A Future Brighter Than Today

Kasra nouri

Director General of Public Relations

Three associated gas gathering agreements were recently signed between National Iranian Oil Company (NIOC) and Iranian contractors: €165 million worth of agreements involving manufacturing of 24 centrifugal compressors and new installations and retrofitting existing gas gathering units in Rag Sefid. That would guarantee sustainable feedstock supply to petrochemical plants, help safeguard the environment and cut 43 million tonnes from greenhouse gas emissions.

In 2018, to agreements worth totally $1.3 billion were signed for the gathering of 600 mcf/d of associated petroleum gas through 27 stations and retrofitting existing stations. The outcome was a daily recovery of 400 mcf of valuable light gas, not to mention environmental benefits and capped gas emissions.

At first glance, it may sound simple news about implementation of a usual oil project. But if it is viewed on a larger scale, more signs will emerge.

The projects described above were implemented against the backdrop of tough US sanctions against Iran’s petroleum industry. That was while big companies do not invest in the petroleum industry of the largest owner of global gas reserves for fear of illogical US penalties. Therefore, domestic companies stepped in.

Meantime, all these projects come online fully by Iranian companies and manpower – in all phases ranging from manufacturing to design, installation, implementation and operation. Many oil-rich nations that have experienced no sanctions are not capable of operating such projects without the help of international companies and foreign investment.

If one takes a deeper look into news, two key points will strike his mind. First and foremost, Iran’s petroleum industry has not been neglectful of environmental concerns even under toughest conditions and does not shirk from its responsibility vis-à-vis residents of areas about oil centers. It has also fulfilled its obligations regarding capping greenhouse gas emissions, which is directly tied to the future of the entire world.

A second point that would send a clear message to US politicians is that all these projects have been operated by Iranians, thereby showing the ineffectiveness of sanctions in the long-term.

When we look more attentively to this issue and juxtapose these new projects with other projects that have been implemented in the petrochemical, gas, refining, pipeline, drilling and exploration sector, it would mean the capability of Iranian companies and manpower as a result of experience of long years of sanctions and confidence in national elite.

Iran’s petroleum industry is mature enough to supply domestic needs while standing tall as a big rival in regional and international activities and setting the stage for a brighter future.

Industrial Prosperity in Makran

CEO of National Iranian Gas Company (NIGC) Hassan Montazer Torbati has said that so far about IRR 120 trillion (over $2.85 billion) has been spent for connecting the southeastern Chabahar port to the Iran's national gas network.

According to Torbati, the supply of natural gas to the strategic port and to the Makran coasts is going to create industrial prosperity in the region.

Speaking in a follow-up meeting on Sistan & Baluchestan gas supply projects, Torbati said due to the vastness of the province, in total, 2,000 sections of gas pipelines have been designed and planned to be implemented across the province, of which so far 300 kilometers (km) have been implemented and 770 km of pipelines are currently being implemented.

Torbati put the projected capital for the implementation of the mentioned pipelines with the gas supply facilities in the cities at more than IRR 200 trillion (about $4.7 billion), saying that the required steel sheets and pipes for the mentioned pipelines have been provided.

He said that the Iran Gas Trunkline-7 (IGAT-7) had been built to carry gas from Assaluyeh for export to Pakistan. “But the issue of Pakistan was put on hold and gas supply to Sistan & Baluchestan was not on the agenda. Gas supply to Zahedan was finally followed up on and in March 2018, the first section of the Iranshahr-Zadegan pipeline came online while President [Hassan Rouhani] was in attendance. Iranshahr had earlier been connected to the gas network.”

Montazer-Torbati said other provinces would help with gas supply to Sistan & Baluchestan, adding two pipelines – one 36 inches in diameter and one 24 inches – would come online by September.

 Key Equipment for Vessels Made in Iran

 CEO of Iran Oil Terminals Company (IOTC) Abbas Assadrouz has announced that a key item used in vessels has been developed by IOTC in partnership with Iranian knowledge-based companies.

“Specialized berthing and separation operations up to global standards at this company, is under way in line with a mission assigned by the Petroleum Ministry and National Iranian Oil Company (NIOC),” he said.

“One of the IOTC-owned vessels that is tasked with berthing and separating oil tankers and fighting fire and providing other offshore services has been out of service due to problems in the speed control system,” he added.

“The ASD vessel’ propulsion system is Z/P, which is among the latest systems for tugboats. It has been developed by Japanese companies,” said Assadrouz.

“After expert work by electronic and instrument engineers at the Offshore Operations Department, it came out that the M/E Control electronic card has experienced disruption in commanding speed control, thereby causing RPM fluctuations.

South Pars Meets Annual Target

 The CEO of Pars Oil and Gas Company (POGC), which is in charge of developing the country’s giant South Pars gas field, has announced that the production goals set by the Petroleum Ministry for the field in the previous Iranian calendar year (ended on March 20) have been completely realized.

Mohammad Meshkinfam said that the South Pars gas field’s output even exceeded the ministry’s production targets by 15 mcm/d during the previous year’s winter period.

“Fortunately, via the efforts made by our colleagues in the operations and support department, about 15 mcm/d of gas was produced in excess of the target output approved by the Petroleum Ministry during the last winter,” the official said on the sidelines of a meeting with the managers of POGC’s operations and support department.

Referring to the preparation of a 20-year vision plan for South Pars’ development and maintenance, he added: "It is necessary to form a working group to prepare and compile a guiding document for maintaining sustainable gas production from South Pars in short-term and long-term periods and in order to identify problems and to make plans for eliminating bottlenecks.”

 Iran Set to Lift Oil Output

 Deputy Minister of Petroleum for Planning Houshang Falahatian has said the most important plan envisaged by the Petroleum Ministry for the current calendar year is to enhance crude oil production.

Falahatian said as demanded in the annual budget bill, oil production level has to increase to supply domestic needs and provide an acceptable portion for export to world markets.

“In parallel with this important objective, the subsidiaries of National Iranian Oil Company (NIOC) have developed plans for production, support and removal of obstacles,” he said.

Falahatian touched on low-yield oil wells, saying efforts were under way in collaboration with knowledge-based companies and universities to increase their yield.

“Removing the obstacles ahead of contractors and investors is incorporated in the agreements,” he said.

Falahatian said natural gas held a 70% share in the energy mix, adding that gas production exceeded 1bcm last calendar year to hit a new record.

 Self-Sufficiency in Petchem Catalysts

 Petrochemical Research and Technology Company (PRTC) plans to develop two catalysts for the production of polypropylene and high-density polyethylene.

PRTC has in recent years made big achievements in terms of developing technical knowhow for processes and catalysts.

Last year, the technical savvy for converting natural gas to PP was unveiled in the Mahshahr branch of PRTC. The same technology helped operate the GTPP plant in Eslamabad Gharb Petrochemical Plant.

The projects under way in the Tehran, Arak and Mahshahr branches of PRTC are big opportunities for the petrochemical industry.

The remaining projects from a total of 17 projects planned for last calendar year that could not become operational due to the coronavirus pandemic are on the line to become operational.

In coincidence with the accelerated development of the petrochemical industry and increased production capacity, various aspects of technology, research and knowhow are also pursued.

Zangeneh Highlights Achievements

Iranian Minister of Petroleum Bijan Zangeneh has said the country saw breakthroughs in the oil sector despite sanctions and the coronavirus pandemic.

Zangeneh made his remarks during a meeting with the heads of the major four subsidiaries of Petroleum Ministry; National Iranian Oil Company (NIOC), National Iranian Gas Company (NIGC), National Petrochemical Company (NPC), and National Iranian Oil Refining and Distribution Company (NIORDC).

The minister said sanctions largely affected the Petroleum Ministry’s plans, adding: “Meantime, the outbreak of the coronavirus directly did not affect the petroleum industry plans, but sanctions were effective.”

“We need to acknowledge that non-removal of sanctions could largely affect exports and investment. We will try our best, but we cannot ignore realities,” he said.

Zangeneh said during the several months left from the mandate of the current administration, the Petroleum Ministry was planning to overcome obstacles and challenges within the petroleum industry.

“But it would not deflect our attention away from other petroleum industry aspects. We will also consider them as in parallel with our major plans and we will take measures for their materialization,” he said.

Separately, during a visit to Sistan & Baluchestan Province, Minister Zangeneh said IRR 200,000 billion had been allocated to supplying gas to the province.

“Development needs infrastructure. In Sistan, we have to go beyond the issue of water,” he said.

Zangeneh said all gas supply projects had to be completed by July because after that a new administration would be taking office.

The minister said that studies on the Chabahar-Konarak and Khash-Saravan gas transmission lines had to be followed up on. He said he would be visiting the province after the holy fasting month of Ramadan.

“Last [calendar] year, 221 million liters of liquefied petroleum gas and kerosene was distributed in Zabol, up 30% year-on-year. Kerosene distribution currently stands at 4.7 ml/d in the country, 2.2 ml/d of which in this province.

Petchem High-Tech Equipment Widely Homegrown

CEO of Persian Gulf Petrochemical Industries Company (PGPIC) Jafar Rabiei has said that high-tech equipment used in the petrochemical industry is largely homegrown.

“Feedstock supply is a cause of concern for the petrochemical industry and flare gas gathering has also been a concern for the petroleum industry. The petrochemical industry intervened with the flare gas gathering in a bid to transmit flare gas to the Persian Gulf Bid Boland gas refinery to be converted to petrochemical feedstock,” he said.

Rabiei said retrofitting and construction of flare gas gathering installations would cost about €1 billion, which PGPIC would provide.

“By implementing flare gas gathering projects, the bulk of associated petroleum gas currently flared in Khuzestan would be converted into valuable petrochemical feedstock,” he added.

Rabiei said: “The Persian Gulf Bid Boland is responsible for gathering 590 mcf/d of associated gas. In addition to preventing gas flaring, it would be converted into feedstock for the petrochemical industry and can be exported.”

NIOEC Chief Boasts of Pipeline Self-Sufficiency

CEO of National Iranian Oil Engineering and Construction Company (NIOEC) Saeed Sattari Naeini has said self-sufficiency was achieved in pipeline construction.

“Under the toughest economic conditions and sanctions, we have reached full self-sufficiency in building pipelines to carry oil and petroleum products,” he said.

Sattari-Naeini said the three Naein-Kashan-Rey, Shazand-Qom-Rey and Tabriz-Khoi-Urmia pipelines along with pumping stations and balanced tanks had become operational by NIOEC, adding that National Iranian oil Refining Distribution Company (NIORDC) had supported NIOEC in these projects. He added that Iranian Oil Pipelines and Telecommunication Company (IOPTC) and National Iranian Oil Products Distribution Company (NIOPDC) had cooperated in the project.

He said that NIOEC planned construction of more than 1,000km of pipeline and 15 pumping stations. He added that development of the Abadan oil refinery was also going ahead despite sanctions.

Sattari said the Shazand-Qom-Rey pipeline was 93 km long with capacity to carry 300,000 b/d of oil.

Cabinet Orders PP Output Hike

The Iranian Cabinet has adopted a decision for increasing polypropylene production and managing methanol production in the country.

National Petrochemical Company (NPC) defined strategic projects one year ago and undertook plans in line with the 4th step in the development of the petrochemical industry with a view to upgrading industrial sustainability in all aspects of the petrochemical industry.

Development of the petrochemical industry is envisaged based on the availability of feedstock up to 2027.

Based on feedstock that would be provided by the petroleum industry in coming years and using basic products as feedstock, as well as examining petrochemical imports, 30 strategic projects have been defined for sustainable research and development. They are classified under feedstock, propylene production and accelerative projects. 

The accelerative projects – divided into propylene, methanol, ethylene and benzene chains – are aimed at diversifying the mix of products, developing the value chain, reducing imports, supplying feedstock for the downstream industry and increasing the value of products. In light of low investment and water consumption, these projects may be implemented in various parts of the country.

Oil Export from Persian Gulf/Oman Sea

President Hassan Rouhani has said Iran would be exporting oil simultaneously through the Persian Gulf and the Sea of Oman.

“Those who are familiar with politics, strategy and national security know quite well what it means and to what extent counts the Goreh-Jask crude oil pipeline project,” he said.

Rouhani said by laying 1,000km of pipe, “part of our oil exports would be shifted from the Persian Gulf to the Sea of Oman and that is very important.”

“From now onwards, Iran’s oil exports would be done simultaneously through the Persian Gulf and the Sea of Oman,” he said.

Rouhani described the Goreh-Jask pipeline as unique in the country, adding: “This project is highly significant and strategic for national independence. In the real sense of word, it is important for national independence.”

The president said last calendar year, despite economic sanctions, thousands of kilometers of pipelines were constructed and launched.

He also said that refinery and petrochemical projects, as well as 52 dams were inaugurated under his administration, adding that five more dams would come online before his administration bows out.

Iran Determined to Expand PP Chain

CEO of National Petrochemical Company (NPC) Behzad Mohammadi has laid emphasis on the development of the value chain of petrochemical products with a view to upgrading the quality of this industry.

“With the adoption of bylaw on the construction of midstream and downstream petrochemical plants and amending the gradual discount in feedstock prices, the ground is prepared for propylene chain projects,” he said.

Mohammadi said the government had adopted a resolution about development of the petrochemical industry, adding: “The resolution is very good and effective. It has two general parts. The first part of bylaw focuses upon building mid-stream and downstream petrochemical units with private and cooperative investment to produce and distribute PP with a view to creating sustainable jobs, which would facilitate the path for developing the propylene chain in the country.”

“As announced earlier, NPC has conducted comprehensive studies on the qualitative structure of the petrochemical industry and considers development of the value chain of products as a fundamental strategy and approach for intelligent development and quality upgrade in the petrochemical industry. To that end, some legal articles need to be amended,” said Mohammadi. 

He said that the propylene chain was the most important value chain of products in the petrochemical industry, adding that its development has so far proven to be insufficient.

“A major portion of petrochemical imports, i.e. $600 million, pertains to the propylene chain, which accounts for 40% of total value of petrochemical imports,” said Mohammadi.

“In examining reasons of insufficient development of the propylene value chain, we had such obstacles to propylene production, because we know that if there is enough propylene, its downstream chain is attractive and will be developed. Currently, about 1 million tonnes of propylene is produced in the country and we have defined projects to make up for shortages. By the end of the 7th Development Plan in 2026, Iran’s propylene production will reach 4 million tonnes,” he said.

Mohammadi said that implementation of projects required preparation of the ground for development.

“With aforesaid bylaws, the ground is now prepared and propylene production projects designed in the Assaluyeh propylene park will go towards implementation,” he said.

“Meantime, given the necessity of paying attention to balanced development in the petrochemical industry, downstream propylene projects in Iran will be developable and will get closer to target markets, which are small and medium-sized enterprises,” said Mohammadi.

Oman Sea, Iran New Oil Destination

Jask Port in southeast Iran is set to handle exporting 1 mb/d of crude oil and storage of 10 million barrels of crude oil. Furthermore, very large crude carriers (VLCCs) of 2 million tonnes would be able to berth at this port. It was only four years ago that Iranian officials decided to develop Jask Port. Remarkable advances have been recorded in the project.

Crude oil exports from the Sea of Oman have always been an ambition of Iranian officials and petroleum industry actors. To fulfil this big wish and social responsibilities and help national and regional development and eradicate poverty in disadvantaged areas, the 12th administration considered building an oil pipeline stretching from the city of Goreh to the city of Jask located 320km east of Bandar Abbas. That would make Jask an energy and industrial hub.

With the implementation of petroleum industry projects in Jask and Makran shores, many other projects could be implemented. Some cases in point are planning for establishing the Jask Special Economic Energy Zone and transforming it into a new energy hub in West Asia, implementing a project to transit natural gas through pipeline to Oman, building crude oil and gas storage tanks, building two refineries and three petrochemical plants by private investment, a power plant, an international airport, developing road and railway transportation along Bandar Abbas, Jask and Chabahar shores, establishing Iran-China industrial park and Jask free zone.

Minister of Petroleum Bijan Zangeneh has said $1.8 billion had been envisaged to be spent for the Goreh-Jask oil project, $700 million of which would be invested in Jask. Furthermore, two refineries have received the nod to be constructed. The next step would be development of the petrochemical sector and gas transmission, said the minister.

Construction of the Goreh-Jask oil pipeline and the Makran export terminal kicked off in July 2020 through videoconference by President Hassan Rouhani.

The Goreh-Jask pipeline has had 80% progress.

Oil Export via Persian Gulf, Oman Sea

Owing to the 80% progress made in the Goreh-Jask pipeline and the operation of the single-point mooring of this project in the final days of last calendar year, Iran is expected to see oil exports via the Persian Gulf and the Sea of Oman together this calendar year.

There were also reports on the completion of welding on 1,000km of the pipeline. Tests show that through construction, significant qualitative supervision was exercised on the process of manufacturing of billets and sheets for pipes.

Pumping Station No. 2 of Goreh-Jask Pipeline is in the pre-commissioning phase. All activities are under way for the injection of oil from Goreh into the pipeline, as soon as possible.

Storage Facilities

Iran’s petroleum industry has been struggling with unilateral sanctions mainly from the United States for more than four decades now. However, it has tried its best to push ahead with its oil and gas production plans. Therefore, in every small and big project, it tries its best to win the confidence of domestic manufacturers and increase its share of self-sufficiency in the petroleum industry equipment. To that effect, domestic companies and manufacturers have been given the major share of crude oil transmission and storage in the Persian Gulf.

According to plans, 20 storage tanks, each with capacity of 500,000 barrels, would be built in Jask to allow for the storage of 10 million barrels of crude oil. A build-operate-transfer (BOT) agreement signed with Omid and Petro Omid investment companies, two storage tanks are expected to be delivered by June.

The first SPM with a capacity of handling 7,000 cubic meters per hour of light and heavy crude oil and gas condensate was launched in the Jask terminal in Hormuzgan Province. This offshore structure weighs about 800 tonnes. The operation of the SPM that has been designed, built and installed by Iranian Offshore Engineering and Construction Company (IOEC), would enable us to load light and heavy crude oil and condensate on VLCCs for export. The project includes about 2,000km of pipeline, five pumping stations, gauges and mechanical equipment, storage facilities and an export terminal.

One of the requirements of the petroleum industry in recent decades has been to develop domestic manufacturing of petroleum industry equipment and to reduce dependence on imports in light of politically motivated pressure and restrictions. Although the issue has been the concern of all administrations, the 12th administration was particularly engaged in it, and therefore it took big steps towards its materialization. In various sectors of the petroleum industry, including oil pipeline and telecommunications, the focus has been on domestically manufactured equipment.

Throughout building the Goreh-Jask crude oil pipeline, the petroleum industry is determined to fully support domestic manufacturing and bring its share to 100%. This project would spare the country more than €200 million and bring about business prosperity for domestic manufacturers.

Amin Ebrahimi, CEO of Khuzestan Oxin Steel Co. (a pipe supplying company), said: “Khuzestan Oxin can manufacture 1.05 million tonnes of wide sheets. Under the aegis of effective support from National Iranian Oil Company (NIOC), Ministry of Petroleum, upstream and downstream sectors, it has managed to develop technology for API sheets.” As the sole manufacturer of wide sheets in Iran, Khuzestan Oxin started working in the sector in 2009. It is a leading company in the manufacturing of these sheets for the petroleum industry.

Less Congestion at Hormuz

Access to oceans and high seas, proximity to Indian Subcontinent nations and the big markets of India and China, the North-South Corridor connecting Central Asian nations, Russia and Afghanistan to high seas and the Indian Ocean, proper sea depth, beautiful and diverse beaches, strategic and geopolitically unique position, attractiveness and openness to investment, implementation of economic and development projects; as well as proximity to the Persian Gulf as a  major source of oil and gas are just part of unique advantages to have convinced Iran to build its second oil export terminal.

Kharg Island is currently the only oil export terminal in southern Iran. Therefore, a more strategic terminal for oil export has been always needed. Jask was chosen as the second terminal. That would reduce congestion of oil shipment through the Strait of Hormuz.

Therefore, a second oil terminal was decided to be built in Jask Port with a daily capacity of 2 million barrels. According to plans, 1 mb/d will be transferred via the pipeline connecting Khuzestan to east of Iran and another 1 mb/d will be carried by the Neka pipeline to Jask for swap.

The Jask terminal will have a storage capacity of 20 million barrels of crude oil. In the offshore sector of this terminal, three SPMs will be installed to carry oil to tankers for export.

Commercial ports and oil export terminal in Jask would make routes more secure and more economical. The route taken by tankers for exporting Iran’s oil will become 2,400 miles shorter, while international vessels will run 600 miles less than going to Dubai.

€165mn No Flaring Deal with Domestic Manufacturers

Agreements have been signed with domestic companies for manufacturing 24 centrifugal compressors and gathering associated gas in the Rag Sefid oil field with a view to ending associated gas flaring. Overseen by Minister of Petroleum Bijan Zangeneh, the agreements are worth totally €165 million. The minister said the agreements constituted a major step towards no-flaring policy, adding that no associated petroleum gas would be flared in 2022.

The Persian Gulf Bid Boland Gas Refinery (Bid Boland II Gas Refinery or simply BB2) struck a €75 million deal with Oil Turbo-Compressor Construction Company (OTC) and MAPNA Turbine Engineering and Manufacturing Company (TUGA) for the construction, installation and operation of 24 centrifugal compressors. BB2 also signed a €90 million agreement with Energy Industries Engineering and Design (EIED) for flare gas gathering in Rag Sefid.

OTC has agreed to manufacture 16 centrifugal compressors for the Aghajari 5 and Bibi Hakimieh 1 operation units, as well as the gas pre-compressor station of Pazanan recycling facility. TUGA has undertaken to build 8 centrifugal compressors for the Bibi Hakimieh gas gathering station.

No Flaring in 2022

Minister Zangeneh said the Petroleum Ministry planned to bring an end to associated gas flaring in 2021. “In light of measures under way, this important goal will be achieved by 2022,” he said.

Zangeneh added that by the end of next calendar year in March 2023, there would be no flare gas to be burnt.

The minister said that the process of gathering associated gas to be transferred to BB2 and the Maroun petrochemical plant had already begun. 

He said the signed agreements were a result of a €1 billion gas gathering project and domestic manufacturing of electrocompressors.

Focus on Flare Gas Gathering

Zangeneh said flaring associated gas would be like setting fire to “gold and dollars”, which would add to sufferings of people.

“One of the priorities the Supreme Leader has instructed the President to take into consideration in the oil and energy sector pertains to gathering associated gas. Our first measure was the "Amak project" for gathering acid gas to build the Maroun petrochemical plant, which is now one of the most profitable petrochemical plants in Iran,” he said.

Zangeneh said gas gathering and its transfer to the BB2 refinery was the cornerstone of all gas gathering projects.

“An important event at the Petroleum Ministry in recent years has been a paradigm shift on the fact that NGL is not classified under the upstream sector and that we can assign it to the private sector. On such basis, NGL 3100, NGL 3200 and BB2 refinery were assigned to the private sector,” he said.

“We are even seeking to assign Q&M for existing NGL projects to private consumers because the Petroleum Ministry should not too much interfere with operation,” he said.

Zangeneh said the ministry was concerned with increasing the share of domestic manufacturing in these projects.

“The most sophisticated petroleum industry equipment pertains to rotary machinery including electromotors, pumps, compressors and turbines,” he added.

“Today it is us, and not vice versa, who demand that domestic manufacturers build oil equipment to us. We ask them to empower us. We have asked oil equipment manufacturing companies to build processing compressors that are widely needed by petrochemical plants. Such equipment could be built domestically and we have just to order them,” said the minister.

Offtake Agreements

Zangeneh said one solution initiated by the Petroleum Ministry in supporting domestic manufacturing was to set up a petroleum technology park and a petroleum technology fund.

“Placing order for goods and guaranteed purchase from manufacturers is under way and that removes one of the major obstacles in the way of manufacturing in the petroleum industry. Therefore, we would no longer face a situation in which a company would manufacture equipment for which no buyer would be found; rather, by creating these structures, the Petroleum Ministry would be ready for guaranteed purchase of oil equipment,” he added.

Zangeneh said the first offtake agreements for petroleum industry equipment would be signed in the near future.

The minister said oil pumps used in the Goreh-Jask pipeline were made in Iran. “We have done all this great job silently. In the past we could not even produce one tonne of acid & sour gas resistant sheets. But over the past one and a half years, 340,000 tonnes of sheets has been produced under the supervision of Petroleum Ministry and National Iranian Oil Company (NIOC). That is a source of honor for the country.”

“No other pipeline across Iran is as Iranian as the Goreh-Jask pipeline. We hope to inject oil into the Goreh-Jask pipeline soon so that this highly strategic project would pay off,” he said.

Zangeneh said TUGA and OTC were knowledge-based companies whose capital was their human resources.

“These companies have done great jobs. We should not speak volumes under sanctions and we had better take action so that people would see their results. Exaggeration aside, Iranian companies are ahead of turbine-manufacturing superpowers in the world in terms of volume of manufacturing,” he said.

“In implementing a project, manufacturing was not my only cause of concern. Rather, I was concerned with increasing the share of domestic manufacturing in the projects in order to have an effect on people’s life,” said the minister.

Environment Protection a Must

The minister went on to touch on the issue of the environment, saying: “I believe and I have stressed that we should protect the environment. I have always been pro-environment.”

He expressed hope for the completion of flare gas gathering projects which would serve the environment, create jobs and accelerate production in the country.

All Flares Off

Masoud Karbasian, CEO of NIOC, said at the meeting: “Based on plans, 1,600 mcf/d of flare gas would be gathered across operating zones in Khuzestan and Ilam provinces.”

He said that with the implementation of NGL 3200, 500 mcf/d of flare gas would be gathered. He added the project would come online at the rate of 250 mcm/d this year. 

Karbasian said the project has had75% progress. “With the implementation of this project that is operated by

the Persian Gulf Petrochemical Industry Company, gas will be moved from West Karoun to Bandar Imam Petrochemical Plant,” he said.

Karbasian said the NGL 3100 project had been completed 55% with a daily capacity of 260 mcf/d. He added that this project would gather associated gas in Ilam.

“Another project is being pursued by the BB2 refinery and the Maroun petrochemical plant, which would help gather 870 mcf/d of flare gas,” he said.

Karbasian said improving the environment and generating value-added constituted the main achievements of flare gas gathering projects.

“In addition to this, these projects would guarantee sustainable feedstock supply to petrochemical plants,” he added.

Karbasian said 14 other agreements would be signed for flare gas gathering in the first half of the current calendar year. “By relying on domestic potential, all flares would be turned off,” he said.

Dream Coming True

Mahmoud Aminnejad, CEO of BB2 refinery, said: “The BB2 refinery is currently an energy artery in supplying energy needs and feedstock to petrochemical plants in Mahshahr.”

He said that the BB2 refinery came online last year to gather associated gas in the provinces of Khuzestan, Bushehr and Kohguiluyeh & Boyer Ahmad.

Aminnejad said for the completion of the BB2 refinery feedstock supply chain, the project for building flare gas gathering facilities was assigned to the BB2 company.

“The agreement is valued at €1 billion, signed between National Iranian South Oil Company (NISOC) and PGPIC,” he said.

He said the project included 27 subprojects divided into pre-compression and injection, retrofitting decrepit facilities and flare gas gathering.

Aminnejad said basic studies for this project had been conducted by a domestic contractor.

“Currently, 12 agreements – today’s agreements inclusive – have been signed for €363 million, 11 of which is taking effect,” he said.

He said thanks to NISOC’s good cooperation, agreements valued at about €350 million would become effective over the coming two months.

“Therefore, of a €1 billion project package, €700 million would be agreed upon. That is a big achievement that would make the dream of flare gas gathering come true in a place like the BB2 refinery,” said Aminnejad.

He said the newly signed agreements with OTC, TUGA and EIED would help increase the BB2 output by 120-125 mcf/d.

Aminnejad said 110 compressors were also being manufactured in line with the retrofitting of flare gas gathering facilities.

“Our objective is to make maximum use of domestic potential in supplying these compressors. For the compressors whose technology is not available in the country, there is planning for Iranian companies to partner foreign companies in a bid to transfer in such technologies,” he said.

Aminnejad said about 350km of sour gas pipeline was envisaged for transferring feedstock to the BB2 pipes. “About 170km of power transmission lines and 9 high-voltage stations are among the outstanding features of this project,” he said.

Aminnejad said the BB2 company was earning IRR 400 billion in daily revenue by receiving only 45-48% of feedstock. He said, once NGL 1200 comes online, the percentage would reach 65%.

Greenhouse Gas Emissions

Mohammad Javad Ashrafi, director of Khuzestan Department of the Environment, said gathering flare gas would prevent the release of millions of cubic meters of sulfur dioxide and carbon monoxide into air. “Gathering flare gas would be instrumental in capping greenhouse gases,” he said.

“Oil activities leave quite harmful impacts on ecosystems and humans in oil zones. But undoubtedly gathering flare gas can be effective in environmental protection and reducing greenhouse gas emissions,” he said.

Ashrafi said Minister Zangeneh had taken effective steps in protecting the environment, expressing hope that the new agreements would also serve the environment.

Flare Gas Gathering

In line with the policy of the 11th and 12th administrations to put an end to associated gas flaring, protect the environment and create value-added from flared gas on the eastern bank of Karun River, two projects were signed under the title of “Retrofitting and Building Flare Gas Gathering Installations” between National Iranian South Oil Company (NISOC) and the Persian Gulf Bid Boland Gas Refining Company and the Maroun Petrochemical Company for $1.3 billion. The agreement signed with the Bid Boland company is valued at $1.109 billion for carrying out 27 subprojects – building gas gathering stations, retrofitting existing stations and transferring gathered gas to the Bid Boland refinery – over 42 months. These subprojects are aimed at gathering 590 mcf/d of associated gas to be treated at refinery. That would add about 1.5 million tonnes a year of ethane to the refinery feedstock, which would be a long step in resolving feedstock shortage problem at the refinery and affiliated petrochemical plants. This project would provide NIOC with about 400 mcf/d of light gas that could be fed into oil fields to be used as fuel.

This agreement was signed in 2018 after conceptual studies were conducted to that effect. A year later, it became effective and would be finalized up to March 2023.

So far, 7 subprojects for gathering 130 mcf/d of gas have been awarded to subcontractors under 9 agreements. Before the end of the mandate of the current administration, 11 more subprojects would be awarded under 5 agreements for gathering 400 mcf/d of gas. Totally, 18 subprojects would be finalized under 20 EPC agreements.

In order to make maximum use of domestic potential, transfer in technology and build capacity for rotary machinery manufacturing, empower domestic manufacturers, OTC would manufacture 16 electrocompressors for the Aghajari 5 and Bibi 1 Hakimieh production units and Pazanan recycling’s gas pre-compressor station for €40 million over 24 months. TUGA will handle manufacturing of 8 electrocompressors for gas gathering at Bibi Hakimieh 2 for €21.5 million over 30 months. And finally, EIED has been awarded a €89.785 million agreement for building a flare gas gathering station in Rag Sefid over 28 months.

OPEC+ Meeting Ends on Optimistic Note

Negar Sadeqi

 The black clouds of covid-19 pandemic that have been haunting the world for more than a year are moving as more and more people are inoculated against the deadly virus. Although uncertainty dominates the market due to lockdown in some European states and the slow vaccination campaign at the global level, global oil demand is forecast to increase in the summer.

That might explain why OPEC member countries and their allies agreed in their April 1 virtual ministerial meeting to gradually lift their output 1.15 mb/d during May, June and July. OPEC+ released a schedule for the upcoming tapering of production cuts for May, June and July, showing the 23-nation alliance would reduce March's 7.05 mb/d in production cuts to 6.55 mb/d in May, and would bring back another 350,000 b/d in output in June, with production cuts reduced to 5.759 mb/d in July.

However, Iran’s Minister of Petroleum Bijan Zangeneh said global oil demand had yet to reach the 2019 levels. He also held out the possibility that oil demand in 2022 would restore to the 2019 levels.   

Market Conditions

In its closing statement, OPEC+ approved the adjustment of the production levels for May, June and July 2021, while continuing to adhere to the mechanism agreed upon in the 12th OPEC and non-OPEC Ministerial Meeting (December 2020) to hold monthly OPEC and non-OPEC Ministerial Meetings to assess market conditions and decide on production level adjustments for the following month, with every adjustment being no more than 0.5 mb/d.

“They recognized the improvements in the market supported by global vaccination programs and stimulus packages in key economies but noted that the volatility observed in the recent weeks warrants a continued cautious and vigilant approach in monitoring market developments,” said the statement.

The ministers noted that since the April 2020 meeting, OPEC and non-OPEC Participating Countries in the Declaration of Cooperation (DOC) had contributed to adjusting downward global oil supply by 2.6 billion barrels of oil by the end of February 2021, which has accelerated the rebalancing of the oil market.

Despite agreement by OPEC and their partners to gradually raise output over three months, oil market remains fragile due to continued lockdown in some countries. That along with a historic economic depression in the world pushed OPEC+ to agree to reduce output in April 2020 with a view to save prices.

Some members did not respect their commitments, but Zangeneh said OPEC+ countries honored their obligations in general. He also noted that non-compliance of some producers had elicited criticism from fellow producers. 

The OPEC+ statement said the “overall conformity reached 115% in February 2021, reinforcing the trend of aggregate high conformity by participating countries.”

The ministers expressed their thanks to those countries that have submitted plans for previous compensation shortfalls and continue to work towards compensating for overproduced volumes. They urged all participants to achieve full conformity to reach the objective of market rebalancing and avoid undue delay in the process.

Iran Exempt

Asked why OPEC+ agreed on the gradual output increase over three months, Zangeneh said: “In light of successful vaccination on the one hand, and the US’s $1,900 billion stimulus package on the other, participating countries – worried about oil market fragility – decided to increase their May, June and July production by 350,000 b/d, 350,000 b/d and 400,000 b/d, respectively.”

He said that the world economic growth would hit 5%, adding that demand for crude oil would increase by about 5.6 mb/d in light of the revival of business activities. Although global oil demand level in 2020 is 9.6 mb/d down from 2019, oil demand is yet to reach the levels seen in 2019.

“During the 15th OPEC+ meeting, Iran, Libya and Venezuela remained exempt from the agreed production cut because they are producing below their natural right due to the US pressure,” said the Iranian minister.

Satisfactory Conformity

No oil producer would like to see the April 2020 experience repeat itself. OPEC and non-OPEC producers have a bitter memory of that nightmare: sharp decline in oil prices and supply glut. However, the same price shock caused OPEC and non-OPEC to set aside their differences and sit at the negotiating table to reduce output in a bid to help drive up prices. Some analysts predicted that this agreement would not last long, but in practice it was extended for several months in a row. That helped market reach stability which remains fragile. In order to guarantee the market stability, OPEC decided to increase the number of its ministerial meetings from twice a year to monthly so that decisions would be made based on the oil market developments. Never has “time” been of essence in the oil market. Any decision has to be made based on the pace of developments in order to supply market needs.

Although some analysts maintained that monthly meetings would not be effective, it has been over time that the decisions adopted by ministers helped restore balance to the market. One key point with OPEC+ monthly meetings is that member states can make decisions in line with market developments.

In their April 12, 2020 meeting, OPEC+ ministers had agreed to lower their crude oil production by a total of 9.7 mb/d starting from May 1. The initial output cut of 9.7 mb/d will be valid through June 30 this year for two months, OPEC said in a statement at the time. For the following six-month period, from July 1 to Dec. 31 this year, the total output cut would be eased to 7.7 mb/d. This was to be followed by a 5.8 mb/d adjustment for a period of 16 months, from Jan.1, 2021 to April 30, 2022.

This agreement could not take effect in the second phase because of market conditions and the coronavirus pandemic. In its December 3, 2020 meeting, OPEC+ decided to increase production by 500,000 b/d in January 2021.

In its 13th and 14th meetings, OPEC+ agreed on freezing output, except for a total 75,000 b/d by Russia and Kazakhstan (60,000 by Russia and 15,000 by Kazakhstan) for February and March. For April, the shares of Russia and Kazakhstan stood at 130,000 b/d and 20,000 b/d, respectively.

Guarded Caution

Saudi energy minister Prince Abdulaziz bin Salman urged the OPEC+ producers’ alliance to exercise caution.

“Until the evidence of the recovery is undeniable, we should maintain this cautious stance,” he said, adding that global oil demand recovery was uneven in the face of the pandemic hit to economic growth.

“For most part, the market is on a stable footing and stocks continue to draw down,” the prince said.

At the beginning of the meeting, Russia’s deputy prime minister, Alexander Novak, who is co-chair of OPEC+,  said that the market had “considerably improved” since its meeting last month. He estimated that demand now exceeded supply by about two million barrels a day, a deficit that would lead to a rapid draw down of inventories, potentially leading to higher prices.

Angolan Minister of Mineral Resources and Petroleum Diamantino Pedro Azevedo, the rotating president of OPEC, echoed this sentiment, saying that "despite the light we can see on the horizon, we must be aware of the clouds that remain", and pointing to ongoing travel disruption as a result of the pandemic.

Market Trusts in OPEC+

Saudi Arabia had announced in its last month meeting that it would cut 1 mb/d from its production voluntarily. The voluntary production cut by Saudi Arabia affected the market and improved prices. Prince Abdulaziz said this time his country would gradually increase its output because the previous cut was voluntary.

Fereydoun Barkeshli, senior energy analyst, said in an interview with Iran daily newspaper that the market’s confidence in OPEC+ seems to have been boosted.

He said that OPEC had set the lowest price at $60 in December 2020, but currently it sets the ceiling between $60 and $70. He said that the market confidence was supporting price rally.

Goldman Sachs said it was still bullish on oil and anticipates strong demand that would require OPEC+ putting another 2 mb/d on the market in the third quarter, after around 2 mb/d that the alliance and Saudi Arabia decided to return between May and July.

“We forecast a larger rebound in oil demand this summer than OPEC and the IEA, requiring an additional 2 mb/d increase in OPEC+ production from July to October,” Goldman Sachs said.

Gas Transmission Record Smashed

Mahnaz Mohammad-Qoli

Being in charge of running more than 37,000 kilometers of pipeline and 86 gas compressor stations, Iran’s gas transmission industry ranks the first in Asia and the Middle East, and the fourth globally behind the US, Russia and Canada. The most important task assigned to the Iranian Gas Transmission Company (IGTC) is to purchase natural gas, ethane, liquefied petroleum gas (LPG) and gas liquids from domestic and foreign suppliers and sell them to domestic customers and export terminals and conduct swap process.

The following is the text of "Iran Petroleum" interview with Mehdi Jamshidi-Dana, the CEO of IGTC.

Given the existence of 10 gas transmission zones in Iran, could you tell us the current capacity of IGTC gas transmission? How much gas did IGCT deliver to end users during the first 10 months of the current calendar year?

The company has capacity to transmit more than 280 bcm/y of gas. In the current calendar year, 212 bcm of gas was transmitted during the first 10 months of the year, up 5% year-on-year.

How much is the maximum gas transferred in a single day? When was it?

On February 21, 851.4 mcm/d of sweet gas was fed into trunklines, which set a record even 7% higher year-on-year.

What about intelligent pigging and leak detection in the current calendar year?

Pigging was carried out on 8,372km of Iran Gas Trunkline-3 (IGAT-3), IGAT-4 and IGAT-7. Through this operation, 1,596km of pipeline was inspected while 3,751km has undergone cleaning pigging. Leak detention was planned for 37,434km in the current calendar year. Until March 6, more than 35,778km underwent leak detection, i.e. nearly 95% of the target.

What measures have been undertaken at compressor stations, and what technical modifications were made to guarantee sustainable gas supply in winter?

The planned maintenance work was done at gas compressor stations and on pipelines despite the coronavirus pandemic. To that effect, 64 turbines and 45 gas compressors were repaired. Furthermore, 33 plans were envisaged with regard to pipeline repairs, coating and intelligent pigging, 30 of which has been completed while 3 are under way. These operations are under way in the gas transmission districts 3, 2 and 9, IGAT-2, Rey-Semnan and IGAT-1. Intelligent pigging was also done on parts of IGAT-3 and on full IGAT-4. The second line of Tehran also underwent pigging. Meanwhile, overhaul resulting from intelligent pigging of IGAT-4 and IGAT-7 was carried out. Reparation on IGAT-3, Tehran’s 4th and 5th pipelines were also done. Regarding replacement of coating on IGAT-1 and IGAT-2, a total of 90km was handled in Sarkhoun-Rafsanjan, Qeshm-Bandar Abbas and Sarakhs-Neka pipelines.

What are the plans envisaged for next calendar year (starting on 21 March 2021)?

In the maintenance of gas compressor installations, 80 turbines and 60 gas compressors would be overhauled. Regarding maintenance of pipelines, a total of 1,100 cases of reparation on IGAT-4, 134 cases on IGAT-7, 818 cases on IGAT-3, 1,452 km of intelligent pigging, 123km of coating replacement (including 42km for Sarkhoun and 24 km for IGAT-2) would be done. Meantime, 8 pipeline safety projects would be carried out in District 9.

Could you tell us about outsourcing at IGTC?

Q&M outsourcing is on the IGTC agenda with an approach of physical assets management and compliant with governing documents including the bylaw on outsourcing Petroleum Ministry activities and in line with corporate strategies. In this regard, by devising a risk assessment model, all installations at gas compressor stations and pipeline production centers have been studied and low-risk installations and pipelines with shortage of manpower have been subject to outsourcing. A 10-year outsourcing roadshow has been devised, which is to be updated next calendar year. The installations at the Safa Shahr-4 gas compressor station were outsourced in 2019, yielding effective results. Furthermore, outsourcing Semnan’s installations would get under way in coming months and while outsourcing is planned for five BOT installations, including Kuhdasht, Deilam, Bid-Boland, Ahvaz and Hosseinieh.

How is the process of outsourcing and selection of companies?

A major risk with outsourcing is the lack of outsource companies or refusal of qualified companies to bid for outsourcing. Therefore, a general assessment was needed on the interest and capability of private companies, as well as market potential. Direct relationship between the outsourcer and the outsource companies and potential outsource companies must be constantly maintained. A databank created for that purpose should be regularly updated to record the specifications and track record of companies. About 29 companies attended outsourcing meetings. No quality assessment was carried out, but based on the

general assessment and on the strength of documents presented to that effect; at least 10 qualified companies are ready to act as outsource companies in the operation of gas compressor stations.

What has IGTC done with regard to self-sufficiency in the manufacturing of necessary equipment? What are its future plans?

Regarding self-sufficiency activities, more than 710 items of commodity, equipment and parts have thus far been domestically manufactured. Of this, 403 items pertain to valve mechanics, 196 in electricity and instrumentation and 109 items are associated with processing. As far as filters are concerned, more than IRR 200 billion has been annually saved. In the industrial oil production, more than IRR 212 billion has been saved annually. In 2019 only, domestically-made equipment worth IRR 40 billion was used. Future self-sufficiency plans envisaged by IGTC include drawing up a self-sufficiency roadmap, five-year self-sufficiency planning, sharing knowhow and technology achieved from all zones and subsidiaries, setting up specialized working groups on electricity and instrumentation, mechanics, processing and pipelines, identifying challenges and obstacles.

How is cooperation with knowledge-based and technological companies followed up on at IGTC?

In research and technology, more than 53 research projects worth IRR 103 billion have been carried out in partnership with universities and knowledge-based centers, while 26 research projects worth IRR 349 billion are under way. Cooperation with academic centers and knowledge-based companies is followed up on by the R&D Division of IGTC. Meantime, academic centers and knowledge-based companies are identified through specialized technomarkets held annually by National Iranian Gas Company (NIGC), as well as R&D Demand and Supply System software. All research proposals that have been assessed based on IGTC needs, and approved by the IGTC Research Council have directly been instrumental in overcoming challenges and problems, significantly reduced costs and saved large amounts of hard currency. For instance, an IRR 240 billion major research project under way involves implementing a system to monitor Siemens turbines. Implementing this project would save IRR 32 billion in annual costs of rotary machinery maintenance for each turbocompressor unit.

What measures have IGTC taken to protect the environment and guarantee the safety of pipelines and installations?

The safety of gas trunklines is associated with the pipeline integrity management system (PIMS). This approach considers 21 common threats to gas trunklines in devising preventive measures, regular monitoring strategies. Some of these threats are corrosion, third party, and infringement of boundaries, security threats, natural disasters, stress corrosion cracking, and construction problems at pipelines. Some of the most important measures adopted against these threats are demarcation, patrolling, corrosion management, controlling maintenance, examining pipe coating, making gas pipelines resilient, class and route modifications, intelligent and cleaning pigging – all aimed at pipeline risk management and reducing consequences. To that effect, supervising the performance of contractors is a key element in IGTC activities within the HSE framework. Such supervision existed both at the time of drafting contract documents and during activity of contractors. Regarding the environment, by managing carbon emissions and reducing environmental pollutant emissions through preventive maintenance of equipment, greenhouse gas emissions are managed. Creating or modifying industrial and human waste systems, managing energy resources and optimizing consumption, and creating green space based on obligations are among the most important measures for protecting the environment. Recently, in the management of waste from origin and using zero waste index (ZWI) and determining emission coefficients, very effective measures have been taken, which would yield in the near future with positive economic and environmental results.

Anything else you would like to add?

Gas transmission is the beginning of outsourcing. Systemic attitude and the experience of implementation of Article 44 of the Constitution require us not to step into darkness through a high-risk route. However, one forgotten risk in similar experiences is the assessment of outsourcing potential and openness of the private sector to partnership. In order to assess these risks, identify potentialities and raise awareness of future strategic partners, companies specializing in the four sectors of operating compressor stations, operating pipelines, overhaul of rotary machinery and intelligent pigging were invited to identify themselves. Qualified companies were identified and separate meetings were held with the company managers. During the meetings, the labor market perspective, investment opportunities, contents of agreements and methods of assessment in tender bids were explained. The views of experienced contractors were applied with a view to minimizing partnership risks. Exemplary synergy was observed in this project. Valuable experience was exchanged between the two parties. Three stakeholders are involved: IGTC, contractors and the industry. By creating transparent communications and public information, any ground for benefitting from leaked information was removed and the experience of other industries including power plants was received. Dynamism and competition picked up speed between potential outsource companies, whose final result would be upgrading the capability of these companies

Iran Oil Poised to Hit World Markets

 Iran’s petroleum industry has experienced tough time following the US’s unilateral withdrawal from the Iran nuclear deal in 2018. However, many international analysts believe that Iran kept exporting oil during the period of transition and nothing could stop its oil industry activities. This was true even in 2020 against the backdrop of the coronavirus pandemic that struck the world economy. Some experts had forecast Iran to be eliminated from the oil market gradually as the US toughened its sanctions against Iran’s petroleum industry. Annika Folkeson of the Center for Conflict Analysis and Prevention at the US Institute of Peace wrote in an article that Iran’s oil was irreplaceable because Iran held the largest oil and gas reserves together. However, the key point is that these resources should be monetized and create value-added as soon as possible, as oil continues to play a key role in the world economy.

Since mid-1960s and concurrently with Iran’s economic blossoming, oil has grown into an effective tool in supplying Iran’s financial needs. Iran’s politics and economic lifeline are tied to oil more than ever. That marks the start of combination of the two concepts of energy and economy in Iran, which gave rise to “oil-dependent economy”. Therefore, the oil and gas industry became the most strategic industry in Iran and governments have spent big sums on development and upgrade of this fundamental industry.

Undoubtedly, in addition to economy, politics is intertwined with oil. The international politics vis-à-vis Iran largely results from Iran’s oil-rich status and that is a factual reality with Iran’s petroleum industry.

The issue of sustained production and exports is of high significance in the world oil markets. Over recent years, Iran’s petroleum industry has been faced with unilateral Western sanctions; however, it has sought to remain ready for a comeback once sanctions have been lifted.

During the sanctions period which slashed Iran’s oil sales, the Petroleum Ministry implemented some development projects which would become effective after Iran’s return to the oil market. As Iranian officials have said, Iran is able to return to the oil market in the shortest possible time.

Hormuz Strait, Iran Bargaining Chip

A report released by the US’s Energy Information Administration (EIA) highlighted a key fact about Iran’s significant role in the global oil and gas trading. It said Strait of Hormuz and Iran’s oil were two inseparable principles, and that the future of global energy supply largely depends on Iran. In the EIA report, it has been noted that on average more than 17 mb/d of oil had been transited via the Strait of Hormuz to various points across the globe over one decade. That figure accounts for about 35% of oil traded at sea or 20% of total oil trade.

Prosperity despite Sanctions

Although it seemed that Iran’s petroleum industry would face numerous problems because of sanctions and the outbreak of the coronavirus disease, National Iranian Oil Company (NIOC) saw prosperity. Thirteen agreements were signed in August 2020 with two NIOC subsidiaries and 14 Iranian companies for enhanced oil recovery. The agreements were worth totally €1.5 billion. Back in October 2018, the first agreement for enhanced oil recovery in the Siri project (Sivand and Esfand fields) was signed, to be followed by 9 other agreements in February 2019.

Another key issue was to prevent any fall in the production from oil fields. To that effect, NIOC decided to develop 28 reservoirs to increase production. In this project, 283 wells would be drilled while more than 1,000 km of pipes would be laid. Furthermore, more than 100 projects worth $350 million would be implemented. Of these 27 packages, agreements for 6 packages were struck in early 2019.

Well No. 6 of the Kaboud field in the Bangestan reservoir was the first well drilled in the framework of enhanced recovery project. It started production in April 2020 at a rate of 1,000 b/d.

Enhanced oil recovery is the largest development project since the 1979 Islamic Revolution in oil-rich areas in southern Iran, covering five southwestern provinces. Iran's Petroleum Ministry and NIOC have specifically prioritized this project which is aimed at reaching an output of 341,000 b/d.

SP11 Development

France’s energy giant Total, China’s CNPC and Iran’s Petropars teamed up to sign a Total-led agreement with NIOC for the development of Phase 11 of the massive offshore South Pars gas field. Alas, Total and CNPC pulled out after Donald Trump took office in the US and restored sanctions on Iran. Finally, Petropars decided to go it alone.

The SP11 development project recorded satisfactory progress in 2020. The wellhead jacket of Platform 11B started officially in the first step for the SP11 development. Operations for the installation of the jacket of the first platform of SP11 started on the location of Block B through the message of President Hassan Rouhani via videoconference. The overhaul of platform of SP11 ended, its flare was rebuilt totally and acidizing of wells in the platform of SP8 started.

Drilling for the first well in the SP11 development project was officially launched following installation of the offshore MD-1 rig in SPD11B location.

Yaran, Azadegan Development

Last calendar year (to 21March 2021) also saw signing of agreements for development of the Yaran and Azadegan fields. The IPC model agreement for Yaran was signed between NIOC and Persia Oil and Gas Industry Development Company. The objective is to recover 39.5 million barrels over 10 years. The CAPEX estimated for this project stands at $227 million, while operation costs would be around $236 million.

The agreement for developing the South Azadegan oil field and constructing a central treatment export plant (CTEP) was signed between Petroleum Engineering and Development Company (PEDEC) and Petropars. Expected to increase output capacity to 320,000 b/d over 30 months, the agreement is worth $961 million plus IRR 11,830 billion. Furthermore, a $300 million agreement was signed for building CTEP (with treatment capacity of 320,000 b/d). It is the largest oil and gas processing unit in the country, planned to be built over 30 months.

Azar Field Operational

Last calendar year (to 21March 2021)  ended while development of the Azar oil field, as one of the most complicated oil fields in Iran, was inaugurated with a production capacity of 65,000 b/d. Addressing the virtual inaugural ceremony of this field, President Rouhani had told that previously Iran had made no recovery from this joint field.

In light of the government’s policy of prioritizing joint oil and gas fields and the Petroleum Ministry’s commitment to finalize the case of all joint fields, all fields have reached production or contractors have agreed to develop them – all that despite sanctions.

Top Exploration Rank

Consultancy group Wood Mackenzie said in its 2019 report that NIOC discovered 4,973 billion barrels of recoverable liquid hydrocarbon. That would make NIOC the top explorer among both NOCs and IOCs. Iran discovered Eram and Namavaran fields in 2019.

The second rank went to Russia’s Gazprom with about 3 billion barrels of discovery. Then came respectively Britain’s BP, American ExxonMobil and China National Offshore Oil Corporation (CNOOC).

About 20 billion barrels of oil equivalent was discovered across the world in 2019. Iran accounts for about 5 billion barrels.

Iran continues to claim the top spot in terms of hydrocarbon reserves in the world. In light of discoveries of the past two years, it has known that Iran would remain a major source of hydrocarbon supply.

Iran is starting a new calendar year while all eyes are turned to the country’s return to the oil market. Based on NIOC measures over this time, Iran would return to the oil market in the shortest possible time, as promised by Minister of Petroleum Bijan Zangeneh.

1400, Record Year for Petchem Output Capacity

Iran’s petrochemical production capacity is forecast to reach 100 million tonnes in the current calendar year (1400).

Iran’s petroleum minister, Bijan Zangeneh said the country had tough time last calendar year, but it could increase its production capacity from 66 million tonnes to 80 million tonnes a year. And Behzad Mohammadi, CEO of National Petrochemical Company (NPC), has said that completion of more projects would bring Iran’s petrochemical production capacity to 100 million tonnes in the current calendar year.

The increase in Iran’s petrochemical production capacity comes against the backdrop of restrictions imposed on Iran’s petroleum industry.

The covid-19 pandemic affected the entire petrochemical sector last calendar year, but petrochemical projects were never stopped.

In Iran, sanctions along with the coronavirus toughened conditions for Iran’s oil sector. For instance, before the coronavirus outbreak, Iran was exporting 70% of its petrochemical output. But the figure declined as buyers of Iran’s petrochemicals experienced economic stagnation. However, after signs emerged of prosperity in China’s market, Iranian products were sold at better prices because China is the main destination for Iranian exports. It has to be also noted that over the past 20 years, Iran’s petrochemical industry has experienced significant growth. In parallel with the increased production capacity at the South Pars gas field, the petrochemical production capacity has increased. Another key point is that some 95 types of petrochemical products were being supplied by March 2020. Ten new products are expected to come online by next March, while three others would be supplied within four years.

In recent years, the petrochemical industry has sought to diversify the mix of products, particularly imported products. Therefore, some projects would become operational in coming years so as to add 20 new products to the petrochemical mix. In this way, 60% of imported products would be sourced domestically.

Global Look

The Persian Gulf Petrochemical Industries Company (PGPIC) has had a decisive share in Iran’s petrochemical exports.

Jafar Rabiei, CEO of PGPIC, said despite sanctions imposed on Iran’s petrochemical industry, “this industry is an export-oriented sector and our presence in international markets will be permanent. Therefore, we always look seriously at our presence in global markets.”

Noting that Iran’s petrochemical industry is a hard currency generator, he said: “Rarely do I know a petrochemical plant in Iran to have not been built for exporting products. Truly supplying our domestic needs is our priority, but we have been always looking at export markets.”

Iran’s petrochemical industry was a major supplier of hard currency at a time the petroleum industry was under tough sanctions and the Iranian economy was faced with restrictions due to sanctions and covid-19.

President Hassan Rouhani has highlighted this issue time and again, and heaped praise on petrochemical industry actors. Last calendar year, 17 petrochemical projects were inaugurated. Some of them were initially forecast to not come online; however, they all became operational, increasing production and exports.

Mohammadi said last February that 35 million tonnes of final products were being produced in the country, 72% of which was exported. A total of 77 chemicals and 18 polymers, in 334 grades, are produced in Iran for consumption in the downstream petrochemical sector.

Oil Sanctions Verification

The US is yet to lift sanctions on Iran’s petroleum industry. The European Union (EU) and the US are apparently seeking a way to resume their talks with Iran. Kazem Gharibabadi, member of Iran’s nuclear negotiating team in Vienna, has said that the US’s return to the 2015 nuclear deal would be verified when Iran would be able to sign oil agreements, export oil, receive oil revenue through banking channels and carry out financial transactions.

Some managers of petrochemical plants have been exporting products with the same sanctions in effect. They hope that US oil sanctions would be lifted, but they say Iran’s petroleum industry has been under sanctions since the 1979 Islamic Revolution. For them, the sanctions have changed in toughness in recent years, but the petrochemical industry has continued its path. Some of them even say they have customers beyond neighboring countries, noting that they would be able to attract investment if sanctions are lifted.

Hassan Abbaszadeh, director of planning and development at NPC, had earlier said that under good economic conditions of 2003-2004, $4-4.5 billion of investment was attracted into the petrochemical sector. In 2019, when tough sanctions were in effect, $3.8 billion was invested in this industry. Chinese finance and national facilities had a small share in this investment as most projects have been financed by holdings.

Joint Ventures

Rabiei said: “It’s true that during sanctions our communications with petrochemical majors for receiving cutting edge technology an investment became very limited, but we were not brought to our knees and we managed to produce some materials like catalysts.”

He expressed hope for joint investment by Iranian and foreign companies in Iran’s petrochemical sector once sanctions have been lifted.

“Furthermore, we expect to diversify and increase our exports,” he said.

Asked to explain if the petrochemical industry remains attractive to investors, he said: “Iran’s petrochemical market is undoubtedly very attractive to foreign investors and particularly big petrochemical companies in the world.”

“Due to feedstock diversity in Iran, big petrochemical companies have always been willing to invest in Iran’s market. Meantime, we are not short of specialized manpower. Therefore, if we did not have the restrictions caused by sanctions, we would see the presence of foreign investors in this sector. Of course, this presence does not mean that there would be less room for Iranian industrialists; rather it means that more orders will be flowing towards us and they can have more cooperation with foreign partners,” Rabiei said.

Iran’s petrochemical industry has been racing ahead normally despite sanctions. But removal of sanctions would help Iran export more, while clearing the way for fresh investment and modern technologies.

According to plans, 28 petrochemical projects would have become operational by March 2026. That would bring Iran’s petrochemical production capacity to 133 million tonnes annually with a revenue of $35 billion. That would push Iran to the top Middle East spot in supplying basic products.

Mohammadi has said petrochemical projects have been planned based on feedstock available up to 2027. Based on the feedstock that may be available in coming years, 30 strategic products are considered for sustainable development. With an investment of $16 billion, these projects would add 20 million tonnes to the annual petrochemical production capacity.

Refining/Distribution Thriving Despite Sanctions

Iran’s daily growing need for fuel in the transportation sector, the necessity of self-sufficiency in fuel production, sitting atop huge oil and gas reserves the urgent need for the refining industry to upgrade its quality and quantity have transformed Iran’s refining and distribution industry a sensitive sector within the Ministry of Petroleum. This industry tried its best to blunt the impact of unjust sanctions targeting the petroleum industry; rather it has taken benefit sanctions as a bridge to develop technical expertise. Design and construction of advanced refining units, manufacturing of refinery equipment and in some cases catalysts are all achievements of resilience during years of sanctions.

Iran has moved from the position of being a gasoline importer to become a leading exporter of gasoline in the region. Iran’s gasoline production has hit 115 ml/d.

Oil Products Exports Grow 4-Fold

Last calendar year Iran saw a four-fold increase in its petroleum product exports. Iran joining the club of gasoline exporters and the key role of the refining industry under sanctions and concomitant reduction in oil exports would mean the year of prosperity for the refining industry. The refining industry earned Iran good hard currency revenue although the country had to cut its oil exports due to sanctions.

National Iranian Oil Refining and Distribution Company (NIORDC) made step-by-step planning for self-sufficiency in the production of petroleum products. Iran is no longer an importer of gasoline; rather it earned more than $1.4 million from petroleum product exports, a major step in the refining industry.

In fact, it could be argued that the simultaneous and coordinated growth and development of all links in the refining industry chain – from production to pipelines, storage and distribution – have been the strengths of development of this industry over recent years.

Refining Capacity at 2.3mb/d

During the previous round of sanctions, Iran’s refining industry was an importer of gasoline. That made the industry an easy target for sanctions. However, with concentration on refinery development projects over recent years, particularly completion and commissioning of four refining phases of the Bandar Abbas Gas Condensate Refinery (known as the Persian Gulf Star refinery), the refining industry in the country became self-sufficient in petroleum products’ production. Furthermore, this self-sufficiency served as a bridge for enhancing petroleum products’ exports. For several years in a row, the country’s refining capacity had remained unchanged at 1.8 mb/d, but it jumped to 2.3 mb/d by the end of last calendar year in March.

Iran has increased its petroleum products exports four times to become the top exporter of petroleum products in the Middle East. Therefore, the quantitative and qualitative growth and development of petroleum products at refineries across Iran vacated the country’s need to import products; rather Iran’s refining industry has recorded a 16% growth over eight years.

40mt Export Capacity

Development of the Mahshahr and Shahid Rajaei ports, both key refining projects, became possible last calendar year by relying on domestic potential, while Iran was under sanctions. The ceremony for the inauguration of the Mahshahr project was delayed on several occasions due to increased export capacity, this important step in the refining industry could not be ignored. With the implementation of development projects and construction of new jetties in these two strategic ports, Iran’s export capacity in the two ports increased from 26 million tonnes to 75 million tonnes a year while the operating capacity of the jetties went from 18 million tonnes to 50 million tonnes a year.

Qualitative Growth

In addition to quantitative growth in gasoline and gasoil production, the refined petroleum products have experienced significant growth in quality in recent years. Iran was producing only 60 ml/d of gasoline in 2013, which reached 115 ml/d in 2020, 80 ml/d of which is up to Euro standards.

The refining industry has made steps closer to supplying products of higher value-added.

4 Transmission Lines

Last winter, four key pipelines used for transmitting oil and petroleum products came online. With the growth and development of these pipelines and the operation of more than 1,000 km of pipes over the past two years, the capacity for the transmission of oil and petroleum products grew significantly.

In addition to increasing the transmission capacity, development and operation of the four pipelines of Naein-Kashan-Rey, Shazand-Qom-Rey, Tabriz-Khoi-Urmia and Abadan-Ahvaz for the secure transmission of oil and petroleum products, Iran saved IRR 40,000 billion annually, according to Ali-Reza Sadeq-Abadi, CEO of NIORDC. These pipelines dispensed with the daily need for 3,000 oil tankers carrying oil, while consuming 178,000 liters of gasoil.

Storage Capacity under Covid-19

Several key oil storage facilities came online last calendar year. Two important ones among them were the Urmia facility with a capacity of 120 ml and the Malayer facility with a capacity of 68 ml.

That along with other storage facilities helped NIORDC enhance its storage capacity of petroleum products significantly.

This capacity increase came against the backdrop of the covid-19 pandemic and the subsequent decline in the consumption of gasoline and petroleum products.

According to Sadeq-Abadi, Iran was among few refiners in the world to not have decreased its refining capacity under covid-19.

Annual Gas Consumption at 232bcm

 In Iran, access to natural gas distribution network is 95%. Iran owns one of the largest gas pipeline networks. Although natural gas consumption in Iran was up 8% last calendar year compared with that of the year before, there was no cut in gas supply in consumers. Iran distributed 232 bcm of gas in the calendar year to March 2021.

Hassan Montazer Torbati, CEO of National Iranian Gas Company (NIGC) believes that although the gas consumption record was broken last calendar year, this industry did its job so well as to avoid any disruption in the gas transmission and consumption. In any case, the gas industry left behind a successful winter despite unprecedented consumption level.

Some of major initiatives in the gas industry last calendar year were as follows:

Natural Gas Processing at Refineries

Iran’s gas refining capacity reached 1.31 bcm/d last calendar year. The key point is the sustainable processing and transmission of gas. Although Iran’s extended gas network is a strength of this industry, gas consumption in Iran still exceeds global standards. This issue has been highlighted time and again by the petroleum minister and NIGC officials. Thanks to enhanced gas production from the South Pars field under the Hassan Rouhani administration, Iran has ensured sustainable gas supply. But last January, gas processing hit a record 840 mcm/d. To that effect, transmission of more than 818 mcm/d of gas showed unbridled gas consumption in the country, in addition to record gas production. Totally, Iran’s gas production increased about 10 bcm, 7bcm of which went to the household sector.

Masoud Zardian, NIGC’s director of coordination and supervision on production, said gas supply record was successful in winter. He added that a long-term 15-year plan had been devised to preserve the gas production ceiling.

Gas remains a source of clean fuel. Over the past eight years, the Petroleum Ministry has tried to supply gas to power plants and reduce fuel oil consumption. In the calendar year to March 2020, Iranian power plants were receiving 167 mcm/d of gas, which increased to 181 mcm/d the following year. These figures show reduction in pollution from power plants. Meantime, 262 bcm of gas was fed into the national pipeline, up 6% year-on-year.

NIGC officials have facilitated gas transmission and injection into national network, predicting the annual gas production to reach 500 bcm by the 2041 horizon. Therefore, it would be necessary to promote energy efficiency programs in a bid to earn the country $350 billion.

Gas Supply to Turkey Ongoing

Iran sits atop huge gas deposits, but its share of global gas trading is not proportionate with its reserves. Iran is currently exporting 30 mcm/d of gas to Turkey. Iran’s gas exports to Turkey were suspended for three months following an explosion at the Bazargan border in March 2020. But Iran’s gas exports to Turkey was not hindered.

Iran-Turkey gas agreement is expiring within years. Since the gas trading ambiance in Turkey has changed from the time the current agreement had been signed and Turkey’s private sector is now the main player in gas distribution, any new agreement would have to match Turkey’s gas market. It is not clear yet how the agreement would be renewed, but talks are under way between the two nations.

Montazer-Torbati has said Iran was trying its best to preserve its share of Turkey’s gas market and even increase it either through Turkey’s government or its private sector.

Another effective agreement pertains to Iran’s gas export to Iraq. Iran is supplying on average 15-20 mcm/d of gas to Iraq. Last summer, the figure varied between 40 and 45 mcm/d.

Iran has also plans to deliver gas to Afghanistan and talks have started to that effect.

The NIGC expressed hope to receive guarantees from the Afghan government and engage Iran’s private sector in gas exports to this country. He hopes Iran and Afghanistan would soon sign a memorandum of understanding for Iran’s gas supply to Afghanistan.

Montazer-Torbati, however, noted that anyone willing to operate projects in Afghanistan would seek guarantees. That would be a time-consuming procedure because in parallel with signing MOUs, market development has to be done.

“We predict to also consider exporting compressed natural gas (CNG) to Afghanistan. This country is not currently a gas consumer and the two countries can proceed with such projects as CNG. Iran would extend its gas pipelines as far away as its border [with Afghanistan] and in parallel we have to be able to create gas consumption in the Afghanistan market,” he said.

Sustainable Gas Supply

Ten gas distribution districts in Iran finished the calendar year to March 2021 with no halt in gas distribution. Mehdi Jamshidi-Dana, CEO of Iranian Gas Transmission Company (IGTC), said 850mcm/d of natural gas was being delivered to consumers. Montazer-Torbati said the figure has now reached 900 mcm/d.

A five-fold increase in NIGC’s fiber optic telecommunications capacity, safety of Iran Gas Trunkline 7 (IGAT-7), leak detection at more than 5,500k of high-pressure pipeline in four provinces by District 4 staff, self-sufficiency in the manufacturing of 650 items in District 7, guaranteeing gas transmission sustainability in IGAT-8 by District 5 staff, self-sufficiency of District 8 in IGV turbine manufacturing, development of digital systems in District 1 and application of knowledge management are among other measures undertaken in the gas sector.

95% Access to Natural Gas

Winter gas supply never stopped despite cold weather; rather it picked up speed. In his report to President Rouhani, Minister Zangeneh said 95% of Iranians had access to natural gas.

Gas supply to Sistan and Baluchestan Province is under way at a quick pace. The provincial head of NIGC has said that more than 65,000 natural gas customers had been counted in the province. The Khorasan Razavi Province Gas Company also announced that an auxiliary gas supply project had been completed in Zahedan.

Full gas coverage of North Khorasan Province, gas supply to 600 villages in South Khorasan Province, startup of gas supply projects in seven villages in Kurdestan Province, start of gas supply to five villages in Yazd Province, start of construction operations for gas supply to power plants in Kish Island, 111% increase in capacity building in gas supply to industries in Kerman Province and sustainability of gas supply to Ilam Province are among other projects.

Completion of operations for gas transmission to three villages in Firoozkooh County, startup of gas supply to Parsian Sepehr gas refinery, start of construction of 18 gas supply projects by the Gas Engineering and Development Company (GEDC), signature of MOU between GEDC and Khazar Exploration and Production Company (KEPCO) and startup of Phase 1 of the Zaran gas transmission line are among other news in this sector.

Other measures taken by provincial gas companies include natural gas odor meter technology acquisition and emergency and warning systems in Khorasan Razavi Province, as well as polyethylene pipeline location system in Bushehr.

Changouleh, Kish Up for Development

Changouleh is one of the important oil fields in West Karoun region in southwestern Iran. Foreign companies have, time and again, shown interest in getting involved in development of this untapped field which Iran shares with neighboring Iraq.

Initial estimates show that development of Changouleh requires $2.2 billion in investment. Such activities as 3D seismic tests, location of wells and infrastructural activities like cleaning and construction of access roads for the development of the field have already been done. The development of the field will start as soon as an investor has been chosen.

Studies conducted on this field indicate that 19 wells need to be drilled for recovery from Changouleh.

Development of this field has been defined in two phases. In the first phase, 15,000 b/d of oil will be recovered under early production plan, while in the second phase the output will reach 50,000 b/d.  

Changouleh was first supposed to be independent, but 3D seismic tests and interpretation of seismic data showed its shared nature. The Exploration Directorate of National Iranian Oil Company (NIOC) has confirmed that Changouleh is a joint oil field.

In the first phase development of Changouleh, which is expected to last 40 months, four new wells would be drilled while two exploration wells will be repaired. Furthermore, a 100-km oil pipeline, as well as oil and gas separation facilities would be established.

Under the second phase that would last 60 months, 13 new wells will be drilled while infrastructural facilities along with pipelines are envisaged to be provided. That would raise production from Changouleh to 40,000 or 50,000 b/d.

The section of Changouleh lying in Iraqi territory is known as Badra. Changouleh is located near Azar oil field in the Anaran oil block.

Being located 20 kilometers southeast of the city of Mehran in Ilam province, Anaran oil block was discovered in 2005 by Norway’s Statoil and Russia’s LUKOIL. The block is estimated to hold recoverable reserves of 400 to 650 million barrels of crude oil.

Changouleh oil field lies along Iran-Iraq border. Bangestan formation in Changouleh field is the second most important field in the Ilam region.

Changouleh is estimated to hold 4.3 billion barrels of oil in place with API at 22. Regarding the construction activities of this project, two new wells are to be repaired while two existing wells are to be repaired for early production from the field. As far as surface facilities are concerned, a separator, transfer pumps, diesel-fueled generator supplied electricity, evaporation pool, flare, stream pipes and wellhead installations are envisaged.

In order to transfer oil that would be supplied under early production, a 130-kilometer pipeline, measuring eight inches in diameter, is being used for delivery to Dehloran.

According to a report by the Petroleum Engineering and Development Company (PEDEC), with the implementation of the early production development of Changouleh field and assessment of the field’s hydrocarbon potential, it would be possible to implement the major development plan for this field with the objective of recovering 65,000 b/d of crude oil.

According to official data provided by the Petroleum Ministry, Iran has more than 102 oil fields, 28 of which are shared with neighboring countries. Onshore joint fields are shared with Iraq, and offshore ones are shared with the littoral states of the Persian Gulf and the Sea of Oman.

Tourism Island a Gas Hub

Kish gas field, which is estimated to contain as much gas as held by five phases of the giant offshore South Pars Gas Field, is a top priority for the National Iranian Oil Company (NIOC). The rate of recovery from this sweet gas field is said to stand at 75%, which means too much for investors and petroleum engineers. Due to the facility of processing its gas to be fed into domestic gas network or to be exported, this field has been taken into consideration by Iranian oil officials. Therefore, Iran intends to develop this field as soon as possible in three phases and raise its output to 5 bcf/d.

Meantime, the location of this field in the coral and tourism Kish Island has largely affected its development. Exploration and drilling of wells at this giant gas field, which is recognized as the second largest gas field in the Persian Gulf, are under way with minimum damage inflected on the environment, while onshore field development is often harmful to the environment. To that effect, drilling of "Cluster A" wells located near the airport in this island and "Cluster B" wells is to be done directionally in order to occupy minimum space possible and cause minimum change to the shape of this tourism island. Meantime, the refining facilities in this gas field have been moved to Gorzeh Port instead of Kish Island in a bid to prevent air pollution. The gas produced for refining is moved to Gorzeh Port via pipeline to be sweetened and brought back to Kish Island.

 The Kish gas field development project is endowed with features which make it different from other fields. For a variety of reasons, the development of Kish gas field has been delayed.

Currently, all projects related to Phase 1, except for the processing unit, have been activated and the drilling of 13 onshore wells is under way.

In Phase 1 of the project, drilling of 12 production wells, workover of an existing exploration well, construction of subsea pipeline and sweetening facilities, gas condensate recovery, light gas pipeline, gas condensate export facilities and processing installations with a capacity of 28 mcm/d of sour gas are envisaged to recover 26 mcm/d of light gas and 13,000 b/d of gas condensate.

Onshore installations and the offshore pipeline are being completed and the agreement for the power plant has been signed with a domestic company. The required equipment for the power plant is being supplied.

Kish gas field is estimated to contain 38.3 tcf of gas plus 398 million barrels of condensate. An option is being studied to gather and transfer gas to Aftab Port where the refinery is located. Therefore, the collected gas will be piped to the Aftab Port refinery to be desulfurized and fed into national network for consumption.

Phase 1 development of Kish gas field is expected to produce 1 bcf/d of gas to be consumed domestically, and 11,300 b/d of condensate for exports.

Onshore wells will be 85% complete soon, while the subsea pipeline is 83% completed.

Kish gas field is estimated to be valued at $300 billion, thanks to its huge gas reserves at the depth of 4,400 meters. Studies indicate that up to 5 bcf/d of gas would be recovered from Kish gas field. Based on maximum gas price in the region, Kish is estimated to be valued at $250 billion. When measured on global scale, Kish is valued at $500 billion.

According to the latest reports, development of Kish gas field has been under way at a suitable rate in the first phase. Drilling is mostly done. There are also plans under way to revise the design of Phase 1 in order to eliminate energy-intensive processes and replace them with energy-efficient ones. PEDEC is operating Kish gas field.

Domestic development of some processes is expected to be done throughout the development of Kish gas field. A gas sweetening project is being followed up on in collaboration with the Research Institute of Petroleum Industry (RIPI), in which determining the dew point is on the agenda. This project is said to be economical.

Iran Developing Sohrab Oil Field

 Iran shares Sohrab oil field with Iraq. It is limited by the Mehr block to north, to the Azadegan field to south, to Band Karkheh, Susangerd, Jofair and Sepehr fields to southeast. Sohrab accommodates Ilam, Sarvak, Gadvan and Fahlyan reservoirs whose rock is mainly carbonated. Sohrab is one of prioritized fields for foreign investment in Iran’s petroleum industry.

Given the significance of projects in West Karoun and the necessity of accelerating the process of recovery from these fields, as well as sanctions in effect against Iran, the bulk of activities defined for the oil production and development cycle, including drilling, oil pipeline building and oil distribution stations in the West Karoun fields have been assigned to domestic companies. Furthermore, the share of job creation for local people has increased in recent years in West Karoun. It has also to be noted that along with the development of West Karoun fields, extensive infrastructure and job opportunities would be created; and economy would grow prosperous, leading to upgraded security along Iran’s borders.

Attracting investment is an effective factor in the development of oil and gas fields. Based on such approach, the undeniable achievement of the Petroleum Ministry in West Karoun is development of fields by Iranian contractors and domestic companies.

Sohrab field is a case in point. A memorandum was signed in 2012 between National Iranian Oil Company (NIOC) and Dana Energy for the development of Sohrab. But the project has been delayed due to various reasons, mainly sanctions. This memorandum contains three phases – preparing a technical report, heads of agreement, MDP and full development. The field was initially planned to be developed during a period of 48-52 months with an investment of $500-600 million. The Sohrab field has capacity to produce 10,000 b/d, but it can supply more than 30,000 b/d.

The Sohrab anticline is located in Abadan Plain, more specifically near the Iran-Iraq border and north of the Azadegan field. NIOC Directorate of Exploration has conducted 3D seismic testing in Sohrab. That was when the Sohrab-1 exploration well was drilled in 2012 to prove oil deposits in the Asmari, Ilam, Sarvak and Kajdomi formations. The second exploration well was drilled in 2014 in the southern part of the field.

Sohrab field is estimated to hold 2 billion barrels of oil in place, 150 million barrels of which is recoverable.

The oil has an API gravity of 16 in the Ilam layer, 17.5 in Sarvak, 31 in Kajdomi and 35 in Gadvan. Well No. 1 of the Sohrab field has been completed for early production by the Arvandan Oil and Gas Production Company.

Big Offshore Field Awaiting Investment

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

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

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

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

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

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

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

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

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

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

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

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

Petrobras Opens Offer Process for 2 Fields

 Petrobras has started the binding phase for the process of selling its entire stakes in the Albacora and Albacora Leste concessions, mainly located in deepwaters in the Campos basin.

Qualified bidders will receive a process letter with instructions on the divestment process, including submission of binding proposals.

The Albacora field covers an area of 455 sq km (175 sq mi) in the northern part of the basin and in water depths ranging from 100-1,050 m (328-3,445 ft), 110 km (68 mi) from Cabo de São Tomé on the northern coast of Rio de Janeiro State.

Last year Albacora averaged 23,200 b/d of oil and 408,500 cu m/d of gas. Petrobras operates with a 100% interest.

Rig Talks on South Africa’s Gazania

Africa Energy is looking to procure a rig for a well in 3Q on block 2B offshore South Africa’s west coast.

The Gazania-1 exploration well will target two prospects in what the company describes as a relatively low-risk rift basin oil play, up-dip from Soekor’s 1988 AJ-1 discovery.

Africa Energy has a 90% operated interest in the block, which will reduce to 27.5% once the South African government approves farm-outs agreed last year with Azinam and Panoro Energy.

In addition, the company is a partner to Total in block 11B/12B off South Africa’s southern coast, which recently delivered a second large deepwater gas-condensate discovery, Luiperd.

Deal on INEOS’ Offshore Norway Interests

INEOS Energy has agreed to sell its Norwegian E&P portfolio to PGNiG Upstream Norway for $615 million.

The deal includes all interests in production, licenses, fields, facilities and pipelines owned by the company on the Norwegian continental shelf.

Presently INEOS E&P Norge produces around 33,000 boe/d via its shares in three fields in the Norwegian Sea: Ormen Lange (14%), Alve (15%), and Marulk (30%).

It also has 22 offshore licenses, six operated, and equity in the Nyhamna terminal (8%) that receives gas from Ormen Lange and the Aasta Hansteen field.

Malaysia Adapts Terms for Offshore Bid Round

Petronas has launched the Malaysia Bid Round (MBR) 2021, which offers 17 offshore exploration blocks

Three are in the Malay basin (PM340, PM327 and PM342), four in the Sabah basin (SB409, SB412, 2W and X), and six are in the Sarawak basin (ND3A, SK4E, SK328, SK427, SK439 and SK440).

Included in blocks PM342, SK4E, SK328 and SB409 are six discovered fields. 

MBR 2021 also offers four deepwater blocks (ND3A, 4E, 2W and X) off the coast of Sarawak and Sabah, where there have been exploration discoveries in recent years

Australia Opens First Decommissioning Center

National Energy Resources Australia has opened The Centre of Decommissioning Australia (CODA).

The new complex, which will address decommissioning of Australia’s aging oil and gas infrastructure, is supported by Chevron, Woodside Energy, Santos Ltd., Esso Australia, Vermilion Oil and Gas Australia and BHP, and service/ research organizations such as Baker Hughes, Atteris, Linch-Pin, AGR, Xodus Group, and Curtin University.

Global Oil Markets Under Pressure

Crude oil producers from Europe, Africa and the United States faced difficulties selling to Asia, especially China, as buyers took cheaper oil from storage while refinery maintenance has reduced demand, industry sources said.

Chinese independent refiners, which account for a fifth of the country’s imports, have slowed imports in the second quarter because of refinery maintenance, strong Brent prices and a large influx of supplies, including Iranian oil, in first quarter.

These buyers and others in Asia are lapping up cheap oil offered by traders under pressure to clear storage after Brent crude flipped into backwardation, with prices for prompt delivery higher than those for future months, traders said.

As a result, traders were forced to sharply reduce prices for spot cargoes loading in April and May from Europe, Africa and the United States for delivery to Asia.

Lockdowns in Europe have also reduced demand, they said.

“Barrels are struggling to find homes in the export market as Asia still isn’t buying and Europe is struggling as well,” said Scott Shelton, energy specialist at United ICAP.

Crude grades priced on Brent were worst hit, traders said, as a wide spread between the global benchmark and Middle East’s Dubai crude price made them least appealing to Asian buyers.

“China’s demand for (Russian) Urals, West African, CPC Blend oil just evaporated. Buying from stock is much more interesting for them now,” said a source with a western trading house.

Virgin Islands Refinery Expansion Permit Blocked

The US Environmental Protection Agency revoked a permit that would have allowed a US Virgin Islands oil refinery to expand with limited review, citing concerns that the area around the facility is already overburdened with pollution.

The move marks the first big move by President Joe Biden’s EPA against a large industrial facility over considerations of environmental justice, which Biden has said would be a big priority for his administration.

The Limetree Bay refinery, located on the island of St. Croix, fully restarted earlier this year, with a goal to process up to 200,000 barrels of crude oil every day. The refinery can keep operating, but it cannot pursue additional expansion before an environmental review to assess measures the facility needs to take to protect nearby residents.

“Withdrawing this permit will allow EPA to reassess what measures are required at the Limetree facility to safeguard the health of local communities in the Virgin Islands, while providing regulatory certainty to the company,” said EPA acting Regional Administrator Walter Mugdan, in a statement.

Some local residents told Reuters recently here that since the refinery restarted they have had difficulty breathing, along with headaches and watery eyes. Some reported oil droplets covering their homes and chemical odors like rotten eggs. The facility employs several hundred people, which the island's governor has praised as necessary during "difficult economic times."

After nearly a decade idle, the refinery restarted last month after securing a permit from the Trump administration on Dec.

US Gas Increasingly Relies on LNG Exports

US gas producers have become increasingly reliant on liquefied natural gas (LNG) exports to Europe and Asia to absorb their growing output and prevent domestic prices from plunging as a result of oversupply.

Between 2015 and 2020, US gas production grew roughly twice as fast (4.3% per year on average) as consumption (2.3% per year), according to data from the US Energy Information Administration.

Some of the excess has been used to replace previous imports, but the rest has been exported by pipeline or as LNG, to markets in the Americas, Europe, the Middle East and Asia.

LNG exports surged to almost 67 billion cubic metres in 2020, up from less than 1 billion cubic metres in 2015, and were rapidly catching up with pipeline exports to Canada and Mexico.

Repsol Seeks EU Funds to Develop Biofuels

Spain’s Repsol is bidding for European pandemic recovery funds to support projects including new biofuel plants and ‘green’ hydrogen production made from renewable sources in a pivot away from oil and gas to supplying low-carbon energy.

Spain and Italy, due the biggest chunks of Europe’s 750 billion euro ($884 billion) lifeline in recognition of the damage the pandemic caused their economies, have invited companies to propose projects that could help wean their economies off carbon.

Repsol responded by putting forward 30 projects which it calculates will need total investment of 5.96 billion euros, the company said.

India Slams Saudi Advice on Tapping Stored Oil

Indian oil minister Dharmendra Pradhan described his Saudi counterpart’s advice to reduce oil stores to tackle high crude prices as “undiplomatic”.

“That was in a way (an) undiplomatic answer by our old friend. I politely disagree with that kind of approach.

“Certainly India has its own strategy, when and how to use our own storage, and we are conscious about our interests,” Pradhan said at Times Network’s India Economic Conclave in the Indian capital.

Pradhan has criticized OPEC and Saudi output cuts aimed at supporting prices and suggested India will have to look for energy alternatives to Persian Gulf oil, its main source of crude.

US to Slash Solar Energy Costs by 60%

The Biden administration set a goal to cut the cost of solar energy by 60% over the next decade as part of an ambitious plan to decarbonize the United States’ power sector by 2035.

The US Department of Energy said the goal accelerates its previous utility-scale solar cost target by five years. For the US power grid to run entirely on clean energy within 15 years, a key pillar of President Joe Biden’s climate change agenda, solar energy will need to be installed as much as five times faster than it is today, DOE said.

To get there, the agency committed to spending $128 million on technologies including perovskite solar cells, which are regarded as a promising cheap alternative to the silicon cells that dominate the market. Funds will also support research on cadmium telluride and concentrating solar technologies.

UAE's ADNOC Deepens Supply Cuts to Asia

Abu Dhabi National Oil Company (ADNOC) has deepened crude oil supply cuts to Asian customers in June to 10-15% from 5-15% in May, one week ahead of an OPEC+ meeting, several sources with knowledge of the matter said.

The supply reduction will apply to the four grades of crude that ADNOC sells to Asia, namely Murban, Das, Umm Lulu and Upper Zakum, they said.

The cuts are part of the United Arab Emirates’ (UAE) obligation under a pact between the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, to reduce output and balance global oil markets.

A spokesman for ADNOC said the company “confirmed crude oil allocations to its term customers for both May and June, in preparation for the launch of ICE Futures Abu Dhabi (IFAD)”.

“Allocated volumes of Murban are in line with the figures reported in the ADNOC Onshore ‘Murban Export Availability Forecast Report’,” he added.

ADNOC’s June allocation comes ahead of the next OPEC+ meeting scheduled on April 1, where producers will decide on May supplies.

OPEC+ sources told Reuters they expected the producer group to broadly stick to its current output cut levels, amid a deteriorating demand picture in Europe due to new lockdowns.

The UAE, the third biggest oil producer in OPEC behind Saudi Arabia and Iraq, pumps about 2.5 million to 3 million barrels per day, mostly produced by ADNOC.

Four OPEC+ sources told Reuters they expected a similar decision to the last meeting as a new wave of lockdowns across Europe to curb the spread of the COVID-19 virus has threatened to cool fuel demand. OPEC+ then broadly stuck to its cuts, allowing Russia and Kazakhstan a modest rise of 150,000 barrels per day.

CNOOC Profit Plunges 59% in 2020

China’s national offshore oil and gas producer CNOOC Ltd reported a 59% plunge in 2020 profit, hitting the lowest since 2017, as the coronavirus pandemic whacked energy prices and hammered fuel consumption.

The listed branch of China National Offshore Oil Corp reported a net profit of 24.96 billion yuan ($3.82 billion), down from 61.05 billion yuan in 2019, while revenue was 155.37 billion yuan, according to a company statement filed to the Hong Kong Stock Exchange.

The net profit was in line with analysts’ forecast of 24.338 billion yuan, according to IBES data from Refinitive. CNOOC is one of the industry’s lowest-cost explorers and producers, with all-in production cost at $26.34 per barrel in 2020.

Realized oil prices last year at CNOOC were $40.96 per barrel, down 35.3% on year, and gas prices dipped 1.6% to $6.17 per thousand cubic feet.

Output was 528.2 million barrels of oil equivalent in 2020, up 4.3% year-on-year.

The COVID-19 pandemic wrecked worldwide demand for energy in 2020, as economies locked down and travel was curtailed.

CNOOC’s capital expenditure was 79.5 billion yuan last year, meeting the adjusted target of 75-85 billion yuan. But the company has planned to raise its capital spending to 90-100 billion yuan this year, the highest since 2014.

The company’s reserve life, a measure of how long its current oil and gas reserve base can last, maintained at more than 10 years, according to the statement, with proved reserves reaching 5.373 billion barrels of oil equivalent.

CNOOC also is expected to start production at Lingshui 17-2, a large deepwater natural gas deposit in South China Sea,

PetroChina Carbon Emissions to Peak by 2025

PetroChina, Asia’s largest oil and gas producer, expects its carbon emissions to peak by around 2025, as it aims to lift output of lower-carbon natural gas to 55% of its total production by then from 47% now.

By 2035, the top Chinese energy company aims to supply more zero-carbon products than the fossil fuels it consumes, putting it on course to reach its carbon-neutral target by 2050, Chairman Dai Houliang told a virtual earnings call.

Spending on greener products including wind, solar, geothermal and hydrogen power will expand “significantly year on year,” Dai said, without giving detail.

He said the next five-to-10 years would be “the window for energy transitions” and the company was working on precise timelines.

In the near term, the company will focus on natural gas to cut emissions as China turns increasingly to the fuel to replace coal, an approach shared by domestic peers Sinopec Corp and CNOOC Ltd.

PetroChina aims to produce between 150 billion and 160 billion cubic metres of natural gas in 2025, which would be 21%-29% higher than last year.

PetroChina earlier reported a 58% fall in net income last year to 19.01 billion yuan ($2.91 billion), the lowest in four years, following falls in oil and gas prices linked to COVID-19.

Its crude oil output gained 1.4% last year to about 2.53 million barrels per day, while its gas production rose 8% to 4,221 billion cubic feet.

PetroChina, China’s second-largest refiner, recorded an 11% fall in sales of transportation fuels last year as it faced fierce competition from private refiners in an over-supplied domestic fuel market.

Western Oil Giants Quitting Tunisia

 Royal Dutch Shell and Italy’s Eni are seeking to sell their oil and gas operations in Tunisia, industry sources said, as the North African country struggles to attract new investments following years of political instability.

Shell has hired investment bank Rothschild & Co. to sell its Tunisian assets, which include two offshore gas fields and an onshore production facility the Anglo-Dutch company acquired as part of its 2016 $53 billion takeover of BG Group, the sources told Reuters.

Shell tried to sell its Tunisian assets in 2017 but abandoned the process due to legal disputes with the Tunisian government.

Eni, which has operated in Tunisia since 1961, has hired investment bank Lazard to run its sale, according to the sources.

Eni produced around 5,500 barrels of oil equivalent per day (boed) in Tunisia in 2019 and has nine oil and gas production concessions and one exploration permit in Tunisia, according to its website.

The gradual departure of major western energy companies from Tunisia in recent years follows growing frustration with the country’s unstable regulatory and political environment since the 2011 revolution that has led to investments drying up.

It also comes as the world’s top oil and gas companies are seeking to sell tens of billions of dollars worth of assets to reduce debt and focus on the most competitive production.

Tunisia’s Energy Ministry told Reuters: “We have no official knowledge that these companies will sell their assets.”

China in Quest for Reliable Energy Partners

 Shuaib Bahman

China’s fast economic growth in recent decades along with its daily increasing need for energy in addition to its limited and insufficient energy resources has caused China to feel concerned over energy security prospects.

Of course, that has never called a halt to China’s domestic investment in the energy sector as it has overtaken its traditional rival, i.e. the US, in oil refining. Given the role of energy in China’s economic growth and development, energy diplomacy lies in the heart of China’s foreign policy with a view to achieving reliable, low-cost and abundant energy. In other words, energy diplomacy consists of conducting diplomatic missions in line with macro-objectives of development with a view to upgrading the country both politically and economically and attract regional and international investment and cooperation in the energy sector. In this regard, establishing relationship with major producers of energy across the world, including the Persian Gulf, is a foreign policy priority for China. China’s strategic cooperation pact with Iran is a case in point.

Rivalry

China outperformed the US in crude oil refining in 2020, becoming the world’s largest oil refiner. China is building four big refineries whose product would most probably be raw materials for plastic production like ethylene and propylene. Logically speaking, China would remain the top refiner in the world in coming years. Further proof, demand for oil is increasing in Asia where nations can receive oil and refined products from China more economically.

China owes its top position in refining largely to big investments in this sector. Another aspect is related to global developments, particularly the impact of the coronavirus pandemic on oil demand. In 2020, the US suffered a lot from reduced demand for oil and its oil activities declined consequently. China benefited from these international changes. Unlike the US, the Chinese government encouraged refiners to produce more even after oil prices slumped.  

Future Partners in Persian Gulf

Chinese leaders have, over the past decades, realized the significance of economic growth and development in their nation’s political and economic security. Therefore, China’s economy has grown nearly 10% over the past couple of decades, overtaking the world by far in many sectors. One effective factor in China’s economic growth and subsequently economic, social and political security in this country is its secure energy supply. Maintenance of China’s economic growth heavily depends on guaranteeing the energy security, and any disruption in the energy sector would not only call a halt to its economic growth, but it would also bring about economic, political and social crises in this country. Therefore, energy security is one of the most significant strategic objectives and foreign policy priorities of China. In a bid to enhance its energy security, China has prioritized some policies in the national and international arenas. These policies include diversification of fuel sources, concentration on energy products, emphasis on efficiency and productivity, establishment of strategic reserves and investment in all oil-rich areas and nations.

Based on this policy, China needs infrastructure and access to energy in a bid to remain the top oil refiner. In other words, China would need enough crude oil to process at its refineries. Geographically, oil imports from the Persian Gulf region would be one of the most economical sources. That is why China holds a long-term strategic look at the Persian Gulf and oil-rich nations in this region. Persian Gulf states are richer than others in this region. Iran and Saudi Arabia remain the top nations because of their sway over world markets. Therefore, China would seek long-term strategic cooperation with these countries as one of its major policies.

Eyes Focused on Iran

China is investing in its One Belt, One Road Initiative and establishing good ties with energy owners, creating offshore and onshore routes and diversifying its oil and gas sources in a bid to facilitate and increase energy distribution security in its best interests. However, for Chinese politicians, increased dependence on the international energy market remains a potential threat to this country in light of US dominance, and China’s increased dependence on the global energy supply market would make this country further vulnerable to price fluctuations and market disruptions, which China could not control.

Therefore, as in recent years, tensions have increased between China and the US, Beijing has sought to boost its ties with regional powers, among which Iran is outstanding due to its rich energy and unique geographical location. Iran-China 25-year cooperation pact can serve both nations in view of China’s daily-growing need for energy imports and Iran’s dependence on big investment. By this document, China would guarantee energy imports from Iran as a long-term and strategic partner while Iran can benefit from China’s investment and technology in various sectors, particularly energy.

Last but not least, China is expected to be a reliable partner for Iran in the energy sector, particularly because unlike Europe and the US, China has not sanctioned Iran and even under the US’s unilateral sanctions, it remained the top buyer of Iran’s oil.

US LNG Exports, Political & Economic Profitability

 Shuaib Bahman

 US policies and strategies in the energy sector have, over recent years, undergone serious changes and developments. The US is an ideal example of international between energy and policy. In other words, correct policymaking in the first stage transformed this country from an importer to an exporter of energy. In the following stages, US politicians tried their best to find new markets for their oil and gas. Therefore, the US has managed to become a gas exporter. In recent months, the US’s LNG exports to Asia have grown significantly.

Since the fall of 2020, the United States has significantly boosted its liquefied natural gas (LNG) exports to the top LNG-importing region, Asia, to the point of setting record highs and competing with Qatar for supplying the fuel to the biggest LNG buyers.

Below-normal winter temperatures in north Asia—the home of the world’s top three LNG importers Japan, China, and South Korea—led to high demand for gas in recent months, while the recovery of industrial activities from the pandemic also helped to push up demand.

According to estimates from Refinitiv, American exports of LNG to the top three importing nations reached 3.2 million tons in February 2021, which was two and a half times the previous highest monthly export levels.

U.S. LNG exports to Asia were already surging last year compared to 2019, despite the pandemic and the lull in demand in the spring and summer months, when U.S. exports and liquefaction volumes were very low.

U.S. exports of LNG to Asia surged by 67 percent in 2020 as total LNG exports out of the United States jumped by 32 percent, the Energy Information Administration (EIA) said last month. American LNG exports to Asia surged by 67 percent last year, and accounted for nearly half—or 3.1 bcf/d—of all LNG exports out of the United States, according to EIA data.

The US has managed to outdo Qatar in LNG exports mainly due to its significant progress in the gas industry, particularly shale extraction. The US’s huge investment in shale oil has changed the country’s status from an importer to an exporter of energy. Prior to shale oil and gas extraction, the US’s dependence on external energy, particularly the Middle East, was increasing on a daily basis. Therefore, in light of advanced technology and innovation, the US has supplied its own needs and found a significant place in global markets.

Of course, cold weather in North Asia where the top LNG importers – Japan, South Korea and China – are located explains why gas demand has increased in recent months. That is while improvement in industrial activities following covid-related lockdown has pushed up demand.

Profitability

Energy exports, particularly in LNG, are profitable. Such profitability was focused upon mainly during the presidency of Donald Trump. Although shale gas influence on the US energy mix and foreign policy started under President Barack Obama, his successor witnessed significant profitability.

Under Trump, the US adopted the policy of diversification in its energy exports. But all eyes were fixed upon the oil market. The US won new markets in the oil sector, but it seems that gas trading would be more profitable for this country. In 2020, LNG exports removed about $10 billion from US trade deficit.

Given the high profitability of LNG sales and less environmental concerns over its production and consumption, the US is highly likely to focus on enhancing LNG exports over time. As noted under Trump, permission for US LNG exports may be extended at least up to 2050.

Political Tool

Increased US LNG exports have turned into foreign policy leverage for exerting political pressure on other nations. For instance, the bulk of US sanctions against Iran’s oil and gas industry is undoubtedly designed to fill the void left in the market. Main buyers of Iran’s energy – Japan, South Korea, India and Turkey – have now shifted to the US for supplying their needs.

Apart from that, the Americans have benefited from energy, particularly LNG exports, to expand their ties with neighbors and allies across the world. For instance, the US took serious steps in a bid to reduce the European Union’s dependence on Russia for LNG. Imposing sanctions on the companies involved in the Nord Stream II pipeline project and increasing political and even security pressure on the countries involved in this project are all indicative of the US’s long-term gas policy.

Outlook

US energy diplomacy approach and increased shale oil and gas recovery using advanced technologies along with its political, economic and security impacts on the US foreign policy are largely changing the world’s energy map. In fact, development of shale oil and gas industry has given rise to various political and economic consequences whose impacts are seen not just on energy markets, but also on politics.

As the US strategy to reduce energy dependence and instead to increase oil and gas exports constitutes a major policy for this country, one has to wait for new aspects of US influence in this domain, because reduced dependence on external energy would give the US more freedom of action to pursue its ambitious strategies in various parts of the world.

Petroleum Ministry Inks 4 Research Deals

Minister of Petroleum Bijan Zangeneh oversaw the signing of four agreements between Iranian Oil Industry Ventures (IOIV) and four Iranian companies. Two are offtake agreements and two are venture capital agreements.

Zangeneh said the agreements were in line with the objectives set for the current calendar year, i.e. production, support and removal of obstacles.

“Numerous meetings were held at the Petroleum Ministry for this slogan to materialize. Therefore, we decided to support knowledge-based companies and startups and remove obstacles in their way,” he said.

An offtake agreement was signed for the purchase of 10 ESP pumps between IOIV and Fanavaran Parsian Company and an offtake agreement for purchasing 30 PDC drilling bits between IOIV and "Asmary Field Services Company". In the venture capital sector, two deals were signed with Faradid Company and Aban Company for two projects on artificial intelligence in the field of HSE and EO purification.

IOIV and Bank Tejarat would consider IRR 20,000 billion credit for knowledge-based companies. IOIV has thus far issued over IRR 1,000 billion worth guarantees for such companies.

A trilateral memorandum on financing and supporting knowledge-based companies was also signed between NIOC, Iran National Innovation Fund (INIF) and Bank Tejarat, while an MOU for financing and supporting knowledge-based and technological projects was signed between NIOC, INIF and IOIV.

Iran More Influential Than Oil-Rich State

Minister Zangeneh laid emphasis on the necessity of cooperation with the world with a view to upgrading national power, saying: “In light of the technological potential in the country, I’m sure Iran can have a more important say than just oil and natural resources.”

Noting that agreements are signed following months of studies by managers and experts for technology development based on the capacity of knowledge-based companies, he said: “Undoubtedly, the future of the country is not tied to traditional production; rather it is tied to knowledge-based capacities and development of national technology. However, it would happen only through cooperation with the international community.”

“Without presence in the course of natural competitions in the world we cannot move from the national to the global level. Cooperation with the world is a principle today and we have to pay attention to it,” he said.

Removing Obstacles to Startups

Zangeneh said the Petroleum Ministry had long considered knowledge-based companies, recalling: ‘Petropars, Mapna and Farab are knowledge-based companies that have been instrumental in the development of power and oil industries. These companies are truly sources of honor and pride.”

He said that numerous agreements had been signed with universities over the past eight years with a view to supporting the technological potential of domestic companies.

“Domestic manufacturing of ten groups of commodities like drill bit, seamless pipes, wellhead and downhole equipment was planned and implemented,” he said.

Knowledge-Based Companies

Zangeneh said the petroleum industry had taken two key steps to support technological companies.

“The first one was establishment of petroleum technology and innovation park whose constitution has been endorsed, its organs and location are known and it is currently operating,” he said.

“So far, several technology and innovation parks have been established with the support of Ministry of Science, Research and Technology, but the petroleum park was among the first one in the demand sector,” he added.

Zangeneh said the second step was establishment of IOIV, adding: “This fund is among the first ones created by the demand sector. That is very important, particularly in the petroleum industry. It could be the largest stimulus for economy in this important technological sector.”

“Normally, parks or funds have been established by suppliers. Industrialists or universities have often established it,” he said.

The minister said Petroleum Ministry subsidiaries are legally allowed to spend IRR 8,000 billion from domestic resources on supporting knowledge-based companies and startups.

“With such permission, we can still help IOIV,” he said.

Domestic Products

Zangeneh said a large number of projects would be implemented in the current calendar year through Park of Technology and Innovation and IOIV.

“Reclamation of low-yielding wells and creating demand for knowledge-based companies, buying services from technological companies for desalting through skid-mounted units, energy efficiency projects and offtake agreements, financial support for startups and innovation centers at universities are cases in point,” said the minister.

Zangeneh said the idea of offtake agreements was first brought about a year ago, which is now coming to fruition.

“NIOC is legally authorized to purchase commodities when it is assured of the capacity of manufacturer in terms of quality and timeliness, but at IOIV there is no such restriction,” he said.

Zangeneh said: “In offtake agreements, the relation between the client or final buyer and manufacturer is final and a manufacturer, endorsed by an expert group, can manufacture commodities. If such commodity receives a certificate for quality, we guarantee its purchase to end imports.”

He said any Iranian company calming to be able to manufacture commodities for the petroleum industry without any client can refer to the IOIV website to observe terms of agreements. He said Bank Tejarat would offer loans for such activity.

New Development in Oil Technology

Masoud Karbasian, CEO of NIOC, said the “technological economy” of the petroleum industry was experiencing new developments like the inauguration of IOIV and offtake agreements.

“The cornerstone for these developments was laid when Mr. Zangeneh first visited the Rey Warehouse. This warehouse, with an area of more than 20 ha, was initially planned to be sold so that a new building would be built for NIOC. But the minister

said the land had better be allotted to the park of technology,” he said.

“IOIV was established to provide financial support in this sector. This fund has 20 contributors, four of which are Petroleum Ministry subsidiaries. The rest are private companies,” he said.

Karbasian said: “This fund has been set up with Petroleum Ministry support. It can recapitalize in the future and attract new capitals.”

He said that Iranian manufacturers would be granted low-interest loans (banking interest rate of 8%), adding that commodities could be directly supplied on the market.

Karbasian touched on an IRR 10,000 billion agreement in the Venture Capital Fund sector, adding: “We hope to see the growth of knowledge-based companies in the future.”

IOIV Financing Measures

Masoud Jafari Estahbanati, CEO of IOIV, said the fund had taken widespread measures for financing startups and companies working in the oil sector.

“Financing is 100% based on partnership and oil industry actors will have to put no deposits,” he said.

IOIV was established by 12 stakeholders and an initial capital of IRR 1,030 billion.

He stressed the necessity of facilitating the financing of oil startups and enterprises, saying: “Guaranteed purchase at the first time of manufacturing, guaranteed facilities, contractual guarantees and partnership packages are among this fund’s measures for facilitating financial service to stakeholders and actors.”

Estahbanati touched on guaranteed purchase, saying: “Manufacturers are often concerned with lack of guarantee for the sales of their products on the market when they first manufacture and supply a product. Meantime, clients are willing to purchase from companies registered in the petroleum industry vendor list. IOIV has taken into account the issue of guaranteed purchase for the first time to allay this concern. It signs agreements with the manufacturer rather than the client.”

Under offtake agreements, manufacturers are assured that they can sell a product on the market; otherwise, IOIV will settle with them.

He referred to the €10 million offtake agreements signed for the first time in Iran.

An offtake agreement is an arrangement between a producer and a buyer to purchase or sell portions of the producer's upcoming goods. An offtake agreement is normally negotiated prior to the construction of a production facility—such as a mine or a factory—to secure a market for its future output.

Offtake agreements are typically used to help the selling company acquire financing for future construction, expansion projects, or new equipment through the promise of future income and proof of existing demand for the goods.

Offtake agreements are legally binding contracts related to transactions between buyers and sellers. Their provisions usually specify the purchase price for the goods and their delivery date, even though the agreements are reached before any goods are produced and any ground is broken on a facility. However, companies can usually back out of an offtake agreement through negotiations with the other party and with the payment of a fee.

Offtake agreements are frequently used in natural resource development, where the capital costs to extract resources are significant and the company wants a guarantee some of its product will be sold.

The offtake agreement plays an important role for the producer. If lenders can see the company has clients and customers lined up prior to the beginning of production, they are more likely to approve the extension of a loan or credit. So offtake agreements make it easier to obtain financing to construct a facility.

Knowledge Role

Reza Dowlatabadi, President of Bank Tejarat, said knowledge-based companies had been focused upon in recent years with a view to improving their quantity and quality.

“Knowledge-based companies have found their role in the economy,” he said.

“Knowledge-based companies have been faced with numerous challenges, including financing and business management. Many also consider knowledge-based companies’ projects to be venture projects.”

‘Fortunately, given the measures taken so far and memorandums signed with IOIV we have partly removed these challenges and the banks have tried their best in directing resources to these companies. Bank Tejarat has provided knowledge-based companies with many facilities and export guarantees,” he said.

“Today’s MOU was signed with a view to provide financial support and guarantee purchase of products which knowledge-based companies need in the oil sector. Knowledge-based companies can benefit from banking facilities,” said Dowlatabadi.

“We introduce these companies to Bank Tejarat to receive necessary facilities for the manufacturing of equipment. In the next phase, based on NIOC guarantees for the purchase of products, the manufactured equipment will be put at the disposal of NIOC for two years. In other words, the loan will be paid in two phases, first to knowledge-based companies for manufacturing and then to NIOC after manufacturing,” he said.

“The interest rate of the loan is 8% over a 24-month period. Apart from loans, these companies would be able to benefit from LC services,” he said.

Khesht Oil Field Set to Come Online

 As Iran’s Petroleum Ministry is planning to enhance national production, output from the Khesht oil field is expected to start in the first half of the current calendar year. Khesht is an oil field in Konar Takhteh in Fars Province. It lies between the cities of Kazeroun and Borazjan.

Early production is expected to begin from this field as three wells at this field are becoming operational in the first half of the current calendar year. Oil will be delivered through a 17-km-long pipeline from Khesht to the Narguesi production center.

Ramin Hatami, CEO of Iranian Central Oil Fields Company (ICOFC) said Khesht oil field would fully come online in the second half of the year with an output of 20,000 b/d.

The first well was drilled in Khesht in August 1992. The field was then developed and its oil was delivered to the Genaveh pumping station. Khesht is estimated to hold 1.053 billion barrels of oil in place, 270 million barrels of which is recoverable.

Given the government’s plan to significantly increase crude oil production, the Khesht oil field is expected to prove instrumental. Development of Khesht is now 90% complete, implying proximity to the output envisaged by National Iranian Oil Company (NIOC). Commissioning Khesht would bring about sustainable development in neighboring areas.

ICOFC Running Khesht

The Khesht oil field is administered by ICOFC. Joint oil fields run by ICOFC saw their output increase 37% last calendar year, year-on-year. ICOFC is ready to return to pre-sanctions levels at any time.

Established in 1998, ICOFC is one of the five major oil and gas production companies and also the second gas producer in Iran. It runs mainly onshore fields in the provinces of Lorestan, Kurdestan, Kermanshah, Markazi, Qom, Ilam, Khorasan, West Azarbaijan, East Azarbaijan, Ardebil, Fars, Bushehr, Hormuzgan, and Chahar Mahal & Bakhtiari. ICOFC, which is currently supplying nearly half of Iran’s gas needs, is in charge of more than 80 oil and gas fields.

Moreover, ICOFC is tasked with production in independent gas fields in Nar and Kangan, Aghar and Dalan, Sorkhoun and Parsian, and oil production from Sarvestan and Saadatabad oil fields for delivery to the Shiraz refinery. Gas is partly fed into National Iranian South Oil Company (NISOC) fields, and partly to National Iranian Gas Company (NIGC) refineries. Gas condensate is delivered from ICOFC-run fields to the Shiraz, Bandar Abbas, Parsian and Fajr Jam refineries, as well as to Taheri Port for exports.

Khesht, Technological Project

Khesht oil field is listed among technological projects of NIOC. To that effect, research projects are under way for the listed fields, using academic and research centers’ potential.

Technological studies on 20 oil and 2 gas fields have been assigned to universities and research centers. Scientific and research cooperation in field-based agreements started in 2014. With a view to identifying scientific and practical approaches for enhancing recovery from oil and gas fields and improving recovery from these fields, establishing long-term, targeted and oriented relationship between NIOC and scientific centers, using universities as technological and scientific consultant in developing fields, maximum use of the scientific potential of universities and using cutting edge technology in the petroleum industry, directing university research and technology at enhanced oil recovery using technological and innovative methods and commercialization of projects topped the agenda.

Five ICOFC research projects are under way, optimally using the potential of universities and research centers.

The projects currently under way include developing scientific and economical approach for chemical stimulation, reservoir rock wettability changes in some gas fields, identifying the geochemical origins of increased hydrogen sulfide in Dehrom wells and Dashtak Formation in the Shanul and Dalan fields, bio-elimination of hydrocarbons through using bacteria separated from contaminated oil in the Naftshahr oil production unit, and using Light Mud & Completion Fluid in drilling.

Technological studies are planned in collaboration with the Shahid Chamran University for enhanced recovery from the Tang-e Bijar, Baba Qir, Samand and Bakul and Khesht. Furthermore, research is under way by the Islamic Azad University for enhanced recovery from Khesht.

Other Activities

ICOFC undertook important measures last calendar year. It managed to increase oil production from joint fields by 37% year-on-year. In the gas sector, it met 97% of its target by supplying about 249 mcm/d of gas to the national network, which was instrumental in supplying gas needs. In the gas storage sector, a 16% increase was seen in Sarajeh and 28% growth in Shourijeh B. The storage facilities supplied 25 mcm/d of gas to national network during peak shaving in winter.

In oil development, three agreements – EPC and EPD – were signed for enhanced recovery from the Saadatabad, Danan and Naftshahr fields. The projects are currently 75%, 51% and 40% completed, respectively. Three drilling rigs are currently operating in Danan and 95% of commodities used in EPD projects are domestically manufactured.

Given ICOFC’s gas activities, a comprehensive plan has been defined for sustainable gas supply to refineries from onshore fields.

Seamless Pipes Manufactured in Iran

More than six years have passed since the project started for the domestic manufacturing of 10 groups of widely-used petroleum industry commodities. This initiative was adopted upon Minister of Petroleum Bijan Zangeneh’s call for maximum support for Iranian manufacturers. Now, the process of phased delivery of domestically manufactured equipment is under way. That has led to further interaction between affiliates of National Iranian Oil Company (NIOC) on one side, and domestic manufacturers on the other. Pursuing the approach of taking maximum benefit from domestic manufacturing potential, NIOC has led its projects based on the capabilities of Iranian contractors and manufacturers. Various projects show incorporation of domestically manufactured equipment. According to Minister Zangeneh, more than 80% of non-rotary petroleum industry equipment is made in Iran, indicating the capacity of domestic manufacturers.

Independence of wellhead and downhole equipment imports, building and installing domestically built wellhead pumps, countdown for mass production of homegrown rock drills, empowering Iranian manufacturers in building flowlines and the success of knowledge-based companies in building drilling measurement tools represent only part of NIOC achievements.

Seamless casings of up to 20 inches  in diameter, welded casings of 20-30 inches in diameter, corrosion-resistant alloy (CRA) tubing, drilling pipes and seamless pipes of more than 6-inch in diameter are among the 10 groups of widely-used petroleum industry pipes.

It is noteworthy that the only manufacturer of seamless pipes in Iran is Luleh Gostar of Esfarayen (LGE). Babak Zand, CEO of LGE, told "Iran Petroleum" that LGE was the first manufacturer of seamless pipes – 6 to 16-inch in diameter – including casing and coiled tubing for the oil, gas and petrochemical sectors. The final objective is to meet petroleum industry needs with a view to regional growth and development. LGE runs five production lines – rolling lines, thermal operations, casing, tubing and coupling. A total of 642 workers are involved in production and supply.

“Most of LGE customers are oil contractors that have either become contractor in the oil pipeline projects or been tasked with the maintenance of wells,” said Zand. “Apart from that, downhole pipes manufactured by LGE are used in activities associated with drilling rigs. LGE is providing services to all these groups.”

Seamless Pipes in Oil Industry

                                   To know more about the significance of seamless pipes in the petroleum industry, it would be enough to have a glance at the “oil production potential” project based on which 15 items of necessary commodities for projects are listed in the tender bid documents. Contractors are required to order these commodities only to domestic manufacturers.

In addition, a list of 84 items whose domestic prototypes are available and therefore whose purchase from abroad is banned are presented as binding documents. Seamless pipes are classified under this category.

Masoud Karbasian, CEO of NIOC, said implementation of 10 agreements signed in 2018 for enhanced oil recovery was being watched closely.

“The share of domestic manufacturers in these agreements is more than 70%, which would exceed 80% once all packages have been implemented,” he said.

The list includes LGE-manufactured seamless pipes for which agreements have been signed. Three of them are as follows: €20 million agreement between contractors of the second phase of enhanced oil recovery and LGE for manufacturing casing and line pipes, agreement for the manufacturing and supply of 15,000 tonnes of seamless pipes in the Forouzan, Siahmakan, Ahvaz 1, Ahvaz 4 and Mansourabad, and €6.5 million agreement for the supply of casing to wells in the Forouzan field. In the absence of foreign companies and under unprecedented US sanctions, the significant role of LGE in the Petroleum Ministry’s most important project, i.e. enhanced recovery, is visible.

Seamless Pipe Supply

Minister Zangeneh has said a major achievement of enhanced recovery projects was the rising demand for Iranian-made equipment.

“Once, if for instance LGE referred to us for 20,000 tonnes, but now this plant is running at full capacity and we need more. That shows the existing capacities for manufacturing seamless pipes are not sufficient. Or we have still weaknesses in the CRA pipes,” he said.

Zand said the nominal production capacity of LGE was 100,000-120,000 tonnes a year, adding: “By signing new agreement and receiving new orders, we are approaching the practical capacity of the plant and we will respond to more demand through arrangement with the Petroleum Ministry and the Ministry of Industry, Mine and Trade.”

He said there was no problem with supplying the needs of petroleum industry projects, adding that filling no order would be delayed.

“Based on plans, we hope to be able to supply oil projects’ needs on schedule,” he added.

Zand said LGE’s top priority in next calendar year would be to concentrate on the development of 28 reservoirs located in Khuzestan, Bushehr, Fars and Kohguiluyeh & Boyer Ahmad provinces. He said that requirement for using domestically-manufactured commodities, giving social responsibility a 4% share in the projects, hiring of local manpower and environmental considerations are among specifications of this new project.

Quality of Iranian Products

Zand said Italy, France, Russia and Ukraine were among leading manufacturers of seamless pipes, i.e. foreign rivals of LGE.

Asked about the quality of Iranian-made commodities and their adaption to international standards, he said: “The petroleum industry applies tough standards. We may not conduct many of tests in the country, but our quality has been endorsed. [Our commodities] are used in all wells across the country and they have had good feedback.”

He added that foreign experts from various nations had visited LGE, saying the Iranian company’s products were on par with European firms’ commodities.    

He said LGE products cost even lower than Chinese commodities, adding: “In other words, we supply high-quality products with below-market prices.”

Domestic Potential

Amid speculation about changes the international atmosphere as a new president has taken office in the US, companies like LGE may be worried about losing their standing in the market as the country may open up to foreign companies. Zand said: “We have proven our capability.”

Asked about obstacles to domestic manufacturing, he said that the main issue was the timely supply of products.

“If we change the pipes’ diameter at long intervals, we can fill orders more effectively. NIOC can accumulate orders and provide us with them. That would accelerate our work and we can deliver orders more effectively and the projects would go ahead,” said Zand.

Given the 11-month activities of LGE, he said the company had grown 70% year-on-year.

“If we go ahead as planned, we will break all manufacturing records. We envisage a tough plan for next year, which we hope we can realize,” he said.

Many other Iranian manufacturers have also benefited from economic sanctions to create opportunities. Many projects have got under way in recent years with the help of domestic manufacturers. The Goreh-Jask crude oil pipeline is a case in point. This project symbolizes domestic manufacturing.

5 Petro Museums across Iran

Recreation and display of the historical identity of oil in a land, where the first Middle East oil wells were drilled and whose petroleum industry is more than a century old now pushed the Petroleum Ministry to put on exhibit this historical identity. Under the instruction of Minister of Petroleum Bijan Zangeneh in 2013, the Directorate of Petroleum Industry Museums and Documents was established. Since then, four petroleum museums have been launched across Iran: Abadan Artisan Museum, Abadan Gas Station Museum, Darvazeh Dowlat Filling Station Museum in Tehran, Kerosene-Burners Museum in Kerman. The Sabzevar petroleum museum had been launched in 2001.

Akbar Nematollahi, director of Petroleum Industry Museums and Documents, said more than 128 oil locations had been registered in the country, 28 of which was suitable to accommodate petroleum museums.

He said that the Petroleum Ministry was a leading organ in establishing industrial museums, adding that the ministry was seeking to inaugurate museums in Masjed Soleiman, Kermanshah and Mashhad, too.

The following is a brief review of petroleum museums in Iran:

Sabzevar Petroleum Museum

The Sabzevar petroleum museum is the first petroleum industry museum in Iran which was established prior to the establishment of Directorate of Petroleum Museums and Documents. It was launched in mid-2000s by a group of staff of National Iranian Oil Products Distribution Company (NIOPDC). This museum, which was a center for distributing gasoline and petroleum products, used to be known as the building of Anglo-Iranian Oil Company (AIOC). Following nationalization of oil industry in Iran, AIOC was renamed as National Iranian Oil Company (NIOC). The pivotal location of Sabzevar in storage and distribution of petroleum products across large swathes of land in northeast of Iran was a major reason for the formation of this museum. At the Sabzevar museum, more than 200 items have been coded. Some of them are instruments, lab equipment, firefighting tools, refinery equipment, oil and gasoline pumps, valves, diesel-powered engines and measures. Following the set up of the Directorate of Petroleum Museums and Documents, the items held there were examined by experts and finally 210 items were chosen to be held at museum. The museum has an outdoor and an indoor section. In the outdoor section, clapped-out items, a drilling rig, old pumps and valves are on display. Inside the museum, there is a photo gallery.

Abadan Gas Station Museum

The Abadan gas station was the first fuel station built in Iran in 1927. It was first used for the distribution of kerosene. But after a while, as cars entered Iran, it became a filling station. The procedure was that the oil products held in riveted tanks were first transferred by manual pumps into measures before being distributed among consumers based on their needs. After the minister of road gave the go-ahead for the operation of petroleum museums in Abadan, it was among the first priorities of the petroleum industry to become a museum.

Studies were conducted to that effect, while old items and documents were gathered from across the country, particularly from oil operation zones. Work started for the establishment of the gas station museum in Abadan in January 2016. The museum finally came on-stream in February 2017.

Covering 1,856 square meters, the museum is adjacent to a new gas station located opposite the Abadan City Hall. The museum has a main building and two secondary buildings.

Owing to its specific architecture, this hexagonal building is outstanding. It is nearly 90 years. Baghdadi brick has been used in its construction.

The building accommodates two small halls, each holding specific objects like barrels, measures, funnels, scales and 20-liter cans for carrying fuel, as well as photos of old stations and fuel distributors who loaded fuel on mules and camels to be transferred to distance areas.

Twelve old nozzles hang over the wall, showing their evolution. On the northwestern side of the museum stands another building that is 60 years old. It was once used for oil products distribution. At the entry into the building, it introduces kerosene-fueled lamps and some banknotes and stamps of the petroleum industry. Lampas, lanterns and various lamps used for heating or lighting purposes are on display there.

Two riveted tanks are placed in the yard located between buildings No. 1 and No. 2. When the filling station was established, kerosene was carried in 20-liter cans and distributed in measures ranging from 1 to 15 liters.

Another part of the museum is its exterior where devices used in the gas stations are arranged based on their year of manufacturing. The oldest one is a glass manual pump made in 1925. Most devices on display, numbering 12, are made in Britain, the US and Japan. There are also devices manufactured in Germany, Australia and India.

Abadan Artisan Museum

Abadan Artisan Museum is the second petroleum museum in Abadan. The Abadan vocational school was established in 1933. Now its building has been restored and put to public display. This building was used for petroleum industry education in Abadan. In 1977, the Department of Apprentices were high, buildings were outdated and the petroleum industry technology had made progress. Meantime, the number of educated persons and job seekers had increased. Upon an instruction of NIOC officials, continued education was no longer effective and hiring apprentices was banned.

With the victory of the Islamic Revolution, hiring apprentices was resumed in October 1980. But it was suspended as the imposed war began. After the end of the war and start of reconstruction, the school was focused upon as a symbol of the city of Abadan. But the education chain requiring training before recruitment was broken and it continued work for only 10 rounds. Finally, it became part of the petroleum industry museums in 2013. Five rooms, a yard and industrial plants are the major parts of the museum. The area that used to host learners is now used for a different purpose. A variety of elements are on display in the yard, including the steam boiler, remnants of the refinery model, industrial valves, old bicycle stands, barrel stands, painting bus and children playing court.

Darvazeh Dowlat

The fuel station No. 6, known as Darvazeh Dowlat filling station, was built in late 1930s by Anglo-Iranian Oil Company to distribute petroleum products like kerosene and gasoline. The mothballed building of this fuel station was considered for museum after the Directorate of Petroleum Museums started work. It was finally launched in July 2019. Each section of the museum is focused on a specific topic like the history of the Darvazeh Dowlat district, as well as the formation and activity of the fuel station. Furthermore, photos, documents, maps and films from this area, some objects used in distribution, transport and discharge of fuel as well as pumping devices are on display. The station was registered as national heritage in August 2014. It is noteworthy that up to 1951 when gas stations in Tehran numbered 10, their architecture was identical and in full compliance with Iran’s traditional architecture. The Darvazeh Dowlat pumping station is the only fuel station to have preserved its original structure up to now.

Kerosene Burners Museum

The "Kerosene Burners Museum" in Kerman is the fifth among museums run by the Directorate of Petroleum Museums and Documents. It was launched in March at the garden which used to house a British consulate. It is the first socio-industrial museum in Iran. Thanks to its unique architecture dating from the Zandieh dynasty, it puts on display various topics related to kerosene-fueled devices. This edifice was built at the order of Abolhassan Khan Mahallati, then governor of Kerman, in the final years of the Zandieh dynasty.

Nematollahi said the "Kerosene Burners Museum" was a special one because it deals with the social impact of oil on livelihood, and shows to what extent the petroleum industry has affected social life. Even when oil had not been discovered in Iran, kerosene burners were used by people as oil was supplied from other sources. In total, 400 kerosene-fueled devices are on display at the museum.

Research Role in Petchem Value Chain Development

 Javad Asghari

Iran’s petrochemical industry has conducted vast planning alongside building plants in order to bring the country’s output to 100 million tonnes a year. That would push the country to the top technological position in the region.

Due to sanctions targeting catalysts used in the petrochemical industry, petrochemical experts have realized that production of this group of substances is a must for consumer markets. Given the region’s needs, it would be possible to take action for its marketing and exports. Therefore, through efforts made by Iranian researchers, the technical knowhow for producing petrochemical catalysts was developed. Some of them are dehydrogenation catalysts, acetic acid production catalysts, methanol-to-propylene catalyst, methanol synthesis catalyst, acetone hydrogenation, dry reforming, PZ, and SAC catalyst.

Petrochemical Research and Technology Company (PRTC), as a main hub of knowhow development, has been instrumental over recent years. Since the beginning of the current calendar year, PRTC has developed 10 catalysts. It is also expected to produce more strategic catalysts for the petrochemical industry by the end of next calendar year.

Development of technical knowhow for petrochemical production, petrochemical catalysts, and strategic chemicals as well as removal of problems are among the major objectives of PRTC.

PRTC’s infrastructure includes 10 labs, 25 pilot systems, more than 50 setup and bench systems in Tehran, Arak and Mahshahr centers. HDPE, PET and MTP demo plants belong to PRTC.

PRTC has so far registered 250 invention patents, the most recent one is PVM or MTP that was registered with the European Union.

Today, about $21.5 billion is spent annually on catalysts, $16 billion of which is in the petrochemical industry. In Iran, from about $400 million of catalyst spending, $270 million goes to the petrochemical industry.

Forty groups of catalysts are used in the petrochemical industry. Ten groups are polymer-based. Currently, altogether17 groups of catalysts have been domestically manufactured and are being used in the industry. According to planning, 16 groups would have been manufactured domestically by the end of next calendar year. Another 13 groups are under research and development. Access to them is very easy, but in some cases their production does not have economic justification.

15 Agreements with Knowledge-Based Companies

PRTC has signed 15 agreements with knowledge-based companies in order to use their potential, particularly in supplying equipment. Production and delivery of 287 tonnes of catalysts to the Sabalan Petchem Plant, launching the LL catalyst in the Lorestan Petchem Plant, delivering the ZSM-5 technical knowhow to the Behdasht chemical company and delivering dry reforming catalyst production knowhow to the Khawrazmi plant are among the major actions of PRTC. Co-precipitation catalyst production has been launched in Lorestan with a capacity of 1,500 tonnes a year.

Costly Petchem Catalyst

Shazand Petrochemical Plant is also equipping its catalyst production unit, as it has received technical knowhow for that purpose. Meantime, polyethylene starters in Kurdestan Petrochemical Plant are under construction, scheduled to come online next calendar year. Shazand plant is also testing the SAC 500 catalyst whose technical knowhow it has received.

The acetylene hydrogenation catalyst knowhow has been delivered and during the first quarter of next calendar year, 200 tonnes a year – enough to meet national needs – will be supplied. The propylene catalyst has also been prepared at the Arak center of PRTC, which would come online in February.

Delivering technical knowhow to Fateh Kimia for converting methanol to propylene, supplying the actuator of potassium carbonate units of the Morvarid petchem plant, supplying technical knowhow to the 310,000-tonne high-density polyethylene unit of the Bushehr Petchem Plant and supply of technical knowhow for PET to the Tondguyan Petchem Plant are among the achievements of PRTC.

Development of the petrochemical industry has a significant impact on the development of any country and the creation of wealth. Today, the demand for oil, gas and petroleum products in the world may be less than one percent per year, but in the petrochemical industry this number is 4 to 5 percent, which indicates that special attention should be paid to this industry and the intelligent development of the petrochemical industry should continue.

Chemicals and petrochemicals are worth $3,350 billion in the world, $18-20 billion of which belonging to Iran. In light of the availability of petrochemical feedstock in the world and global markets, development of this industry should continue.

9 Petchem Projects Online

A total of 17 petrochemical projects were initially planned to come online since the beginning of the current calendar year. So far, 9 of them have come online.

After all these 17 projects come online, Iran’s petrochemical production capacity would reach 90 million tonnes a year.

Iran is expected to bring its petrochemical production capacity to 100 million tonnes by the end of next calendar year. The petrochemical industry is the only industry that would meet its targets set in the 6th Five-Year Economic Development Plan.

With more than half a century since the start of the petrochemical industry, more attention is needed to be paid to sustainable, resilient and resistant development. To that end, the National Petrochemical Company (NPC) has considered new strategic projects in a bid to stop importing chemicals and petrochemicals.

Iran’s petrochemical industry has 31 strategic projects categorized under the three groups of combined feedstock, propylene production and accelerative projects.

Senior Iranian petrochemical managers are mainly concerned with the shortage of at least 3 million tonnes of propylene. Six propylene projects are envisaged in western Iran and in Assaluyeh in the south.

A group of 22 accelerative projects are aimed at supplying domestic needs, halting imports and diversifying the mix of products. Each tonne currently cost $400 to $500, which would increase to $1,500 a tonne once the accelerative projects come online. These projects are mainly compact, but of high value.

Strategic projects will totally add 22 million tonnes to Iran’s petrochemical production capacity, worth about $11 billion.

Annual Review of Oil Industry Sport Achievements

Last calendar year was replete with ups and downs for sport activities in the petroleum sector. Petroleum industry athletic teams ran in games with minimum costs on the one hand due to the coronavirus pandemic, and on the other for the purpose of helping national economy in the light of unjust sanctions. Yet, their success was similar to previous years. Last calendar year began with a third place going to weightlifters of the oil sector in the premier league. The year ended with the weightlifters finishing runners-up. Therefore, last calendar year was marked with weightlifting in the oil sector. They showed brilliant performance in all matches and proved to be a source of honor and pride for Iran’s sports.

The following is a brief review of the success of oil teams in national matches during last calendar year.

Weightlifting

The weightlifting teams of National Iranian Drilling Company (NIDC) and National Iranian South Oil Company (NISOC) finished respectively the third and the fifth at the end of the premier league of Iranian weightlifting clubs. They scored 2,203 and 1,848 points, respectively.

The pro league weightlifting matches in the junior category of Khuzestan Province ended sooner than expected with the championship title going to the Naft Masjed Soleiman team.

Naft Masjed Soleiman weightlifting team scored 1,506 points to overcome NISOC’s team that scored 1,416 points.

Young weightlifters from the Ahvaz branch of NIDC defeated their counterparts to become champion in the province. The competition was tight between the Ahvaz branches of NIDC and NISOC. At length, NIDC scored 778 points to become champion while NISOC finished runners-up with 729 points.  The Aghajari Oil and Gas team finished the fourth.

Karate

The Karate teams of NISOC and NIDC of Ahvaz jointly won the third rank of the freestyle super league of Iranian clubs. The Board of Directors of the League was convened to decide on the teams competing in the karate leagues. Seyed Hassan Tabatabaei president of the Karate Federation, and other Federation officials and League managers were in attendance.

Table Tennis

Due to the covid-19 pandemic, the playoff of the table tennis pro league was not held. The Table Tennis Federation tested the ground whether or not to hold the playoff of the 18th round of men’s pro league. The Federation decided to put the playoff on hold and announce the results based on the ranking of the preliminary stage of men’s pro league of Iranian clubs. The table tennis team of Bandar Imam Petrochemical Plant is the leading champion in table tennis among Iranian clubs. It celebrated its 5th championship in a row. The table tennis team of Palayesh Naft Abadan was also present, which was ranked the 5th.

Judo

The judo team of Naft Masjed Soleiman acquired the 3rd ranking of Judo Pro League matches of Iranian clubs. The super league and judo league matches were not held completely due to the coronavirus pandemic. Therefore, the teams were scored based on their performance in the preliminary stage. Other clubs endorsed the ranking.

Water Polo

The water polo team of Naft Omidieh finished third among Iranian clubs in the 29th pro league matches. The good performance of Naft Omidieh in the second round of pro league matches encouraged this team to bid for the championship title. But the coronavirus pandemic called a halt to its activity. The case was referred to the Technical Committee of Water Polo Federation. The teams were classified based on their scores obtained in the preliminary stage. The third title was granted jointly to Naft Omidieh and Saipa.

Women’s Football Pro League

After months of uncertainty over women’s football pro league, officials in the Football Federation made up their mind and announced the end of the league. The women’s football team from Palayesh Gaz Ilam scored 35 points to finish 5th. Of course, the trainees of Inas Arastenejad were lucky enough to win the 4th rank in the several weeks left. The women’s football pro league matches were delayed due to the covid-19 pandemic and when the disease struck severely, the teams demanded that the league be declared over.

Beach Soccer

The beach soccer team of Pars Jonoubi managed to celebrate its 7th championship in the competitions after winning the championship title in the 13th round of pro league matches of beach soccer of Iranian clubs.

The Pars Jonoubi team showed strong performance and recorded 9 victories in rapid succession to reach the finale. The trainees of Mihan Doust had a tight race in the final match held in Bushehr. They won 5-4.

History of Oil in Iran

 Ali Bahrami

 The discovery of oil in Iran was done by the D’Arcy team. But there is historical evidence indicating that the existence of oil in southern and western Iran dates from centuries.

After reviewing archeological, historical and geological studies about Iran prior to the discovery of oil in Masjed Soleiman, the British might have assumed risk of investment in oil exploration in Iran.

Oil was discovered and recovered industrially in Iran in 1908. But centuries ago, even prior to the revelation of Islam, there was evidence of petroleum in Persia. Iranians used oil for a variety of purposes during migration. Iran’s southern and western areas were leading in oil recovery. Various areas in Iran are known to contain oil. In the late 13th century AH, the contemporary history of Iran was reviewed and revealed that oil could be found in Iran.

Oil Much Spoken About

Archeological and historical activities and leak of firsthand scientific and historical information might have led D’Arcy to consider investment in Iran’s oil sector. D’Arcy used to embrace risks.

American scholar Daniel Yergin describes William Knox D’Arcy in his book entitled" The Prize: The Epic Quest for Oil, Money, and Power" as follows: “D’Arcy was born in Devon, a country of England. He then moved to Australia where practiced law. He also developed an interest in gambling on racehorses. D’Arcy assumed big risks, and in the biggest risk in his life prior to investing in oil, he had purchased a mothballed gold mine in Australia. Later on, it became known that the mine had been abandoned while it was rich in gold.

Gold money had made D’Arcy a very rich man. He returned to London as a millionaire. D’Arcy was then looking for grounds to use his money and his offer to invest in oil discovery in Iran was welcomed. He dispatched his secretary to Iran in March 1901 to discuss terms and conditions of future oil concession.”

However, D’Arcy had based his risks on logic grounds. He must have had access to studies conducted by archeologists, geologists and historians, or he must have learnt from his advisors where to make investment.

Khosrow Motazed, in his book on oil, quotes a 1840 travelogue as saying: “By noon, we arrived at a petroleum source from which a black oil was gushing, which Iranians used to kill joint pains.”

A British geologist had seen traces of oil in southern Iran during his visit there. In an article, he had pointed to the existence of oil reserves in Masjed Soleiman and southwestern Iran.

Decades later, French archeologist Jacques de Morgan followed suit and noted the existence of oil in southern and western Iran. Years later, a German archeologist found oil in Iran.

What Do Reports Say?

Many researchers and tourists who have crossed Iran have pointed to oil resources in the country. The oil in Iran was sometimes used in the form of tar. Farshid Khodadadian, in his book Oil and Gas Use in Ancient Persia, writes: “Iranian geographer Abu Isaac Ibrahim bin Mohammad Istakhri, who lived in the 10th century, has spoken of wax in a cave in Fars. He had said the wax had such power of treatment that the cave was always protected by a guard. The wax was collected once a year in a stone recipient to be sent to the governor. English traveler Thomas Herbert who had come to the Shah Abbas court visited a wax mine in Jahrom and noted in his letter that this substance could render poison ineffective. Other kings sent gold, pearl and precious gifts to Shah Abbas to receive wax.”

Famous Muslim geographer Ibn Battuta spoke about oil in the 8th century. Prominent Iranian scholar Mohammad Ali Movahed, a veteran oil industry researcher, has translated Ibn Battuta’s book. Moroccan-born Ibn Battuta had traveled to Iran and then recounted how oil was used for medical purposes.

Before D’Arcy came to Iran, George Curzon had conducted a detailed and precise study about oil in Iran. Curzon has highlighted key points about the political, social, cultural and economic life of Iranians in the final years of the Qajar era. He toured Iran for years and published his findings in The Times.

Curzon writes in one of his books as follows: “The research conducted so far in Narestan, 35 km southeast of Borazjan, has not proven the existence of oil. It only shows streaks of coal and hard rocks immersed in tar. However, it is noteworthy that many tar streaks are seen around the Dalaki hills. It has long been said that there are important underground resources in this region. Two green water streams are also gushing out with temperature at 95 degrees Fahrenheit. It is mixed with sulfur and hydrogen, thereby releasing bad smell. Another oil-rich area is Ramhormoz located near Karoun. Studies show there are three oil zones there. The first one is Jardin village with 10 oil streams, three of which are important. The second one is located 24 miles from Karoun River and the third one 45 miles southeast of Shoushtar. There are six shallow potholes, one of which containing oil which would power lamps without having to be refined. It is sold on the markets in Isfahan, Tehran and Shoushtar. There is also oil in Dezful, as well as near Qasr-e Shirin and Kalhor in the vicinity of Kermanshah and also in Kurdistan. Petroleum products are also seen in Ahmadi and Bandar Abbas. However, the only place where oil is extracted for consumption is the Salkh area in Qeshm Island. A coarse oil is extracted which is used for lighting and treatment of rheumatism.”