New Year Prospects

Kasra nouri

Director General of Public Relations

 Iran’s calendar year ends on March 20. It was a marked year in Iran’s petroleum industry. Despite tough sanctions and hardships, it made significant success and breakthroughs.

A unilateral war waged by the US administration against Iran’s political and economic independence, imposed in the form of unjust sanctions, reached its zenith in this calendar year.   

The sanctions were designed to keep Iran’s petroleum industry from running and to force Iranians to bow to illogical excessive demands put forward in violation of international norms and conventions. However, this dream did not come true even under the former US administration led by Donald Trump.

Over recent years, Iran’s petroleum industry has been racing ahead regardless of pressure and sanctions. Furthermore, it pressed ahead with its predicted development and renovation plans by relying on domestic capital and human resources and technical expertise and lay the foundation for future development.

A review of projects that have come online only during the past couple of months shows clearly the extent of successful petroleum industry projects. Some of them are as follows: startup of Phase 1 of Qeshm ultra heavy crude oil refinery, startup of the Ilam Petrochemical Plant’s olefin and desulfurization plant, Hegmataneh Petrochemical Plant and Urmia Petrochemical Plant’s sulfate plant together with a total investment of $1 billion, laying 1,000km of oil pipeline stretching from Shazand to Rey and Urmia and from Goreh to Jask, designing, engineering and operating the Kangan petro-refinery project with an output of 3.5 million tonnes a year, start of construction of $2 billion Kian petrochemical project, enhancing recovery from the Azar field to 65,000 b/d, completion of the petrochemical value chain through development of domestic knowhow, raising petrochemical output from 50 million tonnes to 100 million tonnes by launching 12 megaprojects, development of production from the West Karoun cluster of oil fields from 70,000 b/d to 300,000 b/d, increasing gas production from 600 mcm/d to more than 1bcm/d, increasing gasoline output from 56 ml/d to 107 ml/d and Iran becoming a major gasoline exporter. 

Achievement of such big success under the shadow of unprecedented sanctions indicates that Iran’s petroleum industry is scientifically and technically self-reliant.

Most of the current calendar year was dominated by illogical behavior of former US administration. The new administration is hoped to adopt a fair stance and acknowledge the right of Iranian people to political and economic independence and embrace pace, friendship and mutual respect instead of war and sanctions.

Iranian petroleum industry decision-makers have said time and again that world peace is tied to fair cooperation and partnership.

Two Petroleum Industry Projects Operational

On March 1, two key petroleum industry projects came online. They were development of the joint Azar oil field and the ethane recovery unit of the Kangan petro-refinery. Investment made in the two projects totaled $2.6 billion. Furthermore, construction of the Kian petrochemical plant started.

Addressing the ceremony, President Hassan Rouhani appreciated the Petroleum Ministry for the measures taken with regard to development of oil and gas fields. He said that Iran’s non-oil exports totaled $31 billion so far.

Minister of Petroleum Bijan Zangeneh also said all oil and gas fields Iran shares with neighbors had become fully operational or had been decided.

Least Reliance on Petrodollars

Rouhani said that oil was tied to Iran’s politics and economy as it accounts for the bulk of national budget.

“In recent years, particularly this year, we were almost not dependent on oil and the country has been administered with minimum reliance on oil,” he added.

The president said: “The country was being run by very low reliance on oil in 2018 and 2019. In fact, national budget was dependent on $70-80 billion in oil revenue and in some years more than $100 billion. But the country was run under the current administration with minimum reliance on oil money.”

He heaped praise on the Petroleum Ministry for its activities under the 11th and 12th administrations, saying: “Gas production has increased from 600 mcm/d to 1,000 mcm/d under this administration, which is a breakthrough. In the South Pars gas field, we were behind Qatar in terms of gas recovery. But today we are outdoing Qatar in using these jointly held huge resources.”

West Karoun Oil Output Quintuples

Rouhani touched on the West Karoun cluster of oil fields, jointly operated with Iraq, saying: “Our production in this area has quintupled. Therefore, the government has invested in this sector in a bid to help regain Iran’s rights.”

“Oil recovery from the Azar field was zero before the current administration, but we reached 30,000 b/d output by March 2017. Today, with the inauguration of the second phase, oil recovery from this field has reached 65,000 b/d,” he said.

Petchem Capacity Doubles

The president also took pride in the Kangan petro-refinery project, saying it was a source of honor for his administration.

“Iran’s petrochemical capacity would increase from the current 50 million tonnes to 100 million tonnes by 2021, indicating hard work done in this regard,” he said.

Rouhani said Iran’s petrochemical industry was a key sector that helped Iran when the country was under sanctions during the imposed war.

Referring to the coronavirus pandemic, he said: “We faced nonoil exports decline due to the coronavirus, but during the last two months of the current calendar year we are registering non-oil exports.”

“Today our conditions are much better and we can export non-oil products. Our nonoil exports have so far yielded $31 billion, which will increase by the year-end,” he said, adding that steel and petrochemicals constituted the main non-oil products that were exported.

Rouhani said the US and the entire world would have to lift unjust sanctions on Iran, adding: “The new US administration has acknowledged four times that the maximum pressure campaign has failed. That is our biggest success in history to have resisted sanctions and survived.”

Satisfactory Status

Minister Zangeneh said the situation of all fields shared with neighbors were in satisfactory condition, adding: “The crude oil production capacity in the West Karoun fields has increased from 70,000 b/d to 400,000 b/d.”

“Given the government policy of prioritization of operation of oil and gas fields and the Petroleum Ministry’s commitments on deciding about development of all joint fields, we will reach a status by the end of the current administration that all fields would reach an acceptable status,” he said.

$1.6bn Return in Azar

The minister said that Azar field had not been developed with its production at nil. “The aggregate output from this field has reached 36 million barrels, while $1.6 billion has returned.”

Nineteen wells, with depth of over 4,500 meters, produce oil at the Azar field. After processing and separation of oil, gas and water, the product reaches domestic consumers or export terminals.

“The key point about this project is the completion of value chain. It means that associated gas is transferred to the Dehloran gas gathering center before being distributed along with gas supplied by the Cheshmeh Khosh, Aban, West Paydar, East Paydar, Dehloran, and Danan fields to NGL 3100. The gas is partly fed into national gird and partly fed into a petrochemical plant,” said Zangeneh.

He said the NGL 3100 project, with an investment of $890 million, was more than 58% completed.

“In the downstream sector of NGL 3100 we have the Dehloran petrochemical plant with a capacity of about 1 million tonnes, under construction by the Oil Industry Pension Fund Investment Company (OPIC). In fact the flare gas produced at these fields is separated in NGL 3100 to be converted to valuable petrochemical products,” said Zangeneh.

He recalled that widespread measures were under way in the chain of oil, gas and petrochemical activities in Ilam Province, saying: “In addition to development of the Azar field,

other important projects include the Ilam polypropylene unit, Phase 2 of the Ilam gas refinery, Phase 2 of development of the Tang-e Bijar gas field and development of the Aban, West Paydar, Changouleh, Cheshmeh Khosh, Dalpari and East Paydar oil fields under the new type of oil contracts.”

Calling Ilam Province a major center of concentration of petroleum industry activities, he said: ‘The investment made in these projects would total $5.3 billion. If we add the NGL 3100 factory and the Dehloran petrochemical plant, this figure will reach $6.8 billion.”

Kangan Petro-Refinery

Zangeneh touched on the Kangan petro-refinery project with an investment of about $1 billion, saying: “In the petrochemical production chain, this project is a major feedstock production one. The feedstock production capacity of projects feeding newly-launched petrochemical plants totals 11.2 million tonnes a year.”

“This project sells $1 billion in annual sales. The liquid products have been exported while ethane is used to feed petrochemical plants located in South Pars,” he added.

Zangeneh said four projects would be running in the downstream section of the Kangan petro-refining project.

“A 1-million-tonne olefin unit and 300,000-tonne polyethylene units are under construction with an investment of $1.5 billion. They are now 40% complete,” he added. 

‘Without sanctions, we could have brought all the projects online altogether. The delayed inauguration of the project is blamed on sanctions,” he added.

Kian, Petchem Megaproject

Zangeneh also touched on the start of construction at the Kian petrochemical plant, saying: “This is a petrochemical megaproject, whose Phase 1 would need $2 billion in investment. It is financed jointly by the Parsian Oil and Gas Development Company and Petrofarhang which is a subsidiary company of Iranian Teachers Investment Fund (TIF).”

The minister said the Kian project would receive a combination of liquid and gas feedstock at 2.5 million tonnes. “In addition to the Kian petrochemical project, three other projects fueled by liquid and gas feedstock (two in Assaluyeh and one in Mahshahr) are under way in line with the third jump in the petrochemical sector,” he added.

He said these projects, fed by a broad range of feedstock, would produce valuable products that would in turn help build hundreds of new downstream plants across the country.

“We emphasize that we should be assured of financing for any project we plan to start,” he added.   

Azar, Most Complex

The Azar oil field development has been handled by the Iranian company Sarvak Azar under a €1.4 billion buyback deal. Since Azar is shared by Iran and Iraq, it was necessary to develop it in the shortest possible time. In the first phase, recovery of 30,000 b/d started from this field in May 2017. The second phase came online with the output of 65,000 b/d this year.

Kayvan Yar-Ahmadi, manager of Azar development, said: “The Azar field is one of the most geologically complicated hydrocarbon fields in Iran. Drilling in this field is very tough and challenging due to the sequence of low and high-pressure layers. Drilling wells in this field often lasts several times longer than drilling wells in other onshore fields.”

In addition to the difficulty of drilling operations and the complexity of geological structure in this field, the fluid extracted from Azar contains highly corrosive substances requiring using corrosion-resistant alloys in installations. Despite sanctions, these materials have been installed.

Yar-Ahmadi highlighted the successful implementation of acid fracturing operations in the field, saying: “Implementing these operations in several wells of the Azar field was carried out for the first time at field levels. Furthermore, other wells in this field were acidized and therefore it became possible to increase the recovery rate of wells in this field.”

Azar holds about 4.3 billion barrels of oil in place with an API gravity of 32-33.

“In a 40-year operation period, more than 400 million barrels of crude oil would have been recovered,” said the official.

Largest Petchem Feedstock Supply

The ethane recovery unit of the Kangan petro-refinery is the largest feedstock supply unit of petrochemical plants with a production capacity of 3.5 million tonnes a year, expected to yield $1 billion in revenue.

Construction of this project started in February 2016 and ended last January.

Hamid Qaderi, CEO of Kangan Petro-Refining Company, said Phase 12 of South Pars would supply 21.5 million tonnes a year of feedstock to the ethane recovery plant. “This plant would produce 3.5 million tonnes of gas products including 1.75 million tonnes of ethane, 1 million tonnes of propane, 500,000 tonnes of butane and 250,000 tonnes of pentane,” he said.

Qaderi said the ethane produced at this plant would be mainly used to feed petrochemical plants in Assaluyeh, as well as producing olefin. Propane, butane and pentane would be also produced for export.

Iranian companies have handled all phases of design, engineering and commissioning without being assisted by foreign experts. Basic engineering was done by the Bakhtar group and detailed engineering by Energy-Intensive Engineering and Design Company (EIED). Contractors have been from Rampco, Payman Roudak, Omran Sahel, Mapna Boiler, Kian Saze Benvar and Exir Sanat.

Iran Oil Products Exports Quadruple

 On February 22, three key petroleum products pipelines were inaugurated in the presence of Minister of Petroleum Bijan Zangeneh and CEO of National Iranian Oil Refining and Distribution Company (NIORDC) Ali Reza Sadeq-Abadi. The projects include 300,000 b/d linking Shazand-Qom-Rey, 204,000 b/d Naein-Kashan-Rey and 65,000 b/d Tabriz-Khoy-Urmia pipelines.

Addressing the inauguration ceremony, Minister Zangeneh said Iran’s petroleum products exports increased from 5.9 million tonnes in 2012 to 23 million tonnes in 2019. He added that refined production capacity had increased four-fold.

“The refining capacity has reached 2.2 mb/d now, up from 1.8 mb/d in 2013 (when President Hassan Rouhani took office),” said the minister.

Zangeneh said Iran’s gasoline production had grown from below 50 ml/d to 107 mb/d now, while gasoil output reached 113 ml/d in 2019, up from 94 ml/d.

Noting that the quality of petroleum products had increased significantly in recent years, he said: “Euro-4 and Euro-5 gasoline production was nil in 2012, but exceeded 76 ml/d in 2019. Euro-grade gasoil production also rose from 6 ml/d in 2013 to 45 ml/d in 2019.”

IRR 80,000bn Investment

Zangeneh heaped praise on companies involved in the transmission, distribution and storage of petroleum products, saying: “We have 13,000km of major pipelines for transferring oil and petroleum products. They handle the distribution of 1.5 mb/d of oil and petroleum products for domestic consumption.”

He touched on the development of technology in Iran and said all pipelines were being manufactured domestically. He said the Goreh-Jask pipeline was “the most Iranian” oil pipeline in the country. 

“Welding and pipe-laying in this project would be over before the end of the [current calendar] year. We hope to load the first crude oil cargo in Jask in the first months of next [calendar] year,” he said.

Zangeneh said the three new pipelines would put an end dependence on thousands of oil tankers travelling across the country. He put at more than IRR 80,000 billion plus €98 million, the total sum invested in the three pipelines.

He said new pipelines would also help prevent fuel smuggling which is blamed on low pricing.

Zangeneh stressed the need for the development of refineries and extension of pipelines, saying: “We have several pipelines under construction, the most important of which is the Bandar Abbas-Sirjan-Rafsanjan pipeline that would carry gasoline from the Persian Gulf Star Refinery to central Iran.”

44 Refinery Licenses

Zangeneh said qualitative upgrade projects had been undertaken in refineries in recent years.

“Upgrading Tabriz, Bandar Abbas and Isfahan refineries cost about $2 billion, as a result of which, gasoline production has increased 7 ml/d and 10 ml/d of Euro-4 gasoline and 11 ml/d of Euro-5 gasoil were being supplied,” he said.

Zangeneh said refining capacity stabilization of the Abadan oil refinery and the gasoil processing unit of the Isfahan refinery were the two projects currently under way. He said the Abadan refinery would see its fuel oil output fall from 45% to 26% and its products be upgraded to Euro-5 grade. This project has been completed more than 65%. The distillation unit of Isfahan refinery would come online early next calendar year, he added.

Zangeneh said since 2013, 44 permits had been issued for the construction of crude oil and gas condensate refinery with a total capacity of 3.1 mb/d.

“We adopted an energy supply document for the transportation sector up to horizon 2041 with the focus being on fuel efficiency,” he added.

Zangeneh said without energy efficiency, no production plan would meet national needs. He added that although increased gas and petroleum products production was necessary, energy efficiency would be the solution to all problems.

Bigger Storage Capacity

Addressing the inauguration ceremony, Sadeq-Abadi said that following the commissioning of the Naein-Kashan-Rey pipeline and Urmia storage facility, the petroleum products storage capacity increased 500 million liters despite sanctions and the COVID-19 pandemic. He said Iran’s petroleum products storage capacity totaled 1 billion liters now.

Referring to the impact of the COVID-19 pandemic, he said: “We were among few refiners in the world to have not reduced the oil refining capacity. That was against the backdrop of shutdown of many refineries across the world.”

Sadeq-Abadi said the inauguration of the three pipelines along with pumping stations would save the country IRR 35,000-40,000 billion annually.

“The Shazand-Qom-Rey pipeline can carry 300,000 b/d of oil products. If we want to carry these 300,000 barrels on tankers it would cost IRR 2,000 per tonne-kilometer. But now it would cost IRR 180 per liter. That would help NIORDC save about IRR 16 billion a day, or IRR 6,000 billion annually,” he said, adding that three pipelines would prevent an extra spending of about IRR 20,000 billion on transmission of petroleum products.

Oil Products Distribution

Qassem Arab Yar-Mohammadi, CEO of Iranian Oil Pipelines and Telecommunications Company (IOPTC), said new pipeline projects allowed for the transmission of petroleum products in the shortest possible time.

“The Naein-Kashan-Rey pipeline carries petroleum products to Rey, which is key in the quick transmission of products with minimum costs from south to north and northeast,” he said.

He added that following the commissioning of the Bandar Abbas oil refinery in early 1990s, the Bandar Abbas-Rafsanjan pipeline was a major route for transmission of petroleum products. Then, the Bandar Abbas gas condensate refinery, known commonly as the Persian Gulf Star, was launched and the Zanjan-Naein and Naein-Isfahan pipelines were added. 

“Prior to launching this new pipeline, petroleum products were transmitted to Tehran via Naein-Isfahan pipeline and two other pipes. But now with the 200,000b/d Naein-Kashan-Rey pipeline, we can handle products more effectively,” he said.

Iran Self-Sufficient in Pipeline

Saeed Sattari Naeini, CEO of National Iranian Oil Engineering and Construction Company (NIOEC), said Iran had become self-sufficient in the construction of pipelines for transmitting oil and petroleum products.

“All that has happened, while we were under toughest ever economic conditions and sanctions,” he said.

“Thanks to Petroleum Ministry support, we can launch any pipeline project totally on our own,” he added.

“I can promise you that the official inauguration of these projects is only the start of development, because NIOEC runs more than 1,000 km of pipeline and 15 pumping stations under construction,” he said. “Furthermore, the largest refining project in the country (Abadan refinery development) is being completed by this company against the backdrop of sanctions and the COVID-19 pandemic.”

Sattari Naeini said the 93-km-long Shazand-Qom-Rey pipeline along with a cathodic protection station and development of pumping stations in Shazand, Qom and Rey are valued at €77 million. This project created 500 jobs during construction and 70 during operation.

He said the Naein-Kashan-Rey pipeline was 420km long, adding that it was fitted with pumping stations and balanced storage tanks.

“The third project with high contribution to job creation and a high share of domestic manufacturing is the Tabriz-Khoy-Urmia which is 220km long. It can transmit 100,000 b/d to the cities of Salmas and Khoy,” he said.

Storage Capacity in Northeast

Ali-Reza Keramat Veis-Karami, CEO of National Iranian Oil Products Distribution Company (NIOPDC), said Iran’s petroleum products storage capacity in northwest totaled 330 million liters with the inauguration of the Tabriz-Khoy-Urmia pipeline and construction of a new oil storage facility.

“Previously, the storage capacity of petroleum products in West Azerbaijan Province stood at 210 ml, which is now 330 ml,” he said. “With the inauguration of this new pipeline, the capacity of products transmission has increased from 35,000 b/d to 100,000 b/d, which has potential to increase to 140,000 b/d.”

Veis-Karami said with the inauguration of this project, no more tankers would have to carry products from Tabriz to Khoy.

He put at 120ml the storage capacity of the new facility in Urmia, saying: “With 14 multi-purpose floating storage tanks, this facility has two firefighting water storage tanks with capacity of 7 ml and 38 spots for simultaneous loading for exports from northwest. We hope to start exporting products to neighboring countries from this spot next calendar year.” 

He said that the capacity of petroleum products transmission in West Azerbaijan Province stood at 35,000 b/d.

“The total investment made in this project stands at IRR 1,500 billion plus €14 million,” he said.

First PP Plant with Iranian Technical Savvy

 In February, the ground was broken for the construction of the Eslamabad petrochemical plant in Kermanshah Province with a $600 million investment. The project was started at the instruction of First Vice President Es’haq Jahangiri.

The significance of this petrochemical project stems from the fact that Iran has mastered the technical knowhow to produce propylene. The Eslamabad facility would now allow Iran to convert natural gas into valuable plastic products.

Minister of Petroleum Bijan Zangeneh has said: “We started a giant knowledge-based project in Kermanshah Province under sanctions and pressure.”

Iran’s National Petrochemical Company (NPC) has now developed the gas-to-propylene (GTPP) technology for manufacturing widely needed propylene for the petrochemical industry.

With an annual capacity of 960,000 tonnes, the Eslamabad-e Gharb facility would convert natural gas to methanol (660,000 tonnes a year), methanol to propylene (120,000 tonnes a year) and produce 120,000 tonnes a year of polypropylene.

Iranian Design

Minister Zangeneh said he had long been looking for the implementation of a GTPP project in Iran.

“Whereas all across Iran there is a wide gas distribution network available, this is a national project.” he added.

The minister said that Kermanshah Province would become the third province after Bushehr and Khuzestan in terms of petrochemical hub. “NPC has managed to master this technology.”

Zangeneh expressed hope the project would come online within schedule set.

“Kermanshah Province is rich in ethylene and produces about 300,000 tonnes of polyethylene. The West Ethylene Pipeline (WEP) crosses this province,” he said.

“Under sanctions and pressure, we managed to start a giant knowledge-based project in Kermanshah Province, which came online in three years and reached profitability. Then we sold all of its stocks to the public,” he added.

NPC Development Initiatives

Behzad Mohammadi, CEO of NPC, said the main feature of the Eslamabad-e Gharb facility was that it was Iranian.

“Both technology and catalyst used in the methanol, propylene and polypropylene production have been developed by Petroleum Research and Technology Company (PRTC) researchers,” he said.

“Under circumstances where the role of the petrochemical industry is becoming more prominent in the production, supply, exports and hard currency generation sectors, NPC is for its part taking fundamental steps for development in this area,” he added.

Mohammadi said the Eslamabad-e Gharb petrochemical plant was a strategic project, adding: “Once this project is commissioned in coming years, it will be a legacy of the 12th administration in Kermanshah Province.”

He put at about 950,000 tonnes a year the propylene production capacity in Iran.

Noting that production of propylene and other derivatives was a major cause of concern for the petrochemical industry, he said: “This product is one of the most valuable petrochemical products, known as the petrochemical industry caviar.”

4.5mt PP Capacity

Referring to the issuance of 20 licenses for investors in the past years to produce propylene from natural gas, Mohammadi said: “So far, none of them has been realized due to the lack of technical knowhow, and everything remains on the paper.”

He added that thanks to Minister Zangeneh’s efforts, planning started at NPC with a view to reaching a propylene production capacity of 4.5 million tonnes and expands propylene production.

Mohammadi said numerous projects had been envisaged to use methanol and natural gas in order to enhance propylene production in the country.

“The Eslamabad-e Gharb petrochemical plant is the first in the mix of propylene production projects. Construction is expected in coming months and years,” he said.

He said the new plant would supply sufficient propylene to western and northwestern provinces, expressing hope that it would come online by 2024. 

“In this project, we will convert natural gas to methanol and then we will achieve propylene and polypropylene,” he said.

Iranian Catalyst

Mohammadi said six catalysts were being used in this project. “Three catalysts for methanol production have been manufactured in Iran over the past two years. The technical knowhow for two catalysts in propylene production will be industrialized in summer 2021. A catalyst for polypropylene production is under construction in the Arak facility of Petrochemical Research and Technology Company (PRTC), which is coming online in March.”

He said that production of 120,000 tonnes of polypropylene would bring into operation small and large-sized plants in industrial parks.

Mohammadi said NPC was in charge of this project which required cutting edge technology.

“There is nothing to worry about over financing. This project has a capacity of 965,000 tonnes, including 660,000 tonnes of methanol from natural gas, 120,000 tonnes of propylene and 120,000 tonnes of polypropylene, as well as pyrolysis gasoline and LPG,” he said.

Mohammadi said $545 million had been invested in the project to generate 4,500 jobs, adding that the plant would generate $220 million in annual revenue.

Propylene production projects are implemented within the framework of strategic projects aimed at enhancing the propylene capacity in the country and developing the chain of this product.

Currently, 950,000 tonnes of propylene is being produced in the refining and petrochemical sector, which would reach 4.5 million tonnes after the Salman Farsi PDH, Eslamabad-e Gharb GTPP, Dair Port MTP, Amirabad Port GTP, Anzali Port GTPP, three MTP projects in Assaluyeh propylene park and the Pars PDH plant in Assaluyeh come online.

NIGC Quintuples Optical Fiber Capacity

 National Iranian Gas Company (NIGC) has quintupled its optical fiber bandwidth on the Tehran-Isfahan route of the Iran Gas Trunkline 4 (IGAT-4).

Mohammad-Reza Nikravesh, NIGC’s acting director of Telecommunications and Telemetry, said: “In light of growing traffic needs of NIGC and its subsidiaries due to using new and mechanized systems, the Directorate of Telecommunications and Telemetry decided to expand the bandwidth of optical fiber network in IGAT-4.”

“Based on technical surveys and available facilities, necessary measures were undertaken to increase the communications capacity of the first strategic section (NCC to BCC), raising the communications capacity of this route from 622 Mb/s to 3,100 Mb/s in the shortest possible time and at the highest safety rate,” he added.

Nikravesh said implementation of this project would vacate communications needs for several years.

“All phases of designing, equipment supply as well as installation of equipment, tests and launch have been handled by the Directorate’s experts in partnership with telecoms engineers,” he said.

NIGC Adopts 15-Year Gas Plan

National Iranian Gas Company (NIGC) has adopted a long-term plan to preserve gas production at the three major gas production facilities, NIGC’s chief coordinator Masoud Zardouyan said.

In a meeting with the secretary of Water and energy Technologies Development Committee of the Office of Vice-President for Science and Technology, South Pars Gas Complex officials and director of Bushehr Province Park of Science and Technology, he said the 15-year plan was aimed at preserving gas production ceiling.

Referring to the status of gas industry in the country and positive developments associated with it, he said: “Although production is part of this devised plan, preservation and logistics should never be neglected.”

“In parallel with this issue, it is necessary to pay attention to parks of science and technology and use this potential in a structured manner in a bid to spare possible consequences that may emerge in the future,” he said.”

Khesht to Reach Early Production Next Calendar Year

CEO of Iranian Central Oil Fields Company (ICOFC) has said early production from Khesht oilfield in central Fars Province will be realized in the first half of next Iranian calendar year (March 21-September 22).

According to Ramin Hatami, the field development project will be completed by the end of the next year (March 2022) when its daily production will reach 20,000 barrels.

“The early phase of the field will be operational in the first half of next year with the launch of three wells, and the produced oil will be sent to Nargesi Center via a 10-inch pipeline,” Hatami said.

When fully developed, the field will have five operational wells, the official said.

The Khesht oil field is being developed by South Zagros Oil and Gas Production Company, which is a subsidiary of National Iranian Central Oil Fields Company.

Early production will come from three wells and produced oil will be sent to Nargesi Production Center via a 10-in. pipeline stretching 17 km, according to National Iranian Oil Co.

Petchem Output Up 9%

Iran’s National Petrochemical Company (NPC) expects petrochemical production to increase nine percent during the year ending March 20.

“Production of variety of petrochemical products is expected to reach 61 million tonnes at the end of this (calendar) year,” said Jalal Mirhashemi, who serves as production chief at NPC, said.

Mirhashemi said output had topped 56 million tonnes in the 10 months to February 18, exceeding the total annual amount recorded in late March last year.

“Production and sales of variety of petrochemical products are continuing smoothly and despite some difficulties, a motto for jump in production has been realized through efforts made by the country’s petchem manufacturers,” he said.

Since 2018, Iran has increasingly relied on exports of petrochemicals as a means of offsetting the impacts of the US sanctions on its crude sales.

Petchems currently account for a bulk Iran’s non-oil trade, while allowing the government to boost jobs across the country by spurring more activity in the manufacturing sector.

Sivand, Esfand Development to Accelerate

CEO of Iranian Offshore Oil Company (IOOC) Alireza Salmanzadeh said a second drilling rig had been installed for increasing production from the Esfand and Sivand oil fields.

“We expect that with the installation of this rig, the project’s completion would pick up speed,” he said.

Salmanzadeh touched on IOOC’s oil production enhancement projects, saying: “So far, all four packages of IOOC for this project have been finalized.”

He said the first package, which involves the Sivand and Esfand fields, has had over 30% progress.

“So far, two (production and injection) wells have been completed in this project while completion of a third well is on the agenda,” he added.

Salmanzadeh said completion of this project would increase oil production by about 16,000 b/d at the Siri zone.

He said the contract packages for Resalat and Forouzan fields were in the phase of commodity purchase order and selecting subcontractors.

 OPEC+ 14th Ministerial Meeting Ends with Accord

The 14th Meeting of OPEC and non-OPEC Ministers took place via video conference on Thursday March 4, 2021, under the Chairmanship of HRH Prince Abdul Aziz bin Salman, Saudi Arabia’s Minister of Energy, and Co-Chair HE Alexander Novak, Deputy Prime Minister of the Russian Federation.

The Meeting welcomed the appointment of HE Mohammed Al-Fares, Minister of Petroleum of Kuwait and the return of HE Mohamed Arkab, Energy Minister of Algeria.

The Meeting also emphasized the ongoing positive contributions of the Declaration of Cooperation (DoC) in supporting a rebalancing of the global oil market in line with the historic decisions taken at the 10th (Extraordinary) OPEC and non-OPEC Ministerial Meeting on 12 April 2020 to adjust downwards overall crude oil production and subsequent decisions.

The Ministers noted, with gratitude, the significant voluntary extra supply reduction made by Saudi Arabia, which took effect on 1 February for two months, which supported the stability of the market.

The Ministers also commended Saudi Arabia for the extension of the additional voluntary adjustments of 1 mb/d for the month of April 2021, exemplifying its leadership, and demonstrating its flexible and pre-emptive approach.

The Ministers approved a continuation of the production levels of March for the month of April, with the exception of Russia and Kazakhstan, which will be allowed to increase production by 130 and 20 thousand barrels per day respectively, due to continued seasonal consumption patterns.

The Meeting reviewed the monthly report prepared by the Joint Technical Committee (JTC), including the crude oil production data for the month of February.

It welcomed the positive performance of participating countries. Overall conformity with the original decision was 103 per cent, reinforcing the trend of aggregate high compliance by participating countries.

The Meeting noted that since the April 2020 meeting, OPEC and non-OPEC countries had withheld 2.3bn barrels of oil by end of January 2021, accelerating the oil market rebalancing.

The Meeting Extended special thanks to Nigeria for achieving full conformity in January 2021, and compensating its entire overproduced volumes.

The ministers thanked HE Timipre Sylva, Minister of State for Petroleum Resources of Nigeria, for his shuttle diplomacy as Special Envoy of the JMMC to Congo, Equatorial Guinea, Gabon and South Sudan to discuss matters pertaining to conformity levels with the voluntary production adjustments and compensation of over-produced volumes.

Foroozan Gas Supply to Kharg Highly Valued

The head of Kharg operational zone said supply of associated gas from the Forouzan offshore complex to the Kharg petrochemical plant would at least generate IRR 40 billion in value-added.

Abbas Rajabkhani said: “The primary target set in the project was to transfer 40 mcf/d of gas. Now capacity building has been made for the transfer of 80 mcf/d.”

He said revenue from implementing the project was forecast at $53 million, adding: “One year has passed since the project came online. So far $40 million has been generated in revenue.”

According to Rajabkhani, about 17 bcf (or 500 mcm) of gas has been transferred to the Kharg petrochemical plant.

Referring to the DCS project of the Abuzar and Forouzan plants, he said: “This project was first started in 2007, but it was abandoned one and a half years later. It was again put on the agenda and work resumed in 2019.”

Regarding projects under way in Kharg, he said: “The most important among them are gas pumping in closed wells in Fz, Fx, F8 and F15 platforms. Once operational, the project would add about 5,000 b/d to the field’s output.”

According to Rajabkhani, completing the overhaul of a 250,000-barrel storage tank, overhaul of thermal transducer at the Abuzar and Forouzan plants, completing a two-stored sport complex, building closed drain system and some water desalination projects were among other projects under way there.

Domestically-manufactured Pump Installed at Goreh-Jask Pipeline

The first domestically-manufactured pump has been installed at the pumping station of the Goreh-Jask pipeline. The pumping station is expected to be fitted with four pumps. The remaining pumps would be installed in the near future. The first pump was a 3.2MW one.

Contracts for the manufacturing of a total of 50 pumps needed in the Goreh-Jask project were signed in 2019 by Petroleum Engineering and Development Company (PEDEC) and Iranian Industrial Pumps Company, Pumpiran and PETCO. The contracts were worth about €48 million.

The Goreh-Jask crude oil pipeline project is a national and strategic project steered by National Iranian Oil Company (NIOC). The project is aimed at building capacity for the transfer of 1mb/d of crude oil, oil storage and exports via the new Jask terminal, guaranteeing sustained crude oil exports, decentralization of export terminals and diversifying terminals as well as sustainable development and job creation in Makran.

The most important subprojects associated with the Goreh-Jask project include building 1,000 kilometers of pipeline to carry sour oil, building five pumping stations and three stations on the route, building pig stations, building 10-million-barrel storage tanks in Jask and offshore installations including three SPMs.

LPG Tanks in South Pars Refineries

Two liquefied petroleum gas (LPG) storage tanks have been launched at the refineries of Phases 22-24 of the South Pars gas field. The tanks can handle 80,000 cubic meters.

Preparation of four LPG tanks – two propane and two butane tanks – at SP22-24 is the product of arrangement between contractors and subcontractors.

According to Pars Oil and Gas Company (POGC) officials, propane and butane storage tanks came online sooner than planned.

After gas cooling, loading at the 45,000-cubic meter propane storage tank and the 35,000-cubic meter butane storage tank would begin. They may totally handle 80,000 cubic meters of LPG.

LPG storage capacity is ready by half. Construction of the two remaining LPG tanks is nearly over and POGC is waiting to receive propane and butane pumps from Iran Industrial Pumps Company in order to bring the LPG loading capacity to 160,000 cubic meters.

Construction and operation of the two sulfur recovery units are among other measures planned at the refinery of SP22-24. Two sulfur recovery units have already become operational and two more are to come online.

New Record Set at Bandar Imam

Hamid-Reza Rostami, CEO of Bandar Imam Petrochemical Plant, said Iran’s largest petrochemical facility was focused upon domestic manufacturing and using the potential of knowledge-based companies.

He said 44,000 items needed at this plant could be manufactured domestically, adding that 10,500 had already been produced.

Rostami said 92 chemicals and catalysts had also been developed domestically.

Noting that the Bandar Imam Petrochemical Plant had incorporated the three main chains of the petrochemical industry, he said: “At this plant, the aromatic production chain, chlorine production chain and PVC products, olefin production chain and polyolefin units and the largest MTBE unit instrumental in premium gasoline production were active.”

He said that the Bandar Imam Petrochemical Plant had the largest R&D unit involved in petrochemical studies.

“In parallel with the principled policy of domestic manufacturing, this unit identified 44,000 items that may be manufactured domestically from a total of 125,000 items studied,” he said.

“In the chemicals sector, 178 chemicals and catalysts are used. We initially planned to manufacture 70% of them by 2024, and so far we have made 92 of them,” said Rostami.

Kharg Ready to Maximize Oil Exports

CEO of Iran Oil Terminals Company (IOTC) Abbas Assadrouz has said the Kharg oil terminal is ready to maximize crude oil exports from Iran.

“Following imposition of sanctions oil exports dropped, the IOTC took the chance to upgrade, repair and develop its infrastructure. It is now fully ready to maximize oil exports,” he said.

“Nine berths at the Kharg terminal (three in the western jetty and six in the eastern jetty) are fully ready and IOTC’s infrastructure can even handle 8-10 mb/d oil exports,” he added.

Assadrouz touched on the high sensitivity of processes at IOTC and the necessity of applying precision and expertise in steering operations.

He called for paying continued attention to human resources, physical assets as well as financing, saying: “Relying on its specialized human resources and benefiting from the capacity of Iranian manufacturers and the scientific potential of universities, the company has undertaken valuable measures regarding the domestic manufacturing of equipment and  has replaced more than 300 foreign items with Iranian ones.”

In response to a question about the strategic project of crude oil transmission from Goreh to Jask, he said: “Undoubtedly, diversification of export terminals can share risks of oil export and give assurances and help economic prosperity.”

Assadrouz said: “IOTC’s mission is to receive, store and export crude oil and gas condensate across the nation. It has always accomplished its missions owing to support from the CEO of National Iranian Oil Company (NIOC) and planning made by staff.”

He said IOTC was required by the Petroleum Ministry and NIOC to rely on domestic forces.

Assadrouz added that the company was upgrading its pipelines, export jetties and storage facilities.

“Paying attention to human resources is a strategic principle of the company in all affairs. Having relied on this principle we have conducted successful projects in reserve engineering,” he said.

Assadrouz also touched on IOTC’s domestic manufacturing projects, saying: “Necessary need analysis has been done by forming technical working groups in equipment supply. A triangle of industry, university and knowledge-based companies has taken shape. IOTC has benefited from domestic potential.”

Maroun Oil/Gas Co. Lifts Output

Mahnaz Mohammad Qoli

Enhancing oil production against the backdrop of oil fields’ complexities has always been a major issue of concern for operating companies, sometimes proving costly. The three oil fields - Maroun, Kupal and Shadegan- in southern Iran are among oil fields where oil and condensate production is complicated. Maroun Oil and Gas Production Company (MOGPC) is tasked with oil and condensate production from the three fields.

"Iran Petroleum" has interviewed Hamid Kavian, CEO of MOGPC, to learn more about the significance of oil and condensate production from the trio.

How much is oil and gas production capacity at MOGPC? Where does it stand in terms of oil production among companies affiliated with National Iranian South Oil Company (NISOC)?

In terms of production, MOGPC ranks the third among five companies affiliated to NISOC. Our crude oil production capacity stands at 600,000 b/d and our rich gas output capacity stands at 700 mcf/d. In the current calendar year, in the oil production sector; oil, rich gas and naphtha production has reached 103%, 101% and 102% respectively of targets, while development and workover of wells has led to a 77,000 b/d increase in output.

How well are wells doing? What measures have been taken to prevent pressure fall-off in the reservoirs?

The reservoirs steered by MOGPC are currently in their second half-life and we inject dry gas in order to stabilize the reservoir pressure and prevent production pressure falloff at the Asmari reservoirs of Maroun and Kupal. Given the circumstances of reservoir rock and fluid, gas injection is a better choice than water injection in these reservoirs. Furthermore, about 60,000 b/d of petroleum sludge is injected into the reservoir.

How many fields are currently in the phase of development?

The Khami reservoir of Maroun and the Asmari and Bangestan reservoirs of Shadegan are currently in the phase of development and increased production. Operations have begun for enhanced production from 28 reservoirs run by MOGPC. That would result in the drilling of 40 development wells and workover of 20 wells within the MOGPC jurisdiction.

What has MOGPC done with regard to fulfilling its production engineering obligations?

To fulfil its obligations, drilling new wells is on the agenda in addition to workover of existing wells. In the current calendar year, the drilling of 6 new development wells with a flow of 6,500 b/d, workover of 22 wells and an increased output of 41,000 b/d led to a 48,000 b/d increase in output.

What has MOGPC done to reach maximum efficient recovery?

Measures such as associated gas control, return of petroleum sludge and injection into reservoirs, gas injection, planning to install downhole pumps and applying new technologies in drilling like horizontal drilling, are among the most important measures we are doing for maximum efficient recovery (MER). To that end, 746 mcf/d and 138 mcf/d of gas is injected respectively into the Asmari reservoirs of Maroun and Kupal.

An important issue with MOGC is to gather associated gas from oil fields. What measures have been taken to that end? How much gas has been recovered?

Currently, more than 82% of associated gas is recovered, and 5% is used for domestic purposes. With the commissioning of pressure compression installations by a domestic company in the form of selling flare gas, the associated gas gathering would increase 4% soon, while within three years, the remaining 9% would be also gathered within the framework of agreements reached with petrochemical companies, and gas flaring would fall to zero.

How is associated gas being consumed efficiently?

Through initiatives, about 40% of flare gas has been gathered over recent years, part of which having been assigned to the private sector for sweetening and compression. That resulted in a 50% decline in flaring. Apart from that, supplying gas to various units by using flare gas is also another measure we are undertaking to reach zero flaring.

Production companies have supported domestic manufacturing. What has MOGPC done to that effect so far?

A total of 250 items of commodities, i.e. 2,800 parts, was manufactured domestically by spending about IRR 33 billion. Furthermore, 160 parts were repaired, costing about IRR 12 billion.

Would you please explain about overhaul of pipes and installations at MOGPC?

Workover is a routine process in any operating company. But in terms of significance, the overhaul of the Asmari gas pressure compressor of industrial plants No. 3 of Maroun over only 15 days in full respect of safety and environment standards, overhaul of the Asmarai gas pressure compressor No. 1, which reduced gas flaring and guaranteed petrochemical feedstock supply, as well as the overhaul of an auxiliary pipeline for the transfer of 10 mf/d of gas are among our most important overhaul projects.

An issue the minister of petroleum has always insisted upon has been to recommend that companies use the potential of knowledge-based companies and startups. What has been done to that effect?

We have largely neutralized hostile sanctions imposed by enemies through cooperation and sharing knowhow with knowledge-based companies, startups and domestic manufacturers. Though domestic development of modern knowhow pertaining to domestic manufacturing of equipment and development of cutting edge technology, there is no need for foreign knowhow. Under the present circumstances, we have supplied our commodity needs through domestic companies. It is noted that the petroleum industry’s trust and the company’s provision of technical consultation to the private sector has been instrumental in achieving this goal.

A major achievement of MOGPC has been to use mobile separators that help protect the environment. What else has been done to protect the environment?

A major achievement of MOGPC, which is important in terms of protecting the environment and hydrocarbon resources, is the recovery of about 106,000 b/d of oil through mobile oil separators (MOS) and mobile oil treaters (MOT). Furthermore, for the first time at NISOC, an oil and gas separator was installed at the Maroun No. 3 industrial plant whose completion and commissioning would help flow any category of oil into the fuel facility. Other measures undertaken in favor of the environment include replacing the flare tips and combustion system, injecting 99% of desalination wastes into disposal wells, planting about 50,000 trees around the installations, giving petroleum sludge to the private sector for recovery, implementing the integrated project for waste management, installing equipment to combat oil pollution and building 32.2 ha of green space.

China Silent on Yadavaran Phase 2 Development

 The manager of Yadavaran oil field development has said that the Chinese have not presented any suggestions for the second phase development of the Yadavaran field. He said that the production capacity of this field had increased in the past one year, but the Chinese had not offered any plans for the project. He said Iran would not wait for the Chinese to develop the second phase of this field.

Iran and Iraq share five oil fields, the most important of which are located in West Karoun. One of these jointly owned fields is Yadavaran, known in Iraq as Sinbad. Yadavaran is the second largest oil field in Iran, coming behind Azadegan.

Located 70 kilometers southwest of Ahvaz in Khuzestan Province, Yadavaran is estimated to hold 30 billion barrels of oil in place, 35% of which is light oil in the Fahlian layer. Experts have also said the field contains about 12.5 tcf of associated gas and 1.9 billion barrels of gas condensate. By estimate, about 2.7 tcf of gas and 397 million barrels of condensate are recoverable.

Output Up 20,000 b/d

An agreement for the development of the Yadavaran field was signed with China’s Sinopec in 2008. The field was agreed to be developed in three phases. Phase 1 came on-stream in November 2016 by President Hassan Rouhani. The Phase 1 development was aimed at the recovery of 85,000 b/d of oil. Following Phase 1 inauguration, sustained recovery from this field continued; however, Petroleum Engineering and Development Company (PEDEC) officials decided to enhance the oil production capacity of this field.

Hojjatollah Norouzi, chief developer of Yadavaran, has said that the field’s output capacity had increased 20,000 b/d in the past one year, 15,000 b/d of which had materialized. It is noteworthy that due to sanctions, Iran does not provide any data about its oil fields. As long as sanctions are effective, this policy will go on.     

Readiness to Launch Phase 2

Under the agreement signed for the field development, Sinopec is required to go ahead with the second phase development. However, the Chinese refused to do so for a variety

 of reasons including sanctions. Norouzi said that the Chinese company did not provide any plans, noting that Iran would go alone.

In May 2018, following numerous meetings with the Chinese contractors, the general framework of the project was approved by National Iranian Oil Company (NIOC). Sinopec was expected to prepare a master development plan (MDP) to be approved by the client.  

Based on the field’s MDP, $2 billion is to be invested in second phase development during which 75 100,000-barrel wells would be drilled. In Phase 3, the field would be producing an extra 60,000 b/d.

In 2020, in a bid to get out of stagnation in the development of 2nd phase of Yadavaran, NIOC once again offered the project to Sinopec. In case the Chinese company refuses to carry out its commitments, NIOC will choose a new contractor.

As Sinopec has not yet provided any express response to NIOC to develop the field based on the new MDP, citing international restrictions, the process of issuance of permit for the second phase development of Yadavaran using technical savvy and domestic resources is on the agenda of NIOC Board of Directors.

Norouzi said: “Currently, second phase development and increased production from this joint field in the shortest possible time would be of significance. It doesn’t matter whether or not the Chinese take part in this process. What matters is the materialization of development objectives in this field. What is clear is that the infrastructure for the second phase development of the field is already prepared and Iran is determined to achieve enhanced production objectives and develop remaining phases.

It is noteworthy that Iraq is in rivalry with Iran, over developing this field. But the point is that Iran and Iraq do not enjoy equal conditions. Iran is under toughest ever US sanctions while Iraq is provided with every technical and financial facility to develop its own section of the reservoir. 

Iran Firm on Joint Fields

Iran is determined to develop its shared oil fields. Despite tough oil sanctions, Iran has never halted its production and is firmly going ahead with its field development.

Iran is currently focused on developing joint oil and gas fields in order to increase the 7% share of these fields in national oil output. The country also hopes to reach the crude oil production capacity of 5.7 mb/d. Over recent years, Iran has shifted attention from independent fields to shared fields.

Capital transfer for developing shared fields has been another issue of concern for accelerating development of joint fields. The West Karoun cluster of fields is a priority option.

Untapped Reservoirs

Final development of oil fields in West Karoun for the production of 1.2 mb/d of oil up to 2021, would require about $25 billion in investment. With every 1% increase in the recovery rate, $33 billion in extra revenue would be generated. In that case, a total of 670 million barrels of oil would be recoverable for more than $670 billion (oil price estimated at $55). The Azadegan, Yadavaran and Yaran fields – all located in West Karoun – are estimated to hold 67 billion barrels of oil in place.

The oil fields in West Karoun are all green fields. The difference between these fields and other fields in Iran is that in the green fields, increased production would happen with development plans.

West Karoun covers an array of hydrocarbon fields starting from the city of Ahvaz and continue as far as Iran-Iraq border. The giant Azadegan and Yadavaran fields have been discovered in the past decade.  

2021 Horizon Oil Output

NIOC has thrown its weight behind West Karoun oil projects. Definitely, operating West Karoun projects would contribute significantly to increasing oil production capacity and guaranteeing energy supply security, which would subsequently boost Iran’s power of bargaining at international forums.

In its oil production projects, NIOC banks in on West Karoun. It hopes to bring West Karoun’s oil output to 1.2 mb/d this year.

6-Fold Oil Output

Iran’s oil production capacity from West Karoun fields stood at 70,000 b/d in 2013, which has now reached 400,000 b/d, which means six-fold increase in seven years.

Minister of Petroleum Bijan Zangeneh has said that oil production capacity at West Karoun fields would reach 1 mb/d in the near future.

The end of COVID-19 crisis and economic prosperity in various nations means the world would have to develop renewable energies. Oil and gas-rich nations would be playing a decisive role in the global economy. Iran sits atop 12% of the world’s oil reserves, coming third after Venezuela and Saudi Arabia in terms of crude oil reserves.

According to BP statistics for 2018, Venezuela holds 303.3 billion barrels of oil in place (17.5% of world total) and Saudi Arabia owns 297.7 billion barrels of proven crude oil reserves, i.e. 17.2% of world total. Based on BP data, Iran was estimated to hold 155.6 billion barrels of proven crude oil reserves. i.e. 9% of the world total. But the discovery of another 53 billion barrels over recent years, would bring Iran’s share to 12%.

First Oil Output Lift by Iranian E&P Firm

Negar Sadeqi

 Four years have passed since Petroleum Ministry cleared a number of Iranian companies to work in the Exploration and Production (E&P) sector. Now Dana Energy says in partnership with foreign firms under an Iranian Petroleum Contract (IPC)-based deal, it has managed to enhance oil production from the West Paydar and Aban fields.

Mahmoud Mohaddess, head of division of Exploration and Production of Dana Energy, said: “With a 20% share in this increased production, we are the first Iranian E&P company to have a sustainable share in national oil production.”

Dana Energy was among the first group of upstream oil contractors whose qualification was approved by the Petroleum Ministry in June 2016 for E&P projects. It came months after Iran and six world powers started implementing a historic nuclear accord under which sanctions on Iran had been lifted. That coincidence was expected to bring about chances for cooperation between Iranian E&P companies and their partners as the new framework of contracts had been endorsed and foreign investors were seeking opportunities for investment in Iran. The Petroleum Ministry also hoped that Iranian oil contractors would become E&P firms over a 15-year period and operate projects beyond borders.

Over the two years following the implementation of the Joint Comprehensive Plan of Action (JCPOA), numerous agreements were signed with foreign companies at National Iranian Oil Company (NIOC) and E&P firms were ready to play their new role in the petroleum industry. Rounds of talks were held between them and foreign investment companies. Dana Energy struck several agreements for cooperation on E&P contracts with international companies and was instrumental in technical studies and contractual negotiations with NIOC.

However, following the US withdrawal from the JCPOA, foreign investors pulled out of Iran. Some of them have continued to cooperate with Iranian E&P firms without any media hype though. It has to be acknowledged that tough US sanctions on Iran’s petroleum industry largely impacted the activities of Iranian firms and slowed down the growing trend which was racing ahead.

Mohaddess said: “After the JCPOA was signed, many European companies came to Iran as they were interested in partnership in oil development and investment agreement. Dana Energy also reached good agreements with them and MOUs were signed. However, due to international circumstances, despite significant progress in the memorandums, only one memorandum was finalized.

Output Lift in West Paydar/Aban Fields

In late March 2018, an agreement for development of Aban and West Paydar fields was signed between NIOC and a consortium of Dana Energy and a foreign company. The idea behind this agreement was to improve the recovery rate and boost production from the two fields which Iran shares with Iraq. The objective is to double output over a 10-year period. The foreign party’s share is 80%.

Touching on this agreement, Mohaddess said: “Fortunately, ever since this project was launched two years ago, several wells have been worked over and several electrical submersible pumps have been installed. Currently, oil production in Aban and West Paydar has more than doubled from the production baseline and Dana Energy holds a 6,000 b/d share.

“A major contractual principle in IPC is to transfer technology and attract investment. Over the past three years, despite restrictions we have managed to achieve breakthroughs in transferring in technical knowhow and attracting investment,” he added.

Therefore, Dana Energy is the first Iranian E&P company to have implemented its IPC agreement for increased output amid sanctions on Iran’s petroleum industry. Of course, it should not be imagined that Iranian companies, over the past two years, have easily achieved this success. They had to go through a difficult process as sanctions were in effect. In many cases, talks were suspended in the final stages. Technical knowhow and importing some technically-sophisticated oil equipment caused these companies many problems.

Operator in Oil Fields

Development of West Paydar and Aban was not the only project to have been handled by Dana Energy. Many other projects were being negotiated during the months following the JCPOA implementation, but they were stopped in 2018 following the US withdrawal.

“We decided to update the Sohrab field development plan by ourselves and we sent our proposal to NIOC. We continued our talks with NIOC, but our proposal was based on what we had prepared earlier in partnership with a European firm,” said Mohaddess.

“Hopefully, talks have been finalized and are in the phase of getting permission from the Economic Council. Given the importance of start of work in the Sohrab field development, we hope that development operations would begin quickly,” he added.

Iraq signed an agreement with a Chinese firm in April 2018 to develop the Hovaiza oil field, which is shared with Iran under the name of Sohrab.

Dana Energy is set to be the operator of the Sohrab field project. It can now hold talks with foreign companies.

“We have always said in our talks with NIOC that we want our contracts to follow international norms so that we can choose our foreign partner any time. NIOC has accepted this demand,” said Mohaddess. “In fact, our talks and contract are such that the ground would be paved for finding a foreign partner. But since US sanctions remain effective on Iran, we don’t expect foreign investors to immediately start their talks with us. However, we are signing agreements with our foreign partners, which would be helpful and mutually beneficial, i.e. win-win deals.”

“The fact that we have agreed to be operator in the development of the Sohrab field shows that we have created this capability in our side to develop an oil project independently,” he said.

Sanctions Hinder Technical Savvy Imports

Under the present circumstances, attracting investment and technology remains a major obstacle to the activity of Iranian E&P companies.

Mohaddess said: “If favorable international conditions are prepared for activity in Iran’s petroleum industry, and we can have access to international markets, we will be able to import technical knowhow by ourselves. We know where to find technical knowhow and we have already worked out financing mechanisms. Now if a foreign company is willing to join us, we will be expecting them to help improve the project based on their share.”

Asked if no foreign partner is found to provide new technologies, he said: “I cannot reveal everything due to sanctions, but we have our own channels of access despite all hardships. It is not such that we would not achieve our objectives. But if we find a foreign partner to match our field development objectives our path will become smoother and we will achieve our objective sooner.”

“Although over the past two years our talks with foreign companies have not progressed significantly, some companies have not closed the doors to talks with us, and they are waiting to see when sanctions would be lifted. Therefore, we planned our development activities with the assumption of foreign companies being absent in Iran,” he said.

Unequal Rivalry

Mohaddess said: “Dana Energy is active in the services, as well as E&P. In the services sector covering seismic testing, processing and interpretation, it can drill development or exploration wells and even provide services to all neighboring and even farther states that may need our services.”

“But in the E&P sector, due to restrictions caused by sanctions the projects currently under way in Iran are more lucrative than any project to be implemented abroad. Therefore, we are focusing on domestic projects now. Of course, the fact is that we are very interested in linking ourselves to international markets,” he said.

“It is also noteworthy that in the region, only Iran’s petroleum industry is under sanctions and we are in unequal rivalry with foreign companies. We cannot bid for international projects easily as our rivals do. Otherwise, drilling an oil well in Azadegan is no different from drilling in Majnoon, and we can do it on our own. The technical properties of wells are the same, but if conditions become conductive we will definitely be able to operate oil projects in neighboring nations,” he added.

Persian Gulf Star Refinery Rejuvenates Iran Oil Industry

 Mahnaz Mohammad Qoli

 Iran was importing gasoline until two years ago. In 2018, Iran imported up to 4.5 ml/d of gasoline. It is now exporting gasoline to regional and world nations. In light of the commissioning of the Bandar Abbas Condensate Refinery, known as the Persian Gulf Star, Iran became an active exporter of this strategic product during the first seven months of the current calendar year, earning about $1.4 billion in revenue. This report reviews the current condition of gasoline export and diversity in refined petroleum products supplied by the treatment facility.

In 2006, Iran was importing more than 27 ml/d of gasoline, which cost Iran too much in hard currency for energy supply security. Therefore, the issue of gasoline sanctions took up added significance and Iran had to reconsider some petrochemical processes in order to use an alternative product to gasoline.

Following the commissioning of the Persian Gulf Star refinery, the page turned for Iran’s refining industry and the country became independent of gasoline imports thanks to the daily output of more than 50 ml of Euro-4 and Euro-5 grade gasoline. Furthermore, the country became a gasoline exporter for the first time.

In fact, as the case of Iran’s gasoline imports drew to a close in October 2018, a new chapter opened to Iran’s refining industry. Therefore, refining units supplied domestic needs and even accounted for gasoline exports.

Previously, although nine oil refineries were operational in Iran, the country had to import 27.3 ml/d of gasoline to meet domestic needs. To that effect, millions of dollars spent on gasoline imports rather than being invested in other projects. But today, with the development of the refining industry and completion of the Persian Gulf Star facility, the crude oil and gas condensate refining capacity has reached 2.3 mb/d, ending the need for budget allocation for gasoline imports.

Killing 2 Birds with 1 Stone

At the first glance, the imagination is that by building and operating the world’s largest gas condensate refinery in Bandar Abbas, Iran is seeking to become independent of gasoline imports. But a deeper look at the mix of feedstock and products of this mega-refinery shows that self-sufficiency in gasoline production would be only the first link in the chain of the refinery construction and development. Consumption of more than 500,000 b/d of condensate at this refinery along with enhanced production of gasoline and gasoil has reduced gas production risk in the South Pars gas field, and guaranteed reliable gas supply to industries, refineries and household sector in addition to putting gas aside for export to neighboring nations. Of course, commissioning the Persian Gulf Star refinery has afforded the petroleum industry another bargaining chip, raising the naphtha output capacity to 4 ml/d, which has become a key liquid feedstock for Tabriz and Shazand petrochemical plants. To put it more simply, Iran’s oil refining industry has killed two birds with one stone by operating the Persian Gulf Star refinery. On the one hand, the ground was prepared for self-sufficiency in gasoline and gasoil production, and on the other hand, put an end to naphtha feedstock shortages in the petrochemical industry.

Higher Supply and Lower Demand

With the outbreak of the coronavirus, followed by lockdown measures across the world, demand for crude oil, natural gas and petroleum products dropped sharply. According to official data, the average gasoline consumption stood at 97 ml/d during the first seven months of last calendar year, which fell about 30% to 75 ml/d this calendar year. Meantime, as COVID-19 conditions persisted in Iran and across the world, most refiners in Europe, India, China and South Korea among others, were strongly present in export markets in order to head off closure of refining facilities and job losses. That has helped the petroleum products – particularly gasoline, gasoline and jet fuel – market a supply-based market outstripping demand. Under the present circumstances, Iran’s refining industry could not supply more due to the decline in domestic demand while on the other hand; air and land routes were closed due to the coronavirus, thereby making it impossible for producers to export fuel.

Diversity in Products Mix

A renewed look at the oil refining industry shows that in terms of quantity, Iran’s refining capacity stands at about 2.3 mb/d, while the production capacity of gasoline and gasoil (both euro-grade) stand respectively at 110 mb/d and 120 mb/d. Therefore, with diversity in the products’ mix, particularly a strategically important product like naphtha, this industry has managed to neutralize the crisis through enhanced naphtha production and exports. Naphtha is used in the petrochemical and polymer industry. Heavy naphtha feedstock has been used in the catalytic conversion unit rather than being used in the isomerization and gasoline pools in order to feed aromatic industries like benzene, toluene and BTX.

According to experts in the feedstock sector, the lighter a product is and the lower in terms of sulfur content, the lower investment you would need for the development of the petrochemical industry. More middle distillate products would be out at your disposal for the development of this industry. When the feedstock is heavy and sour, more technology and investment would be needed. Therefore, gas condensate may create a unique opportunity for the design and construction of petro-refineries. More than 60% of gas condensate components may be transformed into naphtha, which is the main feedstock for petrochemical plants.

New Concepts in Refining

Naphtha production has given rise to new concepts in this industry. Gone is the time of refinery construction merely for producing fuel. Even under post-COVID circumstances, Iran may diversify its transportation sector fuel mix and enhance the CNG share in order to manage the jump in the gasoline consumption and through increasing the CNG share in the fuel mix in the transportation sector, billions-dollar investment would be used for the construction of petro-refineries rather than building refineries to produce gasoline and gasoil.

Oil and gas are not separate. In Iran, with a diverse mix of feedstocks like ethane, methane, propane, butane and condensate; as well as a variety of crude oil categories, it would be possible to build lucrative industries running on various oil and gas feed stocks. Naphtha production and exports under sanctions and COVID-19 condition showed that the resilience of the oil refining industry would increase along with diversity in the mix of products.

Tehran Refinery Gasoline Upgraded to EU- V

 The design and construction of a new continuous catalytic reforming (CCR) unit is a priority program at the Tehran oil refinery with a view to upgrading the quality of gasoline production. That would increase the quality of gasoline supplied by the Tehran refinery to the Euro-5 grade. Furthermore, the octane number of gasoline would reach 91, currently 87.

CEO of Tehran Oil Refining Company Hamed Armanfar tells "Iran Petroleum" this project would yield $1 per barrel of crude oil in margins.

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

After Iran and six world powers reached the 2015 nuclear deal, a memorandum of understanding was signed with Japanese companies for the construction and financing of a new CCR unit for Tehran oil refinery. Is it still on the agenda at the Tehran refinery?

Yes, carrying out designing, purchase, installation and launch of heavy naphtha processing unit, CCR, benzene reduction and liquid gas deethanization are on the agenda of this company. That would decrease the benzene content in gasoline to below 1%. The octane number will go from 87 to 91 and comply with EU-V standard. It is noteworthy that by building liquefied gas deethanization unit, bottlenecks in the liquefied gas production units of the refinery would have been removed. This is among the environmental projects of the Tehran oil refinery, whose implementation would be aimed at honoring environmental considerations, achieving organizational excellence, winning society and client satisfaction. Therefore, by designing and building the CCR unit and benefiting from existing potentialities and resources at the Tehran refinery, the total quality of gasoline produced at this facility would be upgraded to EU-V, and the gasoline output would grow 14% in volume. The profitability of this project is estimated at $1 per barrel of crude oil.

How have sanctions affected the perspective of Tehran oil refinery operation?

Since the 1979 Islamic Revolution, the US has been imposing unilateral sanctions on Iran. Various measures have since been undertaken to bring Islamic Iran to its knees, but they have failed. Following the US withdrawal from the JCPOA, crippling and toughest ever sanctions, as they say, were adopted both economically and diplomatically against our country, but despite problems we have relied on domestic manufacturing and made maximum use of capabilities of domestic manufacturers and suppliers to leave behind sanctions and go ahead with sustained production. We have implemented many projects aimed at renovation of refineries and improvement of the process of production. Of course, I would like to say that in the near future, we will be making necessary purchases for the CCR project.

What are your plans for refinery development?

The perspective and strategic objectives of organization have been designed based on a strategic management blueprint. Furthermore, based on strategic objectives, improvement projects have been defined in line with the objectives, outlook and mission of the organization, which are monitored every month. In the domain of upgrading the quality of products and increasing production with higher value-added, I may refer to the project for building gasoline quantitative and qualitative upgrade units. In the domain of energy management, fuel consumption and cost management, Tehran refinery is envisaging connection to city power grid, reducing liquid fuel consumption and finding lower-cost alternatives, enhancing gas-fueled power plants’ yield and operating a new one (Gas Turbine Generator) instead of the old steam turbine generator (STG). As far as sustained production is concerned, despite the covid-19 pandemic, the company had satisfactory overhaul planning for the first half of the year. A plan is also under way to replace urban water with water received from the treatment plant of Rey. Other important measures under way at Tehran oil refinery include construction of heavy naphtha treatment units, CCR, benzene reduction and deethanization for the purpose of hydrogen treatment of heavy naphtha and increasing the final octane number of gasoline. Furthermore, design, purchase, installation and operation of boiler economizers to increase the output of boilers by reducing fuel consumption and environmental pollutants, treating water received from plants in southern Tehran and distributing it in the refinery in order to substitute for treated wastewater as part of the strategic management plan and building a hexane normal solvent unit to recover normal hexane from byproducts of the isomerization unit.

As industries are apportioned the blame for air pollution in Tehran, what has Tehran refinery done to curb pollution?

The environmental air pollution gauge stations and the meteorology station of southern Tehran constitute the most important responsible decision by Tehran oil refinery in the current calendar year in monitoring air pollution in line with environmental obligations. It is noteworthy that halting liquid fuel supply and using natural gas instead to power furnaces and boilers, using lox-nox and low-sox flares in furnaces and boilers, installing oxygen analyzers on all refinery furnaces to control the process of combustion, installing analyzer to monitor air pollution parameters on 15 furnaces, installing gas treatment equipment in the sulfur recovery unit, building a sulfur granulation unit to prevent the emission of sulfur particles, building a nitrogen production unit to use as cover gas, implementing self-declaration plan in monitoring to measure the smokestack, treatment station and ambient air output as well as building isomerization units to produce clean gasoline, treat kerosene to lower its sulfur content and treat gasoil to produce diesel fuel in line with global standards and planning for the construction of a catalytic transformation facility to upgrade the quality of gasoline are among the most important measures undertaken by Tehran oil refinery aimed at improving the quality of products and cutting air pollution.

What measures have been undertaken for wastewater and industrial waste management?

As far as wastewater and industrial waste management is concerned, the treatment capacity of waste has been increased to 11,000 cubic meters a day, shock-absorbing pools have been constructed, wastewater has been purchased from the southern Tehran treatment facility, reverse osmosis-based treatment facility has been built to treat the purchased waste, a biological centrifuge has been purchased and installed to recover oil waste. Furthermore, an online monitoring system has been installed on the treatment facility and connected to the Department of the Environment, processing and non-processing waste has been classified based on RCRA, the status quo has been identified, the waste produced at all refining units have been studied in terms of quantity and quality, general and technical instructions have been adopted on handling varieties of waste while HSE instructions have been implemented. As far as underground water and soil pollution is concerned, academic advisors have been hired to study and monitor underground water pollution and identify the origins of pollution in the Rey industrial area, recover oil substances from underground water wells, drill appraisal wells to control and monitor underground water pollution, make feedstock and product reservoirs resistant to leakage to underground water and soil and conduct seismic survey to monitor underground water pollution. Meantime, Tehran oil refinery was designated among the top 10 in terms of environmental measures in 2019 after evaluation by NIORDC.

What has been done to reduce accidents and increase safety at refineries?

Planning to establish a risk-based process safety management as described in the Center for Chemical Process Safety (CCPS) guidebook, adopting an action plan for implementing PSSR instructed by the refining and distribution division in ongoing projects and overhaul based on the requirements of RB-PSM based on CCPS, completing and updating process risk assessment based on the HAZOP method and risks related to other activities, risk assessment before starting non-routine jobs based on the operator’s request, fire risk assessment and estimation of insurance premium applying the Dow Index method, establishment of HSE high committee for urgent prevention in the HSE sector on a regular monthly basis in accidents and presenting control and reforming solutions, registration, examination and analysis of all events including near-miss, medical treatment and accidents and finding the root causes of accidents to prevent any repetition, setting up an analysis and inquiry committee to prevent accidents based on the PSM model, updating the instructions of HSE division, supervision the management of change (MOC) system through CMMS software by safety monitors stationed at units and using intelligent EHS to monitor and register unsafe cases in overhaul are among the most important measures that have been undertaken with a view to preventing accidents and boosting safety at refineries.

Output Hike Potential in Salman & Sumar

 Salman oil field located in the Persian Gulf is jointly owned by Iran and the United Arab Emirates (UAE). The shared offshore field has high-pressure gas layers, too. Discovered about 45 years ago, the Salman field has since been supplying oil.

 It is located in Hormuzgan Province and more specifically 144 kilometers south of Lavan Island.

Due to the existence of about 70% of oil and gas layers of this oilfield in Iran’s territorial waters and its shared status, its development has always been a priority for Iran’s petroleum industry. In the 2000s the platforms of this field that had been damaged during the 1980-1988 imposed war were renovated.

A couple of years ago in Tehran, the Iran Offshore Oil Company (IOOC) nominated Salman along with the Norooz, Dorood, Foroozan and Soroush as candidates for development under the newly developed contractual framework known as the Iran Petroleum Contract (IPC).

In compliance with the Petroleum Ministry’s policy of prioritizing development of jointly owned fields, Salman is the most important of the five fields for development.

Given the history of oil production in the Salman field, it seems that the main objective of Iran’s petroleum industry in such ageing fields as Salman has been to apply cutting edge technology for maximum efficient recovery and enhancing the rate of recovery from these fields.

Despite the high recovery rate in the Salman field, some layers of this field have yet to be depleted. Therefore, it is possible to enhance output from this mature brownfield.

Salman contains light crude oil with API gravity varying between 33 and 37. Renewed development of the Salman field allows for increased output. If enhanced oil recovery (EOR) methods are applied, a much higher output is envisioned.

Salman field incorporates an asymmetric anticline measuring 14 kilometers long and 11 kilometers wide. Geologically, it is composed of three oil production layers dating from the Jurassic and Cretaceous eras.

The Salman field also incorporates a gas layer.

The field was discovered in the 1960s by Lavan Petroleum Company. The first exploration well in this field was drilled in 1956 to allow for production, three years later.

According to the latest data, the field has 44 oil and 10 gas wells. Based on studies currently under way, gas production from Salman could rise after making some arrangements.

The field is owned 67% by Iran and 33% by the UAE. No precise figure is available on gas production from Salman whose rate of recovery stands at 51%.

The oil extracted from Salman field is carried to Lavan Island via a subsea pipeline of 22 inches in diameter for final processing on onshore facilities and then exported or stored to feed the Lavan refining facility.

Despite being ageing, Salman still has an acceptable level of deposits. A timely development of this field would boost its output. Five platforms are currently operating in this field.

Among the three reservoirs in Salman, the one located at a depth of 10,000 meters under seabed accounts for 70% of the Salman output. A layer located at a depth of 8,000 feet accounts for 20% of the Salman output and a third layer at a depth of 5,000 feet for 10%.

Salman is estimated to contain 4.5 billion barrels of oil in place. Since 1999 onwards, when a number of oil and gas fields were developed under buyback deals, studies on the Salman field were carried out under the supervision of Petroiran Development Company (PEDCO) and the Petroleum Engineering and Development Company (PEDEC).

The primary processing of crude oil is done on platform prior to being carried in a 144-kilometer-long pipe for secondary processing, storage and exports to Lavan.

Gas produced from the nine wells in this field is carried to Siri Island via a 36-inch pipeline.

Sumar Development a Must

Sumar oil field, which was discovered in 2009 in the western province of Kermanshah, is jointly owned by Iran and Iraq. Sumar holds 475 million barrels of crude oil in place, 70 million barrels of which is recoverable. Iran plans to develop this field based on the new model of oil contracts: the IPC.

Sumar is a newly discovered field, but since it is shared with neighboring Iraq, the National Iranian Oil Company (NIOC) has prioritized its development.

But when Iran decided to develop it, its petroleum industry was under international sanctions and it had to award the contract under an EPCF agreement to Iranian companies. The contract envisaged drilling two wells, building stations for transmission and separation of oil and gas, pumping and gathering systems. Production from Sumar was initially expected to start two years after the start of operations with Phase 1 output at 5,000 b/d and Phase II output at 10,000 b/d, but this objective was not achieved.

However, the Iranian Central Oil Fields Company (IOFC), which administers Sumar, drilled one well which produced 3,000 b/d. The oil produced from this field is being carried via a 23-kilometer pipeline to Naftshahr production/desalination unit.

In preliminary assessment report on Sumar oil field in 2009 and 2010, development of the field in Asmari Formation with an initial output of 5,000 b/d from four wells was envisaged.

In the study conducted for the transfer of oil from Sumar oil field to Naftshahr production and desalination unit, installation of multiphase pumps, and a single-phase transmission system including a separator, pump and compressor fitted with OLGA and PIPESIM were envisaged.

The preliminary studies indicated that at most 5,000 b/d of pre-salt oil could be processed at Naftshahr production and desalination unit. But as long as non-salt oil is being produced, the processing of the entire oil is possible in the old unit.

Drilling three new vertical fields in Asmari Formation, workover of an oil production well, installing a 25-kilometer offshore streamline stretching from wells to manifold, acquisition of land and drilling of well, setting up manifold and two-phase separation system, purchase and installation of single-phase pumping system with a capacity of 10,000 b/d, 123 horsepower and 550 pam external pressure, laying out 23-kilometer pipeline to carry 10,000 b/d of oil to Naftshahr production and desalination unit, installing 48 kilometers of power supply lines and a 1.5MW electricity station stretching from Naftshahr to satellite manifold and Sumar wells; are among the most important equipment and facilities needed for Phase 1.

After Iran signed a landmark nuclear deal with the six world powers, Poland's PGNiG signed a memorandum of cooperation with the Department for Development and Engineering Affairs of NIOC in November 2016 to study Sumar.  The CEO of PGNiG said at the time that cooperation with the NIOC would clear the way for more cooperation in oil extraction.

The Sumar recovery rate currently stands at 15% and it holds light oil. Four new wells are expected to be drilled in Sumar for a daily output of 4,500 b/d.

PGNiG submitted the findings of its studies to the NIOC in December. The report has been reviewed by the Committee of Advisors at the NIOC Directorate of Reservoirs. A final decision is to be made on the development of Sumar, shortly.

Arvand & Doroud Up for Investment

 Iran’s petroleum industry is considering development of all oil fields it shares with Iraq by foreign companies under the new contractual framework. Doroud and Arvand are among these oil fields which would be attractive to foreign investors.

Until a couple of years ago, development of the oil and gas fields  that Iran shares with neighboring countries had been slowed due to financial and technical impediments in Iran, thereby helping neighboring nations make big gains.

Iran has shifted toward the development of joint oil and gas fields located mainly in South Pars and West Karoun. In the West Karoun area, Iran shares oil fields with Iraq. Three West Karoun oil fields recently started production.

Arvand oil field which is located 50 kilometers south of Abadan in Khuzestan Province is one of these fields in question. The field lies at the entry of Arvandroud River and is 42 kilometers long and 13 kilometers wide.

Arvand is estimated to contain one billion barrels of oil in place with a recovery rate of 15%. Arvand also holds over 14 bcm of dry gas and 55 million barrels of gas condensate.

Discovered in 2008, the Arvand field lies along Iran-Iraq border. Drilling had started in Arvand in 2006 for the purpose of estimating the hydrocarbon potential of the formations in the Khami and Bangestan centers.

Four well logging operations were carried out in the Fahlyan formation to prove the existence of oil and gas in that formation. Fahlyan formation holds light crude oil with API gravity at about 44.

The Arvand oil field is administered by the Arvandan Oil and Gas Production Company (AOGPC) whose production is estimated to reach 1.4 mb/d by 2025.

AOGPC is estimated to have the highest oil and gas production rate in the coming decade. A major facility inside this field is a 165,000-barrel-per-day processing unit. This treatment unit was built by National Iranian Oil Company during years when Iran was under sanctions. A variety of crude oil may be processed at this facility. Thanks to the existence of this treatment facility, the return of investment will be fast. Any investment in the development of the Arvand oil field will have a good rate of return. The short distance between the Arvand field and the treatment facility is an indicator of the fast development of the oil field.

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

The Arvand oil field is expected to produce 5,000 b/d of oil in the first phase, which would reach 20,000 b/d in the final phase. The investment needed for the development of this field is to be $135 million, which is likely to increase. The API gravity of oil contained in Arvand varies between 39 and 43. The Arvand oil is planned to be delivered to the Abadan refinery.

Iran and Iraq share eight oil fields along their joint border with combined recoverable reserves of 14 billion barrels. The eight fields are Dehloran, Naftshahr, West Paydar, Azar, Azadegan, Yadavaran, Dehloran and Arvand. These fields have different names on the Iraqi side. Nine percent of Iran’s crude oil reserves exist in the fields shared with Iraq.

As recovery from jointly owned fields leads to migration of hydrocarbon, NIOC officials are concentrating on the development of such fields.

3rd Stage of Doroud Development

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

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

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

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

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

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

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

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

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

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

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

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

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

Production Costs Trend as Oil Age Ends

 Shuaib Bahman

Crude oil extraction and production cost is an effective factor in oil pricing. Such costs vary from one spot to another, depending on the size and availability of oil reserves. Although most oil companies are unwilling to release precise data about oil production costs.However, estimates about costs of extracting oil from active fields in various countries are available. Comparing these costs would be key to analyzing the future of world oil markets. This data would show which countries can keep producing oil, even though in periods when prices keep falling. This issue takes up added significance in light of significant reduction in oil prices over recent years.

Oil Costs Equation

In the Persian Gulf region where most OPEC nations are located, oil is produced at very low costs because the oil fields in this region can have primary production. Oil production costs have varied between $7 and $12 a barrel in the Persian Gulf over the past decade, far lower than $30-40 a barrel in some other areas.

Estimates show that oil extraction and production in key OPEC member states would continue to be much less expensive than that of  non-OPEC producers like the US, Russia, Canada, Brazil and Britain.

The main reason for difference in oil production costs in various nations results from the difference in nature of oil fields and methods of production.

Production from an oil field would impose costs on at least two sectors. The first one covers capital expenditures (CAPEX) including primary measures for identification of a field like exploration and seismic testing, drilling, development and operation. The second one covers operational expenditures (OPEX) which would integrate all costs affecting production. Some of them are staff salary and maintenance costs.

Crude oil transportation to destination imposes extra costs. Given the distance from the starting point to destination and the safety of route, oil production cost per barrel would go up. Production costs would be much higher for deeper and offshore fields.

OPEC, Non-OPEC Production Costs

Britain is currently enduring the highest costs in oil production in the world, reaching $44.33 a barrel. Due to tough access to the North Sea, oil extraction costs are high there. It is followed by Brazil ($34.99) and Canada ($26.64). In the US, shale oil production costs $23.35 per barrel, while that of conventional oil is $20.99. Russia spends $19.21 for each barrel of oil to be produced, while the figure for Norway is $21.31.

Among OPEC nations, Nigeria in terms of cost per barrel comes first by spending $28.99 per barrel, followed by Venezuela ($27.62) and Indonesia ($19.71). Middle East nations pay much less: Saudi Arabia ($8.98), Iran ($9.08) and Iraq ($10.57).

The reason for low costs in Saudi Arabia is that its crude oil reserves are not located in high depth. The size of its fields also make oil extraction economical. Iraq generally pays small sums for each barrel, but there are some mature fields in this country to require higher costs for oil recovery.

Taking into account the low costs of oil production in Iraq, Iran and Saudi Arabia – all top OPEC MCs – it can be argued that the Organization of the Petroleum Exporting Countries is influential on oil markets. At the end of 2019, OPEC member countries held about 79.1 % of the world proven oil reserves.

Threshold

In economics, when production costs exceed the cost price of a commodity in the market, production would be expected to go on a downward trend in order to help balance supply and demand. However, this issue would face specific challenges in the oil market, as many nations rely on oil for the bulk of their budget and revenue. Depriving them of this source of income would create economic and even political challenges. Technically speaking, the possibility of reducing the production from an oil resource would be challenging and is likely to damage existing industries or cause problems for future recovery. Therefore, global energy markets cannot simply follow all economic rules.

Meantime, high oil production costs while prices are low would mean low profits and in some cases would mean losses for producers. In case it results in a halt in oil production, more economic consequences like weakened global economic growth would follow, particularly because decrepit installations in some countries would increase production costs in the future. Therefore, if proper investment is not made in the petroleum industry of some nations, the world will be faced with oil production fall. Of course in recent years, shale oil production costs have declined significantly. Production cost of shale oil is normally higher than that of conventional oil; however, technological progress over recent years has narrowed down these two rates.

In any case, the most economical oil production still belongs to Persian Gulf states, which can even tolerate oil prices falling to $10, a threshold which would lead to the shutdown of oil industry in many other nations.

PetroRio New Owner of Brazil Frade Field

 Petrobras has completed the sale of its 30% interest in the Frade field in the Campos basin to a subsidiary of Brazilian independent PetroRio.

The latter now has a 100% controlling interest in Frade, situated 118 km (73 mi) offshore the north coast of the state of Rio de Janeiro, in water depths of 1,050-1,300 m (3,445-4,265 ft).

Production started in June 2009, last year averaging around 20,000 boe/d, with 6,000 boe/d net to Petrobras.

PetroRio also operates the Tubarão Martelo and Polvo fields in the same basin and is a partner in Manati in the Camumu-Almada basin.

Equinor Taking Writedown on Tanzania Gas Project

 Equinor will write down the book value of its Tanzania LNG project (TLNG) by $982 million.

After signing a production-sharing agreement with the Tanzania Petroleum Development Corporation (TPDC) in 2007, the company, as operator of offshore block 2, made nine gas discoveries with estimated in-place gas volumes of 20 tcf.

ExxonMobil is the other partner.

Over the past few years the partners have been working on a commercial framework for TLNG, but the expected breakeven price remains well above Equinor’s portfolio average.

Manned Subsea Ops Offshore Norway Approved

The Norwegian Petroleum Safety Authority (PSA) has issued consents for manned operations in 2021 to be performed by Technip Norge and Subsea 7 Norway.

Equinor signed framework agreements with the two contractors, and via a pool arrangement, Gassco and Vår Energi will also be able to draw on the framework agreements.

In Vår Energi’s case, this applies to the company’s Balder and Ringhorne fields in the North Sea and Goliat in the Barents Sea.

Technip Norge’s parent company TechnipFMC may deploy the DSVs Deep Arctic and Deep Explorer and the light diving craft (LDC) Seahunter for its campaigns.

Myanmar Coup May Force Offshore Project Reassessments

 Myanmar’s military coup could impact planned upstream offshore investments, according to Wood Mackenzie and Maplecroft.

Wood Mackenzie research associate Saloni Kapoor said: “We estimate that new upstream projects worth US$2 billion up until 2030 are yet to take final investment decision…

“Key developments such as PTTEP’s Block M9 (Zawtika) and Woodside’s Block A-6 account for around 40% of the country’s expected supply until 2030

Australasia Production Remains Resilient

 Even though 2020 was the year that oil and gas producers reduced output to balance the pandemic-hit demand, Australasia’s production did not only stay resilient, but it also rose a little, according to Rystad Energy.

It estimates combined petroleum output across all products was 1.210 Bboe last year, little changed from 1.208 Bboe in 2019.

Within this, Australasia – Australia, New Zealand, Timor-Leste, and Papua New Guinea – produced an average 160,000 b/d of crude oil, an increase of about 3% from 2019. The largest contributor to crude oil production growth was Woodside’s Greater Enfield project, which is estimated to produce about 28,000 b/d.

China to Raise Renewable Power Purchase to 40%

 China will force regional grid firms to buy at least 40% of power from non-fossil fuel sources by 2030 in order to meet the country’s climate targets, according to a new government document seen by Reuters.

Grid companies will steadily increase the amount of power purchased from clean generation sources from 28.2% in 2020 to 40% by 2030, according to a draft policy from the National Energy Administration (NEA), verified by a person with direct knowledge of the matter.

President Xi Jinping pledged last year to make China “carbon neutral” by 2060, and said in December it would boost the share of non-fossil fuels in primary energy consumption to around 25% by 2030 from a previous commitment of 20%.

“To ensure President Xi’s climate targets...(China) will set more stringent targets for non-fossil fuel consumption,” the NEA document said.

Power procured from non-hydropower renewable sources will reach a minimum of 25.9% by 2030, up from 10.8% last year, according to the draft plan, which has been opened up for consultation with stakeholders until Feb. 26.

The targets suggest China will rely on solar and wind to fulfill its renewable goals, and move away from the construction boom of large-scale hydroelectric projects in recent years.

In December, Xi also said that China will boost its installed capacity of wind and solar power to more than 1,200 gigawatts (GW) by 2030.

The targets set out in the NEA document are based on estimates that China’s total power consumption will reach 11 trillion kilowatt-hours and primary energy consumption will hit 6 billion tonnes of standard coal equivalent by 2030, according to the policy draft.

 Winter Storm Shuts US Oil Wells, Refineries

 A deep freeze across the United States is taking a toll on the energy industry in the largest US crude-producing state, halting Texas oil wells and refineries and forcing restrictions from natural gas and crude pipeline operators.

The rare deep freeze prompted the state’s electric power suppliers to impose rotating blackouts, leaving nearly 3 million homes and businesses without power. US President Joe Biden issued an emergency declaration, unlocking federal assistance to Texas.

Texas produces roughly 4.6 million barrels of oil per day and is home to some of the nation’s top gasoline and diesel producing refineries.

In Midland, heart of the West Texas shale region, a record snowfall and temperatures that hit a 32-year low closed offices and businesses. Temperatures are expected to rise above freezing.

“Some producers, especially in the Permian Basin and Panhandle, are experiencing unprecedented freezing conditions which caused concerns for employee safety and affected production,” the state’s energy regulator said.

Oil refiner Motiva Enterprises said it was shutting its 607,000 b/d Port Arthur, Texas, refinery, the largest in the United States. Valero Energy Corp and Total SE separately moved to shut their 335,000 and 225,000 b/d plants in Port Arthur, Texas, due to severe cold, sources familiar with plant operations said.

Exxon Mobil also began shutting its 369,024 b/d Beaumont refinery and 560,500 b/d Baytown refinery and chemical plant in Texas, sources familiar with plant operations said. Its Baton Rouge, Louisiana, plant also suffered operational issues.

Citgo Petroleum Corp said some units at its 167,500 b/d Corpus Christi, Texas, oil refinery were shutting due to weather-related power disruptions.

 Biden Administration Prodded on Nord Stream 2 Sanctions

Two US senators urged President Joe Biden to ensure the implementation of sanctions passed in January aimed at stopping the Nord Stream 2 Russia-to-Germany gas pipeline project, which a State Department spokesman reiterated was a “bad deal” for Europe.

Senators Jim Risch, a Republican, and Jeanne Shaheen, a Democrat, urged the State Department not to delay issuing a report to Congress required under sanctions passed in the annual defense policy bill, which they said was due by Feb. 16.

The report will identify companies involved in constructing, insuring and verifying Nord Stream 2.

BP Offers Employees Shares

Oil major BP is launching its first share award scheme to rally its more than 60,000 employees around CEO Bernard Looney’s plan to shift to renewable energy following a bruising year of mass layoffs, bonus suspensions and spending cuts.

The distribution of the shares, which will be locked for four years, will take place throughout 2021.

The cost of the program was not yet clear but BP said it would not impact its $2.5 billion cost savings target or plans to reduce debt to $35 billion this year.

Looney, who took office a year ago, held a company-wide town hall meeting where he announced that all employees would receive shares, the first such program in BP’s history, according to a company spokesman.

Oil Price Rally Points to More OPEC+ Easing

 OPEC+ oil producers are likely to ease curbs on supply after April, given a recovery in prices, OPEC+ sources said, although any increase in output will be modest as producers are wary of fresh setbacks in the battle against the pandemic.

The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, slowed the pace of a planned output increase in January to match weaker-than-expected fuel demand due to continued restrictions on population movement because of the pandemic. Saudi Arabia made additional voluntary cuts to supply for February and March.

An oil rally since then to a 13-month high to almost $64 per barrel has boosted confidence among producers that the market could absorb more supply.

Europe Pulls Ahead in Race for Hydrogen

 Most of the world’s planned hydrogen projects and the biggest chunk of related investments this decade are expected to be in Europe, an industry report said, as the continent races to scale up the low-carbon fuel to meet climate goals.

The European Union has made hydrogen a key plank in its aim to eliminate its greenhouse gas emissions by 2050, this decade with plans to install 40GW of electrolyzes - equipment to produce emissions-free hydrogen using water and renewable power.

The EU currently has less than 0.1GW of electrolyzes, and is betting on a rapid scale-up to decarbonize steel, heavy transport and chemicals, the latter of which already uses hydrogen produced from fossil fuels.

 Nigerians Win UK Court OK to Sue Shell

 The UK Supreme Court allowed a group of 42,500 Nigerian farmers and fishermen to sue Royal Dutch Shell (RDS) in English courts after years of oil spills in the Niger Delta contaminated land and groundwater.

Senior judges said there was an arguable case that UK-domiciled Shell, one of the world’s biggest energy companies, is responsible, in the latest test of whether multinationals can be held to account for the acts of overseas subsidiaries.

Represented by law firm Leigh Day, the group of Nigerians have argued that the parent company Shell owed them a duty of care because it either had significant control of, and was responsible for, its subsidiary SPDC. Shell countered that the court had no jurisdiction to try the claims.

“(The ruling) also represents a watershed moment in the accountability of multinational companies. Increasingly impoverished communities are seeking to hold powerful corporate actors to account and this judgment will significantly increase their ability to do so,” Daniel Leader, partner at Leigh Day, said.

“UK common law is also used in countries like Canada, Australia and New Zealand so this is a very helpful precedent.”

The decision comes almost two years after a seminal ruling by the Supreme Court in a case involving mining firm Vedanta. The judgment allowed nearly 2,000 Zambian villagers to sue Vedanta in England for alleged pollution in Africa.

That move was seen as a victory for rural communities seeking to hold parent companies accountable for environmental disasters. Vedanta ultimately settled out of court in January.

Nigeria’s Ogale and Bille communities allege their lives and health have suffered because repeated oil spills have contaminated the land, swamps, groundwater and waterways and that there has been no adequate cleaning or remediation.

Talos, Enauta Consortium Places Bid for Petrobras Fields

 A consortium of Talos Energy Inc, private equity firm EIG Global Energy Partners, Enauta Participacoes SA and 3R Petroleum Oleo e Gas SA has submitted a non-binding offer for Brazilian oilfields Albacora and Albacora Leste, five sources familiar with the matter told Reuters.

The exact value of the bid submitted to Brazil’s state-led oil company Petrobras was unclear, though the asset is likely to fetch in the billions of dollars, said two of the sources, who requested anonymity to discuss confidential talks. The bid was officially submitted, one source said.

The two fields produce 77,000 barrels of oil equivalent per day according to tender documents released by Petrobras. The state-run oil firm is seeking to rapidly de-leverage by selling non-core assets.

Petroleo Brasileiro SA, as the producer is formally known, has sold dozens of small and medium-sized fields over the last two years. The Albacora divestment would be the largest since 2017, when the company agreed to sell a stake in its Roncador field to Norway’s Equinor ASA for $2.9 billion.

If the bid is successful, it would mark a significant geographic shift for Talos, which is active only in the Gulf of Mexico.

In recent years, Talos has attempted to negotiate a so-called unitization agreement with Mexican national oil company Pemex over the offshore Zama discovery, which the Houston-based company announced in 2017. Pemex claims most of the nearly 700-million-barrel find is in its adjacent field, and talks have been an enduring headache for Talos.

A source familiar with the firm’s strategy described the Albacora offer as consistent with Talos’ push for adding offshore scale and diversity to its portfolio.

Both Washington-based EIG and Brazil’s Enauta have previously said they were looking to use cash firepower from recent divestments to make acquisitions in Brazil, including production assets.

Shell LNG Canada's Coronavirus Restart Plan Approved

 Royal Dutch Shell’s LNG Canada export project in British Columbia has won approval from health officials for construction to ramp back up with improved coronavirus protection measures.

Work at the site was curtailed last month by an order from the Provincial Health Officer which applied to five major industrial projects in British Columbia, including LNG Canada.

“Our approved restart and measured workforce increase at the project site will continue over the coming months,” LNG Canada and JGC I Fluor, the engineering joint venture building the project, said in a statement.

LNG Canada said the coronavirus restart plan includes additional coronavirus testing for workers.

All non-local workers will continue to be forbidden from leaving the site except for medical emergency or “critical” appointments that cannot be held virtually or postponed, it added.

LNG Canada is the only big LNG export plant under construction in Canada.

It is set to cost about C$40 billion ($31.4 billion), and is designed to produce about 14 million tonnes per annum (MTPA) of LNG or 1.8 billion cubic feet per day of natural gas.

Before coronavirus delayed the project, it was expected to start producing LNG in 2024. Many analysts however now say they expect the project to enter service in the second half of 2025.

Officials at LNG Canada were not immediately available to discuss the cost or timing of the project.

S&P Downgrades Exxon and Chevron

 S&P Global Ratings cut the credit ratings of top US oil producers Exxon Mobil Corp, Chevron Corp and ConocoPhillips by a notch, citing massive quarterly losses and the pressure to tackle climate change.

The ratings slipped to ‘AA-,’ weeks after the agency warned it was considering downgrades for 13 of the world’s largest oil companies due to the rising risk from energy transition and volatile commodity prices.

Several oil companies posted billions of dollars in losses in 2020 after the COVID-19 pandemic brought global travel to a standstill, slashing fuel demand and sending crude prices to historic lows.

The sector is also under pressure from investors and pension funds demanding companies to disclose their carbon footprint and reduce greenhouse gas emissions by investing in renewable energy projects.

While companies including Exxon, Chevron and ConocoPhillips have announced steps to tackle climate change, S&P said it does not see those “providing material credit differentiation”.

Investors are also pressuring the companies to cut spending and focus on dividends and buybacks after the sector amassed massive debts to grow during shale oil’s golden era.

S&P has a ‘stable’ outlook on Chevron, widely considered to have the best restraint on spending. ExxonMobil’s outlook is negative, meaning the ratings agency could downgrade its profile again.

Iraq Oil Ambitions; Outlook and Challenges

 Shuaib Bahman

The Iraqi economy depends on oil income. Petrodollars account for about 90% of Iraq’s total revenue. Although Iraq’s petroleum industry has, in recent years, been faced with major challenges due to wars and international sanctions, the government of Iraq has embarked on extensive effort to renovate its petroleum industry. One major aspect of this renovation pertains to inviting major oil companies to invest in Iraqi oil fields. Over recent years, there has been serious competition between oil companies for presence in Iraq. The Iraqi government has an ambitious plan to increase its oil output. If this plan materializes, the country would see its status change significantly in global energy equations. Of course, Iraq is facing serious challenges and barriers.

Iraqi oil export currently stands at 3.8 mb/d, but the country can export up to 5 mb/d. Iraq exported 4.97 mb/d of oil in August 2019. Iraq was planning to reach the production ceiling of 6.1 mb/d by the end of 2020, but this objective was not achieved due to oil price decline and political and security tensions. In fact, the main reason for the decline in Iraqi oil exports was the outbreak of the coronavirus pandemic, oil price slump in global markets and OPEC’s decision to reduce exports in order to help stabilize prices.

9mb/d Target Set

The Iraqis are still pursuing their own objective. According to Iraq energy plans by the end of 2020 and 2030, Iraq is required to produce 7 mb/d and 9 mb/d of oil, respectively. Over recent years, American, Chinese, Russian and European firms have been actively present in Iraq’s petroleum industry. Russian giants like Gazprom and Lukoil have struck long-term deals with Iraq. Russian companies have so far invested about $13 billion in Iraq. Chinese oil companies have also been active in Iraqi oil projects. In September 2019, the then prime minister of Iraq, Adel Abdul-Mahdi, visited Beijing where he met with China’s president. China said it would invest $20 billion in Iraq.

In addition to China and Russia, Iraq has been also wooing American oil companies. During the last August visit to Washington of Iraqi Prime Minister Mustafa al-Kazemi, a statement was released announcing a new start in cooperation and economic partnership between Iraq and the US. During this visit, numerous agreements worth $8 billion were struck with American companies including Honeywell International, Baker Hughes, General Electric and Chevron among others. US Energy Minister Dan Brouillette said the agreements would be instrumental in Iraq’s energy future. He said US companies would help Iraq benefit fully from its energy industry potential.

Outlook

Iraq’s long-term plans to enhance oil production are consistent with oil reserves in the country. According to most recent data released by OPEC, Iraq holds about 147 billion barrels of oil and about 3,744 bcm of natural gas in place. These huge reserves have always been at the center of attention of major oil companies. What makes Iraq’s oil specifically attractive is the low cost per barrel, which would be a good incentive for attracting foreign investment. Of course, Iraqi oil ambitions are not limited to enhanced production. Baghdad has announced it is planning to establish storage facilities in other nations as part of oil marketing objectives. Therefore, Iraq is in talks with Chinese state companies to build crude oil storage facilities with a view to selling more oil to Asia.

Iraq is currently the OPEC's second largest producer. In case Baghdad’s plans for enhancing oil production go ahead as planned, this country would become an effective player within OPEC. It is noteworthy that oil production and exports constitute a key lever in OPEC decision-making. Saudi Arabia has in recent years supplied massive oil and benefited from Iranian oil sanctions to impose its own will on fellow OPEC members.

Under such circumstances, in case Iraq manages to raise its oil production, it will definitely become a tough rival for the Saudis in OPEC decision-making.

Challenges & Obstacles

Iraq is faced with numerous challenges as it races ahead with its oil ambitions. Each of the challenges listed below may negatively affect Iraq’s oil production hike plans:

There is tough rivalry between various players for presence in Iraq’s energy sector. The interests of Russian, Chinese, European and American giants would require state support. Therefore, rivalry for more profits in the oil sector may result in competition in the political and security fields. The US has said clearly it would not like to see Russian and Chinese firms operate oil fields in Iraq. For Washington, it would disrupt US involvement in Iraq’s energy market. Russia and China view the US similarly.
Increased oil production in Iraq would mean getting closer to Saudi Arabia's production level, and may affect decision-making within the Organization of the Petroleum Exporting Countries. Therefore, the Saudis would never be happy with Baghdad’s oil ambitions. That may undermine Iraq’s economy and even security so that it would not realize its oil production plans. It is noteworthy that the Saudis have already been instrumental in stirring unrest in Iraq by supporting Baathist remnants and terrorist Daesh militants.
Insecurity and political tensions in Iraq may disrupt the activity of major oil companies. In fact, many oil agreements are likely to be annulled if insecurity spreads across the nation.
The existing discrepancies between the central Iraqi government and the Kurdistan Regional Government about sovereignty on oil resources in Kurdish areas may destabilize Baghdad’s position. The point is that whereas Iraq does not have an effective role in the energy markets and related international trends, it would need an integrated oil policy, to become a prominent player in the world energy scenes.

Win-Win Deal in Iran Oil

 Increased oil production in Iran and acquiring maximum production capacity in the shortest possible time is seriously pursued by Petroleum Ministry.

Minister of Petroleum Bijan Zangeneh said recently: “I’m not worried about lost markets and oil buyers do not stick to one or two sellers.”

The minister said Iran had increased its oil exports, adding that the country would make a strong comeback if sanctions are lifted.

Iran may maximize its oil output given its current operational capacity because of the availability of necessary tools and valuable experience in this industry, which show Iran’s readiness to raise output quickly to reach full production capacity.

A review of Iran’s increased oil production in the affiliates of the Petroleum Ministry, including National Iranian South Oil Company (NISOC) that accounts for a significant share in Iran’s oil production, testifies this issue. More than 80% of Iran’s oil production capacity lies in southern oil-rich areas.

As the government targets 2.3 mb/d of oil and condensate exports during 2021, NISOC will continue to have a big share in oil production and exports.

Ahmad Mohammadi, CEO of NISOC, said Iran is ready to bring back its oil production to 95% of pre-sanctions levels at any time.

In addition to enhanced oil recovery projects recently struck with Iranian firms, Iran’s petroleum industry has other such projects. Furthermore, there are routine annual projects like wells, installations and pipelines. With the implementation of these projects, any fall in production will be prevented while oil-rich areas will see their potential increase in line with the objectives of the Petroleum Ministry and NIOC.

Oil Output Lift Experience

Iran’s oil exports has declined due to the US sanctions. But as Minister Zangeneh has said time and again, they have never fallen down to zero. Oil market analysts watching Iran’s oil exports confirmed last October that Iran had increased its exports more than estimated.

As Joe Biden took office as US president, speculation is rife the US would return to the Joint Comprehensive Plan of Action (JCPOA), in which case Iran would broaden its trade transactions in the oil sector. Within three months into JCPOA implementation in 2016, Iran raised its output to 3.8 mb/d. Iran’s oil and condensate output totaled 4.8 mb/d in that year, 3 mb/d of which was exported.

It would not be strange to see Iran enhance its oil production quickly if sanctions are lifted to let Iran export 2.3 mb/d of oil and condensate.

Iran to Meet Oil Market Demand Fast

The Petroleum Ministry insists on increased oil production. Farrokh Alikhani, deputy CEO of NIOC for production, said: “Iran is fully ready to bring oil production back to pre-sanctions levels in the shortest possible time. The ground is paved, even if such instruction is issued tomorrow.”

He said the Office of Deputy CEO of NIOC for Production has always played a major role in NIOC, adding: “Various scenarios have been envisaged for producing oil and bringing production levels back [to pre-sanctions levels].”

Alikhani said Iran’s readiness to return to pre-sanctions levels is part of the NIOC working plan.

He said that sanctions represented an opportunity for removing faults in oil installations, adding: “Our level of readiness is high for increasing oil production and after we receive a feedback from the market for demand we can quickly respond to market needs.”

Noting that bringing oil production back to pre-sanctions levels required capital, he said: “However, relevant consultations have been made with the Petroleum Ministry to that effect.”

Balance Return to Oil Market

It is crystal clear that any global end to the covid-19 pandemic and the effectiveness of coronavirus vaccine would herald return of prosperity to the business market. The International Energy Agency (IEA) said in its recent report that the recovery in global oil demand will accelerate in the second half of this year as the market continues to rebalance after the turmoil brought about by the pandemic.

Despite increasing its estimates for oil output in 2021, the IEA said in its monthly market report that a recovery in demand would outstrip production in the second half of the year, prompting “a rapid stock draw” of the glut of crude that has built up since the pandemic began.

The agency significantly increased its forecast for producing nations outside the deal signed by the Organization of the Petroleum Exporting Countries and allies such as Russia, raising its projections for non-OPEC supply growth by 290,000 barrels a day to an increase of 830,000 barrels a day this year.

At the same time, the IEA trimmed its forecast for global oil demand by 200,000 barrels a day to 96.4 million barrels- around 3% less than in 2019, prior to the emergence of the coronavirus pandemic- although added that part of that change came thanks to a change to historic data.

Even so, with much of the developed world grappling with fresh COVID-19 variants and renewed lockdown restrictions, a brightening economic outlook and strict supply discipline from OPEC-plus are hastening the drawdown in global oil inventories, the IEA said. It added that "the prospect of tighter markets ahead" has been responsible for a sharp rally in oil prices in recent weeks.

“Renewed lockdowns, stringent mobility restrictions and a rather slow vaccine rollout in Europe have delayed the anticipated rebound,” the Paris-based agency, which advises major economies, said.

In light of firm determination shown by Iran’s Petroleum Ministry for increased production, Iran would not face limited opportunities in the world energy market .

Zangeneh at Iran Plast:

4th Petchem Jump Programmed 

 Minister of Petroleum Bijan Zangeneh told the inauguration of the 14th Iran Plast exhibition in Tehran that the current calendar year was the “most golden” year for Iran’s petrochemical industry.

Referring to the petrochemical industry’s plan to develop and inaugurate 10 petrochemical plants since the beginning of the current calendar year, he said next calendar year would see the gross petrochemical production capacity reach 100 million tonnes worth $25 billion, which would increase to $33 billion by 2025.

He said that the plan for the 4th jump in petrochemical production has been determined.

Zangeneh said despite toughest ever international sanctions, Iran’s petrochemical industry has been racing ahead.

“We were supposed initially to inaugurate 17 petrochemical projects with capacity of 25 million tonnes. Ten projects have been inaugurated and the rest will come online in coming months,” he added.

The minister said two projects would come online next calendar year, noting that they have had more than 80% progress.

“The case of projects that would become operational during the third jump is clear and some of them have had 60% progress,” he added.

Zangeneh said Iran had used all its capacity to provide all varieties of hydrocarbon feedstocks to develop the petrochemical industry. With a capacity of more than 900,000 barrels of oil equivalent, feedstock will be supplied for upstream petrochemical industries including gas, LNG and liquid hydrocarbons.

Noting that focus has to be shifted more than ever toward downstream industries, he said: “Although it does not lie with the Petroleum Ministry to directly handle this issue, since the downstream industry creates a secure market for the petrochemical industry and completes the value chain, we have asked all petrochemical holdings directly to enter the downstream chain.”

He said that the Persian Gulf Petrochemical Industries Company (PGPIC) had accepted numerous commitments, expressing hope that other holdings would accept this commitment to directly interfere with the downstream sector. 

Zangeneh also touched on the accelerative industries developing the downstream sector in the four chains of methanol, propylene, ethylene and benzene, saying: “Ethylene production and transfer to central and northeastern areas of the country are decisive.”

“Due to water shortages, more than 1.5 million tonnes of propylene is produced in Assaluyeh to be transferred to north of Shiraz via a 400-km pipeline. Furthermore, 400,000 tonnes of propylene will be produced in Neka to be transferred via a 200-km pipeline to the Damghan area before being delivered to northeast,” the minister said.

Zangeneh said implementation of these projects would mean paying attention to underdeveloped areas. Referring to the implementation of petrochemical projects in Eslamabad Gharb, he said: “This project is under way in completion of the propylene chain to stimulate development of downstream industries.”

The minister said that with propylene production, the ground would be paved for the development of hundreds of downstream projects by the private sector.

Private Sector Supported

The minister touched on the development of downstream industries and employment, saying: “We have thought a lot in this regard about the way we can help activate downstream industries. Therefore, we said that we could share our technical knowhow with the private sector freely. We can also cut interests on facilities, as noted in the budget bill.”

“We have also guaranteed feedstock supply and product purchase so that investors would be able to make investment and take loans for their projects,” he said.

Zangeneh also touched on the plastic industry, expressing hope for better steps in this sector.

He said many new units were formed based on plastics, adding: “Iran’s petrochemical industry has made big jumps during its 60 years of life following the [Islamic] Revolution and it has taken very good steps in recent years.”

Polymer Output Up 120%

Behzad Mohammadi, CEO of National Petrochemical Company (NPC), presented a full report about the performance of the petrochemical industry.

He touched on the production capacity of 9 million tonnes of polymer, saying: “With the commissioning of plants under construction in the third jump of the petrochemical industry, this figure will jump 120% to reach 21 million tonnes by 2025.”

Mohammadi said the petrochemical production capacity had increased from 65.8 million tonnes to 80 million tonnes thanks to 10 new projects.

“Currently, 40 million tonnes of feedstock or 900,000 barrels of oil equivalent is being consumed in 60 plants across the country,” he added.

Mohammadi said 35 million tonnes of final petrochemical products was being produced in the country, 72$ of which was being exported. He added 77 varieties of chemicals and 18 varieties of polymer were produced in 334 grades to be consumed in downstream petrochemical facilities.

The NPC boss said in coming decades, petroleum products consumption would decline while petrochemical products would increase in consumption. “Therefore, it is necessary to pay further attention to macro development of the petrochemical industry,” he added.

Mohammadi said 9 million tonnes of polymer was produced in the country, which would reach 21 million tonnes by 2025.

He said Iran’s share of the annual 420-million-tonne polymer production in the world was 2%, adding: “Polymer production will reach 530 million tonnes by 2025 while Iran’s share of this mix will increase to 4% by then.”

Mohammadi put the polyethylene production capacity at 5.1 million tonnes, adding that polymer projects would start production in 2022. He noted that compound feedstocks and third jump projects would bring polyethylene production to 13 million tonnes by 2025.

He said the propylene production capacity totaled 1 million tonnes, adding: “In 2021, the Khomein polypropylene project comes online and we will reach the capacity of 1.2 million tonnes. But by 2025, this figure will reach 4.5 million tonnes as strategic products become operational.”

PP Technical Savvy

The NPC chief said Iran had mastered technical savvy to convert methanol and natural gas to propylene.

Noting that technical knowhow was a bottleneck in propylene production, he said: “With the new projects coming on line we would reach the 4.5-million-tonne capacity by 2025.”

He described polystyrene as a special and costly polymer, saying: “Our capacity currently stands at 870,000 tonnes and in 2022, we will reach the 990,000-tonne capacity as the Dalaho plant comes online in Assaluyeh and Styrene Park becomes operational.”

Mohammadi said the Tabriz and Qaed Basir units were producing ABS, adding that the Pad Jamm polymer plant would become operational in 2022 to raise production capacity to 330,000 tonnes a year.

50 Polymer Plants

Mohammadi said 27 plants out of a total 60 are involved in polymer production. This number will go to 50 out of a total 113 by 2025.

He said that 54% of polymer produced in the country was exported and the rest was consumed domestically.

“At NPC, efforts will be made for increasing and diversifying production. The Ministry of Industry, Mine and Trade should also try to complete the value chain in the downstream sector,” he said.

Mohammadi said 85 catalysts, worth annually $270 million, were being consumed in the petrochemical industry.

“The polymers’ share of this mix is $50 million. We have manufactured 20 categories domestically, worth annually $125 million. Up to 2022, 36 other varieties will be manufactured domestically to bring this figure to $195 million.”

Mohammadi said by March 2022, 70% of catalysts used in the petrochemical sector would have been made domestically.

He also touched on plans for increasing petrochemical exports, saying the objective is to diversify the petrochemical mix.

14th Iran Plast a Success

 Javad Asghari

 The exhibition industry has left behind a tough year. The COVID-19 pandemic whose ways of transmission were little known across the world, targeted any kind of gathering, including exhibitions. Despite the deadly infection, Iran held the 14th Iran Plast to show the significance of the event. Iranian ministers of petroleum and industry and some MPs attended the inauguration ceremony.

Iran Plast, a regional exhibition well known in West Asia, was delayed due to the impact of the coronavirus. Restrictions were imposed even on domestic visits. Unjust international sanctions undermined the presence of foreign companies in this round of the exhibition. However, the 14th Iran Plast, as many participants and visitors acknowledge, left an acceptable record behind despite special conditions. A proper use of such potential as online platforms and exhibitions was a new initiative which would continue to be helpful in coming years, too.

Iranian, Foreign Businessmen Hold Talks

Despite previous rounds, and in line with norms in effect about plastic and tire exhibitions across the globe, what was displayed in this edition of Iran Plast did not present a full image of the polymer industry achievements, particularly in machinery and equipment sectors. However, those who participated in the event held serious talks with Iranian and regional businesspeople in full and strict respect of health protocols. Iranian products remain attractive to many buyers across the region and the coronavirus failed to prevent businesspeople from the Kurdistan Regional Government, Iraq, Azerbaijan and India from attending this event to hold talks with Iranian businesspeople.

As far as the significance of this industry in Iran’s economic growth is concerned, it would be enough to know that the petrochemical share of oil and gas production in Iran is only five percent. However, the petrochemical share of non-oil exports goes beyond 40% thanks to a 76-million-tonne output. That means the highest value-added and increased GDP in Iran.

As 70% of the petrochemical industry’s value-added is achieved in the downstream sector, only by developing this sector, it would be possible to gain $48 billion in annual revenue, which would equal half of crude oil exports.

Converting raw materials like methane, ethane and oil into such products as bags, shoes, clothes, electric kitchen devices, car parts and many such items as tables, chairs,

domestic decorative items and equipment used for construction, medical and computer devices among others depend on the downstream petrochemical sector.

Developing Downstream Industry

Despite Iran’s relative advantage in the downstream petrochemical industry, we are witnessing discrete chains in this sector. That is why most materials produced in various sectors of the petrochemical industry are exported to industrialized nations like China, Japan and the European Union before being sold back at much higher prices to Iran. However, it is noteworthy that with the development of the upstream and mid-stream petrochemical industries in recent years, key steps have been taken in completing the value chain of this industry. However, selling crude oil remains the most important advantage of this industry in Iran. Current data shows that about 70% of the petrochemical industry’s value-added is realized in the downstream sector. But the downstream sector has not been developed in parallel with the upstream sector.

The Petroleum Ministry has over the past couple of years focused upon regular plans to complete its value chain in the petrochemical industry. Development plans have been also envisaged in this regard. This process has taken shape while the relative advantage of petrochemical products, particularly in the downstream sector, over oil and gas sales has pushed the petrochemical sector to bold relief in the eyes of Iranian politicians. Furthermore, given the significant role of these industries in economic and social development and the existence of potentialities in the country, much more attention should be paid to the petrochemical industry due to its significant capabilities and potentialities for domestic and foreign industries.

Global Interaction

Since the petroleum industry, particularly Iran’s petrochemical sector, cannot survive without interaction with the world and rivalry with similar foreign companies across the world, efforts should be made for upgrading and updating this sector.

A good occasion for interaction with Iranian and foreign companies in any industrial sector would be international exhibitions. As far as the petrochemical industry is concerned, Iran Plast is a key event. In the latest edition of this exhibition, 200 companies were in attendance. Meantime, 250 foreign businesspeople from Iraq, Afghanistan, Azerbaijan, Kenya, Syria, Turkey, Jordan, India, Bosnia and the Kurdistan Regional Government visited the event.

The presence of foreign participants at this exhibition may be analyzed from two standpoints: first, long-term presence in Iran’s market, participation in projects and investment in various sectors of upstream and downstream industries; second, selling

 machinery needed by downstream industries, raw materials including advanced polymers, as well as various industrial items.

The fact is that the most important element in the presence of foreign companies in the oil, gas and petrochemical industries pertains to upstream industries, oil and gas recovery as well as production of petrochemicals and polymer products that require high technological knowledge and financing capabilities. Foreign buyers are still willing to interact with petrochemical companies in Iran. Although sanctions have blocked ways of trading between them, all options are not banned and Iranian petrochemical products are exported worldwide. In this edition of the exhibition, most foreign businesspeople hoped that the Iran sanctions would be lifted so that they would be able to upgrade their transactions with Iran.

The exhibition was held in the middle of winter, but the weather was like spring. Domestic and foreign participants placed hope in Iran’s return to world markets. Although Iranian petrochemical products are sold on global markets, removal of sanctions would help increase the level of transactions. However, with plans adopted by National Petrochemical Company (NPC) for completing the value chain in this industry, Iran may grow into a key player in regional and global markets over the coming decade.

Foreign Buyers Welcome Iran Petchem Products

On the sidelines of the Iran Plast exhibition, businesspeople and CEOs of petrochemical exchanged views about future cooperation. During such business meetings, each party offers its argument for any cooperation.

Under circumstances where everyone imagined such events would not be warmly welcomed due to the coronavirus pandemic, long lines of foreign buyers of Iranian petrochemical products indicates well the market for petrochemicals remains attractive to foreigners.

The meetings were held with representatives from Iraqi business companies from Iraqi mainland and the Kurdistan Regional Government (KRG), the Republic of Azerbaijan, Afghanistan and Jordan among others.

Iran Can Dominate KRG Market

The presence of high-ranking delegations from KRG was marked in this edition of the exhibition. During the first day of B2B meetings, more than six agreements were signed between Iranian and Kurdish businesspeople about the purchase of raw materials and equipment.

Over recent years, an increasing number of KRG delegates have been visiting Iran Plast. Meantime, historically cultural and social relations between Iran and KRG have long made Iranian products well known in Iraq.

The head of KRG Union of Exporters and Importers said Iranian companies can now win control of KRG market, which is dominated by Turkey, by offering discounts.  

The CEO of a company active in the plastic industry also said diverse Iranian products were put on display at Iran Plast.

“In the past years, the number of active Iranian companies in the petrochemical industry was low at Iran Plast, but this year we are witnessing Iranian companies that are strongly present,” he said.

Sheikh Ata Mohammad, deputy head of KRG Union of Exporters and Importers, said: “Iran has long been standing by KRG; and Iraqi and Kurdish businesspeople would like to purchase from Iran.”

“Most Iranian products in the upstream and downstream sectors are of high quality and therefore such products are highly attractive to businesspeople in Iraq and KRG,” he said.

Kamal Karimi, CEO of a plastic company in KRG, said he has been cooperating with Iranian plastic manufacturers for more than 10 years. He added that he had signed commodity purchase agreements with five Iranian companies on the second day of Iran Plast.

Highlighting the high quality of Iranian petrochemical products, he said: “Iranian products are currently dominating Iraqi KRG market owing to the quality of products and their affordable cost price. Furthermore, due to lower transportation costs than in China, Turkey and Malaysia, doing business with Iran is in our interest.”

Quality Better Than Expected

Foreign delegates from the Arab part of Iraq also held separate meetings with Iranian manufacturers. They had travelled from various cities including Najaf, Karbala, Samawah and Basra. Their main demand was polypropylene raw materials, granule, master batch and petrochemical equipment in the upstream sector and plastic bag, water tank, disposable table mat and plastic basket in the downstream sector.

Rashid as-S’adi, executive director of Iraqi business delegation, said several agreements had been signed on the purchase of commodity and equipment during the exhibition.

“Iraqi industrialists and businesspeople are seeking to upgrade themselves. We hope that through cooperation with Iranian companies we would be able to progress favorably in this regard,” he said. “The quality of products and services on display at Iran Plast was much higher than expected. We have signed several agreements to buy equipment and plastic products.”

Noting that Iraq is receiving on a regular daily basis big volumes of petrochemical products from Iran, he said: “By setting up more regulatory bodies to supervise exports to Iraq, Iran would be able to win a bigger share of the Iraqi market.”

He said presence at Iran Plast was a big opportunity for Iraqi businesspeople to get familiar with downstream petrochemical products and achievements, adding: “We can have consultation with our Iranian counterparts about launching plastic production lines in Iraq.”

Sa’di also touched on Iran’s high potential in designing and building downstream petrochemical units, saying: “We are interested in benefiting from the technical knowhow of Iranian companies in developing our own petrochemical industry.”

Afghans Keen to Buy from Iran

Business delegations from Afghanistan showed marked presence in this round of exhibition. They held separate talks with Iranian companies involved in the downstream petrochemical sector.

Bita Alinejad, executive director of the Afghan business delegation, noted Iran’s role in the development of downstream petrochemical industry in Afghanistan.

“Currently, Afghanistan’s petrochemical hub in Herat Province depends on power exported from Iran. We hope that under the aegis of more cooperation from Iranian companies we would be able to develop downstream petrochemical industries in other Afghan provinces. We still believe that the high population of Afghanistan can create a good market for Iranian companies,” she said. 

Alinejad said Iran Plast was an exceptional opportunity for Afghan businesspeople, adding: “Through this exhibition my colleagues managed to strike several agreements with Iranian companies on the purchase of industrial machinery and molds.”

Describing Iran Plast as a channel of communication between Iranian and Afghan companies, she said: “Over recent years, Iran Plast has multiplied the volume of plastic products in our nation. The direct presence of Iranian petrochemical companies and producers has significantly reduced the cost price of export products to Afghanistan, which has been welcomed by our people.”

Iran Products in Azerbaijan

Rashid Khalilev, an Azeri entrepreneur present at Iran Plast, said over recent years Iranian companies had won a good share of Azerbaijan’s market.

Like other business delegates, he said the high quality of products and low transport costs and subsequently low cost prices had made Azerbaijan a good market for Iranian petrochemical products.

Touching on the high quality and diversity of Iranian products at Iran Plast, he said: “Our company is a leading producer of melamine crystal in Azerbaijan. During this exhibition, we had held talks with some companies to purchase polyethylene from them, which we hope would lead to agreement.”

Khalilev said Iran Plast represented a golden opportunity for consumers of raw materials and foreign equipment and machinery.

“We noticed how Iranian companies have made progress despite Western sanctions,” he added.

Khalilev said it would be lucrative for Azeri companies to buy raw materials from Iran because of short distance and low cost prices.

In any case, it has to be acknowledged that sanctions and the coronavirus prevented many companies from attending this round of Iran Plast. However, this four-day event was host to a large number of buyers of Iranian petrochemical products from across the region.

Some participants were not willing to give interviews because of sanctions; however, they expressed hope that the next edition of Iran Plast would bring together major players, i.e. producers and consumers, and introduce the potentiality of these groups in the petrochemical industry.

Drilling Industry Turns 41 in Iran

  December 21 marks National Drilling Day in Iran. National Iranian Drilling Company (NIDC) was established on December 21, 1979. The company started its work with 6 drilling rigs.

In terms of geography, NIDC is among the largest service companies of National Iranian Oil Company (NIOC). It provides services to more than 10 provinces, ranging from drilling exploration wells in the area run by Khazar Oil Exploration and Production Company (KEPCO) in the north to drilling wells in gas fields run by the Iranian Central Oil Fields Company (ICOFC) in central and western Iran, drilling services in oil and gas fields run by National Iranian South Oil Company (NISOC) in southern, western and southwestern Iran; to offshore drilling in the oil fields located in the Persian Gulf under administration of Iranian Offshore Oil Company (IOOC).

Abdollah Mousavi, CEO of NIDC, speaking about the activities of NIDC, said: “Over 41 years, the company has drilled and completed 4,722 oil and gas wells in offshore and onshore oil-rich areas. They include 4,310 onshore and 412 offshore fields in the Persian Gulf. NIDC has drilled 2,437 development wells, 115 appraisal wells, 142 exploration wells and 2,028 workover fields over 41 years, mostly in the areas run by NISOC.”

9mn Meters of Well

A review of NIDC fleet indicates that the company owns more than 70 light, heavy and superheavy onshore and offshore drilling rigs. Furthermore, more than 9.5 million meters of wells have been drilled over this period of time, including 664,853 meters offshore.

There have been 146,729 cases of drilling services, cement job and well stimulation aimed at drilling, workover and completion.

Meanwhile, 876,624 meters of horizontal and directional drilling on 1,874 meters of well, 37,088 meters of coring and 9,949 logging operations, 7,362 logging operations on drilling fluid and 123 well logging operations are among other achievements of NIDC during the 41-year period.

NIDC Technical Operations Done

According to NIDC, 7,420 extended and special acidizing operations, 47,871 cementing operations, 44,709 injection operations, 7,604 cases of coiled tubing, 13,239 drill stem tests, 309 cases of full and special air drilling for 378,586 meters, 315 full and special drilling operations for 24,737 meters of underbalanced drilling, 19,157 cases of pipe-laying in wells, 4,581 cases of hanger installations and 1,524 cases of productivity index (PI) tests have been carried out.

In addition to providing technical and specialized logistics services to oil production companies over the past days, NIDC has been handling implementation of EPD projects in offshore and onshore oil-rich areas including shared oil fields in West Karoun in the provinces of Khuzestan, Kermanshah, Bushehr and Hormuzgan. Carrying out drilling projects in North Azadegan, South Azadegan, Yadavaran, South Yaran and Azar oil fields; as well as eight phases of the giant South Pars gas field development are among these projects, leading to the drilling of 120 onshore wells and 100 offshore wells.

Partnership in Field Development

In line with NIDC development plans, including development of 28 reservoirs using domestic companies and contractors’ potential, NIDC has been engaged in field-based projects. It is currently involved in the development of Gachsaran and Naftshahr fields directly, while partnering the private sector in the development of the Lali, Balaroud, Ramin, Sepehr and Jofair fields.

NIDC has been instrumental in drilling exploration wells in various areas and discovering the Azadegan oil field and the South Pars gas field. Furthermore, two drilling projects in recent years have led to the discovery of the Eram gas field in Fars Province and the Namavaran oil field in NISOC-run area.

 Cooperation with 30 Education Centers

A significant and effective measure undertaken by NIDC in recent years has been cooperation with more than 30 education, scientific and research centers across the country, as well as cooperation with manufacturers, industrialists and knowledge-based companies in building equipment. The outcome of such cooperation has been designing and manufacturing thousands of items and equipment used in the drilling industry, as well as implementing numerous research projects in this field. Meantime, for research purposes and also in order to increase opportunities for benefiting from domestic potential, more than 500 domestic manufacturers have so far been identified and their technical capacity has been used in NIDC construction projects.

Over the past decade, more than 20,000 items widely used in the drilling industry have been manufactured domestically. More equipment is being designed by Iranian manufacturers and academic centers for future manufacturing.

Online Courses

Education is another key issue at NIDC. To that effect, the company’s Department of Education and Human Resources Equipment conducted 6,008 persons-hours of online education for employees due to restrictions caused by the coronavirus pandemic. The courses are decided following expert and need analysis studies by various directorates.

Holding on-the-job training courses for oil workers is done by teachers and experts on the ground. Over the past one year, more than 880 drilling workers have passed these courses.

Environment

Obtaining certificates and installing quality, environment and occupational health management systems, safety management, obtaining COF certificate, structure upgrading, regulating costs, supporting domestic manufacturers, carrying out social responsibilities, job creation, and supplying petroleum industry needs are among NIDC’s plans for the current calendar year. The envisaged plans will be pursued in the light of experience and potential of NIDC experts and staff with more serious efforts.

 MAPNA Vying with World Manufacturers of Gas Turbine

CEO of power utility MAPNA Group Abbas Aliabadi has announced that talks have been held with the Iran Offshore Oil Company (IOOC) on the development of the Nosrat oil field.

“Talks have started in this regard, but no final decision has been made yet,” he said.

He also said that 11 wells had been drilled in Phase 11 of the massive South Pars gas field with the MAPNA-owned rig. If needed, he said, more drilling rigs may be used.

He noted that owing to its achievements, MAPNA was able to rival leading companies manufacturing gas turbines.  

Aliabadi said that MAPNA was ranked among top 10 global high-tech companies involved in gas turbine. “That is a big source of national pride,” he added.

Referring to the Middle East Economic Digest (MEED) ranking of MAPNA among top 10 in 2020, he said: “MAPNA is an achievement of the Islamic Revolution in Iran. Industrial potential in Iran is a source of pride.”

Refinery Overhaul

Aliabadi also touched on the overhaul of refineries at the South Pars Gas Complex (SPGC), saying: “MAPNA has smashed a significant record in the overhaul of the 10th refinery of SPGC. Overhaul of this refinery was carried out within 13 days.”

He also said that memorandums had been signed with the Petroleum Ministry on development of the Paranj and Parsi fields.

“In light of receipt of Economic Council’s agreement about development of this field, we are waiting for the signature of agreement with the Petroleum Ministry,” he said.

Axial and Centrifugal Turbocompressors

Aliabadi said: “The technology for the manufacturing of axial and centrifugal turbocompressors has been nationalized by MAPNA. Agreements for the manufacturing of more than 132 turbocompressors have been finalized and nearly 100 turbocompressors have been delivered.”

“Our objective in turbocompressor manufacturing is to achieve higher scales. 90-Bar turbocompressors are common, and MAPNA eyes 240-Bar turbocompressor design and manufacturing for the Khangiran and Shourijeh projects, which we hope to supply domestically with the help of Iranian technical experts,” he said.

Aliabadi said that manufacturing of these compressors was economical and without technical challenge. MAPNA Group is in talks with the Petroleum Ministry in this regard.

He added that MAPNA had important projects under way in the oil and gas sector, adding that launch of gas compressor stations at the Farashband refinery, construction of West Karoun power plant for the development of oil fields there, and the delivery of well No. 10 of the Danan oil field in Ilam, were all among MAPNA projects.

Techno-Engineering Services

Aliabadi said that MAPNA had favorable conditions with regard to exporting techno-engineering services to other nations, adding: “While outside the country, some were trying to keep the nation in the dark, we not only turned on our own light, but also our neighbors’, through exporting technical and engineering services.”

“Today, our power plants are being managed with domestically designed systems. It means that we are running our own power plants and we have even received requests from foreign nations for such equipment,” he added.

Noting that MAPNA relied on exports, he said: “We are selling equipment manufactured with cutting edge technologies, and we have manufactured them all.”

MAPNA, World-Class Power Plant Builder

Referring to MAPNA’s presence in international markets, Aliabadi said that MAPNA was building 500MW of power plants in other nations. He said MAPNA was a world-class constructor of power plants with high quality and score to rival leading international companies.

He also touched on a 250-megaampere generator being built as an advanced product, which would be sold to an international company.

Aliabadi said MGT-70 (3) turbines, as well as control and manufacture systems as MAPNA products supplied on the market.

“MAPNA has severely rivaled some leading companies of power plant construction in terms of price and quality as it has been able to supply high-quality equipment at lower prices on international markets,” he added.

Aliabadi said that MAPNA was involved in significant exports operations amid tough sanctions, adding: “Obtaining a letter of guarantee is necessary for participation in tender bids because banks deny us security deposit due to sanctions, but we received such deposits and won tender bids.”

Power Generation Twice Iran Needs

Aliabadi also said that Iran was generating power at the rated capacity of 85,000MW for the production of 700 billion kilowatts/hour of electricity. He said it was twice Iran’s need.

“In the power plant industry, we are even able to feed power plants with gas condensate and naphtha so that if one day we face any problem in gas production due to consumption restrictions and gas condensate selling, we would remove restrictions,” he said.

Power Plants Output

Aliabadi said that MAPNA had managed to enhance the power plants’ output to 60% with turbine and generator that we have built.

“In using renewable power plants, our focus is upon wind power plants. We have so far built 2MW and 2.5MW wind turbines, and we will soon build 4.5MW turbines,” he added.

6 Oil Fields’ Development

Mojtaba Gharavi, head of MAPNA oil and gas division, said MAPNA-manufactured turbocompressors which are being used in SP13-16, as well as in national gas trunklines. He said that Khangiran and Shourijeh were among the fields where MAPNA turbocompressors had been installed.

He also touched on the activity of MAPNA as an E&P company in the oil and gas sector, saying: “MAPNA has drafted master development plans for six oil fields including Rag Sefid, Karanj, Mansouri and Ab Teimour. Along with 13 other Iranian companies, it is involved in a consortium tasked with developing the joint Azadegan oil field.”

Oil Teams Shine in Iran Soccer Pro League

 Premier League competitions of Iranian soccer clubs are in mid-way now. Two teams are representing Iran’s Petroleum Ministry. Despite many structural changes, the teams had a good start in these competitions and did well up to the end of the first half-season.

Naft Masjed Soleyman and Sanat Naft Abadan are present at the pro league. The following is a brief review of their performance.

Naft Masjed Soleyman

The Naft Masjed Soleyman soccer team struck fears into the heart of all teams until the end of the half-season of pro league matches. Naft Masjed Soleyman is one of petroleum industry soccer teams in Khuzestan Province. Despite financial and structural problems, it competed in the 20th league under the leadership of Mojtaba Hosseini. Since the team had no famous star player, nobody expected it to shine in the matches. However, oil teams that first showed off their success in the 19th league proved to be faring well in the 20th league as well, despite shortages.

Naft Masjed Soleyman ended draws with league giants like Esteghlal and Perspolis. They defeated Foolad and Sepahan teams. Oil industry football teams have not won recognition as football starts; however, they have proven to be stars for themselves in Iran’s soccer.

At the beginning of the 20th League, the petroleum industry had to undergo major changes in the Board of Directors and the club management. However, Naft Masjed Soleyman had already experienced financial and structural problems and therefore they were unfazed by such changes. They appeared as a more coherent team and pursued no other objective than not submitting to powerful teams. Now, Naft Masjed Soleyman have grown into a team, every other team is afraid of. All other teams are playing Naft Masjed Soleyman, fearing they may lose.

Naft Masjed Soleyman is currently ranked the 10th with a total score of 18 points, four points behind well-held teams like Foolad and Golgohar Sirjan. Such ranking shows Naft Masjed Soleyman is racing ahead perfectly. Naft Masjed Soleyman may not claim the championship title this year to seek a berth in Asia, but if relevant officials offer assistance they may make it more difficult for rivals to go ahead, in which case the petroleum industry and residents of Masjed Soleyman would always feel proud. Mojtaba Hosseini, head coach of Naft Masjed Soleyman, quit leading the team at the end of half-season. Now, Dariush Yazdi is leading the team into the second half-season.

Sanat Naft Abadan

The Sanat Naft Abadan soccer team showed remarkable performance in the first half-season of the 20th league. Having scored 23 points, it is now ranked among powerful teams. Sanat Naft Abadan has over recent years centered its mind on hiring young and local players. In the current season, it pursued the same approach and lent more credit to local and young players. It has turned out to be a surprise-making team.

Owing to its beautiful matches, Sanat Naft Abadan has from the very beginning won recognition as a popular team. It plans to proceed with this trend in order to be among the top four teams by the end of season and win a berth in Asia for the first time.

Such honor and good record is not limited to the petroleum industry; rather Sanat Naft Abadan has shown real soccer to Khuzestan in a much better standing than big teams. Now, people of Abadan and fans of Sanat Naft Abadan dream of a berth in Asian championship.

This year, combination of young and experienced players in Sanat Naft Abadan team served them effectively. This team has qualified players and they have done excellently. What may pose a challenge is financial problems which almost all teams are grappling with. The Sanat Naft Abadan team has no technical weakness or problem. Due to its good formation, every new player plays very effectively and therefore a bright future is expected for this team. The point to keep in mind is the young and experienced technical staff of the team. A key pillar of the Sanat Naft Abadan success has been the competent coach Sirous Pour-Mousavi. Apart from the technical qualifications of the head coach, he has developed very friendly ties to all players and therefore they are playing wholeheartedly for him.

The petroleum industry has everything needed to appear strong. Influential players like Beit Saeed, Khaleqifar, Ahl-e Shakhe and Rikani along with Garousian, Hanafi and Zobeidi helped the team achieve acceptable results and join championship candidates.

Another key point with the Sanat Naft Abadan in the 20th league was that this team is accustomed to winning and therefore all players hope to emerge winner. Self-confidence is high among Sanat Naft Abadan players and this factor has been instrumental in the result of the team. However, the efforts undertaken by Pour-Mousavi should not be ignored easily. Reversing the result is the art of a head coach, which is seen in the petroleum industry soccer team. The Sanat Naft Abadan team has learnt quite well how to make a comeback. For instance, it compensated for its loss after playing Paykan. Of course, Sanat Naft Abadan has weaknesses which should be remedied. But as experts say, the petroleum industry is playing its uniformed team so effectively that weaknesses are not seen.

Aramco Dividends

 The Saudi state oil company (Aramco), which is happy with the steady rise in the price of black gold these days welcomed stock market investors on March 7, 2021, and its value gained the highest daily growth in the last five months. In general, the Saudi stock exchange called "Tadawul" had the highest return March 7, 2021 among the stock exchanges of the Arab countries of the Persian Gulf, due to the positive outlook of the oil market as the largest export commodity of this country. Analysts are doubtful about Aramco's ability to pay its dividends; however, according to a note of Bank of America (BoA) the company would have no problem paying its $75 billion dividends next year. BoA claimed that given the rising trend of oil prices, Aramco is able to boost production without being in need of new investment. The bank also argued that there is strong possibility of raising the rate of its dividends.

According to Bloomberg, stocks in Saudi Arabia grew faster than other stock exchanges in the region during Sunday 7 March trading, i.e. the first day of the week in Saudi. Being closed on Fridays and Saturdays, the exchange did not react, on 7 March, to the OPEC+ shock aimed at stabilizing supply.

The main index of the Saudi stock exchange (Tadawul) rose 1.4 percent, bringing its return to 7.9 percent since the beginning of 2021. Share of Saudi Arabia's basic industries, Saudi Aramco and Al-Rajhi Bank contributed the most to the uptrend. Stock exchange indicators also rose in Abu Dhabi, Kuwait and Oman, while Dubai and Bahrain did not follow the same trend. OPEC+ decision made on March 4 was a positive point for Saudi government as it made the deepest cut in supply to support oil prices. Oil price hit $69.36 a barrel, the highest level since May 2019.  As a result, Goldman Sachs revised up its oil prices estimate at $5 in the Q3 and Q4 of this year to reach $75 and $80 a barrel, respectively. Saudi Aramco share rose 2.3 percent yesterday, with its highest daily return since 2 September 2020, i.e. five months ago. BoA has stated that the Aramco enjoys a "unique position" to meet any demand hike, and could generate nearly $100 billion in free cash flow next year. Of course, it is subject to materialization of optimistic assumptions. Karen Kostanian, managing director of Russian Equity Research at BoA, said there was even a possibility of a rise in dividends. Aramco 2020 Income Report will be released on 21 March 2021. BoA has said that the oil price rally has completely ruled out the likelihood that Aramco will not be able to pay its $75 billion dividends next year.

BoA added that while Aramco is unlikely to fail to pay dividends, the company may even increase its dividends rate in 2022 as oil prices move toward $70 a barrel. Aramco's commitment to pay $75 billion a year to shareholders in its first five years as a publicly traded company was called into question last year due to a drop in oil demand amid the COVID-19 pandemic, forcing the company to cut expenditures but increase borrowing. The development also intensified additional pressure on Saudi Arabia's financial affairs. Following the initial public offering in December 2019 ,the Saudi government which possesses 98% of Aramco's share ,is relying on the company's dividends to make up for its budget deficit which is to some extent emanated from high cost of war in Yemen. "Aramco enjoys a good position to pursue higher goals of splitting its dividends at the time of the initial public offering and even raising dividends to at least $ 75 billion in profits," BoA analysts including Doug Leggat and Karen Kostanian said in a report. "Aramco is one of the few companies in the world that can enhance production without increasing the capital expenditure (Capex)," the analysts added. Saudi Arabia has taken benefit from OPEC+ production restrictions since last year.

Brent, the benchmark for more than half of the world's crude oil, jumped 4.9 percent. According to BoA, there is a potential for higher dividends on Aramco shares. BoA left its forecast for these shares unchanged at 35 Saudi riyals. Aramco share in Riyadh reached 36 riyals on March 7. This stock has earned 2% profit this year. The BoA report was released March 4, 2021, just prior to the conclusion of a meeting of the OPEC and its allies, such as Russia, on supply constraints, which further improved the stock. Saudi Arabia also said it was delaying the cancellation of its one- million barrel per day unilateral reduction of production, and this was welcomed by oil investors.

Yamani, Saudi Oil Minister Who Brought West to Its Knees

 Saudi Arabia's Sheikh Zaki Yamani, the embodiment of the ascent of Arab petroleum power and the face of the 1973 oil embargo that brought the West to its knees, died.

Yamani was a witness to the 1975 murder of the Saudi king who had plucked him, a non-royal, from obscurity to be oil minister. Later the same year Yamani was kidnapped at an OPEC meeting by Ilyich Ramirez Sanchez, known as Carlos the Jackal.

Yamani, 91, died in London, Saudi state media reported on February 23.

Known for his elegant manner and trademark goatee beard, Yamani's 24-year tenure running the oil affairs of the world's biggest crude producer made him a global celebrity during the inflationary "oil shocks" of the 1970s.

That ended with his abrupt sacking in 1986 after a costly attempt to prop up crude prices, a failed strategy which has cast a shadow over Saudi oil policy to date.

In December 1975, Yamani attended the meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, which ended in a hail of bullets fired into the ceiling from Venezuelan assassin Carlos and five cohorts. Three bystanders were killed.

Carlos, promoting the Palestinian cause, targeted Yamani as the most valuable hostage, telling him repeatedly that he had been sentenced to death. Ministers were held for two days in a dynamite-charged room before the captors were granted a plane out of Austria with their hostages.

A further 43 harrowing hours on board, flying from Algeria to Libya and back, created an intimacy between captive and hostage taker.

"It was odd, but as we sat together and talked, it was almost as if we had become friends," Yamani told biographer Jeffrey Robinson. "He was telling me so much, knowing that I would die."

A deal was struck in Algiers and Carlos vanished, escaping arrest until 1994. Serving a life sentence in a French jail, Carlos outlived Yamani.

Months earlier, Yamani was at the side of Saudi King Faisal in Riyadh, receiving a visiting delegation when a disaffected Saudi prince pulled out a revolver and shot the king dead.

Commoner among Royals

Yamani's career was remarkable, for the time, as a commoner in a society dominated by the royal family.

Born on June 30, 1930, the son of an Islamic scholar and judge in Mecca, Yamani was expected to follow his father and grandfather into teaching.

After studying law in Cairo he left for New York University and Harvard. Returning to Saudi Arabia, he set up a law firm and took on government work, drawing the attention of the future King Faisal. He became oil minister in 1962.

Yamani became a leading figure in the development of OPEC, founded in 1960. He extricated the Saudi oil industry from the grip of American companies in a series of steps that produced a deal on national ownership of Saudi Aramco in 1976.

Aramco remains among the world's wealthiest companies by assets.

In Yamani's early years as oil minister, Arab nationalism was on the rise and oil power was at the heart of it.

By the time of the 1967 Arab-Zionist Regime Six-Day War, Riyadh was ready to flex its economic muscle. Yamani announced a supply embargo against countries friendly to Israel. But the embargo did not bite. High inventories in the West and extra supply from Venezuela and pre-revolutionary Iran filled the gap.

In 1973 the fourth Arab- Zionist Regime conflict prompted Yamani to trigger another oil embargo. This time it worked - a fourfold increase in the price of crude marked the high point of OPEC power and sent western economies into recession as inflation soared in what became known as the first oil shock.

Oil Masters

Yamani summed up that moment when oil producers took charge. "The moment has come," he said. "We are masters of our own commodity."

With the end of the war and the embargo, Riyadh found an accommodation with the United States.

Yamani was now a price moderate, espousing the view that high prices would ultimately destroy demand and encourage production from new exploration in places such as the North Sea.

When the 1979 Iranian Islamic revolution triggered a second oil shock in the West, most in OPEC raised oil prices. Riyadh, close now to Washington, issued the "Yamani Edict", holding Saudi prices at official levels to ease the pain for importers.

Yamani's new-found price moderation was to cost him. A supply glut born of the early 1980s recession in the West depressed fuel demand.

Faisal's successor, King Fahd, called on Yamani to both protect Saudi market share and boost prices. Instead, he cut Saudi production to a 20-year low of only 2 million barrels per day in an effort to shore up prices.

Fellow OPEC members were not as disciplined on production and Yamani was criticized at home as others increased their market share at Riyadh's expense. As the oil glut ballooned, crude prices crashed below $10 a barrel.