum along with the library of Kerman’s Zoroastrian Society came to light in 1983, when the head of the society, Parviz Vakhashouri, and the former head of library, Mehran Gheibi, collected cultural heritage artifacts of Kerman’s Zoroastrian community. These two officials added many other objects to this collection. The museum was officially inaugurated during Jashn-e Tirgan in 2005 by Iran’s Cultural Heritage, Handicrafts and Tourism Organization.

Jashn-e Tirgan or Tiregan is an ancient Iranian rain festival observed on July 1. The festivity refers to archangel Tir (literally meaning arrow) or Tishtar (lightning) who appear in the sky to generate thunder and lightning for providing the much needed rain.

Sadeh ceremony is celebrated every year in Kerman.

Also the archeological ancient area of Jiroft and Tappe Yahya Baft are located south of Kerman. Rayen Castle is also located on Rayen town, south east of Kerman.

 

Zoroastrian Fire Temples

 

Kerman city has two fire temples, of which we are aware, an old temple that houses a wood fire and a newer temple opened in 2001, and one that uses a gas fire. The newer temple was constructed about 350 meters from the older temple, and its construction was made possible by donations from Farzaneh Hormozyar Oshidari and Mahindokht Siavashian.

In an unusual move the new temple and its inner sanctum has also become home to an anthropological museum devoted to Zoroastrianism (rather than a separate room) and the Kerman Zoroastrian Society's library. The museum was inaugurated during Jashn-e Tirgan in 2005. Among its display collection are different types of fire braziers and lanterns, women's clothing such as coats, dresses, headscarves and pants decorated with floral patterns,  which are all between 50 and 150 years old. The museum also displays manuscript hand-written in Germanic Gothic script, and published in 1828 CE.

 

Historic Dome

 

Jabaliyeh Dome is one of the other tourist attractions of Kerman, which is enlisted among the most beautiful architectural works of Iran.

Its architecture shows it was a Zoroastrian temple built by the Sassanid Dynasty.

The dome is octagonal, with a 20-meter altitude. It has gateways, each of which is two meters wide.

Enlisted among Iran’s national monuments in 1937, the dome was renovated in 2004.

Also, the smallest gravestone discovered in Kerman province is kept in this monument.

There are magnificent and outstanding gardens in Kerman, among which Harandi Garden is highly popular in this city, because it is home to the museum of archeology and traditional musical instruments.

This garden dates back to late 13th century AH and has been registered on Iran’s National Heritage List in 1975.

Currently, the ground floor of the building is the museum of traditional musical instruments, while its first floor houses the museum of archeology.

The goal behind the construction of archeology museum is the introduction of the province’s ancient civilizations and its historical bonds with neighboring regions.

Historical works of Shahdad civilizations and Kerman province are displayed in this museum.

Moreover, the archeology museum has displayed gray-colored porcelain works with unique patterns, which date back to at least 5,000 years.

Also, a number of historical works, dating back to the rule of Achaemenian Dynasty, are displayed in this museum.

The musical instruments museum was inaugurated in 2002. The goal behind the establishment of this museum is to familiarize visitors with Iran and its neighboring countries’ traditional musical instruments.

About 250 musical instruments are kept in this museum in three sections, namely national, local and international.

These musical instruments are unique and have been made by the most skillful experts in this domain.

 

Gas Supply Structures

 

Kerman receives gas from Harat in neighboring Yazd province. The gas is pumped through a pipeline stretching from the city of Babak. At the moment, the most important gas supply project in the Kerman province is the construction of a 180-kilometer pipeline stretching from the city of Mahan to the proximity of the historic city of Bam. The project was started a year ago and is predicted to take one year to be completed. The pipelines are of 16-inch diameter.

Within ten years, all villages in the Kerman province will have access to natural gas.

Kerman; Conflicting Natures

Parisa Sadeqieh

 

The city of Kerman always reminded me of deserts and hot weather.  But when I arrived there, the image in my mind changed completely. Tourism attractions in Kerman are often neglected and everyone considers this southern Iranian city to be a desert. Everyone visiting Kerman will definitely have a new experience due to the city’s conflicting nature.

 

Geography

 

Kerman is located on a high margin of Kavir-e Lut (Lut Desert) in the central south of Iran. The city is surrounded by mountains. Kerman is also located along the Saheb Al Zman mountain .The city is 1,755 m (5,758 ft) above sea level that makes it the third capital city(of a province) in Iran with the highest Elevation. Winter has very cold nights in Kerman. Mountains in the South and South East Jftan Joopar and Plvar and Kerman are covered with snow all year round. Kerman is located at latitude 30.29 and longitude 57.06 .

 

History

 

Kerman is counted as one of the oldest cities and its name is derived from the Germaniol race listed by Herodotus, and its construction is attributed to Artaxerxes I of Sassanid Dynasty in 3^rd century CE.

Kerman was ruled by Turkmens, Arabs and Mongols after the 7th Century CE and was expanded rapidly during the Safavid Dynasty. Carpets and rugs were exported to England and Germany during this period. As it also is a major hand woven carpet production center of the country, and hundreds of small workshops scattered through the city.

Kerman has had a long turbulent history. It was only during the rule of the Qajar Dynasty that security was restored in this city under the Central Government. Kerman has a small Zoroastrian minority. Most of the ancient Kerman was destroyed in a 1794 earthquake.

 

Climate

 

The city's many districts are surrounded by mountains which bring variety to Kerman's year round weather pattern, thus the northern part of the city is located in an arid desert area, while the highland of the southern part of the city enjoys a more moderate climate. The mean elevation of the city is about 1755 m above sea level.

Kerman city has a moderate climate and the average annual rainfall is 135 mm. Because it is located close to the Kavir-e Lut, Kerman has hot summers and in the spring it often has violent sand storms. Otherwise, its climate is relatively cool.

 

Shazdeh Garden

 

Shazdeh Garden meaning Prince’s Garden is a historical Persian garden located near (6km away from) Mahan in Kerman province.

The garden is 5.5 hectares with a rectangular shape and a wall around it. It consists of an entrance structure and gate at the lower end and a two-floor residential structure at the upper end. The distance between these two is ornamented with water fountains that are powered by the natural incline of the land. The garden is a fine example of Persian gardens that take advantage of suitable natural climate.

This remarkable garden was made in the 1890s by the Governor of Kerman. It is a rectangular green oasis surrounded by brown desert. There are pavilions and a central canal. The residence for which it was built is now derelict. The design looks best in an aerial photograph.

Shazdeh Garden with a collection of pools leading to a large palace (once was the summer residence of a prince whom now is unknown). The palace is partly now converted to a nice restaurant.

Other than the main residential building, at its entrance the garden also consists of a two-story building for which the second floor was used as living quarters and for receiving guests. Other smaller utility rooms are situated along the sides of the garden. Amongst them a few side entrances also connect the garden to the outside.

The garden itself consists of a variety of pine, cedar, elm, buttonwood and fruit trees which benefit from the appropriate soil, light breezes and qanat water enable such an environment in contrast to its dry surroundings. The water enters the garden at the upper end and while irrigating the trees and plants along its way, flows down through a series of steps and falls. On the two ends of the water path, meaning at the main entrance and the residential structure, there’s a pool that collects and subsequently redistributes the water. All together from top to bottom there are 8 levels/falls along the water path.

In 1991, the premises were completely renovated on the occasion of the commemoration ceremony of Khaju Kermani. A traditional guesthouse has been constructed in the city center for the use of tourists and visitors. Some damage to the garden was caused as a result of Kerman’s 2004 earthquake. In 2005 experts of the Research Center for Historical Sites and Structures were preparing documents to register Shazdeh Garden, amongst other gardens, on the UNESCO World Heritage List and the garden was finally inscribed in June 2011.

 

Masjed-e Jame (Jame Mosque)

 

Masjed-e Jame or Muzaffari is one of the historical monuments of the 14th century CE, famous for its magnificent portal, its mihrab and mosaic-tile decorations, and its historic inscription, which bears the date 1349 CE.

On the western side of the mosque, there is an ivan which originally dates from the times of Ali Muzaffar. It has a wonderful blue faience featuring shades of blue from turquoise to ultramarine, creating a vertical horizon of smooth shimmering tiles.

However, the mosque has been repaired in later periods, including repairs of the main part of its mihrab, carried out in the reign of Shah Abbas II of Safavid Dynasty. The wall of the Mihrab (altar) and the central dome are also decorated with admirable geometric compositions. The altar is open to the public.

The south-western portal of the mosque also belongs to the Safavid period. The minaret and the Muadhin`s cage of the Masjid have been repaired under Karim Khan of Zand Dynasty, and its mihrab is one of the outstanding parts of this monument.

 

Ganjali Khan Bath

 

Ganjali Khan was one of the famous rulers during the reign of Shah Abbas of Safavid. As the ruler of Kerman province he constructed many monuments and buildings. Ganjali Khan Complex is composed of a school, a square, a caravanserai, a public bath, a water reservoir, a mint house, a mosque and a bazaar. A number of inscriptions laid inside the complex indicate the exact date when these places have been built.

Out of Ganjali Khan complex, the Khan public bath located in the grand bazaar of Kerman serves as an anthropology museum today and attracts an increasing number of Iranian and foreign tourists. This is a unique work of architecture with beautiful tile works, paintings, stuccos, and arches.

The bath rendered service no later than 60 years ago. In the closet section and main yard of the bath there are many life-like statues. These statues were designed at Tehran University's faculty of fine arts in 1973 and then transferred to this museum.

This complex has been built during the Safavid era (1501 - 1722 CE) enjoying a modern architectural style of the time. This bath is an association of architecture and application of an array of constructional materials in an appropriate space with totally popular approaches. The architect of the bath and the complex is a master from Yazd city named Mohammad Sultani.

 

Lut Desert, the Hottest Spot on Earth

 

The big desert of Lut is situated in the eastern region of Iran. It is part of the northern of the two deserts belts which encircle the Earth. The Sun heats these two belts of land more than any other part of Earth and creates deserts. A NASA satellite recorded surface temperatures as high as 71 °C (159 °F), the hottest surface temperature recorded on Earth.

There are reports that no living creature can survive for long in this region, with Lut generally considered an abiotic zone, being so forbidding that not even bacteria can live. Research groups took sterilized milk into the Lut desert, stored it uncovered in temperatures in excess of 71 °C (159 °F) in the shade and yet, the milk remained sterile.

The Lut Desert consists of several large basins separated by worn mountains and ridges, covering an area of about 200 by 100 miles, with the western part containing wind-swept corridors separating high ridges. The east is a sea of sand, described by Alfons Gabriel, one of the first explorers, in 1938, as “a confused mass of impassable tangled dunes.” Winds pile the sand into dunes up to 500 feet high, as tall as Washington's monument.

The uniqueness of the desert is assured by an abundance of typical phenomena. The longest widespread system of yardangs in the world (120 km long in 80 km wide), the hottest point in the world, as detected by satellite data and the tallest sand pyramid of the world (500 meters high) are only a fraction of the wonders this desert has to offer.

 

Culture

 

Kerman has an abundance of architectural relics of antiquity.

Kerman is among several cities in Iran with a strong cultural heritage, which is expressed in the local accent, poetry, local music, handicrafts and customs that Kerman has introduced to the world of culture.

The only anthropology Iran museum of Zoroastrians in the world, which showcases the ancient history of Zoroastrians, is in Kerman’s Fire Temple. The idea of launching the museum along with the library of Kerman’s Zoroastrian Society came to light in 1983, when the head of the society, Parviz Vakhashouri, and the former head of library, Mehran Gheibi, collected cultural heritage artifacts of Kerman’s Zoroastrian community. These two officials added many other objects to this collection. The museum was officially inaugurated during Jashn-e Tirgan in 2005 by Iran’s Cultural Heritage, Handicrafts and Tourism Organization.

Jashn-e Tirgan or Tiregan is an ancient Iranian rain festival observed on July 1. The festivity refers to archangel Tir (literally meaning arrow) or Tishtar (lightning) who appear in the sky to generate thunder and lightning for providing the much needed rain.

Sadeh ceremony is celebrated every year in Kerman.

Also the archeological ancient area of Jiroft and Tappe Yahya Baft are located south of Kerman. Rayen Castle is also located on Rayen town, south east of Kerman.

 

Zoroastrian Fire Temples

 

Kerman city has two fire temples, of which we are aware, an old temple that houses a wood fire and a newer temple opened in 2001, and one that uses a gas fire. The newer temple was constructed about 350 meters from the older temple, and its construction was made possible by donations from Farzaneh Hormozyar Oshidari and Mahindokht Siavashian.

In an unusual move the new temple and its inner sanctum has also become home to an anthropological museum devoted to Zoroastrianism (rather than a separate room) and the Kerman Zoroastrian Society's library. The museum was inaugurated during Jashn-e Tirgan in 2005. Among its display collection are different types of fire braziers and lanterns, women's clothing such as coats, dresses, headscarves and pants decorated with floral patterns,  which are all between 50 and 150 years old. The museum also displays manuscript hand-written in Germanic Gothic script, and published in 1828 CE.

 

Historic Dome

 

Jabaliyeh Dome is one of the other tourist attractions of Kerman, which is enlisted among the most beautiful architectural works of Iran.

Its architecture shows it was a Zoroastrian temple built by the Sassanid Dynasty.

The dome is octagonal, with a 20-meter altitude. It has gateways, each of which is two meters wide.

Enlisted among Iran’s national monuments in 1937, the dome was renovated in 2004.

Also, the smallest gravestone discovered in Kerman province is kept in this monument.

There are magnificent and outstanding gardens in Kerman, among which Harandi Garden is highly popular in this city, because it is home to the museum of archeology and traditional musical instruments.

This garden dates back to late 13th century AH and has been registered on Iran’s National Heritage List in 1975.

Currently, the ground floor of the building is the museum of traditional musical instruments, while its first floor houses the museum of archeology.

The goal behind the construction of archeology museum is the introduction of the province’s ancient civilizations and its historical bonds with neighboring regions.

Historical works of Shahdad civilizations and Kerman province are displayed in this museum.

Moreover, the archeology museum has displayed gray-colored porcelain works with unique patterns, which date back to at least 5,000 years.

Also, a number of historical works, dating back to the rule of Achaemenian Dynasty, are displayed in this museum.

The musical instruments museum was inaugurated in 2002. The goal behind the establishment of this museum is to familiarize visitors with Iran and its neighboring countries’ traditional musical instruments.

About 250 musical instruments are kept in this museum in three sections, namely national, local and international.

These musical instruments are unique and have been made by the most skillful experts in this domain.

 

Gas Supply Structures

 

Kerman receives gas from Harat in neighboring Yazd province. The gas is pumped through a pipeline stretching from the city of Babak. At the moment, the most important gas supply project in the Kerman province is the construction of a 180-kilometer pipeline stretching from the city of Mahan to the proximity of the historic city of Bam. The project was started a year ago and is predicted to take one year to be completed. The pipelines are of 16-inch diameter.

Within ten years, all villages in the Kerman province will have access to natural gas.