€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