Petchem, Future of Iran Petroleum Industry

Kasra nouri
Director General of Public Relations

Environmental concerns have become a key issue in the world with fossil fuels being at the receiving end of accusations. The petrochemical industry can lead the oil and gas industry towards a brighter future. Particularly for oil-rich nations, development of the petrochemical industry offers a chance to kill two birds with one stone.

Preventing the sales of crude oil and natural gas and instead generating value-added by a factor of 3-30, creating job opportunities through expanding small-sized enterprises in the downstream sector, facilitating new recovery from hydrocarbon reserves in case of renewable energy replacement and reducing environmental concerns are among objectives that would be achieved through smart development of the petrochemical industry.

Iran’s Petroleum Ministry and petrochemical policymakers have in recent years devised coherent and precise plans in the petrochemical sector for a jump in the petrochemical sector. The first and second jumps have already materialized and arrangements have been made for the third jump to materialize.

The main objective in these jumps is to complete the value chain alongside quantitative development and diversification of the Iranian petrochemical mix, which would supply domestic needs in addition to offering big opportunities for regional and global demand.

Construction of the first methyl amine plant in Iran, starting up the first project to complete the value chain of the butane feedstock, launching the Masjed Soleiman urea/ammonia plant with $ 850 million, operating Sabalan methanol plant with $400 million, implementing a project in Assaluyeh to put an end to imports of hexane and pentane, the GTPP plant in Eslamabad Gharb with $545 million for developing the propylene chain and dozens of other projects would soon reserve Iran a special status in the international petrochemical market.

Taking into account all relevant aspects – economic profitability and value-added, environment, social issues and job creation – one may claim that the petrochemical industry is the future of the petroleum industry. Iran is taking big steps towards smart development of the petrochemical industry.

 Local E&P Firms to Study Azadegan Field

 Negar sadeqi-The giant Azadegan oil field, estimated to hold 32 billion barrels of oil in place, has already been developed in two sections – North Azadegan and South Azadegan. The field is currently supplying 215,000 b/d of oil.

Talks were under way with foreign companies for the second-phase development of this field, but due to sanctions, foreign companies pulled out of Iran. National Iranian Oil Company (NIOC) then decided to award the development project to Iranian E&P firms. Finally, memorandums of understanding were signed with five local firms to study the giant field. 

Minister of Petroleum Bijan Zangeneh has expressed hope that studies on the Azadegan field would end within six months. Reza Dehqan, deputy CEO of NIOC for petroleum and engineering, has also said that contractual talks with E&P firms would begin as soon as their technical and financial proposals win the NIOC approval. 

On May 31, three MOUs were signed between NIOC and five local E&P firm to study the giant Azadegan oil field.

Minister of Petroleum Bijan Zangeneh said at the ceremony that although Iran’s petroleum industry was under US sanctions, everyone is waiting for Iran’s return to the oil market. He said some governments had even claimed that Iran could not produce oil and that there was no market for Iran’s oil.

“Never say there is no market for oil. It is always possible to find a market for it. Iraq, whose production never ever exceeded 3 mb/d, has brought its output to 5mb/d now and has market for it. How is it that Iran cannot find a market for its extra production?”   

“We need to show firm determination, in which case, we will achieve success,” said the minister.

Output Lift a Must

Some experts still maintain that enhanced oil production Iran would mean more dependence on petrodollars. Zangeneh said bringing the country’s oil production to 6.5mb/d would not mean dependence on oil; rather, he said, “it would mean weaning the country off oil because if the oil revenue is invested in the private sector…we would be distancing ourselves from an oil-dependent budget.”

He noted that he would no longer take any government posts after the current administration of President Hassan Rouhani bows out in August.

“I recommend that the next administration bring oil production to 6.5 mb/d. I assure you that sooner or later some conventions would take shape to restrict oil production by nations to not allow countries and governments to produce oil. Therefore, we need to enhance our oil production capacity as long as we have time because international restrictions would cause problem for us. We have to boost our production quickly and this objective is practical,” he said.

Zangeneh said that the main issue in oil production was “management and technology” and not supply of equipment.

“Equipment may be supplied. Now 90% of equipment needed in the petroleum industry is domestically manufactured, which could not be compared with the situation in 20 years ago,” he added.

Foreign Firms Welcome

Zangeneh said that despite financial and technological sanctions, major work had been done in the petroleum industry at the national level.

“The capacity of oil recovery from West Karoun oil fields has increased from 70,000 b/d to 400,000 b/d,” he said.

Zangeneh said Azar oil field could add 60,000 b/d to the West Karoun output. “Activity in joint fields has been among the most significant activities of the Petroleum Ministry. That was done while Iran could not even import pipes and sheets due to sanctions.

“The 6th Five-year Development Plan was not deigned for sanctions. Without sanctions we would have done much more. However, following imposition of sanctions on Iran we did not give up, rather than that we  hit honorable records for the Islamic Republic,” he said.

Noting that what was under way in the Azadegan oil field was just a first step, Zangeneh said: “Out of more than 21 billion barrels of oil in place in this field, we are recovering 5.5%. If we can add 1% to this recovery rate, we will have a further 200 million barrels of oil, which would be valued at $10 billion with $50 barrel.”

The minister expressed hope that the studies would be fulfilled on schedule, noting that foreign companies may join Iranian firms.

Zangeneh also said that the MOU was just a technical and financial proposal for signing a development agreement. He added that Azadegan’s development would need $4.5 billion in finance, which should be preferably supplied domestically.

Local Firms Active

Zangeneh said he wished general contractor companies would take shape in Iran. “Currently, we have several active companies in this field. Formation of E&P companies was another wish of mine and my third wish was to see the effective and active presence of Iranian companies in the foreign trading of crude oil and petroleum products,” he said.

Zangeneh added: “These companies took shape against the backdrop of sanctions pressures and we effectively managed to set up commercial companies in the crude oil and petroleum products sector. God willing, these companies would continue their activity even after removal of sanctions, and this potential that has been created would spare any harm.”

Output Maintenance a Must

 On the same day, operations started for the construction of the Tabnak separation center and the Homa and Varavi gas compressor stations for the purpose of enhancing and stabilizing gas production level.

The bulk of Petroleum Ministry plans under the Rouhani administration has been to increase recovery from joint oil and gas fields and maximize output. However, maintaining production to avoid a fall-off in coming years is an issue that has not slipped into oblivion. The petroleum minister has said there was no option but to increase gas recovery. He specifically referred to enhanced recovery from the giant offshore South Pars gas field, adding that $25-30 billion in investment was needed for that purpose.

Touching on activities carried out at the Petroleum Ministry for enhanced gas recovery, he said: “The start of construction operations for gas compressor and separation center at South Zagros would guarantee feedstock supply to the Parsian refinery. That would generate 3.3 million tonnes of ethane, butane, propane and gas condensate as feedstock in the downstream sector. Without this investment we would face problems in feedstock supply as planned.”

“Although the petroleum industry did a lot in terms of investment during years of sanctions, the petroleum industry needs much more investment. This amount of investment does not match the country’s human resources capacity,” he said.

Zangeneh touched on the projects under way in Parsian and Kangan for enhancing gas production, saying these projects had been urgently considered.

“But it does not mean that we had not thought about them. We had defined them earlier and determined the field, but we had postponed it to later on. Delay in the implementation of efficiency plans and lack of price reform strategy alongside increased gas consumption accelerated the implementation of these projects for gas distribution,” he said.

Zangeneh said that all these projects were ready, adding that the next administration would make the final decision about them.

MOU Details

MOUs for studying the Azadegan field were signed in the three southern, central and northern sections. The one for the northern section of Azadegan was signed between NIOC and Persia Oil and Gas Development Company, the one for the central section of Azadegan between NIOC and Petropars and Petroiran Development Company, and the one for the southern section between NIOC and Pasargad Energy Development Company and Dana Energy.

Azadegan is the largest oil field Iran shares with neighboring countries. Covering 1,500 square kilometers, the field is known as Majnoun in Iraq. Estimated to hold 32 billion barrels of oil in place, Azadegan has so far been developed in the northern and southern sections.

The North Azadegan field has been developed by China’s CNPCI. It started producing 75,000 b/d of oil in November 2016. The South Azadegan field was awarded to local firms after the Chinese contractor in charge of the project was expelled in 2014. An agreement has been signed with Petropars for completing the Phase 1 development of South Azadegan and establishing a central treatment export plant (CTEP)

Talks Dependent on Financial Offers

Reza Dehqan, deputy CEO of NIOC for development and engineering, said that in case the technical and financial proposals of E&P companies with which NIOC has struck MOUs are approved, contractual negotiations would start with them for the development of Azadegan.

“Over recent years, development of this field has started in the northern and southern sections. CNPC’s development of North Azadegan brought production from this field to 75,000 b/d in 2016. This output capacity has so far been preserved,” he said.

“In the southern section, Petroleum Engineering and Development Company (PEDEC) – on behalf of NIOC – moved to consider development of this field by signing numerous agreements with contractors, drilling companies and installations. Last [calendar] year, completion of development in the South Azadegan field was awarded to Petropars,” he said.

Dehqan said: “The production capacity of South Azadegan and North Azadegan field currently stands at 140,000 b/d and 75,000 b/d respectively. Total output capacity at Azadegan stands then at 215,000 b/d.”

“Following the JCPOA (the 2015 Iran nuclear deal), we intended to use the development studies of several famous international oil companies on the Azadegan field to accelerate the field development, but the US’s withdrawal from the JCPOA totally changed conditions,” he added.

Dehqan touched on the idea of Iranian E&P companies’ involvement and using the technical, engineering, management and even capital potential of these companies to overcome the current crisis, saying: “Based on studies conducted on Azadegan, the southern section is twice the northern section in terms of deposits. Therefore, it is likely that the southern section be divided into the central and southern sections, and Iranian E&P companies could focus their development studies on these three sections.”

“The signing of this MOU makes clear whether or not such division would be practical, in which case, it would be judged in terms of technical and economic justification,” he said.

Dehqan said NIOC was assisting Iranian E&P companies in the studies on Azadegan. To that end, he added, a joint technical committee has been established for the three sections of the field to study manner of preserving the integrity of the field in terms of reservoir, investment and management.

Recovery Rate Up

Construction of Tabnak separation center and Homa and Varavi gas compressor stations also begun aimed at feeding the Parsian refinery. That would guarantee a 60 mcm/d supply of gas from Tabnak, Homa and Varavi gas fields. All these projects, valued at € 281 million, would be operated by Persia Oil and Gas Company over 36 months.

Homa gas compressor station is constructed with a 1+3 array of compressors with electric drive with a view to enhancing gas recovery from this field from 45.4% to 82.8% reaching a stable output of 15 mcm/d. Auxiliary facilities include a 61-km pipeline to carry liquids from Homa to Kheirgoo separation center.

Varavi gas compressor station is constructed with a 1+2 array of compressors with electric drive with a view to increasing gas recovery from this field from 29.7% to 49.2% for a stable output of 9 mcm/d. Auxiliary facilities include a 6-km pipeline to carry liquids.

Tabnak separation center is being constructed to increase the input feedstock of the Parsian refinery. For that purpose, a 21-km pipeline along with a pump and belongings would be constructed.

The Parsian zone is administered by the South Zagros Oil and Gas Production Company, a subsidiary of Iran Central Oil Fields Company (ICOFC). It is located in southern Fars Province. It is home to Tabnak, Homa, Shanol and Varavi gas fields that feed the Parsian gas refinery.

Feedstock Supply Guarantee

Ramin Hatami, CEO of ICOFC, said the aforementioned projects would guarantee feedstock supply to the Parsian gas refinery.

“The Parsian refinery was launched in two phases in 2003 and 2006 with a total processing rate of 79 mcm/d supplied by Tabnak, Homa, Varavi and Shanol gas fields. Last [calendar] year, the value chain of this section was completed by launching the ethane recovery section of Parsian and Sepehr, thereby maximizing the value of products,” he said.

Hatami said: “In light of the fall in production from these fields and the significance of sustainable feedstock supply, some requirements were planned and pursued by the Ministry of Petroleum. What we saw was the first link in the chain of planned actions.”

“With the implementation of this project we would see the rate of recovery increase from the Homa and Varavi fields respectively 34% and 16%. At the Tabnak field we should see a 3% enhanced recovery in addition to improved quality of refinery feedstock,” he said.

Hatami said the main mission assigned to Petroleum Ministry regarding enhanced recovery was to make maximum use of God-given underground resources to feed refineries. “By implementing this project, billions of cubic meters of gas would be added to our production. We will also produce about 22 million barrels of liquid products.”

He said that the investment made in this project would be recouped by the feedstock supply to the Parsian and Sepehr refineries, not to mention the advantage of using the engineering skills of Iranian companies.

“Establishment of the Shanol pressure compressor station and development of adjacent gas fields including Eram and Paznan with a total rate of 30 mcm/d is on the ICOFC agenda,” he said.

Petropars to Develop Farzad B

On May 17, a $1.68 billion buyback agreement for development of the Farzad B gas field was signed between National Iranian Oil Company (NIOC) and Petropars Limited. The agreement was signed by Reza Dehqan, deputy CEO of NIOC for development and engineering, and Hamid-Reza Masoudi CEO of Petropars.

The agreement is aimed at achieving 28 mcm/d of sour gas over five years. As this agreement is signed, the case of all jointly owned fields is closed under the administration of Hassan Rouhani.

Minister of Petroleum Bijan Zangeneh has also said that under the Rouhani administration, gas recovery from the giant offshore South Pars gas field increased 2.5-fold, while oil production from West Karoun cluster of oil fields increased six-fold.

The gas recovered from the Farzad B field would be taken to onshore facilities in Pars 2 zone, where condensate would be separated from sour gas to be transferred to the refineries of SP12 and SP19. The gas emitted from the onshore facilities of Farzad B would be also distributed among the five refineries located in Pars 2 for processing.

The CEO of Pars Oil and Gas Company (POGC) says Farzad B holds about 23,000 bcf of gas in place and gas condensate of 5,000 barrels per each 1 bcf of gas.

Sanctions Scared Away India

Zangeneh said: “Farzad B gas field is among the fields whose contractual talks were under way with the Indians since long time ago. Iran was willing to award this development project to the Indians who planned to convert Farzad gas into LNG, but during the first round of sanctions they pulled out of this field. After the sanctions were removed, they returned. I personally talked with India’s oil and gas minister and other officials on development of this field, but they refused to come in. We even agreed to their conditions for not producing LNG, but they again refused to come because of sanctions and other issues.”

“NIOC has studied many scenarios for developing this field. Development of this field would cost as much as one South Pars phase, i.e. $2 billion,” he said.

“The gas condensate in the Farzad field equals one-eighth of South Pars. In fact, there is no balance between receipt and payment; and reimbursement for this project would be very difficult,” said the minister.

30 Scenarios

Zangeneh said nearly 30 scenarios had been studied for developing Farzad field in order to minimize costs.

“Finally, it was decided that the gas produced at this field be transferred to Site 2 of South Pars so that the facilities available at South Pars would be used. Currently, Site 2 of the South Pars has high capacity to receive gas,” he added.

Zangeneh said the project would now cost about $1.8 billion, adding: “Farzad B field would be developed under a buyback deal. We have been struggling with the problem of sanctions, finance and money shortage of National Development Fund of Iran (NDFI). But this project has been financed jointly by NDFI and bonds.”

Zangeneh said that a study entitled “Using Persian Gulf West Refineries” was carried out to show what kind of gas is transferred to these refineries. It became known that gas came from Belal and Kish.

Joint Fields Finalized

Zangeneh said the development contract for Farzad B gas field was the last one for the Petroleum Ministry with regard to developing shared gas fields.

“Of course, there is also Farzad A gas field, but whose gas production depends on development of Farzad B. To develop Farzad B, the complications of this field must be known precisely. Spending money is not the only tool for development. Rather, acting reasonably is important,” he said.

Zangeneh said he had kept his pledge to finalize the case of all fields shared with neighboring states.

“In South Pars, 95% of work pertaining to reservoirs has been done and the rest is related to maintenance of output and pressure compression, which would cost $ 20-30 billion. Its plan is now ready and the next administration has to deal with it,” he said.

The minister said that recovery from West Karoun fields grew six-fold from 70,000 b/d in 2013 to 420,000 b/d now.

“Gas recovery from South Pars has also increased 2.5-fold. The field is currently producing 700

mcm/d of gas. That is important. It is noteworthy that due to huge potential in the country, such things may not be repeated. A movement that had started under the reformist administration [of President Mohammad Khatami] was closed under this administration,” he said.

Zangeneh said maintaining the 700 mcm/d output from South Pars would require expertise, adding that the production capacity of South Pars was complete.

The minister said agreements for joint oil fields were signed during the time Iran was under sanctions.

“We did not sign just something for showoff, we have financed all of them,” he said, adding that an agreement would be signed soon for developing the giant Azadegan oil field. 

Noting that big efforts have been made in recent years to upgrade Iranian companies, Zangeneh said: “Thanks to God, they were upgraded and Petropars is now a source of national pride. We hope that this honor would go ahead for the entire country.”

No Obstacle to Foreigners

Asked why the petroleum ministry did not wait for the conclusion of ongoing nuclear talks in Vienna before signing agreement for Farzad B field, Zangeneh said: “That would have delayed our work. Even now there is no problem with partnering a foreign company. If willing, foreign companies may also join this agreement.”

When asked to comment about reports by foreign news agencies regarding Iran’s enhanced oil production and exports, he said: “I won’t talk about it.”

The minister also said that he would retire after his term ends in the Rouhani administration. He said he would no longer hold any government posts.

Finance Proportionate to Progress

Masoud Karbasian, CEO of National Iranian Oil Company (NIOC) offered a report on the final decision made for jointly owned fields. “The agreement signed for the development of Farzad B field was the last page in the file of joint gas fields in the country. Upon permission from the Economic Council for two oil fields in the near future, the case of joint oil fields would be also closed soon.”

He also said that Petropars had already signed a deal to develop Phase 11 of South Pars. He said that the necessary finance for Farzad B would be supplied by issuing bonds as the project would make progress.

Karbasian also said that the production capacity of joint oil fields had increased 5.7 times over the past eight years.

Farzad B Tougher than South Pars

Reza Dehqan, deputy CEO of NIOC for development and engineering, compared Farzad B with South Pars in terms of hardships, saying: “Development of Farzad B field would need more knowhow, technology and cutting edge equipment.”

He said the work would be tougher in Farzad B than in South Pars, adding: “The gas recovered from Farzad is dry. The temperature of this reservoir is 128 degrees Centigrade and its reservoir pressure is 9,000 psi, which is about twice that of South Pars.”

He added that the sulfur content of gas in Farzad B was eight times higher than that of South Pars.

According to Dehqan, Farzad B is located 230 kilometers away from onshore areas, i.e. twice the South Pars distance.   

He said such comparisons show that Farzad B is replete with complications and uncertainties, adding that drilling, extraction and transfer of gas onshore would require the toughest ever pipe-laying in the country.

“Naturally, under such conditions, development of this field would require sophisticated knowhow and technology in design and high-tech equipment and corrosion resistant alloys,” he added.

Asked why Petropars had been chosen as contractor in this project, he replied: “Owing to its successful presence in a similar field, i.e. South Pars, Petropars was seen as the best choice to develop Farzad B, and we hope it would prove to be successful in this field too.”

Signals from Foreign Firms

On the sidelines of the ceremony for signing the agreement, Dehqan told “Iran Petroleum”: “Over recent months, we have received signals from foreign companies for oil cooperation with Iran and even some of these companies said they would start cooperating with Iran once sanctions have been lifted.”

He said he would name foreign companies if sanctions on Iran’s petroleum industry would be lifted.

“They have expressed willingness to be involved in the fields for which agreements have already been signed and also for new fields. We have told foreign companies that they may partner Iranian companies in the fields for which agreements have already been signed,” said Dehqan.

He said that negotiations for developing some oil and gas fields were 99% complete before the US quit the Iran nuclear deal in 2018. “Therefore, I think that if sanctions are lifted and conditions become conducive to signing contracts, we may at least sign five new agreements by next March.”

Petropars Knows Farzad

Hamid-Reza Masoudi, CEO of Petropars, said that 38 scenarios had been examined for the development of Farzad B gas field whose pressure is high and whose geological structure is very complicated.

“This company has agreed to develop this field with full knowledge,” he said.

Masoudi said Farzad B held 29.3 tcf of gas in place, 23 tcf of which lying in Iran’s territory and the rest in Saudi Arabia’s territory.

“Petropars had already signed a heads of agreement with NIOC Directorate of Exploration and the Iranian Offshore Oil Company (IOOC) for exploration and development studies. That was done based on the contract provisions. Later on, some other important projects like 3D geomechnical studies were also assigned to it,” he said.

“For the first time, 3D geomechanical studies were carried out by Petropars in cooperation with Iranian universities. That is a source of honor for the oil and gas industry. We learned where we may start drilling to achieve the best result,” he added.

Hope for Lower Risk

Masoudi said Pars Oil and Gas Company (POGC) had assigned studies to Petropars under an MC framework. “Six major and 32 minor scenarios were designed for studying and developing hydrocarbon fields. Two top international companies cooperated with Petropars in studying Farzad B until the best scenario was chosen.”

He said serious risks would have emerged in case of any intervention without prior knowledge of the field. “Fortunately, Petropars has entered development with full knowledge. We hope that we could reduce risks and develop the field in the shortest possible time,” he added.

NISOC Proceeds with Green Development

Mahnaz Mohammad Qoli

CEO of National Iranian South Oil Company (NISOC) Ahmad Mohammadi has said sustainable and continuous production, supply of refinery feedstock and providing oil for exports were among the major achievements of the company. In an interview with "Iran Petroleum", he also said that NISOC was ready to lift output from its oil fields as soon as sanctions are lifted. NISOC supplies 80% of Iran’s oil production.

Here is the full text of the interview Mohammadi gave to "Iran Petroleum".

What are NISOC’s current plans for enhanced production?

As plans designed in the past two years have materialized and new production capacity has been created thanks to engineers and technicians working at NISOC’s subsidiaries, the company is now ready to return to pre-sanctions production levels, i.e. that of before 2018. Following task assigned to it, NISOC has made necessary plans and forecast necessary resources to realize its production objectives in the current [calendar] year, which involves sustainable output lift. To that end, it has boosted its production capacity, and realization of such big objective would definitely require supply of services and logistics and removal of obstacles to production. With production capacity at more than 3 mb/d of oil, NISOC can supply 80% of Iran’s oil production. All operation sections and their subsidiaries – Karun, Maroun, Aghajari, Gacsharan and Masjed Soleyman production companies – have been instructed about output enhancement plans. As soon as sanctions are lifted and the ground is paved for increased oil exports, enhanced output would materialize.

What are requirements for increased production at NISOC-run fields?

That requires implementation of the rigline plan this year, stimulating wells, repairing pipes, carrying out enhanced production plans and increasing the saline oil processing capacity using prefabricated desalters. During the obligatory decline in production, the situation of wells, reservoirs and installations at NISOC-run areas are monitored constantly and necessary arrangements have been made for enhancing and maintaining the production capacity. In parallel with these measures, activities related to technical inspection, safety of installations and HSE regulations are under way for increased production.

Could you tell us about projects NISOC has so far implemented in order to increase production?

In order to maintain and enhance production, which has always been stressed by the minister of petroleum and CEO of National Iranian Oil Company (NIOC), NISOC signed 18 agreements with E&P companies last calendar year in two phases. The €2 billion agreements included the contract packages of Ahvaz 14, Maroun 3, Maroun 6, Maroun 14, Maroun 25, Ramin, Balaroud, Mansourabad, Zilaei, Siahmakan, Chelinger and Garangan, Bibi Hakimeh, Soulabdar, Binak, Gachsaran 34, Golkhari, Ahvaz 235 and Lali Bangestan.

For how many of these packages, have you started basic work?

We have started work for 11 packages including Ahvaz 14, Maroun 3, Maroun 6, Maroun 14, Maroun 25, Ramin, Balaroud, Mansourabad, Zilaei, Siahmakan, Chelinger and Garangan. Of 27 packages, 24 have been decided while operations are under way for 17 packages. Work will start on 7 others this year. Furthermore, three other packages including Pazanan, Gachsaran 12 and Qale Nar would be agreed upon by contractors this year.

How many drilling rigs are envisaged for these contracts?

Last calendar year, the number of operating rigs reached 14. With new agreements being signed, this figure is set to increase in the current calendar year.

In light of sanctions and the outbreak of the coronavirus pandemic, how much feedstock has NISOC managed to supply to refineries?

The plan for producing and delivering crude oil as feedstock to refineries has materialized both quantitatively and qualitatively in line with NIOC plan. The sanctions and the pandemic have not affected NISOC’s production plans. We have even seen success in this field. Guaranteed quality and timely supply of feedstock to refineries, energy stability and fuel production in the country is the outcome of implementing the project. NISOC has met 95% of its sustainable supply plan targets in feeding refineries across the country.

Which fields does success lie in?

Given the country’s need, several processing changes were made in NISOC installations to allow for the exchange of four grades of crude: light, heavy, ultra-heavy and synthetic from the transmission pipeline corridor of NISOC to consumer points. Before that, only light and heavy oil was transferred from NISOC-run reservoirs and fields and the oil received from other companies via the chain of installations and pipelines of this company. Following several design schemes and numerous processing changes, it has become possible to receive ultra-heavy crude oil supplied by West Karoun fields, as well as the synthetic oil received from the Bahregan terminal.

One important issue in NISOC-run areas is to feed the Persian Gulf Bid Boland gas refinery. How much feedstock was supplied to this refinery last calendar year?

NISOC-run areas are required to supply 2bcf/d of feedstock for the Persian Gulf Bid Boland gas refinery. Therefore, in the wake of coordinated arrangements with the Persian Gulf Petrochemical Industries Company (PGPIC), the necessary gas was supplied for the operation of the refinery last calendar year. This gas is pumped from the Aghajari and Gachsaran installations to Bid Boland. Engineering studies on some of these projects are now over and some have been awarded to domestic contractors. Other projects are currently in various phases of the process of bidding. By implementing these projects, in addition to economic and environmental benefits, more than 593 mcf/d of gas would be saved from flaring.

One important issue that was stressed at NISOC last calendar year was the use of pipelines owned by the company for an integrated management of South Pars condensate.

Yes, it was agreed to deliver the synthetic oil produced from South Pars gas condensate to the Abadan and Isfahan refineries. In this project, synthetic crude is received from Bahregan prior to being delivered to the Omidiyeh pumping station via NISOC pipeline. It will finally go to the Isfahan and Abadan refineries.

Would you please explain about measures taken by NISOC with regard to support for domestic manufacturing?

In parallel with production and development activities, NISOC has been seriously pursuing domestic manufacturing. Last calendar year, 30% of 7,500 items of commodities was domestically manufactured. That is highly significant. Through NISOC support, down-hole and seamless pipes were domestically manufactured by Iran National Industrial Group and the company made significant success in this regard.

How about supporting knowledge-based companies?

In application of Law on Supporting Knowledge-Based Companies and Maximum Use of Domestic Capacities, NISOC last

year signed an agreement with a knowledge-based company. More agreements are expected in the current calendar year. Also under an agreement with Sharif University of Technology, NISOC envisages domestic construction of 100 Inflatable Retrievable Packers, a high-tech tool. In addition to that, agreements have been signed with domestic manufacturers on flare gas gathering.

What has been done with regard to cooperation with universities?

NISOC has always had good cooperation with universities. Last calendar year, we improved our cooperation with universities and scientific and research centers. To that effect, agreements were signed with Research Institute of Petroleum Industry (RIPI), Sahand University of Technology, Ferdowsi University, and Isfahan University of Technology for enhanced recovery from the Rag Sefid, Masjed Soleyman, Binak and Maroun fields. Furthermore, NISOC has signed a 5-year cooperation agreement with RIPI to carry out specialized projects in the upstream and downstream sectors. NISOC has also signed a memorandum with Sharif University of Technology for maximum use of technological and knowledge-based capacities in 20 technological sectors, whose positive impacts will come to the limelight for the petroleum industry in the future.  

Eight opportunities for investment in skid-mounted oil processing facilities were recently unveiled. Would you please briefly introduce them?

Regarding enhanced oil production capacity by this company, prefabricated units are envisaged in the field of processing saline oil. Based on the Petroleum Ministry and NIOC's decision, technology companies may be used for units with capacity below 25,000 b/d. That may be achieved without having to go through bureaucracy. In this regard, purchase of services, supply, installation, operation, steering and maintenance of eight skid-mounted processing facilities have been introduced to attract cooperation of knowledge-based and technology-based companies. They are considered for the Ahvaz, Masjed Soleyman, Rag Sefid, Kupal and Ramshir oil reservoirs with a total capacity of 220,000 barrels. It is noteworthy that Bangestan reservoir of the Ahvaz field, Ramshir Field, the Asmari reservoir of the Masjed Soleyman field and Rag Sefid field, and the Bangestan reservoir of the Kupal field with more than 200,000 barrels of capacity would need skidding services at different levels of production, desalting, sweetening and pumping systems.

What measures have been taken by NISOC in terms of green production and development?

In line with Petroleum Ministry and NIOC policies on execution of environmental instructions for reducing environmental pollutants, NISOC eyes full gathering of flare gas. NISOC is currently operating several key agreements and one MOU for flare gas gathering. Their completion would put an end to gas flaring in the Aghajari, Ramshir, Pazanan, Rag Sefid and Maroun fields, which would in turn bring about positive environmental and economic results for the country. Meantime, based on the agreement signed with PGPIC, 26 subprojects are under way in three provinces: Khuzestan, Bushehr and Kohguiluyeh & Boyer Ahmad for the gathering of associated gas and supplying gas to the Bid Boland II gas refinery. Besides, NISOC is conducting the process of management of industrial waste in all processing units as part of its environmental obligations.

Last calendar year, we saw for the first time that the Bangestan reservoir of the Narguessi field reached production.

With the drilling of Well No. 13 in the Narguessi field as part of the 28-reservoir package, after completion in Sarvak Formation and making necessary arrangements, the Bangestan reservoir reached production with a flow of 3,000 b/d. Then, necessary planning started for complementary tests, measuring oil in place, recoverable deposits and development phases of the Bangestan reservoir.

What measures have been undertaken to reduce the energy consumption?

Enhanced energy costs, particularly in the industrial sector would have unfavorable impacts on organizational efficiency. Therefore, organizations would have to envisage a series of measures to obtain maximum productivity and save on energy consumption. In this regard, NISOC plans a 25MW decline in electricity consumption. For this purpose and in line with the resilient economy policy, particularly regarding reduction of energy intensity and preventing energy waste in different sectors, planning would be needed. In this regard, after carrying out comprehensive energy audit, prioritized and necessary solutions would be presented for implementation. Implementing an energy management system, regularly monitoring electricity consumption, installing smart electricity meters, installing double-glazed UPVC windows, installing energy-efficient lamps and LEDs, planning and supervising the functionality of ventilation systems, hiring energy inspection groups for peak  hours, using drip irrigation system and using A and B-ranked equipment are among plans. Over recent years, NISOC has won praise from Power Distribution Company for energy efficiency. Furthermore, in the industrial and construction sector and without affecting the welfare level, about 10MW of electricity was saved by NISOC.

Iran Determined in Zero-Flaring Projects

Mahnaz Mohammad Qoli

The issue of zero-flaring is not only significant for Iran’s petroleum industry, but also for every other nation. Globally speaking, more than 150 bcm of associated gas is flared every year. According to the World Bank data, the figure is equal one-third of Europe’s total gas consumption.

Turning Off Flares

Turning off gas flares at National Iranian Oil Company (NIOC) goes back to 1970 when National Iranian Gas Company (NIGC) was established. Even one reason for the establishment of NIGC was to gather associated gas flared at fields run by the Directorate of South Oil Fields. In the 1970s, since independent gas fields had not come online, associated gas gathered and processed prior to being fed into the 1,100-kilometer-long Iran Gas Trunkline 1 (IGAT-1) for distribution in cities and powering power plants (in Shiraz and Tehran) and export to the Soviet Union. Furthermore, the associated gas gathered at the Ahvaz, Aghajari and Maroun oil fields was processed at the Bid Boland gas refinery prior to being either distributed for domestic consumption or exported via IGAT-1 and gas compressor stations.

Following the victory of the Islamic Revolution, flare gas gathering projects have received a share in the annual budget. In a bid to prevent the flaring of sour associated gas and environmental pollution, supply feedstock to petrochemical plants, massively produce light gas for household and industrial purposes and make optimal use of flare gas, NIOC gave priority to gas gathering projects in the Bangestan layer of the Ahvaz, Ab Teimour, Mansouri, Kupal and Maroun oil fields. However, the projects were delayed for a variety of reasons including imposed war and budget allocation shortages. Finally in 2014, a law was adopted requiring the government to invest in associated gas gathering projects. Under the 6th Five-Year Economic Development Plan, the government is required to cut its flare gas production 20% annually to cut it down to 10% this calendar year. Therefore, the $3.4 billion Persian Gulf Bid Boland megaproject came on-stream last calendar year in a bid to prevent the environmental damage from flare gas and use flare gas as feedstock for petrochemical plants and also for feeding national gas grid. According to officials, one of the objectives of this project was to create value-added, prevent pollution resulted from gas flaring and serve public health and environment. Therefore, the Bid Boland project is said to be the new airways for that area.

Zero- Flaring Next Calendar Year

In light of the economic value of flare gas and indirect interests from their gathering, various nations have moved to invest in this sector with a view to cutting their gas flaring. Persian Gulf littoral states such as the United Arab Emirates (UAE), Kuwait and Saudi Arabia are among them. Thanks to their investment in this sector, they have turned off many flares at their oil fields. Iran has also taken some measures in this regard. Minister of Petroleum Bijan Zangeneh said at the inauguration ceremony of the Persian Gulf Bid Boland gas refinery that gas flaring would end by March 2023.

Gas Gathering in South

National Iranian South Oil Company (NISOC) is one of the companies active in zero- flaring. It plans to thoroughly end gas flaring, in line with the policies instructed by Petroleum Ministry and NIOC and in line with observing environmental instructions for reducing pollution. Although gas gathering and transfer of gas to consumption origins like petrochemical plants would have high economic value, various companies have been doing so not just for economic benefits but also for safeguarding the health of their staff. To that effect, NISOC is currently implementing several agreements and one memorandum for flare gas gathering. After their completion, which are mainly located in Khuzestan Province, zero- flaring would materialize in the short and long term, and Khuzestan and the rest of the country would benefit from positive economic and environmental results.

600mcf/d Gas Gathering

In coordination with NIOC, NISOC has awarded some gas gathering projects to the Persian Gulf Bid Boland gas refinery. Under this agreement, in addition to gathering flare gas, purchase of necessary equipment and commodities has been assigned to the refining facility. That would largely end flaring in the Aghajari, Ramshir, Pazanan, Rag Sefid and Maroun fields in Khuzestan, Kohguiluyeh & Boyer Ahmad and Bushehr provinces.

According to the agreement signed with the Bid Boland refinery, around 593 mcf/d of gas would be gathered over a period of 42 months, starting from August. That could cost about $1,109 million. In addition to flare gas gathering, about 1.5 million tonnes a year of heavier products would be produced from ethane, which would yield big revenue in hard currency.

Maroun Petchem Gas Gathering

Another agreement pertains to the $200 million deal signed between NISOC and the Maroun Petrochemical Company for gas gathering. Under the terms of this agreement, more than 200 mcf/d of associated gas would be gathered at Maroun and Ahvaz in Khuzestan Province.

This project has five subprojects as follows:

Supplying four TB-4000 turbines for NGL 700 and NGL 800 plants;
Optimizing condensation trains at the Amak gas compressor stations;
Optimizing Rolls-Royce turbines, including control and fuel system;
Adding two turbocompressors to NGL 700 and NGL 800 plants;
Replacing outdated compressors at Ahvaz/Maroun gas compressor stations;
Optimizing flares at Karoun Oil and Gas Production Company;
Renovating pipe network at Maroun Petrochemical Company; and
Replacing 35km of associated gas pipeline stretching from Zilaei to Ahvaz-2.

Private Sector Open to Cooperation

Furthermore, two agreements have been signed between NISOC and two private companies for selling flare gas. Under these agreements, about 50 mcf/d of gas would be gathered to be carried to gas and liquefied gas plants.

NISOC has also signed a memorandum of understanding with the Bakhtiari Petro-Refinery Co. for gathering about 120 mcf/d of associated gas in the north of Khuzestan Province.

South Pars No Flaring

NIOC has also signed a deal for recovery and consumption of flare gas from the second refinery of the South Pars gas field (SP2 and SP3). A major achievement from this agreement would be to recover 450,000 mcm/d of flare gas, 85% of which would be methane and the rest would be valuable hydrocarbon compounds that could be cycled back into production. Preventing the emission of 500,000 tonnes a year of carbon dioxide, the possibility of generalizing and sharing experience and technology of this project in other South Pars phases, the possibility of gathering and injecting flare gas into oil and gas reservoirs for enhanced recovery and protecting the environment and improving the quality of air in favor of public health are among other achievements of no-flaring project at the second refinery of South Pars. The flare gas recovery and consumption project at the second refinery of South Pars has been agreed upon. Necessary budget allocation has been approved after green light was given by the minister of petroleum. Officials say the flare gas recovery and consumption at the second refinery of South Pars may be extended to other refineries and petrochemical plants and even other petroleum industry operating areas.

Zero- Flaring in East Karoun

NIOC has also signed an agreement for flare gas gathering to generate electricity and renovate oil and gas equipment. By signing another agreement, the fate of completion of the Kharg NGL project was decided upon. Meantime, the Hengam gas processing plant was completed and the Parsi flare gas gathering station was launched as the first associated gas gathering project to have been operated by the private sector. NIOC has also other zero-flaring projects. It hopes to end flaring on the eastern side of Karoun River in the near future in a bid to end pollution. This project would gradually cover across Khuzestan Province.

Final Destination

NIOC has already launched the second phase of the Amak gas gathering project in Khuzestan Province. Next in the line is the gas gathering facility in Hengam Island for the processing of 80 mcf/d of gas. Once operational, this plant would end flaring and save more than $700,000, not to mention environmental services.

NISOC aims to gather 90% of its associated petroleum gas (APG). To that end, 23 small plants would be built with fully Iranian equipment, which would be an effective step in job creation for local residents.

The significant physical progress in other projects like NGL 3100, NGL 3200 and Kharg NGL, Hengam refinery and Bid Boland II shows that gas gathering projects in Khuzestan Province are nearing end.

A memorandum has been signed for the recovery and consumption of flare gas in one of the South Pars refineries between NIOC and two other companies. In case it becomes successful, the experience gained from it would be used in gas gathering in Ahvaz and in equipping other gas refineries at South Pars with this technology.

Under arrangements with Pars Oil and Gas Company (POGC) and South Pars Gas Complex (SPGC), new refineries would reduce more than 50% of their flaring, which would be a breakthrough. Furthermore, all main flares would be turned off before the 12th administration ends its term.

No-Flaring in Cheshmeh-Khosh Expected This Year

Marjan Tabatabaei

The Iranian Central Oil Fields Company (ICOFC) assigned to a domestic company a project for gathering flare gas at the Cheshmeh-Khosh oil field. Under this agreement, 67 mcf/d of associated petroleum gas would be gathered over six months. The flare gas gathered at this oil field is estimated to earn the country $5 million a year. Furthermore, ICOFC is implementing other flare gas gathering projects across the country with a view to reducing harmful impacts on the environment and creating value-added, offering investment opportunities and creating businesses. In Naftshahr, Sarvestan and Saadatabad, ICOFC is currently gathering 26.1 mcf/d of gas. The Dehloran gas gathering and gas compressor station projects are under way with an investment of €125 million. A gas gathering project in the Khesht field is expected to be awarded to contractor in the near future. The Cheshmeh-Khosh oil field is located in the western Ilam Province. Discovered in 1964, it became operational in 1977. The oil produced at this field is processed at a production center prior to being carried in a 153-km-long pipeline to the Ahvaz 3 production complex, which would finally feed refineries or go to Kharg Island for export. Ahmad Rajabi, director of production at ICOFC, told "Iran Petroleum" the objective behind the Cheshmeh-Khosh gas gathering project was to appropriately use national assets, domestic potential in the manufacturing of such widely-used equipment as compressors, develop the economy and minimize or eliminate environmental pollution.

The full text of the interview is as follows:

First of all, I would like to ask you about the beginning of the Cheshmeh-Khosh gas gathering project and its objective?

An auction bid was held last calendar year for selling associated gas gathered at Cheshmeh-Khosh. An agreement was signed with a domestic company later that year. The project started last March after allotment of the necessary land.

What’s the objective behind this project?

The objective is to gather associated gas at Cheshmeh-Khosh and recover light gas and condensate including LPG and C5+. Appropriate use of national assets, using domestic potential in the manufacturing of such equipment as compressors, economic development, elimination or maximum reduction of environmental pollution are sought through this project. Completing the value chain in the oil and gas process, and creating generative opportunities for investment would create job opportunities and make business prosperous in western Iran.

What is the share of domestic companies in the project? Could you provide us with more details?

This project includes design, supply of commodity, construction and operation of gas compressor units and condensate recovery in Cheshmeh-Khosh. Domestic companies manufacture 85-90% of commodities required in the project.

How much gas would have been recovered once the project becomes operational?

In this project, about 67 mcf/d (1.895 mcm/d) of gas would be gathered. One cubic meter of gas worth 0.75 cents. Therefore, the gathered associated gas would be valued at $14,000 a day. This amount of gas is planned to be gathered for one year.

Which phase is the project in now?

Currently, gas sale, land delivery and mine-sweeping agreements have been signed. Design has been carried out and commodities have been ordered, and compressors have been manufactured. Construction has already started.

How much is the project estimated to be valued?

This project would be valued at $5 million a year, which would be achieved through selling gas. The contractor will make revenue from selling light gas and gas condensate.

How will this project affect the environment, the economy and in broader terms completion of the value chain?

Implementing this project will prevent the sales of associated gas and reduce environmental pollution, make business prosperous, create jobs and value-added.

Why hasn’t the project been operational sooner?

The main project for gas gathering at Cheshmeh-Khosh and its satellite fields has been done within the framework of development of 16 ICOFC-administered fields. It has had 85-90% progress now. The objective of this project is to deliver associated gas to the NGL 3100 plant. However, in light of operation and launch of the NGL 3100 plant by next year, the gas gathering project would be completed in parallel with the NGL 3100 plant. That is why we decided to auction off the Cheshmeh-Khosh associated gas prior to the commissioning of the NGL 3100 plant.

What about development of the Cheshmeh-Khosh oil field?

The Cheshmeh-Khosh field is currently producing 80,000 b/d. Since the consortium in charge of developing the Cheshmeh-Khosh, Dalpari and East Paydar fields has suggested improved oil recovery (IOR) for these fields, it has been tasked with envisaging enhanced oil recovery (EOR), too for a 10-year period.

Have environmental considerations been taken into account in the development of the field?

As far as IOR and EOR are concerned, we plan to use downhole pumps. Regarding the environmental aspect of associated petroleum gas, the contractor has not offered any specific plan. Therefore, the initial plan developed by ICOFC for gas gathering and delivery to the NGL 3100 plant is still envisaged. Before the operation of this plant, associated gas would be gathered to be auctioned off.

How do you see the economic, environmental and social impacts of gas gathering projects?

Associated gas gathering projects prevent any waste of gas and environmental pollution.  By completing the value chain of gas production, light gas (for injection into oil reservoirs or feeding into national gas network) and gas condensate will be created, business will become prosperous and jobs will be created near oil facilities, particularly in underprivileged areas. Furthermore, in case of light gas injection into oil reservoirs, the recovery rate will increase. In developing oil fields, planning should be made so as to gather and consume associated petroleum gas at the same time as the field is developed and operated so that no gas would be flared at any time.

Iran Ready for Pre-Sanctions Oil Output

 Deputy CEO of National Iranian Oil Company (NIOC) for production management Farrokh Alikhani has said the country is ready to bring its oil production back to pre-sanctions levels.

“Precise planning has been carried out for restoring the oil production to pre-sanctions levels within one week, one month and three months. In case sanctions are lifted, the bulk of national oil production will be revived in one month,” he said.

“After the re-imposition of sanctions on Iran and the adoption of production control scenario, a scenario for production revival was devised in parallel. We made planning for production revival in one-week, one-month and three-month periods,” he added.

“Although a three-month period for restoring full production is envisaged, based on planning and arrangements, we project to revive the targeted capacity within one month,” said Alikhani.

ICOFC Flare Gas Gathering Finalized

 All flare gas gathering projects in the area run by Iranian Central Oil Fields Company (ICOFC) have been decided upon after a third agreement was signed for the Khesht oil field.  

Ramin Hatami, CEO of ICOFC, said: “Based on the code of conduct on flare gas, instructed by the Petroleum Ministry, and with a view to preventing the flaring of associated gases and in light of ICOFC planning made last calendar year, three agreements have been signed with local companies.”

“By assigning flare gas gathering in the Khesht field at the rate of 10 mcf/d, the final step was taken on flare gas gathering at ICOFC,” he said. 

Hatami said agreements had been signed with local firms for the gathering of about 103 mcf/d of flare gas from Saravesan/Saadatabad, Cheshmeh-Khosh, Naftshahr, Sumar and Khesht oil fields.

He said implementation of the agreements would last two years, while operation would last five years. He added that the deadline would be renewed due to the significance of the project and the necessity of preventing any waste of resources and protecting the environment.

Domestic Manufacturing to Save $19mn

 The domestic development of the knowhow for the production of equipment and materials needed in the gas industry is saving Iran $19 million every year, an official with National Iranian Gas Company (NIGC) announced.

“Currently, more than 90 percent of adsorbents, more than 95 percent of catalysts, and over 90 percent of solvents and chemicals needed in the gas industry have been localized,” the director of NIGC’s Production Coordination and Supervision Masoud Zardovian said.

Speaking in a seminar on coordinating supply and demand in the gas industry, Zardovian said: “We are now looking to improve the quality of products, and to facilitate access to them while making prices more competitive.”

He pointed to the sustained and safe supply of clean gas for the consumers as the major axis of his company’s activities and said: “All the major policies of the company are defined and determined according to the mentioned goal.”

Persian Gulf Star Refinery Exports Up 200%

Export of petroleum products (naphtha, diesel and gasoline) from the Persian Gulf Star Refinery, a subsidiary of National Iranian Oil Refining and Distribution Company in the port city of Bandar Abbas, experienced a 200% growth in 2020 compared to a year ago, the refinery’s managing director said.

“An estimated 1.6 million tons of oil derivatives were offered on international markets in 2020,” Mohammad Ali Dadvar said.

“The US sanctions and fluctuations in oil prices notwithstanding, exporting gasoline are on the government’s agenda. Whenever there is an inventory surplus, it can be sold via Iran Energy Exchange [with less difficulty compared to crude].”

“Despite political and economic sanctions, we used maximum capacity to play an effective role in supplying the country’s fuel mix and feed petrochemical plants and export special products to global markets,” said Dadvar.

He said that the oil market was currently among the most complicated, most tumulted and least transparent financial markets in the world, adding: “However, estimating the final price of petroleum products is instrumental in planning for sales and optimizing production in the long-term.

EFQM Model for Iran Petchem Sector

 The director of planning and development of National Petrochemical Company (NPC) has said that the European Foundation for Quality Management (EFQM) would be used for assessing petrochemical projects in Iran.

“Petrochemical companies are required to be fitted with modern tools in a bid to enhance their productivity,” said Hassan Abbaszadeh.

He said that the NPC Board of Directors agreed on the Excellence Award based on the EFQM in 2010, adding: “Petrochemical companies would be assessed in terms of quality based on a coherent management system. This award will encourage companies to take steps in that direction.”

“After the adoption of this award, training was carried out and now it could be argued that it is strength of Iran’s petrochemical industry that all petrochemical companies have an excellence manager,” he said.

Abbaszadeh said more than 250 evaluators had been trained in compliance with standards, adding that about 100 persons had received the EFQM certificate.

Iran Gas Exports Double

 Iran’s petroleum minister, Bijan Zangeneh, has said that gas exports had doubled under the administration of President Hassan Rouhani.

“If we want to have extra gas for exports we have no option but to embrace energy efficiency,” said Zangeneh.

He added that about $50 billion in investment was needed to preserve production at the giant South Pars gas field and other gas fields.  

Referring to the gathering of flare gas, he said: “The issue of flare gas has been debated for more than 60 years now. It is a sophisticated, tough and costly project.”

“In order to gather flare gas we need to set up NGL units or gas refineries to use associated gases. It requires big investment,” said the minister.

Zangeneh said private sector had been authorized to build NGL units, adding: “With the measures taken, the entire flare gas in Khuzestan Province, as well as flare gas in areas run by Iran Offshore Oil Company (IOOC) and Iranian Central Oil Fields Company (ICOFC); were decided upon and the projects are being implemented.”

Zangeneh expressed hope that gas gathering would be more than 90% complete by March 2023.

The minister said that gas gathering in Masjed Soleiman had been awarded to the Bakhtiari petro-refinery facility.

“One of the most important measures taken with regard to flare gas gathering was to build the Persian Gulf Bid Boland gas refinery in Behbahan with an investment of $3 billion. It would receive 56 mcm/d of gas to supply 3.4 million tonnes of feedstock for petrochemical plants. The project was inaugurated last [calendar] year,” he said.

Zangeneh touched on flare gas gathering in East Karoun, saying the gas would go to the Bid Boland and Maroun gas refineries.

“The project whose agreement was signed in 2018 is effective. With an investment of about $2 billion, 17.5 mcm/d of gas would be gathered at East Karoun and no more gas would be flared,” he said.  

“Furthermore, NGL 3200 is effective in West Karoun. It would need $1.4 billion in investment. The first phase of the project is coming online this [calendar] year to feed 1.8 million tonnes of feedstock into the Bandar Imam Petrochemical Plant and 9.6 mcm/d of gas into national trunkline,” he added.

Zangeneh said: “NGL 3100 in Dehloran is another gas gathering facility with an investment of $890 million, provided by the Oil Industry Pension Fund. It has had 50% progress and will come online in 2022. A petrochemical plant with 900,000-tonne capacity is under construction to be fed.”

Zangeneh also said that flare gas was being gathered in South Pars, Kharg NGL and Kharg, adding that the Hengam refinery, gathering gas in Qeshm, had become operational.

Tehran, Baku Discuss Energy Ties

 Iranian Oil Minister Bijan Zangeneh held talks with Azerbaijan's Deputy Prime Minister Shahin Mustafayev to discuss expansion of economic and energy ties.

Mustafayev who visited Tehran heading a high-ranking delegation met with Zanganeh to mainly discuss cooperation in oil and gas sectors, Shana reported.

Addressing the meeting, Zangeneh stressed positive political and economic relations between the two countries, saying: “Iran-Azerbaijan relations have grown well in all fields over the recent years, mostly in the oil, gas and energy sectors and the development of joint fields in the Caspian Sea.”

“Although we have not yet been able to realize this cooperation (development of joint fields) due to external pressures imposed through sanctions, according to the leaders of the two countries, it will be operational soon,” he said.

Mustafayev for his part emphasized the necessity of expanding mutual relations between the two countries, and said: "I admit that our relations have developed in recent years, which was due to the political will of the presidents of the two countries."

"The relations between the two countries have made significant progress in different fields, and they can be even further boosted by constructive talks," he stated.

IGTC Equipped with Energy Management System

CEO of Iran Gas Transmission Company (IGTC) Mehdi Jamshidi Dana has said that an ISO 50001 integrated energy management system has been established at the company.

Noting that the new system was installed to help reduce energy consumption, he said: “Relying on its mission for the clean, safe, sustainable and productive transmission of natural gas, NIGC has laid the foundation for upgrading energy and carbon at the highest levels of strategic roadmap.”

He touched on IGTC’s outlook to become an excellent company by horizon 2025, adding that in parallel with ISO 50001:2018 and ISO 50009:2020, establishment of integrated energy management system has started in the ten gas transmission districts across the country.

All the information on commercial transactions like gas volume, calorific value, consumption of gas, value of gas consumed, nominated quantity of the gas delivered, transmission tariff, price of gas, other costs and applicable taxes will be available on real time basis.

The system will help in monitoring operational aspects of the pipeline on real time basis including information regarding network utilization, gas sales, volume transferred, revenue generation through gas sales and price variations.

Geophysical Projects for Oil Exploration

The director of exploration at National Iranian Oil Company (NIOC), Saleh Hendi, has said that NIOC Directorate of Exploration had fully fulfilled its commitments under five-year national plan.

“Given the renewal of structures in all sedimentary basins, the path is prepared for geophysical projects over coming 10 years,” he said.

Addressing a ceremony for signing a 2D seismic survey project in Dasht Koouh, Hendi said: “Hopefully the Directorate of Exploration has managed to fulfill its exploration commitments on schedule.”

“In light of the present circumstances in the country, we have 20 years for exploration. We need to use everything at our disposal to realize exploration objectives in the oil sector,” he said.

Hendi said that a major challenge in exploration was the process of work, adding that most discoveries were “traps” which made the job tougher.

He said that over eight years – 2013-2021 – Iran’s hydrocarbon exploration promoted Iran to the top spot in the world in 2019.

Over the same period, 19 fields including Namavaran and Yalda reservoirs as well as the Pazanan and Eram gas fields were discovered. The new discoveries are estimated to hold 3,303 million barrels of recoverable crude oil and 72,874 bcf of recoverable dry gas.

Iraq Expected to Pay Debts Back to Iran

 Iranian and Iraqi officials have agreed upon an arrangement for settlement of Baghdad's debts to Tehran, said spokesperson of Iraq's Ministry of Electricity.

"There are debts that we have to pay to Iranian sides…we reached an agreement over a timeframe for paying debts and Iran is to resume exporting natural gas to Iraq in coming days," Ahmad Mousa said.

In December, National Iranian Gas Company (NIGC) said Iraq owes more than $6 billion in unpaid energy bills. The debts include $2 billion in arrears and $1 billion in contract violations. Three billion dollars are blocked by the Trade Bank of Iraq, due to the US economic blockade and banking restrictions.

Iran exported 65 billion kilowatt-hours of electricity to Iraq since 2005 worth an estimated $6.2 billion. The neighbor is one of the biggest regional markets for Iranian exports. Twenty million cubic meters of gas is also exported every day (worth $200 million a month).

Ali Abdul-Amir Allawi, Iraq’s finance minister, Majid Mahdi Hantoush, the electricity minister and Salem Chalabi, the CEO of Trade Bank of Iraq held a meeting with Iranian ministers of energy and petroleum.

Iran's Minister of Petroleum Bijan Zangeneh expressed his hopes for quick settlement of debts to Iran adding that Iran is willing to increase the volume of gas export to the neighbor.

Iran Market Comeback Tied to Nuclear Deal

Minister of Petroleum Bijan Zangeneh has said that Iran would return to the oil market as soon as nuclear talks between Iran and world powers reach a final conclusion.

“As soon as an agreement is reached and sanctions are lifted we will return to the oil market,” he said, noting that Iran had not set any date for possible return to the market.

Zangeneh also said the last OPEC+ ministerial meeting was “brief”, adding: “I think it was largely influenced by Iran’s possible return to the oil market.”

According to the minister, OPEC and its allies agreed not to increase oil output.

“The next meeting is to be held on July 1 to assess the oil market,” he added. 

In response to the OPEC secretary general’s remarks that Iran’s return to the oil market should be regular and transparent, Zangeneh said: “We are transparent; however, we are working regularly.

He said that Iran, Venezuela and Libya remained exempt from oil production cut.

The OPEC+ meeting reaffirmed the existing commitment of the participating countries in the Declaration of Cooperation (DoC) to a stable market in the mutual interest of producing nations; the efficient, economic and secure supply to consumers; and a fair return on invested capital.

It also “reconfirmed the existing commitment of the 10th OPEC and non-OPEC Ministerial Meeting in April 2020, amended in June, September, and December 2020, as well as in January and April 2021 to gradually return 2 million barrels a day (mb/d) of the adjustments to the market, with the pace being determined according to market conditions.”

The meeting “reiterated the critical importance of adhering to full conformity, and taking advantage of the extension of the compensation period until the end of September 2021, as requested by some underperforming countries. Compensation plans should be submitted in accordance with the statement of the 15th OPEC and non-OPEC Ministerial Meeting.”

The ministers “reconfirmed the decision made at the 15th OPEC and non-OPEC Ministerial Meeting with regards to production adjustments for the month of July 2021, given the observed market fundamentals”, and “emphasized the need to continue to consult and closely monitor market fundamentals and maintain the monthly OPEC and non-OPEC Ministerial Meetings until the end of the decision made at the 10th OPEC and non-OPEC Ministerial Meeting on 12 April 2020.”

32 Petchem Projects in 8 Years

 On May 20, three petrochemical projects came online. They were Sabalan methanol project with annual capacity of 1.65 million tonnes, Masjed Soleyman urea and ammonia plant with annual capacity of 1.7 million tonnes and Assaluyeh Exir Hallal project with annual capacity of 50,000 tonnes of pentane and hexane. President Hassan Rouhani officially inaugurated the projects.

During eight years of Bijan Zangeneh serving as minister of petroleum, a total of 32 petrochemical projects have come online.

Addressing the inauguration ceremony, Rouhani said Petroleum Ministry had been a leading driver in national development, noting that growth and development had grown into the dominant discourse in the country.

“May 19 marked the anniversary of the 2017 presidential election. Nobody imagined at that time the heavy burden this administration would have to bear. Over these four years, we were drawn into the largest economic war. Nobody had predicted a pandemic, unseen in a century,” he said.

Petchem Jump

Rouhani said: “As we had promised, we inaugurated 17 petrochemical projects from April 2020 to May 2021, which is unprecedented in the history of Iran’s petrochemical industry.”

Noting that the petrochemical projects inaugurated were in reaction to the US sanctions, the president said: “These inaugurations show that the Iranian nation is resilient and sanctions cannot block its development and progress.”

“If someone has not followed the inaugurations and learns about them he would wonder how 17 petrochemical projects have come online against the backdrop of sanctions and the coronavirus pandemic. The government managed to realize ‘jump in production’ in the real sense of word,” he said.

Rouhani said: “The two-fold increase in the petrochemical production capacity over eight years and reaching 100-million-tonne production capacity is very important. Every year, $3 billion was invested only in the petrochemical sector despite all hardships, a sign that the Petroleum Ministry, the private sector, companies and all of our engineers and workers have done a great job.”

“Nowadays in the country, there is consensus that Iran needs development and that production needs to be boosted. Everyone agrees that we have to keep the economy running. The main discourse in our country is growth and development, and we are united on the issue of growth and development,” said the president.

Defeating Sanctions

Rouhani said Petroleum Ministry had been driving development in the country under his administrations. “Today we are self-sufficient in gasoline, gasoil and gas production; while we used to import these products and that is a big source of honor for the country,” he said.

The president said Iran would have faced economic problems without its petrochemical industry.

“Nonoil exports constitute 34% of our exports. In other words, petrochemicals replaced oil because many obstacles were created on the way of our oil exports. However, over the past eight years, our nonoil exports grew $130 billion compared to the previous eight years,” added Rouhani.

The president said his administration would be defeating sanctions, adding: “Every Thursday, we inaugurate big projects, which is very important under condition of sanctions and the coronavirus. Today’s inaugurations amounted to IRR 290,000 billion. That is why the opposite parties came to the negotiating table in Vienna. They have agreed to remove the main sanctions on the oil, petrochemical, banking and insurance sectors among others and talks are under way for details.”

Sanctions Halved Investment

Minister Zangeneh said more than $3 billion had been invested in the petrochemical sector by the private sector every year. “Were it not for the sanctions and if we could use foreign finance and investment, the figure would double,” he said.

“Using foreign finance and investment does not mean that we disregard domestic issues. Rather, it means that we would use foreign sources alongside domestic sources,” he added.

Zangeneh said: “A campaign has started in the petroleum industry, which we hope would continue. It requires investment to rely on domestic potentialities. In other words, a chain of employment has been created in the manufacturing of equipment, services and startup. Hundreds of plants and workers have become active.”

Petchem Capacity Up 38%

Minister Zangeneh said with the inauguration of the three new projects, the government had made good on its promises.

“Under the 11th and 12th administrations, 22 petrochemical projects with capacity of 34 million tonnes came online, bringing the petrochemical production capacity from 56 million tonnes to more than 90 million tonnes. Over the past one year, the petrochemical capacity has grown 38%, which is the most historic for the petrochemical industry,” he said.

Zangeneh put at $17 billion the value of petrochemical projects that had come online. “Over the past eight years, more than $25 billion has been invested in the petrochemical industry. Some of these projects have been inaugurated and some others would come online under the second jump next year,”

” he said.

Referring to the Masjed Soleyman petrochemical project, the minister said: “I feel delighted that in Masjed Soleyman a project is inaugurated with an annual production capacity of 1.76 million tonnes of urea and ammonia with an investment of $850 million.”

The minister said agreement had been granted for building a petro-refinery in Masjed Soleyman, running on associated petroleum gas. “We hope that this project would also become operational so that more investment would be made in this area which is the birthplace of Iran’s petroleum industry,” he added.

Referring to the methanol project in the Sabalan petrochemical plant, he said: “Sepehr Energy and Petrofarhang have already invested $406 million in this project whose capacity is 1.65 million tonnes a year. The petrochemical plant may export 410 million tonnes of products a year.”

Zangeneh said: “With the commissioning of this project, the country’s methanol production capacity would reach 14 million tonnes a year. Based on plans, 5 million tonnes would be used in the propylene production chain and downstream projects in order to supply domestic needs and balance foreign markets for methanol.”

He also said that $48 million had been invested in the pentane and hexane projects of the Assaluyeh Exir Hallal petrochemical plant for an annual production capacity of 50,000 tonnes.

Petchem Output to Hit 100mt

Zangeneh said 10 projects would remain to become operational next year, adding: “With the inauguration of these projects, the country’s petrochemical production capacity would reach the target of 100 million tonnes a year.”

“Forty petrochemical projects are also ready for the third jump, whose operation would bring the petrochemical production to 133 million tonnes a year for $37 billion. These projects on average have had 30% progress,” he said.

Zangeneh said necessary arrangements would be made for megaprojects running on mixed feedstock soon. “The Hormuz megaproject with a capacity of 5.8 million tonnes and Arya oil & gas with a capacity of 4.8 million tonnes are among them, which are expected to supply new products. Classified under the third jump, they are planned to come online by 2027.”  

The minister said that a group of projects on associated gas gathering, development of gas fields, gas refinery, petrochemical plants and downstream projects would start in western Iran with a total investment of $2.5 billion. 

He said projects had been defined for the 7th Five-Year Economic Development Plan in order to pave the way for development in the petrochemical industry.

“Within this framework, emphasis has been laid on the strategy of development and completion of the value chain and diversity in products and creation of value-added in the propylene, methanol, ethylene and benzene chains,” he added.

The minister said once all these projects become operational, 20 new products would be added to the petrochemical mix.

“I feel so happy that our colleagues in the petrochemical industry have honored their commitments. The government was supposed to provide feedstock for this projects,” he said.

Several days prior to the inauguration of the new projects, Behzad Mohammadi, CEO of National Petrochemical Company (NPC), had said: “Iran’s installed petrochemical capacity reached 65 million tonnes from 1963 to 2019, which has now reached 90 million tonnes. A 25-million-tonne increase in one year and 38% growth indicate unprecedented record in this industry.”

Noting that NPC is the architect of petrochemical development, he said: “In addition to development plans, I would like to mention that the petrochemical industry is today involved in hard currency generation.”

Mohammadi said Iran’s petrochemical production capacity would reach 130 million tonnes a year by 2025, adding that the country would see a diversified petrochemical mix by that time and therefore strategic downstream products would experience a decline in imports.

He said diversity in the petrochemical mix would also change the image of the petrochemical industry. He said that six new chains of 33 projects were envisaged to become operational in coming years.

MIS Petchem Exports to Start

Akbar Eftekhari, CEO of State Pension Fund, said the Masjed Soleyman (MIS) petrochemical plant in the north of Khuzestan Province had created 4,000 jobs during construction and 1,500 jobs during operation. He said following the first oil discovery in Iran in this rea, no other project had become operational there.

He touched on the production of 1.076 million tonnes of urea in the MIS petrochemical plant, saying: “An agreement for exporting 500,000 tonnes of products by this company has been finalized, and exports will begin soon.”

He said total investment made in the MIS project stood at $850 million, adding that the project was expected to earn Iran $268 million annually.

Eftekhari said the MIS project was the product of

trilateral cooperation among China’s Wuhan Co. as the contractor, the private sector as partner, State Pension and Iranian engineers during the coronavirus pandemic.

Construction of the MIS urea/ammonia plant started in March 2015 for an annual production of 680,000 tonnes of ammonia and 1.075 million tonnes of urea by consuming 861 mcm a year of gas as feedstock. State Pension Fund holds a 66.55% stake in the project with the rest going to the private sector. China has provided the $850 million investment line for this project.

The ammonia unit of this plant has received Swiss Casale license, while the urea unit holds the Japanese Toyo license.

Petrofarhang, Top Methanol Supplier

Mohsen Haji-Mirzaei, the minister of education, said at the ceremony to inaugurate the Sabalan petrochemical plant that Petrofarhang Co. was one of the four holdings of Teachers' Investment Fund (TIF).

“This holding is active in the petrochemical and energy sector, and its profits go to TIF,” he said.

“In fact, a significant share of this fund’s profit, which would reach IRR 50,000 billion this year, is the result of futurist investments in the petrochemical sector. Within the framework of such strategy, we have been witnessing Petrofarhang’s second methanol project inauguration by the president in one year,” he added.

Haji-Mirzaei added: “The Sabalan petrochemical plant, owned 51% by Petrofarhang, is the second methanol project to come online in one year, and the first of a group of three projects run by Sepehr Energy, whose products would worth $400 million a year.”

He said Petrofarhang would inaugurate two other methanol projects in coming years under the names of Dena and Siraf Energy.

“Through such planning, Petrofarhang would turn into one of the largest producers and suppliers of methanol in the world. It would be a source of national pride and a source of revenue for teachers. In addition to profitability, it would also contribute to national development,” he added.

Marzieh Shahdaei, CEO of Petrofarhang, also said methanol was not the final point for Petrofarhang. “This holding will get involved in the downstream industry this year,” she said.

She said that China Export & Credit Insurance Corporation (Sinosure) had provided the necessary finance for the Sabalan petrochemical project in 2015, adding that Petrofarhang joined Sepehr Energy to accelerate the project.

“Once operational, this plant would add 1.65 million tonnes to national output,” he said.

Shahdaei said Sabalan petrochemical plant had been fitted with a Danish technology, noting that most equipment had been domestically manufactured. She added that a catalyst developed by the Petrochemical Research and Technology Company (PRTC) had been used for the first time in this plant.

Sabalan petrochemical plant has come online with an investment of $412 million for the production of AA-grade methanol. It lies in the Pars Special Economic Energy Zone. Its shareholders are Sepehr Energy (99.96%), Dena Petchem Co., Siraf Energy Investment Company, Seco Trading and Sepehr Lavan Petchem Company. The necessary feedstock for this plant, equal to 1 million tonnes of natural gas, would be supplied from the national gas trunkline by the Damavand Petchem Company.

Iran Ends Hexane, Pentane Imports

Mohammad-Reza Akhavan, CEO of Takht-e Jamshid Petchem Company, said Exir Hallal Assaluyeh Petrochemical was a subsidiary of his company, noting that it was launched to produce 40,000 tonnes of hexane and 10,000 tonnes of pentane.

He said Exir Hallal Assaluyeh Petrochemical had been launched to compensate for shortages of polyethylene and polystyrene solvents.

“Exir Hallal Assaluyeh Petrochemical is an accelerator. We used to import hexane and pentane from South Korea and India among others. But now we no longer need to import them and we even plan to export,” he said.

Akhavan put at $48 million the total investment made in the Exir Hallal Assaluyeh Petrochemical project, saying it had been financed fully by the private sector.

“This project is forecast to earn the country at least $30 million in foreign sales and $10 million in domestic sales,” he added.

With the inauguration of this project, he said, petrochemical plants across Iran would no longer have to worry about supplying hexane, which is very versatile.

“This product is delivered to petrochemical plants by pipeline. This company has designed 6 kilometers of feedstock supply pipeline so that Exir Hallal Assaluyeh Petrochemical would be ready to receive 260,000 tonnes of raffinate from Nouri Petrochemical Plant,” said Akhavan.

Noting that the technical knowhow, design and catalyst had been provided by Exir Novin Farayand Asia, he said that more than 90% of equipment used in the project had been sourced domestically.      

Petchem Output Set to Grow 10mt 

 Iran’s petrochemical production capacity has been growing over the past eight years. Despite tough sanctions imposed on Iran’s petroleum industry, the petrochemical sector has constantly exported products to become a major source of revenue for Iran.

Born more than 50 years ago, Iran’s petrochemical industry is now endowed with a 90-million-tonne production capacity, which is set to reach a record 100 million tonnes by next March, i.e. at the end of Iran’s current calendar year.

Behzad Mohammadi, CEO of National Petrochemical Company (NPC) told a press conference the petrochemical industry earned Iran $15 billion in revenue from domestic and foreign sales of petrochemicals, last calendar year.

He told "Iran Petroleum" that foreign investors were yet to hint at cooperation with Iran as hopes are growing for the revival of the 2015 Iran nuclear deal and concomitant removal of US sanctions. “However, if investors want to cooperate with the Iranians we need their cooperation in the technical knowhow sector.”

The following are excerpts from Mohammadi’s remarks:

Foreign Savvy Needed

“Many foreign companies left Iran, as sanctions were restored. Now, the return of these companies depends on the political circumstances in the country. As long as necessary conditions are not fulfilled, we have to go ahead as we are doing now. But generally speaking, if we take a look at the petrochemical industry in terms of development, production and exports, we will find out that we have been largely resilient. Therefore, it could be argued that our conditions were not severely affected by sanctions. Of course, we could have fared much better in terms of development; however, the petrochemical industry has an acceptable record now.

As JCPOA talks go ahead, we have not received any serious signal from foreign investors, but there are signs of overture and better atmosphere for external communications. As far as cooperation with foreign investors is concerned, the petrochemical industry needs the partnership of major foreign companies for providing investment and technical knowhow. In some points, we need to use foreign technical knowhow.

Petchem, Key Chapter in Iran-China Pact

“Following the Iran-China 25-year cooperation pact, we have not yet had any talks with the Chinese, but petrochemicals constitute a very significant chapter in the pact. We have listed incomplete projects and those that need finance. Our projects are incorporated in this package, but we have not held talks to discuss details. The petrochemical industry supplies nearly 35% of national hard currency generation. Last [calendar] year we met our commitments for hard currency generation for the Central Bank at 150%. The petrochemical industry has been highly instrumental in stabilizing the economic conditions in the country.

Petchem Exports at 25mt

“Last calendar year, despite restrictions caused by sanctions, as well as decline in demand due to the coronavirus pandemic, we exported 25 million tonnes of products, which yielded $10 billion. We also sold 10 million tonnes on domestic markets for $5 billion. There is no other industry in the country to supply 10 million tonnes of products to its downstream sector. Such amount of products would result in prosperity and unrivalled job creation at 15,000 small and large-sized enterprises in the downstream sector of the petrochemical industry. Last calendar year, 40 varieties of chemicals as well as about 340 grades of polymer products were supplied on the market. By 2025, when new projects become operational, 20 new products would be added to the petrochemical mix and the mix would become more diverse.

Petchem Output Capacity Up

“The annual growth in demand for petroleum products is less than 0.9% at the global level. The rate stands at about 5% when it comes to petrochemical products, an important sign of necessity for the further development of the petrochemical industry. Therefore, we need to use rich oil and gas deposits as feedstock and follow a roadmap towards quick and smart development of the petrochemical industry and generation of wealth. Fifty-eight years have passed since establishment of petrochemical industry in Iran. The petrochemical production capacity was 65 million tonnes in the Iranian calendar year to March 2020. Implementation of 17 new projects has brought the figure to 90 million tonnes, a historic record in this industry. Among the second jump projects, 10 remain to become operational. They have had 84% progress, which would come online by March 2022. Then, the petrochemical production capacity would reach 100 million tonnes, which would mean that the petrochemical development target has been met. In the third jump projects, 40 are now active, whose operation would bring the production capacity up to 135 million tonnes by 2025. Then, Iran’s ranking in the supply of basic products in the Middle East would escalate from the second to the first.

50 Projects Up to 2025

“But regarding selling crude oil, natural gas and derivatives, it is noteworthy that last calendar year 40 million tonnes of feedstock including natural gas, ethane, gas condensate, rich gas, naphtha and kerosene was received from the petroleum industry, which is 1 mboe/d. By 2025, when 50 more petrochemical projects are expected to come online, the figure would reach 2.2 mboe/d which means shifting from crude selling toward creating value added. Currently, 67 petrochemical plants are operating. Once the projects left from the second jump come online by the end of the current calendar year, the number of operating plants would reach 77. Last calendar year, 62 million tonnes of products was produced in the petrochemical industry, 27mt of which was exported and 35mt of which was consumed by the petrochemical industry. Generally speaking, 30% of products is consumed by domestic industries while the remaining 70% would be exported to various nations.

$105bn Investment in 58 Years

“The investment made in the petrochemical industry since the beginning would have reached $105 billion by 2025. So far, the figure stands at $79 billion which would go up to $82 billion as the second jump’s remaining projects come online. In a bid to develop the value chain, supply downstream industry needs, diversify the mix of products and reduce imports of costly products, 33 projects in 6 chains have been introduced to investors as opportunities for investment. So far, permission has been given to 15 projects whose capacity is estimated at 3.3 million tonnes with a total investment of $3.5 billion. Once operational, these projects would add 18 new products to the petrochemical mix, thereby allaying downstream industries’ concerns with regard to raw materials supply. Furthermore, the $1.3 billion spent on imports would be cut by 70%. The most significant chain for these new projects is the propylene chain to help make up for shortages in the country. Therefore, where there is no methanol, propylene would be produced form natural gas and propane. We are determined to enhance propylene production capacity from the current 1 million tonnes to 4 million tonnes by 2025.

Petchem Catalysts Homegrown

Last calendar year, the technical knowhow for the process of propylene production from methanol was unveiled. For the first time in the petrochemical industry we saw the construction of a mega petrochemical project with fully Iranian technical knowhow to supply propylene, a strategic product. That is why NPC has been pursuing this project. The process of domestic development of petrochemical knowhow is being pursued quickly in other products, too. Currently, 85 catalysts are annually used in the petrochemical industry, worth $275 million. Twenty petrochemical catalysts have been domestically manufactured and 16 others would be produced by next March. By the end of the current calendar year, $200 million of the $275 million mix of catalysts would have been domestically manufactured. We are faring better in the petrochemical catalyst production than in other sectors. Although we are under sanctions, many private companies have established direct communications with suppliers of technical savvy and they have managed to acquire their necessary technical knowhow. But I have to recall that the petrochemical industry relies on global technical knowhow, and in case of having more access to it, developing the petrochemical industry would be much easier.

Danan, Cheshmeh-Khosh, Susangerd Attractive to Investors

 Sanctions have failed to halt Iran’s petroleum industry activities. However, developing the industry in Iran would need foreign investment and cutting edge technology to raise output. Over recent years, in the absence of foreign companies, local contractors have moved to develop oil and gas fields. The Petroleum Ministry has awarded many projects to local firms; however, Iran’s petroleum industry potential is so great that it is still attractive to foreign investors. Among more than dozens of oil and gas fields up for investment, there are some which would be less complicated than offshore fields for development. Some of them are Danan, Cheshmeh-Khosh and Susangerd fields, shared by Iran and Iraq.  

Danan

Danan oil field in Ilam Province is located along Iran’s border with Iraq. It lies 80 kilometers northwest of Andimeshk and 30 kilometers southeast of Dehloran. This field incorporates Bangestan and Asmari reservoirs.

In this field, Ilam and Sarvak formations – measuring respectively 85 and 750 meters thick – form Bangestan reservoir whose thickness is 835 meters.

At present, 26,000 b/d of crude oil is being extracted from Danan field prior to being carried to the Dehloran production center through pipeline. After being sweetened, it is pumped through a 52-kilometer pipeline to the Cheshmeh-Khosh desalination unit.

Danan is administered by Iranian Central Oil Fields Company (ICOFC). A variety of scenarios have so far been envisaged at National Iranian Oil Company (NIOC) for the development of the Danan field. The broad lines for the development of Danan field (scenarios categorized under natural depletion, water injection and gas injection) have been submitted, and experts have offered their views.

In studying the Danan field, once the reservoir’s properties are examined, a static and dynamic model is designed and the performance of the reservoir is studied under different scenarios. Natural depletion scenario includes drilling new wells: vertical and directional wells, and gas injection scenario involves returning gas to an injection well in the reservoir.

These studies have indicated that in the gas injection scenario, oil production wells face the problem of high GOR, while in water injection scenario, the volume of injected water is limited due to the low permeability of reservoir rock; therefore, the recovery rate could not be improved.

Thus, the best scenario for the development of Danan field is natural depletion which involves drilling new wells with high diversion and spudding directional wells in order to establish further contract with the rock reservoir. Application of this method will require a fewer number of wells than vertical drilling.

The contract for exploration and development of Danan block was signed between NIOC and a Vietnamese company in March 2008 for exploration and development activities, identification and evaluation of hydrocarbon deposits in this block and winning cooperation of top international companies in the upstream sector after issuing tender bids. The Vietnamese party has so far invested more than $20 million in this block.

Cheshmeh-Khosh

Cheshmeh-Khosh which was explored in 1964 and started production 11 years later, is one of old fields in western Iran. Its current output rate stands at 18,000 b/d and its gas production rate stands at 3.3 mcm/d.

Cheshmeh-Khosh is located in Ilam Province in western Iran, and is 52 kilometers south of Dehloran and 70 kilometers west of Andimeshk.

The oil produced from this field is processed before being carried to Ahvaz-3 production plant through a 153-kilometer pipeline. The oil is finally brought to Kharg Island in order to feed refineries or to be exported via the Kharg oil terminal.

Cheshmeh-Khosh is run by ICOFC and it currently needs investment and state-of-the-art technology in order to preserve and enhance its output.

It has two reservoirs in the Asmari and Bangestan formations. The Amsari formation is made from sandstone with favorable reservoir properties, while Bangestan formation is more than 700 meters thick.

Currently, oil is extracted from Asmari reservoir while Bangestan formation is to produce 20,000 b/d. The recovery rate of Asmari would range from 27% to 35%, while that of Bangestan reservoir would be 6 to 8%.

Cheshmeh-Khosh field’s crude oil production capacity stands at 18,000 b/d on average while 115 mcf/d of natural gas could be extracted from this field.

Cheshmeh-Khosh’s oil is carried to the Ahvaz 3 production center via a 153km pipeline prior to being sent to refineries as feedstock or being carried to Kharg Island for exports.

The desalination unit of Cheshmeh-Khosh is operating at a nominal capacity of 181,000 b/d now.

ICOFC officials have said that new production technologies would be used in the Cheshmeh-Khosh field.

Susangerd

Susangerd oil field lies 20km southwest of the Ahvaz oil field. Its geological structure was discovered in 1962 based on 2D seismic lines. Later on, after the drilling of Well No. 3 in 2008, hydrocarbon deposits were proven to exist in the Asmari, Ilam and Sarvak formations.

NIOC has already announced that Susangerd could offer sustainable production for 25 years in a row. Susangerd is untapped and it has been offered for development under the new model of contracts, known as IPC.

A variety of local and foreign firms had offered to develop the field. The proposals were examined by the advisory committees of NIOC Directorate of Reservoirs.

 Before the US pullout of the 2015, Iran nuclear deal and restoration of sanctions, Gostaresh Iranian Oil And Gas Industries Development Company (IDRO-Oil) and Russia’s Zarubezhneft had signed a memorandum of understanding for the joint development of Susangerd. They had agreed to set up a specialized working group to study the project for a final agreement. Upstream studies on the field had been assigned to IDRO-Oil and Austria’s HOT ENG with a view to drawing up a master development plan.

Susangerd field is located near Jofair, Ab Teimour and Band Karkheh fields. Three exploration wells have been drilled, but no production is under way. Susangerd is estimated to hold 39.5 billion barrels of oil in place, 14.1 billion barrels of which is recoverable. The Susangerd oil has an API gravity of 19.

Isfahan Oil Refinery to Become Petro-Refinery
Saeed Mohammad-Beigi

Reforming and improving operational processes, as well as upgrading the quality of production in line with decisions of the High Council of Environmental Protection and Process Improvement Plan of the Ministry of Petroleum constitute an important issue in the refining sector. To that effect, Petroleum Ministry has entered this sector effectively and managed to maintain production while supplying more qualitative refined petroleum products on the market.

Isfahan oil refinery is a key and active facility in improving operational processes with a view to upgrading product quality. To that end, it has implemented numerous projects, some of which have already become operational and some others are in the pre-commissioning phase.

Perspective

Morteza Ebrahimi, CEO of Isfahan oil refinery, said: “This giant industrial complex may become a petro-refinery. Some measures have been taken for producing petrochemicals.”

He said that refineries should diversify their activities under the present circumstances, adding: “The Isfahan Oil Refining Company’s perspective is based on becoming a petro-refining plant.”

Ebrahimi said that Isfahan refinery was producing 33 petroleum products in addition to the main products. He added: “The commissioning of the Persian Gulf Star refinery gives impetus to the oil refineries producing Euro-grade gasoline. Therefore, the refineries should not limit their mix of products to the core products.”

He also said that the refinery had purchased 43% of Isfahan Petrochemical Plant shares.

Ebrahimi said more shares would be purchased from industrial plants, adding that some shares of the Sepahan Oil Company had been also purchased by Isfahan oil refinery.

23% of Products Supplied 

Ali Mohammad Yasliani, director of planning and project control of the Isfahan oil refinery, said: “The refinery started its activity in crude oil refining and petroleum products supply as well as supply of feedstock for downstream industries (Isfahan Petrochemical Company, Arak Petrochemical Company, Sepahan Oil Company, Jay Oil Refining Company and Iran Chemical Industries Company) in 1979 and now it is able to supply 23% of the country’s petroleum product needs.”

Noting that Isfahan refinery covers 340ha of land northwest of the city of Isfahan, he said: “The refinery has seen significant progress over time. During early 1980s it managed to increase its crude oil refining capacity 85% to bring its output from 200,000 b/d to 375,000 b/d.”

He said that Isfahan oil refinery was receiving its crude oil from Maroun, lying 70km from Ahvaz, through seven compressor stations via a 430-km pipeline.

“This big refining plant has three 120,000-barrel distillation units whose main parts are LPG production, vis-breaker, catalytic conversion, hydrogen production, Isomax, special solvents, control units, SRP, gasoline production units (ISO, CCR, NHT, …),” he added.

Yasliani also touched on the products of Isfahan oil refinery, saying: “Gasoline, kerosene, gasoil, fuel oil, LPG, raw oil, sulfur solvents, ATK, JP4 and other petroleum products are supplied by this refinery.”

He added that the products are classified under “core products” and “special products”.

“LPG, gasoline, kerosene, gasoil and fuel oil are the core products, which are sent to National Iranian Oil Products Distribution Company for distribution. Vacuum bottom, special kerosene, naphtha, platformate and base oil are special products which are supplied to the major customers of Isfahan oil refinery. Since they feed Jay oil company, Iran Chemical Industries, Arak Petrochemical Company, Isfahan Petrochemical Company and Sepahan Oil Company, they are instrumental in national economy,” he said.

Yasliani said Isomax kerosene, Isomax gasoline, naphtha, solvents, isorecylce, light and heavy base oil, vacuum bottom and sulfur were used to feed small-sized industries.

Process Upgrade

Yasliani said an agreement had been signed with Chinese and South Korean companies partnering Iran’s Mapna for upgrading the processing at Isfahan oil refinery.

He said the improved processing plan included five projects: hydrotreating unit for the distillation towers’ residues, propylene production and catalytic cracking of the distillation towers’ residues, utility and offsite and storage facilities, two amine and one sour water units and two gasoil refining units, one sour gas unit, sulfur recovery and granulation, URP third distillation and gasoline production.

He said that operations for the hydrotreating unit of the distillation towers’ residues had started in 2019.

“The second project pertains to the propylene production and catalytic cracking of distillation towers residues for the purpose of preparing the residues supplied at distillation towers at the rate of 81,000 b/d for delivery to the RFFCC to produce valuable light products like LPG, naphtha, gasoline and gasoil,” he said.

Yasliani said the second project would cost IRR 15,877 billion plus € 683 million, adding that its products would yield € 1,872 million.

Regarding “utility and offshore and storage facilities”, he said that this project was under way in partnership with Mapna and the Oil Design and Construction Company (ODCC) since 2015. The project was estimated to cost IRR 22,624 billion plus € 263 million.      

He said that two amine units and one sour water unit, two gasoline refining units as well as a sour gas production unit, sulfur recovery and granulation were under way in partnership with Chagalesh Co., Nargan and ODCC since 2014.

300 tn Sulfur Eliminated

Yasliani said elimination of 300 tonnes of sulfur from the gasoil production cycle to reduce the sulfur content to below 50 ppm would help remove 300 tonnes of polluting sulfur from 100,000 barrels of gasoil supplied by the refinery.

The URP third distillation was the fifth project in the series of projects aimed at upgrading Isfahan refinery.

He said that the project was aimed at debottlenecking, boosting the safety of units and reducing crude oil feedstock congestion in the distillation units. It started in 2015 and ended four years later.

He said the project had cost € 40 million plus IRR 4,150 billion. He added that 81,000 b/d of residues of distillation towers would be processed.

Yasliani said that development of Isfahan refinery had resulted in job creation and self-sufficiency.

“After implementing the project, the feedstock supply to the refinery increased to 360,000 b/d and therefore light, valuable and Euro-5 grade products supply increased,” he added.

Referring to Isfahan oil refinery’s longtime history, he said that maintaining the refining capacity would be highly significant.

“To that end, 10 projects have come online with a view to maintaining the production capacity. Setting up new flares, optimizing the recovery unit and completing the RO system, setting up a de-oiling system, establishing lines connecting gasoline storage facilities, setting up 230-kv power transmission lines from the power plant to the refinery, building loading platforms, implementing a pipeline and building the Shahin Shahr waste treatment unit, as well as a pumping station are chief among them.”

He said these projects had cost IRR 1,746 billion plus €115 million.

GDP Growth

Mohammad Rezaei, assistant to CEO of National Iranian Oil Refining and Distribution Company, said that implementing optimization projects at refineries would mean higher profitability and generation of wealth, adding that it would be instrumental in increasing gross domestic product (GDP). 

He said that GDP growth would boost welfare levels in the country, adding that even less than 1 percent increase in GDP would mean big profits.

“Contributing to facilitating implementation of environmental projects at refineries, power plants and motorized vehicle manufacturing industries is important issues that may help reduce air pollution, particularly in winter,” he said.

Rezaei said that facilitating the refinery processes would be helpful. “The hydrotreating project at Isfahan refinery, which is the first step toward reducing the emission of 300 tonnes a day of sulfur into the air is one of these measures which would largely help protect the environment.”

Ali Farrokhi, ODCC Board member, touched upon the planned production of euro-5 grade gasoil at Isfahan refinery, adding: “Currently a project has been defined for two 50,000-barrel units, as well as utility and hydrogen units, which would reduce the gasoil sulfur and upgrade its standard to Euro-5.”

Future of Russia Gas Exports to Europe

Shuaib Bahman

Europe’s dependence on Russian gas has impacted the European Union over recent years. While European nations are trying their best to wean themselves off Russia’s gas, official data on energy imports/exports show that the Europeans have failed to reduce their dependence on Russia.

Russia is exporting nearly 200 bcm/y of gas to Europe, 70% of which goes to West Europe. The figure stood at 159 bcm in 2015. According to the official data, Russia’s gas exports to Europe in the first quarter of 2021 grew 30.7% year-on-year. This increase in Russia’s gas exports to Europe, reaching 53 bcm, was due to cold winter. Russia’s March gas exports to Europe hit a record 18.2 bcm.

Although over recent years, one of the most important pivots of the EU’s energy policy has been to reduce dependence on Russian energy imports and to diversify its oil and gas sources of supply, statistically speaking the European bloc has not managed to significantly reduce its dependence. In fact, Russia’s increased gas export to Europe shows that some of the Europeans’ long-term plans for reducing dependence on Russia’s energy have ended in failure.

For instance, among European nations, Germany is the largest importer of Russian gas. It has tripled its imports from this country. Germany is currently receiving half of its gas needs from Russia. The Nord Stream 1 gas pipeline stretching from Russia to Germany is carrying 55 bcm a year of gas. The North Stream 2 pipeline would increase Germany’s gas imports from Russia. Once operational, Nord Stream 2 would bring the capacity of transmission of Russia’s gas to Germany via the Baltics to 110 bcm a year. Part of this gas may be delivered to France and other West European countries via Germany. That is while the Turk Stream gas pipeline would be instrumental in shipping the bulk of Russia’s gas to Eastern and Central European nations via Turkey.

Europe’s Gas View of Russia

Among European countries, there are conflicting views about the use of Russian energy resources.

In the first group, some nations like Britain, Poland and the Baltic states believe that the EU should reduce as much its dependence on Russia’s energy as possible because Russia has over recent years used energy as a lever and weapon against the Europeans.

In the second group, countries like Italy and Greece believe that Russia can be the most important and the best energy partner for the Europeans and therefore Europe has to work towards developing its relations with Russia.

The third group comprises countries like France and Germany among others. They believe that Russia can be a suitable energy source for Europe, but European governments should not become fully dependent on Moscow. These countries are instrumental in the EU’s decision-making and policymaking. They have, over recent years, pursued the idea that Europe must diversify its imports while designing alternative routes for energy imports to Europe. A new variable has been added to Russia-EU energy ties. This new player in the US whose new energy policy has put a strain on the Europeans. The Americans are looking at gas exports to Europe from a long-term perspective and they try to portray the Europeans’ dependence on Russia as a serious threat. On this basis, the US is trying to harm Russia-EU cooperation as it has imposed sanctions on the Nord Stream 2 pipeline.

However, despite US pressure, the Europeans are not ready to back down from cooperating with Russia in the energy sector. The main reason lies in the lack of accessible alternatives. Although over the past years, the Europeans have focused on some sources like Iran’s gas; due to political issues, as well as lack of necessary infrastructure and pipelines, these projects have not reached a reliable point for the Europeans. The issue of gas imports from some North African nations has not made any significant progress due to insecurity in this region and lack of political stability. Therefore, the only reliable source for the Europeans for secure energy imports would be Russia.

In addition to energy security and sustainable supply, another factor making Russia attractive to Europe is the price of gas imports. Economically speaking, Russia is a lower-cost route because of its proximity to Europe. Although until several years ago, half of Russia’s gas was shipped to West Europe via Ukraine and half via Nord Stream 1 and Belarus, the transit fee by Eastern Europe nations was high due to long route. But now completion of the Nord Stream 2 project can reduce costs more than ever. Therefore, the Europeans’ investment in this project shows that they hold a long-term view of gas imports from Russia.

Challenges Ahead

Although based on statistical data, Europe’s gas imports from Russia have increased and completion of such projects as Nord Stream 2 and Turk Stream may result in higher exports of gas from Russia to Europe at lower prices. But Moscow is facing a tough rival, i.e. Washington. According to the official data, Russia’s share of Europe’s gas imports was nearly 45% in 2019. However, latest EU data show that this figure dropped below 40% in the first half of 2020. More interestingly, the US had a very low share in liquefied natural gas (LNG) exports to Europe in 2019. But in the first half of 2020, the US gas share of Europe’s imports reached 6.2%. While the US had a very small share in oil exports to Europe in 2019, the US share reached 9.2% in the first half of 2020. Therefore, Russia is facing a serious rival, i.e. the US, when it comes to energy exports to Europe. Such rivalry may turn into a venue for more tensions between Moscow and Washington, thereby putting Europe once more at the heart of bilateral tensions.

Russia would be faced with other challenges in the future. For instance, the issue of Iran’s gas exports to Europe has always been a point noted by the Europeans in the face of the Russians. Of course, this issue is not a competitive priority for Russia for a variety of reasons. First and foremost, Iran’s political ties with the Europeans are under US sanctions and in the following stages, there is not necessary infrastructure including financial sources and technology and pipeline for Iran to ship gas to Europe. Therefore, although Iran’s gas reserves may be a potential rival for Russia, they would not pose any threat to Moscow at least for one decade!

TotalEnergies; a Real Change?
Shuaib Bahman

Over 90% of shareholders of France’s energy giant Total agreed on renaming the leading oil and gas company TotalEnergies as part of climate project. Meantime, some shareholders have embarked on a campaign to dismiss speculation about any green objectives because they do not see the company’s objectives adequately ambitious. Despite these changes, the main question remains to know whether the name change would lead the company towards renewable energies or it was just a show.

As a multinational company, Total is one of the top seven giants involved in the oil and gas sector. It owns big assets across the globe. Total is also involved in the production of gas condensate and distribution of products. Total’s chemical products also enjoy a big market in various nations.

Total is cooperating with different organizations in the world and is operating many projects. Total is cooperating specifically with Switzerland, the Netherlands, Angola, Germany, Iraq, Nigeria, Libya, Malaysia, Mauritania, Mozambique, Myanmar, the US, Oman, Qatar, South Korea, Australia, Uruguay, United Kingdom, Indonesia, Russia, Vietnam, Venezuela, Belgium, Argentina, Saudi Arabia, Germany, Morocco, Azerbaijan, Bolivia, South Africa, China, Cyprus, Brazil, Italy, Bermuda, the United Arab Emirates and Congo.

The main activities and services of Total are classified under various categories: exploration and extraction; gas, renewables and energy; refining and chemical products; marketing and service provision; Total international services; people and social responsibility; and strategy and innovation.

People and social responsibility, as well as strategy and innovation, was added to Total in 2016. The task of these departments is mostly related to environmental issues and the company's strategies in the face of global warming and human resources. In May 2016, in order to reduce the environmental pollution resulting from its production, Total decided to reduce about 20% of the carbon production in various parts of the company by 2035. To implement this reduction plan, Total intends to improve its fuel products, increase energy efficiency and produce new renewable energies. Total also made a $1 billion investment in November 2016 to reduce the impact of fossil fuels on climate change.

Conflicting Views

As far as TotalEnergies is concerned, two views may be raised:

The first view is based on the fact that Total will move towards production and supply of renewable energy in the future based on its firm belief in environmental issues. Accordingly, the change in the approach of large companies active in the field of energy is a pervasive event and will be pursued by all these companies in the future because environmental issues have become very important for the public opinion. In line with this approach, other large companies will have to change their environmental policies in the near future. ExxonMobil has been embroiled in a legal dispute with environmental activists over climate change, and a Dutch court has ordered the Anglo-Dutch company Shell to accelerate its greenhouse gas emissions reduction process.

The second view emphasizes that the renaming of Total is only a show and propaganda act, and the company will not be out of competition with other major oil competitors to gain more profits, and will continue to move in the direction of its previous policies. In fact, Total will not abandon its lucrative oil and gas projects and will continue to be active in the field of fossil fuels.

New Strategy

Although Total is investing in renewable energy implementing solar and wind projects and has changed its name, this does not mean giving up investment in fossil fuels production. In fact, in addition to continuing its activities in the field of hydrocarbon exploration and operations, Total is trying to step into new areas of energy production. The company's executives are well aware that any sudden turn in Total’s policies could have dire consequences.

As a result, it is highly unlikely that Total will abandon any of the oil and gas exploration, mining, energy generation, transportation, refining, and marketing sectors for petrochemicals and international crude oil trade in the future. In fact, the closure of any of these sectors could lead to the loss of a significant portion of the capital of this large company.

Therefore, one may expect that Total, while maintaining its old policies in the field of fossil fuels, will pursue a new strategy regarding renewable energy. This approach actually shows the intelligence of Total directors. Because in the first place, this large company will move towards the production of renewable energy, which can be very profitable for it in the future, and in the next stages, by showing the company's activities in the field of environment, public opinion, especially environmental activists. Take life with you. The company has also announced that it will allocate part of the revenue from investing in fossil fuels to renewable energies.

Of course, in the meantime, in order to implement its environmental plans, in addition to investing in new energies, Total has developed new methods for the exploration, extraction and transfer of oil and gas products. Total is the first oil and gas company to announce that it will shut down its plants’ flares by 2030. The company has succeeded in calculating the capacity of reservoirs with three-dimensional and four-dimensional modeling of oil and gas fields and using the best and most optimal method for exploration.

As a result, Total will continue its activities in the field of fossil fuels and will take a new and smart approach to new energies. Total’s hybrid approach could become a model for other large energy companies in the future.

Petrobras Stakes Claim for Santos Basin

 Petrobras has expressed interest in two areas in the presalt Santos basin offered under Brazil’s Second Bidding Round of the Transfer of Rights’ Surplus Volumes.

The company is targeting a 30% stake in the Atapu and Sépia areas, under the preferential rights arrangement.

Assuming government approval, the signature bonuses would be R$1,200.6 million ($224 million) for Atapu and R$2,141.4 million ($400 million) for Sépia.

Petrobras’ Strategic Plan is to focus its resources in world-class assets in deep and ultra-deepwaters.

BP, Eni Discussing Angolan Joint Venture

BP and Eni have entered a non-binding memorandum of understanding to progress detailed discussions on combining their upstream portfolios in Angola, including all their oil, gas and LNG interests in the country.

According to the companies, the joint venture company would be expected to generate significant synergies, create more efficient operations, and increase investment and growth in the basin.

BP and Eni have informed the Angolan government of their intention.

Britain Offshore Market

Robert Gordon University (RGU) expects marked changes in the UK’s offshore energy workforce mix over the next decade.

RGU’s UK Offshore Energy Workforce Transferability Review predicts that roles in decarbonized energies will rise from 20% to 65% of all jobs in Britain’s offshore energy market (oil and gas, offshore wind, carbon capture utilization and storage, and hydrogen).

More than 90% of the UK’s oil and gas workforce appear to have a medium to high skills transferability and are therefore well placed to work in other energy sectors.

Investments in capital and operating activities in the UK offshore energy market over the next 10 years could total over £170 billion ($241 billion).

Shell Selling Philippines Stakes

Shell Petroleum has agreed to sell Shell Philippines Exploration (SPEX) to Udenna Corp. subsidiary Malampaya Energy XP.

SPEX has a 45% operated interest in Service Contract 38 (SC38) offshore the Philippines, which includes the producing Malampaya gas field.

The transaction, which should close later this year, carries a base consideration of $380 million, with further payments of up to $80 million between 2022 and 2024 depending on performance and commodity prices.

The Malampaya field started producing in 2002.

Exploration Permit Offshore Australia

 Subsidiaries of Santos and SapuraOMV have acquired the AC/P50 permit offshore northwest Australia from Rouge Rock.

In 2018 Melbana Energy sold its 55% interests in this permit and AC/P51 offshore the Ashmore and Cartier Islands to Rouge Rock, with the terms including an upfront cash payment of around $397,000 and a 10% share of any future royalty Rouge Rock would receive for production from this permit area during a defined period.

The new purchasers have also negotiated the right to acquire AC/P51.

Dutch Court Orders Shell to Deepen Carbon Cuts

 A Dutch court ordered Royal Dutch Shell to significantly deepen its planned greenhouse gas emission cuts, in a landmark ruling that could pave the way for legal action against energy firms around the world.

At a court room in The Hague, judge Larisa Alwin read out a ruling which ordered Shell to reduce its planet warming carbon emissions by 45% by 2030 from 2019 levels.

“The court orders Royal Dutch Shell, by means of its corporate policy, to reduce its C02 emissions by 45% by 2030 with respect to the level of 2019 for the Shell group and the suppliers and customers of the group,” Alwin said.

Shell currently has a target to reduce the carbon intensity of its products by at least 6% by 2023, by 20% by 2030, by 45% by 2035 and by 100% by 2050 compared with 2016 levels.

But the court said that Shell’s climate policy was “not concrete and is full of conditions…that’s not enough.”

“The conclusion of the court is therefore that Shell is in danger of violating its obligation to reduce. And the court will therefore issue an order upon RDS,” the judge said.

The court ordered Shell to reduce its absolute levels of carbon emissions, while Shell’s intensity-based targets could allow the company to grow its output in theory.

The lawsuit, which was filed by seven groups including Greenpeace and Friends of the Earth Netherlands, marks a first in which environmentalists have turned to the courts to try to force a major energy firm to change strategy.

It was filed in April 2019 on behalf of more than 17,000 Dutch citizens who say Shell is threatening human rights as it continues to invest billions in the production of fossil fuels.

Exxon Loses Board Seats to Activist Hedge Fund

Former Energy Secretary Dan Brouillette slams Dems' 'climate corps' push for having ulterior motives.

A tiny hedge fund dealt a major blow to Exxon Mobil Corp as shareholders elected at least two of the fund's nominated directors to the oil giant's board after a months-long battle over the company's carbon footprint and growth plans.

The success by activist hedge fund Engine No. 1 during the Exxon shareholder meeting showdown sent shockwaves across an energy industry grappling to address concerns about climate change.

Engine No. 1's stake in Exxon - an energy behemoth with a market value of close to $250 billion - is worth just $50 million. The development came as climate activists scored a big legal win against Royal Dutch Shell, which was ordered by a Dutch court to increase its greenhouse gas emission cuts.

The result will add to pressure facing Exxon CEO Darren Woods, who campaigned to convince shareholders to shoot down the board challenge, arguing the company was already diversifying away from fossil fuels and should not jeopardize its profits in doing so.

Under Woods, Exxon incurred a $20 billion-plus loss last year and has been slower to embrace lower-carbon investments than its global rivals.

"We welcome the new directors, Gregory Goff and Kaisa Hietala, to the board and look forward to working with them constructively and collectively on behalf of all shareholders," Woods said at the end of Exxon's shareholder meeting.

German Coal Industry Underpins Renewable Push

Germany is an enlightened leader in the global battle to reduce CO2 emissions, a pioneer in renewable energy and community power projects and a champion of energy efficiency.

Or so the common narrative goes.

But try telling that to Monika Schulz-Hopfner. She and her husband, along with 250 other residents of Atterwasch, a quiet village near the Polish border, face eviction from their home of 30 years to make way for the Janschwalde-Nord coal mine.

And not just any old coal, but lignite, the dirtiest form of this ancient fossil fuel that is mined in vast opencast pits.

If the plans go ahead, the village, parts of which date back more than 700 years, will be demolished.

BP Suspends Production from Foinaven Fields

 BP has suspended production from its Foinaven fields off Shetland so the vessel used can be removed from operation.

The Petrojarl Foinaven floating, production, storage and offload (FPSO) vessel is said to now be nearing the end of its 25-year life.

Age and the "demands of operating west of Shetland" ruled out an extension.

Alternative options to recover estimates of up to 200 million barrels from the area are being considered.

Production has been suspended to allow preparations to begin to remove the FPSO.

It was commissioned in 1996 and has been on location in the Foinaven area since 1997.

Vertex Energy to Acquire Shell's Mobile, Alabama Refinery

Royal Dutch Shell is selling its 90,000 barrel-per-day (bpd) Mobile, Alabama refinery to specialty refiner Vertex Energy for $75 million plus the cost of hydrocarbon inventory, the company said.

Vertex plans to produce petroleum fuel and renewable diesel at the refinery following the close of the transaction in the fourth quarter of 2021, pending approvals.

Shares of Texas-based Vertex surged more than 40% in after-market trading after the deal was announced.

Vertex will also buy co-related logistics infrastructure and hydrocarbon inventory, including more than 3 million barrels of crude oil and product storage.

US Congress Unlikely to Override Nord Stream Sanctions Waiver

US Senate Republicans opposed to the Nord Stream 2 gas pipeline will not likely gather enough support to reverse the Biden administration's decision to waive some sanctions on the project developer.

Senator Kevin Cramer, Republican-North Dakota, said late May 24 that he had not yet picked up any Democratic support for his bill, the Protecting Our Well-being by Expanding Russian Sanctions (POWERS) Act. It would reverse the waiver granted to Switzerland-based Nord Stream 2 AG and its CEO Matthias Warnig, as well as expand the sanctions to include subcontractors working on the pipeline.

Korea to Demonstrate Carbon Capture and Storage

South Korea announced plans for a demonstration project for the capture, transportation, and storage of carbon dioxide.

The project, which involved eight Korean companies including Korea Shipbuilding & Marine Engineering and the Korea National Oil Company along with government-sponsored research, is part of a broader plan to redeploy a decommissioned offshore gas field for the storage while converting to generate offshore wind in the area as part of a hydrogen initiative.

The project centers around the Donghae Gas Field, which is scheduled to end production in 2022.

They plan to capture and transport 400,000 tons a year of carbon from industrial users for injection into the depleted wells starting in 2022. Korea has a goal of collecting, utilizing, and storing 10 million tons of carbon dioxide per year by 2030.

The plan is that industrial applications will use more than six million tons while the remaining four million tons will be treated through storage.

Korean National Oil is leading the project which will work with SK Energy to capture carbon from industrial applications.

SK Innovation will acquire the technology to treat the CO2 while Korea Shipbuilding will participate in the transportation and storage. Korea Petroleum Corporation will utilize its experience in the operation of the Donghae Gas Field for 20 years, to inject the CO2 into the stratum of the decommissioned gas field.

Yang Soo-young, president of Korea Petroleum Corporation, said, “Oil companies are actively engaged in the era of decarbonization around the world.

Greece-Bulgaria Gas Pipeline Delayed

The Interconnector, or IGB, the proposed gas pipeline between Bulgaria and Greece, has been delayed until June of 2022, according to a statement from the Bulgarian energy regulator.

Meant to help wean Sofia off Russian gas, the proposed pipeline has hit another snag and will not be operational until June 2022.

Issues leading to the delay include not only coronavirus-related problems but also a need for additional environmental assessment for a crossing under a dam.

The dam, located in the Bulgarian section of the proposed gas line, poses a major issue for the project, according to the ICGB company, which is behind the effort.

The Interconnector Greece-Bulgaria  pipeline, or IGB, has a price tag of 240 million euros. It was expected to have been ready by the end of last year, when Sofia’s 25-year deal with the Azeri gas company SOCAR was to have taken effect.

The deal is meant to allow the importation of 1 billion cubic meters of natural gas a year.

The IGB, a 182-kilometer (113 mile) long pipeline, is currently being built by a joint venture of the Bulgarian state energy company BEH and Greece’s gas utility company DEPA, along with Italy’s Edison.

Ivan Ivanov, the head of Bulgaria’s energy regulatory authority, explained to Reuters in an interview “We have given our consent to the request of the ICGB to extend the deadline for the start of operations of the IGB to June 30, 2022.”

The IGB, which will have an initial annual capacity of 3 billion cubic meters of gas, is a key component in Europe’s plans to minimize its reliance on Russian gas.

Total, Chevron Suspend Payments to Myanmar

 French oil and gas group Total and U.S. energy company Chevron have suspended some payments from a gas joint venture that would have reached Myanmar’s junta, earning praise from pro-democracy activists for taking an important first step.

International companies doing business in the country have come under pressure from rights groups and Myanmar’s parallel civilian government to review their operations to stop payments flowing to a military government that seized power on Feb. 1.

Myanmar has been in chaos since the army overthrew the elected government and detained its leader Aung San Suu Kyi, and the junta has responded with brutal force to daily protests, marches and strikes nationwide in support of the ousted civilian administration.

In a statement, Total said “in light of the unstable context in Myanmar” after a joint proposal with Chevron shareholders at the meeting of the Moattama Gas Transportation Company voted to suspend all cash distributions.

Total is the biggest shareholder with 31.24%, while Chevron holds 28%. Thailand’s PTTEP and Myanmar Oil and Gas Enterprise hold the remainder.

“Total condemns the violence and human rights abuses occurring in Myanmar and reaffirms that it will comply with any decision that may be taken by the relevant international and national authorities, including applicable sanctions issued by the EU or the U.S. authorities,” the statement said.

UK Moving Towards Renewables

The UK oil and gas sector is on the "cusp of transformation" into renewables, according to a new report.

Aberdeen and Grampian Chamber of Commerce (AGCC) said 75% of contractors surveyed anticipated moving into renewables work over the next three to five years.

This is the highest level recorded since the question was first asked in 2015, the organization said.

The findings came in the 33rd AGCC Oil and Gas Survey.

The previous survey, published in November, said the UK oil and gas sector was in "economic turmoil" amid the coronavirus pandemic with about a fifth of firms expecting more redundancies in 2021.

The latest study said almost half of the respondents expected to recruit new staff in the next 12 months.

The survey - which cover the six months to April - was carried out in partnership with the Fraser of Allander Institute and KPMG UK.

AGCC said it painted a picture of "fragile optimism".

Martin Findlay, senior partner at KPMG in Aberdeen, said: "As we emerge from the pandemic, we're facing a new set of climate-related challenges.

"Seventy-five per cent of contractors interviewed for the survey told us they're likely to become more involved in UKCS (UK Continental Shelf) renewables work over the coming three to five-year period.

"Contractors also told us oil and gas activity would account for less than three quarters of their business activity by 2025 - down from the current average of 86%."

South Pars Development Seen Foiling Sanctions

Javad Asghari

Despite President Joe Biden taking office in the United States, Iran’s petroleum industry is still unable to sell crude oil as much as its market share due to the toughest ever financial and banking sanctions his predecessor Donald Trump imposed on Iran in 2018 after quitting the 2015 nuclear deal. Meantime, the coronavirus pandemic has left serious negative impacts on the market. And the petroleum industry has automatically not been spared over years. The petroleum industry definitely needs investment and technology.

The question to be answered is: "How has Iran’s petroleum industry managed to survive without investment and technology?" Many pundits believe that the key to Iran’s petroleum industry success is its investment in local firms.

Development of oil and gas fields that Iran shares with neighbors has been the most outstanding among petroleum industry projects. Iran has, over recent years, managed to take significant steps with regard to the development of jointly-owned fields. A case in point is the South Pars gas field. Iran shares this giant field, the largest in the world, with neighboring Qatar. Despite US sanctions, National Iranian Oil Company (NIOC) continues to prioritize development of South Pars. Iran has managed to outdo Qatar in terms of recovery from South Pars, although sanctions have blocked international companies from investing in Iran. Development of South Pars continues by reliance on domestic potential.

The petroleum industry is witnessing improved cooperation on the part of domestic companies and manufacturers. The issue of domestic manufacturing is taking added significance in Iran. Some strengths of local companies include specialized manpower, cost-saving vision, high flexibility, high power of bargaining and win-win talks, ability to export technical and engineering knowhow and services, and access to hardware and software among others.

75% Share in Gas Supply

With full development of remaining South Pars phases (SP11 and SP14), South Pars would increase its share of gas supply in Iran from the current 75% to 82%. Relying on its domestic manpower and innovative knowhow, South Pars has turned out instrumental in Iran’s economy, a clear sign of the firm determination of Iranian petroleum industry staff. South Pars is expected to see its share of national energy mix reach 70%. Of course, commissioning of the Persian Gulf Star refinery in Hormuzgan Province to be fed with South Pars condensate has played a key role in this big achievement. Therefore, 40% of domestic gasoline needs is supplied by South Pars.

Iran started developing its own portion of South Pars about 20 years ago. Since then, in addition to gas recovery, a civilization has taken shape in the Persian Gulf, which shows the completion of the value chain in the oil and gas industry.

When the first administration of President Hassan Rouhani took office, Iran was recovering about 280 mcm/d of gas from South Pars. That was while Qatar has outdone Iran a decade before.

To make up for delays, Iran prioritized phase development of South Pars. Within seven years, the South Pars output reached 700 mcm. The field is currently supplying 75% of Iran’s gas needs.

More than $80 billion has so far been invested in South Pars. The field saw its output increase 2.5-fold from 2013 to 2021.

Preventing Output Drop

Maximum recovery from jointly owned oil and gas fields has been a major cause of concern for the Petroleum Ministry. The South Pars production capacity has increased, but after full development of all phases, the main issue would be to maintain production levels and prevent a fall in output levels. That would require big investment, application of modern technologies and development of some adjacent gas fields as South Pars output is expected to start falling within five years.

Some plans were drawn up for that purpose and necessary studies had started. But sanctions blocked attraction of necessary investment for that purpose. However, development of hydrocarbon fields located near South Pars has started over recent years.

Foresight and Hope

Studies indicate that 108 gas wells had become operational by March 2013 in South Pars. But over a seven-year period, 228 new wells were drilled and now 336 wells are operating in total. Furthermore, 11 offshore platforms had been installed in South Pars up to 2013, but under the Rouhani administration, 26 new platforms were installed and now 37 offshore platforms are producing gas.

Regarding pipelines, 1,050km had been laid by 2013. But over seven years, 2,160km of new pipeline was laid. Currently 3,200km of offshore pipeline is carrying gas from sea to onshore refineries. As for the refining trains, 20 trains were processing gas for injection into national trunkline by 2013, but over the past seven years, another 30 new refining trains became operational.

In terms of investment, prior to the Rouhani administration, $55 billion had been totally invested in South Pars. But over the past seven years, $25 billion has been invested.

With developing South Pars, Iran would not have sufficient feedstock for operating the Persian Gulf Star Refinery. In that case, Iran would never become an exporter of gasoline and it would have even to import gasoline for its domestic needs.

What makes Iran outdoing Qatar more important is that only one-third of South Pars lies in Iran’s waters. Despite a smaller space for drilling wells and installing platforms, Iran has managed to recover more gas than Qatar from South Pars.

Sustainable Gas Exports

The Gas Exporting Countries Forum (GECF) has over the past two years announced its perspectives about the future of natural gas. According to the GECF, global demand for natural gas would increase 50% over two decades. According to estimates, the US, Russia, China and Iran would remain four major suppliers of gas.

Gas is currently accounting for 22% of global energy, which would reach 26% by 2040. Meantime, since South Pars is owned jointly by Iran and Qatar, and no border may be defined for shared fields, development for maximum recovery would be of high significance for both sides.

Development of South Pars phases disturbed equations of US tough sanctions against Iran’s petroleum industry. Therefore, Iran’s oil and gas industry overcame many of challenges to energy exports and by diversifying this sector and selling refined petroleum products, the conditions became easier under sanctions.

Development of an industrial civilization in the Persian Gulf and big investment during various periods of sanctions in the Iranian sector of the world’s largest gas

field has tied the huge reservoir to national economy. Therefore, South Pars enjoys a special status generating economic, political and international power for Iran amid the unfavorable conditions of sanctions.

Enhanced recovery from the largest independent gas reservoir in the world has reduced Iran’s dependence on gas imports from neighboring nations, while thanks to increased gas exports from South Pars have made Iran an exporter of gas.

Iran is currently pumping gas to Turkey and Iraq. Iraq, which is OPEC’s second largest oil producer, relies on Iran’s gas as feedstock for its power plants. Iran’s private sector is also making arrangements for a plan to export gas to Afghanistan.

Iran has doubled its gas exports to neighboring countries from 2013. It shows that gas exports have grown more than 93% over seven years despite US sanctions in place.

According to CEO of National Iranian Gas Company (NIGC) Hassan Montazer Torbati, by feeding gas into power plants, $75 billion has been saved since 2013.

“Without a 2.5-fold increase in the South Pars production, at least 150 billion liters of liquid fuel had to be consumed. But by supplying gas to power plants, the equivalent of $75 billion has been saved and Iran has switched from importer to exporter of petroleum products,” he said.

2nd/3rd Jumps in Petchem

The network of interaction between customers of South Pars does not end here. Midstream and downstream industries, particularly the petrochemical industry with gas-based feedstock (gas condensate, natural gas, ethane and LPG), are major beneficiaries from this energy hub in the heart of the Persian Gulf.

The petrochemical industry is a major player in generating hard currency revenue for Iran in non-oil exports. Owing to huge gas reserves and gas products at South Pars, Iran enjoys a better position than the regional and world nations in this regard.

The life and death of this lucrative industry depends on feeding petrochemical plants. Undoubtedly, increasing the gas production capacity and byproducts in South Pars has been instrumental in drawing up the roadmap for the petrochemical industry for the second and third jumps up to 2025.

Iran is determined to commission 27 petrochemical plants with an investment of $17 billion up to next March, bringing the total number of petrochemical plants in the country to 83. The petrochemical plants would be fed with 62 million tonnes a year of feedstock, or equivalent to 1.4 mb/d of crude oil. Therefore, Iran’s petrochemical industry would see its annual output capacity reach 100 million tonnes after the second jump with an investment of $70 billion, whose products would be worth more than $25 billion.

On this basis, despite Iran being faced with economic problems caused by tough sanctions, a record increase in petrochemical production is seen in Iran in the current calendar year. That would serve as a powerful arm for dealing with sanctions, playing a role in the global trade market and leading hard currency generation.

According to CEO of National Petrochemical Company (NPC) Behzad Mohammadi, Iran’s revenue from petrochemical exports would reach a record $25 billion by next year, which would continue to increase to $34 billion over five years.

Gas Supply Development

Since 2013, rural households’ access to natural gas has more than doubled to cover 84% of villages. Overall, 95% of Iranians have access to natural gas.

From 2013 to early 2021, more than 20,000 villages with nearly 1.76 million households have had access to gas. Over the same period, 193 cities with more than 641,000 households have also been linked with natural gas network. Currently 98.4% of Iran’s urban and 84% of rural population is connected to gas network. The figures were respectively 95% and 54% in 2013.

In parallel with widespread activities undertaken to expand the urban and rural gas distribution network since 2013, measures have been taken to prevent any accumulation of natural gas in South Pars. To that end, 31 compressor stations and more than 5,000km of transmission pipeline have been installed. NIGC and its subsidiaries are currently building 2,205km of pipeline, 1,042km of which has been laid.

Increased gas exports have been also indirectly behind the increase in petroleum products exports as gas supply projects have expanded across the country.

Were it not for the accelerated increase in the South Pars production from 2013 to 2020, Iran would have faced serious problems in gas supply and it had to pay exorbitant prices for gas imports from neighbors as 17,000 villages, 143 cities as well as petrochemicals, refineries and power plants would have been consuming liquid fuel.

It is noteworthy that the gas consumed as fuel in petrochemical plants and refineries has increased from 46 bcm in 2012 to more than 56 bcm in 2018. The share of liquid fuel at power plants increased up to 95% thanks to natural gas replacement, while gas supply to power plants increased 61% to 66 bcm in 2018.

In case South Pars recovery had stayed unchanged at 280 mcm/d recorded in 2013, Iran would not enjoy a high position among gas producers in the world and its exports level would have been at best similar to that of 2013. But thanks to increased gas production from South Pars, Iran is now the third largest gas producer, just behind the US and Russia. Furthermore, Iran’s average gas export is currently earning $4.8 billion mainly thanks to South Pars.

JCPOA, Gate for South Pars Equipment

Many South Pars phases have been developed over recent years thanks to domestic capabilities. Many South Pars phases have been developed, but restoration of sanctions and subsequently prohibition on importing certain equipment has caused problems for the development of South Pars.

Immediately after Iran and six world powers implemented the JCPOA nuclear deal, Iran could bring in equipment it had purchased years ago for South Pars, but they were stuck at European and Asian customs.

Germany was the first country to send a delegation to Iran after the JCPOA implementation. German Siemens agreed to release the equipment that Iran had paid for. A total of 10 compressors including four off-gas compressors and six cooling compressors were brought into Iran to be installed in SP12. Another 6 Siemens-made compressors were delivered in March 2016 for SP17-18. Furthermore, pipes, joints and valves among other equipment that had been purchased from European firms were brought into Iran for installation in SP17, SP18 and SP20-21. In SP14, valves were installed while SP19 and SP20 received ethane recovery turboexpanders – all thanks to the JCPOA.

The JCPOA removed extra costs and zeroed commissions. Oil companies that had to sell their products at low prices to buy necessary equipment at higher than world prices saw their problem resolved with the JCPOA implementation without having to pay any extra costs. Before the JCPOA implementation, the dealers had imposed heavy costs on Iran for money transfer and equipment imports.

CNG, Iran National Fuel

Javad Asghari

The first experience of Liquefied Petroleum Gas (LPG)-fueled vehicles in Iran dates back to 1978 in the southern city of Shiraz where in a pilot plan taxis in the city were converted to LPG-fueled. Later on, in 1991, Vahed Motor Co., affiliated with the Tehran Bus Company, converted some of its buses to CNG-fueled. In 1999, simultaneously with changes in the fuel consumption pattern in the country, the government focused on using CNG as the most suitable alternative fuel to gasoil. With the establishment of the Iran Fuel Conservation Organization (IFCO) in 2000 at the Petroleum Ministry, preliminary studies began to make cars gas-fueled. In a bid to reduce gasoline consumption and subsequently air pollution, agreements were signed with car manufacturing plants and the private sector to manufacture gas-fueled cars and provide infrastructure for CNG stations.

Following the Paris climate agreement, all signatory nations pledged to reduce environmental pollution and aerosols. One of the most important measures taken by the parties to the deal was planning to convert diesel-fueled vehicles to CNG-fueled.  The countries that could use liquefied petroleum gas (LPG) due to their certain conditions focused on LPG.

Lower Pollution in Megacities

Finding a solution to resolve the issue of natural environment and urban pollution drove policymakers and politicians across the globe to invest in clean fuel with lower pollution. In Iran, due to an increase in transport vehicles and development of industries particularly following the 1979 Islamic Revolution, air pollution levels dropped significantly, particularly in big cities. Since vehicles are one of the most important pillars of an industrialized society, they have caused the most serious environmental challenges for humanity. With carbon dioxide, nitrogen dioxide and organic particles, they create ozone under sunray and therefore they have grown into the most important cause of air pollution. A major challenge in megacities that has yet to be resolved is the air pollution which is caused by cars. Whereas CNG produces less pollution than gasoline and gasoil, its replacement with gasoil and gasoline could be of great help. CNG pollution in hazardous materials like PM, SOx and NOx is much less than gasoline and gasoil. Now, if CNG is replaced properly, the bulk of urban pollution would be removed.

Ever since gasoline rationing began in Iran, dual-fuel vehicles have been more welcomed in the country.  

As gasoline rations declined and CNG consumption advantages became further known, motorists moved to convert their vehicles to dual-fueled.

Studies conducted on the concentration of pollutants across highly congested cities shows that in most cases the air breathed by residents contains carbon monoxide levels and aerosols much more than allowed. Today, governments and industrialists are looking for energy carriers emitting less pollutants. That is why the world has braced for natural gas.

Diversifying Fuel Mix

Diversity in the fuel mix constitutes an option for fuel supply security across the world. That would vacate dependence on a specific fuel in the transportation sector. Therefore, each country would design a reliable fuel mix based on its own relative advantages.

Relying on its huge gas reserves, Iran has used gas in various sectors, including in the transportation sector in the form of CNG. Therefore, under various circumstances, the government can strike a balance between gasoline and CNG in a bid to gain more profits compared with single fuel state.  

Iran holds 34 tcm of proven gas reserves. Since 2013 so far despite international sanctions, the country has managed to complete South Pars development phases to bring its gas production capacity to 1.1 bcm/d.

 60% Cost Saving

 There are currently about 2,400 CNG stations in the country, distributing 21 mcm/d of CNG. Another 40,000 cubic

meters a day may be added to the daily capacity.

When cars become dual-fueled, costs spent on gasoline consumption would be cut 60% for cars using subsidized fuel. For cars using unsubsidized fuel, CNG would cut costs 80%.

Iran has the second largest CNG-fueled transportation fleet behind China in the world. More than 16% of CNG-fueled cars in the world belong to Iran. That explains why Iran moved 15 years ago to replace gasoline with CNG as fuel for vehicles.

Since 2017, 24.5 million CNG-fueled cars have been registered across the world, more than 17 million of which in Asia-Pacific region. During the 1994-2016 period, due to more focus on gas reserves and the functionality of more than 60% of CNG-fueled vehicles in Asia-Pacific, the highest growth in this industry was recorded in this region.

According to Iran’s Vision Plan 2025, energy efficiency plans will be communicated to the Petroleum Ministry by determining the share of energy carriers and prioritizing projects for reducing pollutants. Laying emphasis on using CNG and alternative fuels with less pollution, as well as energy saving in transport vehicles is among instructions.

CNG Advantages

Natural gas is roughly less costly than gasoline in the world. According to a 1996 survey, natural gas prices in 11 out of 12 European nations were 14-77% lower than gasoline and 12-74% lower than gasoil. In these countries, fuel tax is the most important factor in determining prices. That is because of lower tax levied on natural gas than on gasoline.  

Gasoline and gasoil whose special weights are respectively 75% and 84%, are considered as heavier compared with LPG whose special weight is 55% and natural gas. When fuel molecules are made from bigger hydrocarbons, combustion would be less effective during consumption and therefore more carbon monoxide and unburnt hydrocarbon would be released into the air.

The advantage with CNG or CH4 is that it does not contain lead which is added to gasoline. Furthermore, since natural gas is mixed with air homogenously, it is burnt more cleanly without producing any smoke. Therefore, it would prolong the lifecycle of the engine. Less service would be needed and maintenance costs would decline. By developing CNG-fueled vehicles, greenhouse gas emissions may be cut by 20%.

Natural gas is lighter than air and therefore in case of gas leak from the storage tank it would quickly move up. The combustion temperature of natural gas is approximately twice that of the the gasoline, thereby incorporating the danger of explosion of gas engines. Meantime, natural gas storage tanks are more durable than normal fuel tanks. 

Natural gas occupies more volume than traditional liquid fuels, thus it must be compressed or liquefied to make it practical for transport applications. Compressed Natural Gas (CNG) is the most common application for NGVs though Liquefied Natural Gas (LNG) use is becoming increasingly common.

When comparing fuel prices it is important to consider energy content of fuels. CNG is sold either by the kilogram or the cubic meter (m3) and LNG is measured in liters. A cubic meter of natural gas contains approximately 38.3* megajoules per cubic meter (MJ/m3), which is approximately the same amount of energy as a liter of diesel (38.8* MJ/l). In some countries, CNG or LNG is sold by the Gasoline per Gallon Equivalent (GGE) or Diesel per Gallon Equivalent (DGE). In these cases the energy content has already been taken into account so the fuel price comparison can be made directly.

$1.8bn Profits

Ali-Reza Sadeq-Abadi, deputy minister of petroleum for refining and distribution, has said that converting gasoline engines to CNG engines would save the country $1.8 billion a year.

He has said that there are 1.4 million old and worn-out cars in the country, burning 20 ml/d of gasoline. These cars – which are mainly pickups, taxis, vans and private cars – may be converted to CNG-fueled.

“It cannot be claimed that all these 20 million cars would be definitely replaced, but if just 10 million vehicles are converted we would be earning the country $1.8 billion a year,” he said.

Continuation of future decision-makings, enhancing the export capacity, reducing transportation costs and return of capital, and creating jobs are other advantages of development of CNG. The nominal capacity of Iranian CNG stations currently stands at 60,000 cubic meters for 24 hours. The figure is 40 mcm/d for 14 hours.   

Thanks to CNG, about 4 million gasoline engines have been converted into CNG-fueled, thereby creating security in the fuel mix of the country. By expanding the fuel mix from one source to two sources, environmental pollution has also declined and CNG has turned into the main fuel in big cities.

Japan, Canada, New Zealand, Italy, Russia, the US, Argentina, Brazil, Turkey, Azerbaijan, the Netherlands and China are among nations with successful experience of CNG. In some developed nations, using CNG as aviation fuel is also being discussed.

 Weightlifting Trainer:
Oil Industry, Birthplace of Iran Weightlifting
 
Javad Naderi, has been active in weightlifting for 25 years now. He has won various titles at the national, Asian and international levels. He’s now a successful trainer. Naderi who is the former weightlifting champion in the 105 kg category, is an employee of National Iranian South Oil Company (NISOC). He is currently leading the national team of Iranian weightlifters in the junior youth category.
The following is the full text of the interview he gave to "Iran Petroleum":
 
Would you please tell us about yourself?
I was born in the city of Nahavand in 1983. I’m 38 now. I have been interested in sport since I was very young. I have been involved in weightlifting for 25 years now. I have studied physical exercises and I currently hold a bachelor’s degree in this discipline. All the members of my family favor sports, but among my siblings, I’m the only one to have professionally pursued sports. I’ve been working with NISOC for more than 25 years now.
 
When did you specifically start weightlifting?
I think I was 12 or 13 when I started weightlifting. A friend of mine used to exercise in a weightlifting club. He recommended me to try weightlifting and when I started weightlifting I found it interesting. Then I continued in this discipline and I’ve been involved in weightlifting for 25-26 years.
 
What titles have you achieved in weightlifting?
I’ve achieved many titles in weightlifting. I’ve always won championship, second and third place at the provincial and national levels. But my most significant title was when I finished runner-up in Belarus in 2006. I became champion in the Asian youth category in 2002. In 2010, I became champion in the Asian adults' category. In 2011, I was recognized as the best weightlifter in Asia. In 2012, I became the best weightlifter in the 105 kg category in Iran. At the club level, I worked with the NISOC weightlifting team at various leagues in Iran, as well as Asian clubs cup and won the first to third titles.
 
How come you joined NISOC?
I was a member of NISOC weightlifting team in 2001. Then in 2004, I was employed by NISOC, a subsidiary of the Petroleum Ministry as national champion.
What’s your job at NISOC?
I was employed in the sport and physical exercise division. I’ve been with NISOC for 15 years now.
 
What do you do in parallel with sport?
Since the time I was employed by NISOC I was also a member of NISOC weightlifting team. After I professionally quit sports I continued it on my own. However, I’m still a weightlifting trainer.
 
How do you assess weightlifting at NISOC?
If I say that weightlifting started like football from southern Iran it would not be exaggeration. In other words, weightlifting in Iran began in Masjed Soleiman and other southern cities in Iran. NISOC is the identity of weightlifting in Iran. NISOC’s club has been the standard-bearer of weightlifting in Iran and Asia over these years, and it has won various championship titles. NISOC was not just a champion; rather it has introduced many qualified weightlifters to Iran.
 
You referred to talents. Are petroleum industry personnel's children involved?
That’s an interesting point. According to National Iranian Oil Company (NIOC) regulations, 70% of the team should be from the children of oil industry staff. Therefore, I should say that most titles have been achieved by these children who are the assets of the club. We are always the champion with a team comprising oil company personnel and their children. At the national level, we were also among the top three.
 
How have you been doing exercises under COVID-19 conditions?
I don’t want to say we were ok. The conditions have been really tough. Most parents were opposed to their children doing exercise under such conditions. Meantime, most Petroleum Ministry sports centers had been shut down due to the coronavirus pandemic. However, we continued our exercises. Fortunately, since weightlifting is an individual sporting activity and weightlifters lift weights at distance from each other we did not face any problems, and families were satisfied. Finally, I would like to tell you that under such tough conditions, NISOC finished runner-up at the national level.
 
Which one is tougher: training or weightlifting?
Training is definitely tougher. As a weightlifter, you just need to think about yourself and the weight you want to lift. But as a coach you need to think about at least 10 persons, each of whom has his own certain conditions and they are different from one another. Hence, you should care about your trainees and manage affairs and guide them so that they would win championship titles.
 
You were recently invited to lead young weightlifters of Iran, weren’t you?
Yes, I’m currently serving the national team in preparation for the Asian and international youth championship games.
 
Can young Iranian weightlifters win championship titles?
We have qualified young weightlifters. I think that they can help us win titles and became champion.

Oil-Rich Aghajari, a Gem in Khuzestan

Iran’s petroleum industry was born in Masjed Soleiman in southern Iran, but Khuzestan gradually as a whole became a focal point of oil industry in Iran and in the Middle East. Each and every spot in this province is filled with massive wealth that would guarantee the future of Iran.

National Iranian South Oil Company (NISOC), whose main activities are in Khuzestan Province, is a major oil producer in Iran.

In this edition, the history of Aghajari, another oil-rich city in Khuzestan is reviewed. Its name is intertwined with the city of Omidieh.

Aghajari is located further east in Khuzestan Province, more precisely between the cities of Behbahan and Omidieh. It is a clam and quiet city whose people are hospitable. Aghajari is an ancient area. The name of this city also incorporates a longtime history.

The name is the corrupted version of the Turkic aghach ari, ("woodman"), a reminder of the time when the now-Luri-speaking Boyer-Ahmadis, still living nearby, spoke a Turkic dialect, imparting one of their tribal names: (Aghachari) to the town. "aghach ari" now turns into (probably) "agac ari" which in Turkish language means "tree-bee".

Birth of Aghajari

In 1938, when the Pahlavi I dynasty was strengthening its rule in Iran, the Anglo-Iranian Oil Company (AIOC) discovered the Aghajari oil field, thereby adding Iran’s unrivalled oil reserves. Britain was the main stakeholder in Iran’s rich oil reserves. Oil was used as proper feedstock for powering the marine fleet and military carriers of Allied forces. In those days, Germany was conquering Europe. In a bid to defeat the Axis, the British were looking for oil in Iran, more specifically in Khuzestan Province. Oil companies became so powerful to defeat Nazi giants and changed the history of the world following the Second World War. A strategic report field at the Center of Iran Petroleum Industry documents on the history of oil discovery in Aghajari puts it as follows: “Aghajari was one of the first regions where exploration for oil began after Masjed Soleiman. Drilling for oil and gas in Aghajari started one decade after Masjed Soleiman. Oil was first struck in Aghajari in 1938 from Well No. 1. Until 1950, with 16 wells drilled in that area, about half of Iran’s petroleum products was produced at the Aghajari oil field.”

Turn of Time

As it was said Aghajari owes its fame to oil. It shot to prominence in Khuzestan and Iran following the formation and development of the petroleum industry. In 20 Years After Petroleum Industry Nationalization, Fuad Rouhani puts it: “Until oil discovery and extraction, Aghajari was a village in the vicinity of the city of Behbahan in the 6th province. However, after identification and extraction of oil, it turned into a district in September 1946. The Aghajari district was split into two parts in December 1990, according to which Aghajari remained in the jurisdiction of Behbahan. But the district known as Omidieh was attached to Bandar Mahshahr. Finally in August 2013, Aghajari became a county.”

As said earlier, it could be argued that Aghajari’s contemporary history was influenced by the petroleum industry. The name of this city is inseparable from oil.

In The Economic Geography of Petroleum, Fathollah Sa’adat refers to the oil roots of Aghajari. “The city of Aghajari is one of the richest oil and gas reservoirs in Iran and even in the world. The Aghajari oil field, which lies 120km southeast of Ahvaz, is among the major oil fields in terms of wells drilled and also in terms of crude oil output. Oil exploration operations in Aghajari had started in 1926. It reached production after the third well was drilled in 1938. In the Aghajari oil field, before nationalization of the petroleum industry, 32 wells had been drilled, most of which were among the richest oil wells in Iran. Well No. 53 of Aghajari was the richest oil well in Iran. In 1956, half of Iran’s total oil output started in Aghajari. Oil production in Aghajari stood at 850,000 b/d in the 1960s. In March 1966, Aghajari joined record holders of oil extraction in the world.”

But one key point about Aghajari pertains to formation of its focal point which is connected to the petroleum industry. In The Geographical Culture of Villages, we read: “Aghajari is a newly established city whose background dates from the exploration of oil and gas reserves. After oil exploration and extraction, a settlement was established to accommodate service workers. Construction of airport and development of infrastructure added to the expansion of this primary core. Lack of sufficient housing and proper infrastructure in Aghajari triggered protests and strikes by petroleum industry workers.”

A Historical-Strategic Company

The Aghajari Oil and Gas Production Company, a subsidiary of National Iranian South Oil Company (NISOC), was established in the 1990s. But establishment of NISOC as the platform of petroleum industry activities in Aghajari has also an interesting story.

Here is the account provided by the official website of NISOC: “After one decade of fruitless effort and unproductive drilling in Dalaki Plain, Qeshm. Mamatin and Chia Sorkh, oil gush from Well No. 1 of Masjed Soleiman was the start of the petroleum industry in the Middle East. Oil-rich regions in southern Iran have since been the birthplace of the petroleum industry, the focal point of development of new technologies for oil and gas extraction and production. These developments became prominent particularly after the victory of the Islamic Revolution and expropriation of foreign contractors and experts. Prior to the Islamic Revolution, oil-rich areas were run by Oil Services Company (OSCO) and Non-Industrial Services Company. Following the Islamic Revolution and the outbreak of imposed war, Directorate of South Oil Regions was established at NIOC to steer production operations in these areas. After the end of the war, the Directorate was renamed Directorate of Offshore Production to cover the entire country. Finally in 2000, the organizational structure of Directorate of South Oil Regions was reconsidered in line with Petroleum Ministry policies and plans for changes and developments. Then NISOC was established. It has 9 subsidiaries, including five oil and gas production companies and four service companies.”

Currently, five companies are under NISOC authority. They are Karoun Oil and Gas Production Company, Maroun Oil and Gas Production Company, Gachsaran Oil and Gas Production Company, Masjed Soleiman Oil and Gas Production Company and Aghajari Oil and Gas Production Company.

In conclusion, it might be interesting to note that Aghajari Oil and Gas Production Company runs eight oil and gas fields – Aghajari, Karanj, Paranj, Parsi, Ramshir, Paznan, Rag Sefid and Part of Maroun.