National Project, International Goals

Kasra nouri
Director General of Public Relations

Operating Goreh-Jask oil pipeline megaproject is not just a big success for Iran’s petroleum industry. Implementation of this $ 2 billion project, involving 1,000km of 42-inch pipes, five 25MW pump stations, 20 500,000-barrel crude oil storage tanks as well as jetties and loading facilities, will help Iran’s petroleum industry achieve its development, economic and security objectives while serving as a key player in global energy supply security at the Islamic Republic’s initiative.

Domestically, implementation of the project using domestic ally-manufactured equipment and installations and hiring Iranian contractor companies in all stages of designing and manufacturing significantly enhanced the technical knowhow of Iranian companies and manufacturers of equipment, in such a way that they had the chance to bid for international projects.

Another achievement of the Goreh-Jask pipeline project was diversification of export terminals for Iran’s crude oil, faster and easier access to the Gulf of Oman and the Indian Ocean as well as development of southeast Iran, which has been instrumental in the implementation of strategic plans for Iran’s economic development plan.

One of the most important points that should be taken into consideration about this project is its location and time of implementation. Over recent years, Iran’s petroleum industry has endured the toughest ever sanctions. The governments that planned and imposed these sanctions never expected Iran to counter them so effectively. Operating the Goreh-Jask project indicated that Iran’s petroleum industry has reached a high degree of knowhow to transform any threat into an opportunity, and despite unilateral pressure and sanctions imposed on us, push ahead with its development plans and guarantee its future energy security.

Goreh-Jask project is not merely a national plan; rather than that while aiming at contributing to global energy security; it symbolizes multilateral diplomacy which highlights interaction with the world based on mutual respect and joint interest.

Goreh-Jask Pipeline Operational

Iran Starts Exporting Oil via Oman Gulf

Outgoing President Hassan Rouhani on July 22 inaugurated a long-awaited pipeline project for loading crude oil at Jask terminal in the Gulf of Oman for exports. In the first phase, the new oil terminal would handle 300,000 b/d of oil. After full operation, the Jask terminal would be exporting 1 mb/d of oil.

Rouhani said it was a “historic” day for Iran while incumbent Minister of Petroleum Bijan Zangeneh said oil exports via the Gulf of Oman would shorten the route for buyers of Iran’s oil.

Built with $2 billion investment, the Goreh-Jask crude oil pipeline is aimed at building capacity for the storage and export of 1 mb/d of oil via the new Jask terminal, guaranteeing sustained oil exports, decentralization at export terminals, diversification, sustainable development and job creation in the Makran coasts.

Megaproject

Addressing the inauguration ceremony, Rouhani said Goreh-Jask pipeline was the most significant project to have been inaugurated during his eight years in office.

“Undoubtedly, the significance of this project will come to the fore gradually,” he said.

Rouhani recalled that in 1985, Iraqi airstrikes had cut Iran’s oil exports via the Kharg terminal, adding: “Today, with the inauguration of this project, we no longer depend on a single terminal, and Iran can export oil via the Gulf of Oman whenever appropriate.”

He said Goreh-Jask pipeline was one of the most strategic projects in Iran and a source of pride for the Petroleum Ministry and National Iranian Oil Company (NIOC).

Goreh-Jask oil pipeline project, using a 1,000-km pipeline, is being inaugurated while Iran is under the toughest ever US oil sanctions.

Rouhani said Jask and Makran coasts were the key to the project, adding: “Today, the ground is prepared here for local and foreign investment.”

“Throughout the economic war, the enemy was fighting at two fronts, i.e. oil exports and money transfer. Heavy sanctions were enforced against us. They imagined that they would bring Iran’s oil exports down to zero and make it impossible for Iran to use hard currency. But during the four months beginning from the start of the current [calendar] year, the Central Bank has supplied more than $5 billion in hard currency – a sign of the failure of the enemy.

“The government has taken necessary measures to help remove sanctions. We have done whatever possible in this regard and were it not for the parliament’s legislation, the sanctions would be lifted,” he said.

Shorter Route for Oil Buyers

For his part, Zangeneh said for the first time in 110-year history of Iran’s petroleum industry, oil exports are being done via the Gulf of Oman.

Zangeneh added: “In fact, we now have an export terminal that delivers oil from the Gulf of Oman for the first time, and this will increase Iran’s export capacity, diversity and flexibility in export terminals in order to reduce operational and security risks.”

He pointed out that operation of this pipeline will shorten the route for the country's oil customers by about 1,000 nautical miles, saying: “The cost of transporting oil to Jask will be reduced from 60 cents by tanker, to about 40 cents by pipeline.”

He added: “More than 250 large and small local companies have allocated their production capacity to this project and about 10,000 people have been involved."

Zangeneh stressed that national and international standards, including IPS, API and ASME standards, had been observed in all parts of the Goreh-Jask pipeline project, adding: “This project has been a unique manifestation of defeating sanctions and relying on domestic potential.”

10mn Barrel Storage

Zangeneh stated that heavy and semi-heavy crude oil would be transferred from Goreh in Bushehr Province to Jask in Hormuzgan Province, adding: “There are 5 pumping stations, 10 substations, about 300 km of transmission lines and 2 pigging stations along this pipeline.”

He added: “At the end of the chain, there is a gauge, a pigging station and then a crude oil loading facility, which comprises 3 SPMs, 3 metering devices, 6 36-inch subsea pipelines (36 km in total in length) and support jetties.”

Zangeneh said 20 storage tanks with a total capacity of 10 million barrels of crude oil were being constructed in the Jask terminal.

“Now, crude oil has reached Jask Port after a distance of approximately 1,000 kilometers without any operational problems and is being loaded on the vessel (as the tanks were not ready, the oil was loaded directly on the vessel),” he said.

Zangeneh said the project has had 82% progress, adding that it would become fully operational next year. He said that so far more than $1.2 billion had been spent on this project.

Noting that gradual commissioning of big projects was totally natural, he said: “The current transmission capacity of the pipeline stands at 300,000 b/d, which would rise to 400,000 b/d by November and 500,000 b/d by next January. Once the pumping station and the storage tank at the Jask terminal become ready it would rise to 750,000 b/d and finally 1 mb/d next March.”

Idea Dating From 1980s

Zangeneh also touched on the history of construction of a crude oil export terminal in Makran, saying: “The idea of building such terminal was bandied about since early 1980s and in the midst of imposed war. Construction of a pipeline started, but it was abandoned after the end of the war. A section of that pipeline was then used for water transmission in Bushehr Province.”

He said during Rouhani’s 2013 visit to Hormuzgan Province, the issue was again raised. Finally, it was approved by the Economic Council and the process of construction and equipment supply began in 2018.

Zangeneh said Petroleum Engineering and Development Company (PEDEC) and Pars Oil and Gas Company (POGC) were respectively in charge of onshore and offshore sections of the project.

“The agreements signed with contractors at PEDEC were worth $1.15 billion, $970 million of which has so far been settled. At POGC, the agreements signed with contractors and supplies were worth $300 million, $200 million of which has been settled. Physical progress has been ahead of financial progress,” he said.

Zangeneh said that operating pumping stations and installations located on the route had been assigned to Iranian Oil Pipeline & Telecommunication Company (IOPTC) which, he said, had the highest professional experience in operating crude oil and petroleum products pipelines.

“Currently, POGC is handling crude oil loading and export operations at Jask, but in coming months it would be fully assigned to Iranian Oil Terminals Company (IOTC),” he said.  

3 Refining Projects

Zangeneh expressed hope that Goreh-Jask pipeline, as the most basic project, would facilitate development of the Makran area, and serve as key to economic development there. He said that licenses had been granted for three refining projects with a capacity of 900,000 b/d in Makran.

He also touched on the problems caused by sanctions throughout the Goreh-Jask project, saying: “When operations began for the project, an agreement was signed for buying 400,000 tonnes of NACE pipes to be resistant to sour hydrocarbon, but these companies delivered only part of the pipes and denied delivering the rest. We had the same problem in pump purchase.”

He added that the only option was to order local manufacturers to provide necessary equipment and commodities, adding that Mobarakeh Steel Mill and Khuzestan Oxin Steel were ordered billets.

“A one-year agreement was in effect between NIOC and Mobarakeh Steel Mill and Khuzestan Oxin Steel for the domestic manufacturing of the main part of sheets,” he said.

“In the pump section, according to the initial design, a 6-megawatt pump was needed, which due to the lack of such capacity in our country, we turned it into 50 2.5-megawatt pumps that were built locally. Now, the four pumps running in station number 2 have been made by six Iranian companies,” he said.

“The pipeline was the most Iranian and fastest pipeline that has been built, and today we have the first stage of operation. Also, this project was one of the most strategic projects of this administration that was put into operation.”

95% Share for Local Firms

Touraj Dehqani, CEO of PEDEC, laid emphasis on the 95% share of local companies in the completion of Goreh-Jask pipeline, saying: “The most strategic, Iranian and fastest megaproject of the petroleum industry has been implemented in the period of about two years in the face of the most brutal economic war.”

He added: “Today, while we are witnessing the beginning of its operation, due to the impossibility of supplying sheets and pipes due to economic sanctions and the refusal of foreign parties to fulfill their obligations, the construction of pipes had not started until 2019; but through PEDEC’s cooperation with local companies and after 6 months of non-stop efforts, in June 2019, it became possible to manufacture NACE pipes.”

“With 95% domestic share in the implementation and completion of this project, it could be considered as a driver of mobility of associated industries, and a clear example of defeating sanctions,” he said.

Jask Key Role in Energy Trade

Mohammad Meshkinfam, CEO of POGC, stressed the key role of the Jask terminal in the future of Iran’s energy trading, saying: “By diversifying the country's export points, the terminal may provide a new, safe route with high economic advantages in terms of reducing the distance, demand-to-supply time, insurance and transportation costs for Iranian oil customers outside the Persian Gulf.”

“Currently, an oceangoing crude carrier with a capacity of 100,000 tonnes has been connected to SPM to load heavy crude oil. So far, 50,000 tonnes has been received to be exported,” he said.

Meshkinfam said the project began when Iran was under tough sanctions aimed at zeroing our oil revenue.

He said that Iranian Offshore Engineering and Construction Company (IOEC) and GAMA as the main contractors teamed up with dozens of consulting companies to bring the project into fruition.

Meshkinfam said the project initially created 1,200 jobs while 300 jobs were created when it was coming online.

Jask Diversifying Iran Oil Export Markets

The first phase of implementation of crude oil export from Jask Port is starting against the backdrop of Iranian officials realizing their dream of diversity in the crude oil export markets, as well as security of energy supply in Iran. The idea of construction of an oil terminal in Jask was first brought up in 1980s, but the project started under the administration of President Hassan Rouhani. To that effect, necessary planning was made and meetings were held. Since domestic manufacturers could not build some equipment and commodities in the country, they were planned to be purchased from foreign companies. The foreign firms did not keep their promises and once the US re-imposed sanctions on Iran in 2018, foreign firms quitted any cooperation with Iran.

Touraj Dehqani, CEO of Petroleum Engineering and Development Company (PEDEC), has over the past three years, been regularly visiting construction of pipeline in Jask and is well aware of the extent the project has progressed.

He told "Iran Petroleum" that during a specific period of time despair dominated in such a way that the project was close to coming to a halt. But PEDEC experts finally decided to trust the private sector as sanctions were in effect and for the first time, 200-250 domestic manufacturers were engaged. Therefore, the project which had less than five percent progress by 2018 now has progressed over 80%, which would allow for Iran to export crude oil from the Sea of Oman, Makran coasts and Jask Terminal.

In his interview with "Iran Petroleum", Dehqani spoke about advantages of the project to carry crude oil from Goreh to Jask and tough days of sanctions and efforts made by domestic manufacturers.

Diversity in Crude Oil Export Markets

Among the advantages of implementation of the Goreh-Jask megaproject, I may highlight diversification of terminals for Iranian crude oil exports. In light of ongoing developments in the international oil markets, competition between crude oil and energy suppliers has become tougher than ever. Therefore, competing oil rivals need to have some advantages in a bid to get a higher share of the market to outdo their rivals.

One of the most important competitive advantages of Iran in operating the crude oil export terminal in the Strait of Hormuz is that customers of Iran’s oil would have more choice and can use this route to receive their crude oil. On the other hand, oil exports from Jask terminal would provide easier access to potential oil buyers across the Indian Ocean and bring us closer to Southeast Asian markets. Access to market would be one of the pillars of development in coming years.

Poverty Eradication

In addition to international advantages, Iran’s eastern provinces that have remained underdeveloped in recent years would enter a path of economic growth and development and strategically we will witness prosperity in Iran’s eastern regions. Development of this part of Iran has been envisaged in the government documents, and even in the 25-year agreement between Iran and China, the Makran coast has been considered as one of the economic advantages of the country. With the operation of Jask oil terminal, we will see the construction of downstream chains in this industry, including refineries. Currently, 5,000 hectares of land have been allotted for the construction of downstream units, which we expect to see a boom in economic activity in the region with the engagement of the private sector. Of course, the private sector must also make an effort.

The petroleum industry, as a parent industry, has paved the ground for the development of Makran coasts. Iran's Petroleum Ministry has been able to fulfill its main mission in this regard. The next phases of development of this region will be completed with the active presence of the private sector and domestic and foreign investors.

Sanctions and Restrictions

Implementation of the Jask terminal project was on the government's agenda in 2013. But over recent years, the project has seen vicissitudes. In 2017-2018, we focused on pipeline supply because the plan to transfer crude oil from Goreh to Jask is a 1,000-kilometer pipeline project, for which the pipes need to be of special type and the sheets should be corrosion resistant. Iranian manufacturers did not have much experience in this field, so its supply by Chinese and Korean companies was on the agenda. Unfortunately, they deferred this contract for two years and did not deliver any sheet to us until the United States withdrew from the JCPOA in 2018, which led these companies to refuse to respect the terms of agreements they had entered into with Iran. This caused us to face complete frustration in the sheet supply section of this project at some point, and in 2018 we almost came to the conclusion that if we could not supply the sheets, the other parts of the project would no longer matter.

Despair

But after some time, we held several meetings and then we decided to study the problem of supply of sheets, we even thought of using alternative sheets, for example, we even went to foreign manufacturers which were able to supply sheets, but because it was an internationally recognized project and we needed 400,000 tonnes of sheets, under sanctions, it was not easy to supply this amount of sheets. Naturally the few manufacturers across the globe were not ready to cooperate with us as they feared penalties. Then Iranian experts said such sheets could be sourced domestically and a new horizon opened for us. Our expert departments studied the issue in terms of metallurgy, supply of pipes and sheets, and even during visits to the factories of the main parent company in Iran that operated in the field of steel, we made initial assessments and managed to reach a conclusion in this regard. In late 2018, we achieved promising prospects in this regard that we can probably build slabs at Mobarakeh Steel Mill with a series of process modifications and expert decisions and risk-taking. Our hopes were very high, and finally, with the deployment of experts from PEDEC at Mobarakeh Steel Mill, and after making several months of efforts, in 2019, we noticed that Mobarakeh Steel Mill could build the slab, which is the first link in the chain, thereby raising our hopes to continue working.

Process Modifications

The next step was to turn the slabs into wide sheets, which also have complex mechanical and chemical processes. To do so, we made a series of process modifications in the production line of the Oxin Steel plant. In the presence of consultants, the production line of Oxin Steel plant was modified in accordance with our needs, and the concern of the second link of this chain was also removed.

The third phase of this project was in the field of pipe construction. In this sector, good capacities had been developed in the country during the past years, and we needed a series of minor modifications, which we completed anyway, and since the beginning of the summer of 2019, it was ensured that we could supply the pipes required for this project 100% domestically. In this way, all the elements and components of the plan went on in line with the new vision, and following this work the implementation process of the plan accelerated even more.

Working More Courageously

We held about 20 tenders in 2018, and executive contractors in the section of pipeline area, pumping stations and storage tanks were selected on BOT basis, and in the offshore section, construction of offshore

installations and jetties and loading facilities was pursued by Pars Oil and Gas Company. They, in turn, completed the chain, so that in the middle of the summer of 2019, the implementation of the project started. The achievement made in the pipe supply sector boosted our confidence to move more boldly in other parts of the project.

More than 95% or almost 100% of the foundation of this project goes back to steel, steel pipes, steel valves, and steel tanks. Now I go one step higher and I believe that the steel sector is an important part of the implementation of petroleum industry projects. If we can make the connection between the steel industry, which is an old industry and one of the top ten industries in the world, and the petroleum industry, which is 110 years old in Iran, we may claim that we have done a great job. I think we are among the few countries in the world that have been able to establish a close relationship between these two sectors during this period. Naturally, with the cooperation and synergy of these two key industries, we may play a more effective role in the development of the country's macro-economy and stimulate other development chains that are a little further away from this industry to play the role of drivers of economic development in the true sense of the word.

Empowering Manufacturers

In the sector of electric pumps, we have signed contracts with three major and top manufacturers in the country, and the construction process of 50 electric pumps is underway. Currently, 25 pumps have been built, some of which are installed and are in the testing phase. I hope that it would be a new chapter in the pump industry to be able to complete its completion stages. We did not limit ourselves to using local capabilities in the implementation of this project only because of instructions; rather, we committed ourselves to empowering the domestic sector in order to help local developers to upgrade themselves. The petroleum industry has gone beyond its organizational commitment in this direction, and the effects of this support will certainly be seen in coming years.

Heavy Valves Built

In the construction of a thousand-kilometer pipeline, about 85 valves weighing dozens of tonnes are used, some of which can reach seven to eight meters in length. That required integrated work, which required in turn new technologies which we had not mastered in the country. We have numerous companies in Iran working in metallurgy and casting. They worked in different sizes, but they could not supply our needs and we had to buy them from abroad. The achievement we made in pipe construction gave us the sense of self-confidence that we can manufacture such pipes in the country. We held meetings with big manufacturers of valves and we asked them to make necessary modifications. We promised to buy their products in case they could fill our orders on time. They properly responded to our needs.

Speedy Job

You should also keep in mind that it takes at least five to eight years for such a project to take shape with such a scope of activity. We had not been able to make necessary progress in the job during certain periods for various reasons and therefore we had to redouble our efforts. That was a real cause of concern for us. We had to honor the schedule and supply commodities in the shortest possible time. Meantime, we had to assume the risk of working with local companies for the first time. Local firms were doing a big job which required big volumes of commodities. Assuming such risk proved to be helpful to a large extent. In some sectors we faced problems as some manufacturers failed to honor their schedule, but we had accepted the risks and my colleagues made sure the project would go ahead. However, I believe that this project proved that sanctions had turned from a threat into an opportunity for us. Regardless of any slogan and despite all shortcoming, we have to do expert work in the implementation of projects.

Records Set

At present, the first phase of this project has had about 96% progress and the project is an accelerated one in terms of speed of implementation and progress of the project, and has set unprecedented records. A group of 250 domestic manufacturers from all over Iran are manufacturing and supplying various items for this project. The synergy in this project and the project management style are other significant achievements in this project. The result of this synergy and integrated management caused this project to progress by more than 80% in less than two years, while 95% of the equipment used in this project is supplied by domestic manufacturers. The standards are also in line with international standards. Fortunately, I have to say that in the pipeline section, which is one of the key components of this huge project, we did not fail in a single case by doing all the relevant tests. The three elements: cost, time and quality have been honored in making the items we needed, and beyond that, we were able to save on several hundred million dollars.

Up to 350,000 b/d Transferrable

As you know, the purpose of this project is to transfer 1mb/d of oil from Goreh to Jask, which means that approximately 25% of the oil produced in the country would be exported from this terminal. In the first phase, with the same existing facilities, i.e. 80% complete, we may carry between 300,000 and 350,000 b/d of crude oil from Goreh to Jask and then to export destinations. We hope that by the end of 3Q2021, all associated facilities, including 8 stations, will be put into operation so that we can transport 1mb.d of crude oil from Goreh to Jask.

 Sustainable Storage in Jask Terminal

Among numerous contracts signed regarding the national project for transferring crude oil from Goreh to Jask, one should be highlighted: contract for the construction of crude oil storage tanks. These build-operate-transfer (BOT) agreements were signed in November 2018 between Petroleum Engineering and Development Company (PEDEC) and Petro Omid Asia (POA) and Omid Investment Management Group.

Based on this agreement, €200 million would be invested during the first three years. Then, a 15-year operation period is determined.

To be more clear about the provisions set out in the agreement, the investor would have to account for the capital, design, commodity and equipment supply, and construction and operation of 20 500,000-barrel storage tanks and associated facilities over three years. Another equally important issue is that the contractor would have to account for maintenance for 15 years. After the end of the 18th year, the ownership of the facilities would be transferred to National Iranian Oil Company (NIOC).

Abdollah Ahmadi, manager of crude oil storage tanks project in the Goreh-Jask crude oil pipeline project, in the early phase of this strategic project, 2 mb/d would be stored while in phase 1, 10 mb/d storage is envisaged.

The crude oil storage tanks construction project, which accounts for 18% of the total Goreh-Jask crude oil pipeline project, in the first phase consists of 20 storage tanks, each with a capacity of 500,000 barrels, a 15-megawatt power plant and a water treatment plant, on a 130-hectare land in the Jask region and the Makran coasts.

Location

The project for constructing oil storage tanks and its associated facilities is located in Jask Port and the last 2 km of this 1,000 km area is located near Mount Mubarak.

NIOC has located about 5,000 hectares of coastal lands located 65 km west of Jask, near Mount Mubarak, for the construction of special oil, gas, refining and petrochemical projects. In this regard, construction of oil storage tanks in this strategic area is important in terms of feeding the planned refineries.

In other words, with the construction of these storage tanks and their development in future phases, another goal of NIOC for presence in the global market of petroleum products and providing necessary infrastructure in the region to erect affiliated industries as part of Makran development plan would be realized.

With the construction of refineries and petrochemicals in the Jask region, in the future we will have a zone similar to Assaluyeh in Jask, with the difference that Assaluyeh is a gas region and Jask is an oil region.

Ahmadi underscored the importance of constructing storage tanks in the national and strategic Goreh-Jask project, production, transfer, storage, gauging and export of oil as important components in the production chain up to oil export and said: “Storage for adequate, timely, and uninterrupted supply is important for national and international demand.”

He also stated that the establishment of a new oil terminal in the east of the Strait of Hormuz is one of the important goals of the project: Storage plays an important role in controlling, stabilizing and sustaining supply, and the reservoirs of this important project are designed to reduce risk and stabilize. The oil market is designed and running so that we can have reliable storage in this regard.

Ahmadi also stated that establishment of a new oil terminal east of the Strait of Hormuz is one of the important goals of the project. He said: “Storage plays an important role in controlling, stabilizing and sustaining supply, and the storage tanks of this important project are designed to reduce risk and stabilize the oil market is designed so that we can have reliable storage in this regard.”

Goreh-Jask Outstanding Feature

The project of construction of oil storage tanks and associated facilities has different features compared to other storage tanks in other sectors of the petroleum industry. In other words, it should be said that this distinction is considered as a kind of prudence and foresight to prevent any danger and damage, which has been considered in different parts of the storage tanks, some of which we will describe in the following. First of all, it should be noted that all the tanks of this project are metallic, for whose construction 35,000 tonnes of sheets has been used.

The more important point in the implementation of this project is that these tanks have a double-walled floating roof. The importance of this measure is that the floating roof in these tanks not only prevents evaporation of oil, but also it helps drain it from the tank by applying pressure on the surface of the oil inside the tank.

Other features that distinguish these tanks from similar storage tanks used in the petroleum industry is the installation of lightning rods in them. It should be noted that climate change in the region, as well as the presence of a floating roof in the tanks, increases the likelihood of fires in them. However, PEDEC, having learned from the events and fires that occurred in oil tanks in the past, has tried to solve these problems in the Jask oil storage tanks, and for this purpose, the Gore-Jask tanks have been fitted with a lightning rod.

One thing to keep in mind is that desludging oil storage tanks is one of the problems we have always faced in the petroleum industry. In the past, desludging operations, in addition to taking the tank out of service for several months, caused a large part of the tank volume to be lost during the operation and there was a possibility of damage to the environment, but Jask tanks have also considered this challenge. In all tanks, sludge prevention systems are installed. The SRJ system is installed in the central part of the tanks and by operating it in the tank once or twice a month for 24 to 48 hours and by creating circular movements, it prevents the formation of sludge in the tanks. This system completely prevents the formation of sludge in 500,000-barrel tanks, which in this sense is not considered a threat to the environment.

Due to the lack of infrastructure to supply electricity in the Jask region, construction of a 15-megawatt power plant to supply the electricity needed for this project has become necessary; a 15-megawatt power plant whose capacity will increase to 50 megawatts is currently under construction.

In order to supply the required water to different parts of this project, construction of a water treatment unit has been envisaged, which will be able to treat water with a capacity of 650 cubic meters per day.

Active and Dynamic Manpower

In the construction of crude oil storage tanks, the national plan for the transfer of crude oil from Goreh to Jask, 750 people are involved directly and 3,000 to 4,000 others are involved indirectly.

Land leveling, dynamic compaction operations on 49 hectares, directing water in the basement, using PVC pipes should be mentioned as difficulties in this important part of the project. In addition to this hard activity, extreme heat and high humidity in the coastal area of ​​Makran are among the conditions that the manpower working in this area is accustomed to or has to endure, but regardless of these climatic conditions, what has made working in this area difficult pertains to special conditions have made the implementation of the operational activities of this project challenging, among which we can mention the type and soil density of that area.

According to Ahmadi, PVD is also pounded in Jask tanks to strengthen the bed. PVDs are actually pipes that are placed 15 meters by 15 meters vertically at a distance of one and a half meters from the ground, the total of which will be 1,000 kilometers. To carry out pre-loading operations, wherein the tanks are to be built, more than 1.4 mcm of soil in the area will be made into a hill. This will pave the ground for the necessary consolidation to build a storage tank in that area. When the excavation operation reaches four and a half meters above sea level, the construction of the concrete foundation will begin.

These crude oil storage tanks will have a capacity of 10 million barrels of light and heavy crude oil and include 20 floating roof metal tanks, each with a capacity of 500,000 barrels.

Bidding Farewell to OPEC

Zangeneh: We’ve to Cooperate Despite Differences

Iran’s outgoing minister of petroleum, Bijan Zangeneh, has more than 16 years of experience of attending ministerial meetings of the Organization of the Petroleum Exporting Countries (OPEC).

The 181st meeting was the last meeting in which Zangeneh was representing Iran. In the next ministerial meeting, Zangeneh’s successor would continue to defend Iran’s OPEC interests.

The OPEC Secretariat praised Zangeneh’s role within OPEC over years, while Saudi Arabia’s Minister of Energy Abdulaziz bin Salman said he took pride in friendship with Zangeneh. He expressed hope that their friendship would survive.

He also said that Zangeneh’s realism and understanding of affairs was of great help to resolving the OPEC problems.  

A number of other OPEC ministers also offered gratitude to Zangeneh for his 16 years of presence in OPEC and strategic contribution to the Organization.

OPEC president Diamantino Azevedo, who is Angola’s minister of Mineral Resources and Petroleum, said the oil producer group would be missing Zangeneh, noting that he had been a helpful figure.

OPEC Secretary General Mohammad Sanusi Barkindo said Zangeneh was a humble leader whose strong presence had significantly affected OPEC. Describing Zangeneh as OPEC’s doyen, he highlighted his instrumental role in the OPEC+ cooperation.

Barkindo said OPEC owed its success to Zangeneh’s diplomatic intelligence, adding all OPEC officials had benefited from the long-serving Iranian minister’s knowledge. Oman’s Minister of Oil and Gas Mohammed bin Hamad Al Rumhi said Zangeneh had largely helped OPEC and nations dependent on crude oil exports. He highlighted Zangeneh’s wisdom, calm and assessment of tough conditions.

Zangeneh said his last presence at OPEC was an opportunity for him to highlight the Islamic Republic’s position in the global oil market. He noted that Iran would return to the oil market as soon as sanctions are lifted, saying the country would be subject to no restrictions.

Although some OPEC member states were concerned about Iran’s comeback to the oil market on the grounds that oil prices would be affected, Zangeneh reiterated that Iran would not back down from its position.

After the conclusion of the 181st meeting, "Iran Petroleum" briefly interviewed Zangeneh on OPEC and Iran’s oil production.

Mr. Zangeneh! As the 181st OPEC meeting marks your last presence in OPEC, would you please tell us your best and worst memory of your 16 years of presence there?

When I was at OPEC, we had too many difficulties. I don’t know why, but my mandate coincided with tumults in the oil market and we had to reach agreement. It was not easy to reach agreement. Iran’s return to the oil market was very difficult in 2015 and 2016 following the lifting of sanctions. We had a tough meeting in Algeria and then a tougher one in Vienna. After the Vienna meeting, Iran managed to regain its lost market share. My good memory dates from the time when we reached agreement and subsequently conditions improved. When someone attends a meeting (as Iran’s representative) he would be speaking for 80-85 million people and he would be facing a tough task. He would have to make the right decision. All eyes turn to OPEC meetings and any increase or decrease in the oil prices would be very important. When oil prices go up or come down $2 a barrel it would mean that a country’s revenue would grow or fall $2 billion. Now, how can a minister decide properly? He would have to make up his mind or bring about obstruction. Obstruction would be a strategy on a short-term, but it would not work on the long-term because others would not sit idle.

(The minister was referring to the (primarily advisory) extraordinary meeting of OPEC in October 2016 in Algeria where OPEC ministers agreed after four hours of intensive talks to cut 700,000 b/d from their output. In the following ordinary meeting in December that year, they agreed to cut 1.2 mb/d from their total production. Iran was authorized in the December meeting to add 90,000 b/d on average to its October 2016 output. Iran was producing 3.9 mb/d at that time, which secondary sources put it at 3.707 mb/d. Iran was also authorized to supply 3.975 mb/d of oil. The country could bring its production to even more than 4 mb/d during the first quarter of the Iranian calendar year that started in March 2017.)

The OPEC secretary-general and other OPEC members praised you for 16 years of presence within OPEC. What was the most significant experience you learnt during these years?

It was really kind of the OPEC Secretariat to have prepared the clip to praise me for my long years of experience within OPEC. It was in fact in praise of the Islamic Republic. In my view, OPEC is the only Third World organization to have been influential within the global economic system. We have no similar organization in the Third World. The key concept OPEC has implemented is that member states can cooperate despite rivalry and political differences. In the Third World, normally we are either friend or enemy without any middle ground. That is while in foreign policy friend and foe mean do not make sense. Every nation pursues its own interests. Today, all OPEC members are after their own interests. That is what I have learnt over years. Some remarks should not be paid attention to. Every nation looks to maximize its own interests. The ministers coming to OPEC have many years of experience as they have already served at different positions. They participate in OPEC Conferences to maximize their national interests. Some nations are rivals and have serious political differences, but the important thing is that they sit together and behave so as to maximize their interests despite rivalry. Over these years, OPEC’s interests have been pursued and OPEC members have benefited from meetings. This is the biggest lesson I have learnt from presence in OPEC and I think it is the most important thing which OPEC should preserve, whether in the Third World or between us and our neighbors, or between us and fellow OPEC members. The main issue is to be able to cooperate regardless of political discrepancies. Channels for cooperation are never closed and we can always find ways to cooperate. During my years of presence in OPEC, I have always defended this point and I have always kept it in my mind. That has been helpful for the Islamic Republic, as well as Muslim and non-Muslim producers and consumers of oil.

Given concerns over Iran’s comeback to the oil market, will Iran’s comeback cause any shock in the market and drive prices down sharply?

No, I think that nothing would happen. OPEC is wise enough and OPEC+ is cooperating with OPEC. They are also wise persons and will get along with Iran’s comeback.

You spoke about Iran’s return to the oil market in the 181st meeting, too. What did you talk about exactly?

I announced Iran’s stance and noted that any decision adopted at this meeting would have no impact on our will. That is our official decision to return to the market with pre-sanctions output in the shortest possible time, as soon as sanctions are lifted.

You said that the prospective minister of petroleum should be focusing on reviving Iran’s market share. What should be the top priority in the domestic sector?

We should be careful about people’s fuel (gasoline and gasoil) needs and fuel gas supply for this and next years. That is very important. In the oil sector, we have so far implemented many projects which would help bring Iran’s output back to pre-sanctions levels after sanctions are lifted. Such projects should be pursued.

What Is OPEC+?

Introduction

The global oil market stabilization has been always a severe concern for both OPEC and major non-OPEC producing and exporting countries. Undoubtedly, these countries play an undeniable role in supply management and establishing equilibrium in the market. Thus, major producers came to this conclusion that their cooperation and synergy could stabilize the world oil market. As a result, a coalition of OPEC and non-OPEC producers has gathered together major producing countries to collectively manage supply within the framework of the Declaration of Cooperation (DoC).

Declaration of Cooperation (DoC)

DoC constitutes an unprecedented milestone in the history of the Organization of the Petroleum Exporting Countries (OPEC). For the first time ever, OPEC Member Countries coordinated with 11 non-OPEC oil producing countries (now 10 – Equatorial Guinea became an OPEC Member in May 2017) in a concerted effort to accelerate the stabilization of the global oil market.

The DoC was an outcome of the Joint OPEC and non-OPEC Producing Countries’ Ministerial Meeting held on December 10, 2016 and was effective for an initial period of six months. The remarkable success realized through this unprecedented cooperation has led to its extension multiple times.

Building on the success of the DoC, its participants recognized the importance of establishing a more permanent platform focused on longer-term cooperation. Thus, at the 6th OPEC and non-OPEC Ministerial Meeting, held on July 2, 2019, OPEC Member Countries and attending non-OPEC oil producing countries endorsed the ‘Charter of Cooperation’. The Charter provides a platform to facilitate dialogue and exchange views regarding conditions and developments in the global oil and energy markets. The goal is to contribute to a secure energy supply and lasting stability for the benefit of producers, consumers, investors and the global economy.

In light of the COVID-19 outbreak and its impact on the world economy and the oil sector, members of the DoC held three Ministerial Meetings between April and June 2020. In addition, OPEC Member Countries convened for the 179th Meeting of the OPEC Conference on June 6 to explore possible avenues to reduce market volatility, reaffirming the countries’ commitment to a stable oil market.

The outcome of these meetings was the largest and longest voluntary production adjustments in the history of the oil sector. The importance of these efforts was recognized at the highest levels of government around the world. For example, the extraordinary G20 Energy Ministers meeting on 10 April highlighted the commitment of DoC countries to promote energy markets stability and the importance of international cooperation in ensuring the resilience of energy systems.

DoC Ministerial Meetings

DoC Ministerial Meetings are supported by the Joint Ministerial Monitoring Committee (JMMC), which is mandated to monitor the conformity of voluntary production adjustments, review market conditions and recommend further decisions to the DoC Ministerial Meeting. The JMMC is supported, at its turn, by the Joint Technical Committee (JTC) and the OPEC Secretariat.

The DoC is based on the core principles of transparency, equity and fairness, which also serve as the foundation for all OPEC interactions with non-OPEC oil-producing partners, including cooperation at the research and technical levels.

Latest Development

Having a glance at the latest developments in the world economy, one may notice that over the seven months since the last OPEC Conference, the global economy has shifted from reverse to forward gear.  Global growth is now expected at 5.5% this year – from a contraction of 3.4% in 2020.

The outlook for worldwide oil demand is to grow by 6 mb/d in 2021, after its turbulent 9.3 mb/d decline last year.  Many market analysts project a strong rebound of oil demand in the second half of the year, putting OPEC MCs within striking distance of pre-pandemic levels in the fourth quarter.

Undoubtedly, the DoC plays an important role in the story of this improving market outlook. At the start of April, the DoC Participating Countries agreed to undertake the step-by-step upward production adjustments.  The market continues to welcome these prudent and forward-looking steps to support sustainable stability, which in turn provide crucial backing for the economic recovery.  OPEC MCs will continue to remain proactive and vigilant in their actions on the back of our commitments and the success of the widely acclaimed DoC.

It is noteworthy that the oil industry plays an important role in ensuring the timely distribution of vaccines by supplying fuel needed for the relevant transportation.  In addition, many petroleum-based products are used for manufacturing equipment essential in the fight against COVID-19.

While making efforts to provide the world with a secure and stable oil supply in line with materialization of world energy security, the OPEC is passing through one of the most difficult chapters in its own history and in the oil industry’s history. 

The collective effort made by OPEC Plus has reinforced and reaffirmed its overall efforts to keep the market on the road to recovery. 

Major oil producing countries have experienced tough situation during the pandemic. The coronavirus continues to take a painful toll, with thousands of lives still being lost every day.  The presence of the new Delta variant and the recent surge in case numbers in India, along with other Asian countries, Latin America, the UK and most recently Russia and Africa, are a grim reminder of the uncertainties that still loom over the market.

The pandemic is not the only concern flashing on the producers' radar screen.  The record levels of fiscal and monetary stimulus that have helped shore up economies and drive the recovery come with heavy baggage – high debt levels and the potential for inflationary spikes – that could in turn erode progress in the oil market. 

Briefly analyzing the current situation, one may notice uncertainties arising from policy measures, investor activism, as well as litigation that could have a detrimental impact on the ability of oil industry to invest in production, technology and human capacity.  These potentially exclusionary policies and investment actions – which are mostly being shaped by some developed countries – risk not only the OPEC Plus members' oil and gas industry, but their ability to achieve social and economic development ambitions.

Two years ago, on July 2, 2019, the OPEC Plus members unanimously endorsed the Charter of Cooperation along with the relevant Declaration of Cooperation partners.  In total, delegations from more than 30 oil-producing countries gathered at the OPEC Secretariat in Vienna for that historic event. Although, today, the Charter stands out as a framework for the OPEC Plus activities, the OPEC statute should be still used as the bible of the Organization.

Recent OPEC and non-OPEC Meeting

The 18th OPEC and non-OPEC Ministerial Meeting convened on July 2 and was supposed to resume on Monday, July 5, 2021, at 15:00 (CEST) via videoconference. But in a letter to Heads of Delegation of OPEC Member Countries and non-OPEC oil producing countries participating in the Declaration of Cooperation (DoC), the OPEC Secretary General, Mohammad Sanusi Barkindo, said: “The 18th OPEC and non-OPEC Ministerial Meeting has been called off,”. It came out that the meeting was postponed to some other time. It seems that the main reason for not holding the follow up meeting was the UAE's opposition in the meeting.

After three days of intense negotiations and several hours of negotiations, the OPEC Plus member states could not reach an agreement which was supposed to be reached on July 5. The interesting point is that even the date of the next meeting is not specified. During the last 10 days, OPEC Plus member states have failed to decide on oil extraction conditions in August this year. The UAE is strongly opposed to an agreement between Russia and Saudi Arabia to gradually increase extraction, and wants to increase its own production level. Although experts do not consider this situation a severe deadlock, the confrontation calls into question the goals of OPEC Plus and may lead to some disruptions in the market.

The main reason for this stalemate is the UAE's serious opposition to the joint decision of Saudi Arabia and Russia to increase the monthly supply of 400,000 barrels by the end of 2021. The UAE, which has the required potential and facilities to increase its extraction, wants to upgrade its position in OPEC Plus to be able to enhance its overall production level by 600,000 barrels per day. In fact, the UAE's intention and firm will allows them to produce more than other members. This is an unprecedented request, and the main concern is that other members may raise similar requests in the future.

Saudi Energy Minister Abdul Aziz bin Salman has sharply criticized the United Arab Emirates for its opposition to an agreement reached between Russia and Saudi Arabia to increase oil production in the period from August to December. "I have attended OPEC Plus meetings for several years and I have never seen a request like the one raised by the UAE," he told Al-Sharq.

He added that everyone expected the UAE to accept the offer of Saudi Arabia and Russia to increase oil production level by the OPEC Plus, and no country can, on its own, determine its own production level for a certain month.

Abdul Aziz bin Salman added, "Oil production level must increase in the summer to make up for the shortfalls, and while intending to establish balance between the needs of producing countries, we would like to secure our own interests, as well as the interests of consuming countries."

Meanwhile, sources reported the escalation of disputes between Saudi Arabia and the UAE at various levels, which has recently culminated in Abu Dhabi's opposition to the Saudi-Russian agreement on oil production.

As long as OPEC Plus fails to decide on the mechanism for increasing production, the market will be at risk of oil shortages. This shortage is already being felt, and the oil price has exceeded $77 per barrel for the first time since October 2018.

"According to the International Energy Agency (IEA) report, global demand for oil may increase by 3 mb/d from now until the end of 2021." For this reason, all OPEC Plus member states support an increase in extraction. The main question here is: "what should be done in the long run?" That is why the atmosphere of the last meeting of OPEC Plus rather than being technical was more strategic.

Analysts' views

Analysts believe that global investment in oil extraction in 2020 fell to its lowest level in the last 15 years. But in 2021, this investment is expected to increase by 10 to 15 percent, and these conditions may bring about the risk of supply reduction; that is to say less than the maximum extraction level in 2012-2014. Therefore, it is logical that countries such as Russia, Saudi Arabia, Iran and the United Arab Emirates, which have the capacity to produce at any level, want to achieve a position with a good outlook in this market. After all, analysts believe that most probably the OPEC Plus countries will eventually reach a compromise.

It seems that global demand for oil is rebounding, and efforts made to enhance production have intensified. Most probably, OPEC Plus could reach a tangible conclusion next week, and the UAE is expected to adjust its position.

Finally, taking into consideration various parameters such as the prospective decision of the OPEC Plus in the framework of DoC and "Charter of Cooperation", promising advancement of the JCPOA negotiations on one hand, and gradual demand recovery due to vaccination pacing across the world on the other; Iran has a good chance to, once more, enter the world oil market to tide over its economic situation properly.

EOR Drilling Starts in Forouzan

Drilling operation has begun in the jointly owned Forouzan field aimed at enhancing oil recovery (EOR) after the installation of the first drilling rig, Well Target 1(WT1).

The agreement for enhanced recovery from Forouzan was signed last August between Iranian Offshore Oil Company (IOOC) and Petropars and Mobin Saze Gostar. According to IOOC, WT1 is to drill seven wells in the locations of the F18 satellite platform in the FX zone.

The field has since been witnessing other development measures, the most important of which being the installation of a new residential platform. The 680-tonne platform, measuring 20 meters long and 14 meters wide, offers welfare facilities to the production staff of Forouzan.

With the demolition of the old Forouzan residential platform, the residence of the platform staff was moved to the drilling barge, and this became an obstacle for the installation of a new drilling rig in this area. By installing a new residential platform and changing the residence of colleagues, the problem of installing the drilling rig adjacent to the F16 platform was also removed.

At the same time, the construction of FY-A and FZ-A platforms in Forouzan is underway in Khorramshahr. Earlier, IOOC had announced that in the Forouzan field, in addition to implementing a plan to maintain and increase production, a separate plan that was pursued in previous years with the cooperation of Iranian Offshore Engineering and Construction Company (IOEC) in this field has also been finalized.

Petchem Plants to Cooperate with Knowledge-Based Companies

The project manager of National Petrochemical Company (NPC) has said that a memorandum of understanding would be soon signed to help establish communications between petrochemical plants and knowledge-based companies.

Amir Vakilzadeh highlighted the very significant role of the petrochemical industry in national economy, saying: “Petrochemical transactions in the world are valued at $3,700 billion globally. In 2020, Iran’s share was only $17 billion, i.e. less than 0.5 percent. Given Iran’s huge hydrocarbon deposits, this figure may be increased and drawing up a comprehensive roadshow would be of great help in this regard.”

The agreements signed for infrastructure projects to support petrochemical plants were valued at IRR 32,000 billion.

Referring to the start of knowledge-based business development since last calendar year, he said: “This office identifies knowledge-based companies capable of manufacturing necessary equipment for the petrochemical industry to establish communications between them and petrochemical plants with a view to concluding agreements.”

GTPP to Come Online in 2024

CEO of National Petrochemical Company (NPC) Behzad Mohammadi said the GTPP unit of Eslamabad Gharb project would come online by 2024, as the first development project of NPC after privatization.

“This project is the first national project in the petrochemical industry whose chain develops from natural gas to propylene and polypropylene,” he said.

During a visit to the facility, Mohammadi said: “The executive operation of this project is defined in three stages; first we will move from natural gas to methanol and from this route to propylene and finally to polypropylene production.”

The NPC chief said the plant is financed by $545 million, and adding: “The technical knowhow of this project has been developed for many years with the efforts of Iranian researchers in Petrochemical Research and Technology Company (PRTC) and it is predicted that its operational process will accelerate and become productive by 2024.: “One of the factors that has caused the country's petrochemical industry not to be successful in developing propylene production plans is lack of technical savvy for production of this strategic item which need 1 million tonnes per year,” he added.

Abuzar E&P Risk Declines

Implementation of a project for advanced geophysical study in the Abuzar field has helped reduce drilling, exploration and development risks at this field.

Mehdi Tavakoli, director of R&D at Iranian Offshore Oil Company (IOOC), said: “The project for advanced geophysical study of the Abuzar field with a view to identifying the reservoir rock and fluid distribution has been implemented by the Research Institute of Petroleum Industry (RIPI), using pre-stacking inversion methods.”

“The findings of the studies have been instrumental in completing and improving the certainty of the reservoir model of the Abuzar field,” he said.

Tavakoli said that a major objective sought in this research project was to remove ambiguities in the production formations of the Abuzar field with a focus on the Asmari layer.

He said seismic facies had been identified and the risks pertaining to exploration drilling and development at this field had declined.

Tavakoli said: “Applying neogeophysical methods, especially simultaneous performance and combination of several quantitative data-seismic study methods,

Extraction from Sivand Oil Field Starts

The first well in the Nasr 5 satellite platform of Iranian Offshore Oil Company (IOOC) has become operational for increased production from the Sivand and Esfand oil fields.

Hamid-Reza Saqafi, CEO of Drilling Company International (DCI), said: “In continuation of the activities of Petroiran Development Company (PEDCO) in enhanced recovery from the Esfand and Sivand oil fields (Sirri), after the drilling and successful completion of E1P6, SICF7-SICF6 wells, the first well in the Nasr 5 satellite platform has become operational under IOOC supervision.”

He pointed out that the conditions of Nasr 5 platform in Sivand was unique due to the unusual dimensions of the platform and the instability of the seabed at the site of this platform, as well as the limitations caused by power cables and inlet and outlet lines to the platform. He added that installing drilling rigs next to this platform was practically impossible, and as a result of these restrictions, over the past decades, drilling operation has not been possible to develop the Sivand field.

 Three Downstream Projects at GTPP

Hassan Abbsazadeh, director of planning and development at National Petrochemical Company (NPC), has said that three downstream projects would get under way at the GTPP plant in Eslamabad-e Gharb.

The projects are: formaline, polyacetal and methylamine, he said.

Abbaszadeh said the GTPP project was the first national petrochemical project whose chain in the three phases of natural gas to methanol, methanol to propylene and propylene to polypropylene had used Iranian technical knowhow.

“A development project at NPC is to use the surplus 200,000 tonnes of methanol to build the formaline, polyacetal and methylamine projects in Kermanshah Province,” he said.

Noting that a steering policy undertaken by NPC is to develop the value chain and the downstream sector of under-way projects, he said: “The investor willing to build the formaline unit has filed its request and a basic agreement is to be signed.”

He said that basic agreement had been reached for the polyacetal unit, adding: “The Persian Gulf Petrochemical Industries Company (PGPIC) is financing the methylamine project in the Sonqor city.”

Abbaszadeh said the GTPP project in Eslamabad-e Gharb was a strategic petrochemical project, adding: “Construction operation has begun by the contractor and the contractor is equipping the site.”

He said that Behzad Mohammadi, CEO of NPC, had recently visited the project, adding that the contractor would offer a comprehensive plan by September.

Abbaszadeh said Iran’s polypropylene production capacity would increase from the current 1 million tonnes to 4 million tonnes in coming years.

“In the past years, GTP and GTPP projects had been defined in the country, but they failed due to lack of technical knowhow. But currently with Petrochemical Research and Technology Company (PRTC) knowhow, the GTPP project is being implemented in Eslamabad-e Gharb. Its value chain is also possible,” he added.

Abbaszadeh said the GTPP plant would be supplying 120,000 tonnes of polypropylene, adding that downstream industries would then be able to operate.

He said that completion of GTPP would allow supplying domestic propylene and PP needs and exporting to neighboring countries.

Abbaszadeh said that the project was being accelerated, adding: “We specifically lay emphasis on the GTPP project in Eslamabad-e Gharb. This project is a gift to Kermanshah Province as it will bring about job opportunities and prosperity.”

South Pars Gas Supply Totals 1.8 tcm

The volume of rich gas recovered from the giant offshore South Pars gas field since the beginning of its development has exceeded 1.8 tcm.

Total gas production from South Pars gas field since the start of production till March 2021, has reached 1,867 bcm along with 2.2 billion barrels of gas condensates. The value of South Pars products is estimated at $335 billion from $80 billion investment in the field.

Iran holds 14 tcm of gas and 18 billion barrels of condensate in the field it shares with Qatar.

With the completion of remaining phases of South Pars (except for SP11) from 2013 to 2019, Iran added 418 mcm/d to the reservoir’s production capacity to outdo Qatar. The figure is broken down to 28 mcm/d in 2013, 95 mcm/d in 2014, 28 mcm/d in 2015, 85 mcm/d in 2016, 56 mcm/d in 2017, 61 mcm/d in 2018 and 65 mcm/d in 2019.

Over the same period, 228 wells were drilled in the developing blocks of the joint field. Meantime, 26 offshore platforms, each weighing 2,500 tonnes, were installed in the Persian Gulf.

2nd Phase of Maroun Gas Gathering Due Soon

CEO of Maroun Oil and Gas Production Company Hamid Kavian has said that the second phase of the Kavian 3 associated petroleum gas gathering would come online in the near future.

“As Maroun 3 associated gas gathering project has started partially, the second phase will be also launched soon to capture 45 mcf/d of associated gas,” he said.

Ahmad Mohammadi, CEO of National Iranian South Oil Company (NISOC), also said: “Environmental and maximum recovery projects will realize with NISOC staff’s efforts.”

Noting that protecting the environment and hydrocarbon reserves were among NISOC priorities, he said with overhaul of two gas plants and operation of gas gathering projects, positive developments would be seen in the fields of protecting the environment and realizing maximum production.

Domestic Potential for IGTC Overhaul

The CEO of Iran Gas Transmission Company (IGTC) has announced the use of domestic potential to carry out overhaul of IGTC installations.

Mehdi Jamshidi Dana said on the sidelines of the IGTC Annual General Meeting (AGM): “In light of five-year planning for overhaul and the high volume of reparations compared with the limited capacity of domestic companies, we have managed to empower several local firms to bid for the overhaul of turbines in the current [calendar] year.”

Referring to the scattered costs of overhaul of turbines, he said: “Last [calendar] year, we managed for the first time to integrate the overhaul costs in parallel with the optimal management of costs.”

Referring to the significance of high-pressure gas installations prior to the arrival of cold season, he said: “We will try to use the capacity of IGTC experts at various levels and benefit from the potential of local firms.”

Jamshidi Dana also touched on the record transmission of 850 mcm/d of gas in the winter, adding: “This shows a precise plan and the round-the-clock efforts of IGTC staff who managed to register a golden chapter in the history of National Iranian Gas Company (NIGC).”

IRENEX Plans Petroleum Futures

Iran Energy Exchange is to launch futures contracts for petroleum products in near future, the IRENEX chief said.

“The Securities and Exchange Organization approved the guidelines last week to launch the futures contracts via IRENEX,” Ali Naqavi said.

Naqavi said the technical infrastructure is in place in coordination with Central Securities Depository of Iran, the clearing house of Iran’s capital market, and the Tehran Securities Exchange Technology Management Company.

“The trading platform is in pilot phase and we hope to launch the first oil-based futures contracts before September,” he said.

“In the first stage, we demand authorization for selling such products as gasoline, methanol, condensate and naphtha. Then we will add more oil products,” he added.

Naqavi said: “Another section which we are following upon is the physical market development whose statistical data has been announced. We are trying to preserve this volume of transactions and even increase it. In parallel, domestic transaction of products would grow.”

He expressed hope that natural gas would be listed on IRENEX by October.

Shazand Refinery, RIPI Sign Needle Coke Deal

Imam Khomeini Shazand Oil Refinery and the Research Institute of Petroleum Industry (RIPI) signed a contract for the production of 90,000 tonnes a year of needle coke, which will render Iran self-sufficient in the production of the item used for steel production.

The contract was signed by CEO of Shazand Refinery Gholamhossein Ramezanpour and the head of RIPI, Jafar Towfiqi, in Tehran.

The pilot plant of the coke production unit has been built at RIPI and it will help launch the unit in the refinery.

Once the unit becomes operational within four years, 90,000 tonnes of needle coke required by the steel industry of the country will be produced from low-sulfur fuel oil domestically.

Iran is currently dependent on needle coke imports. The contract is of great strategic value for Iran, as the US sanctions imposed on the country have made it difficult to import the item to Iran.

Needle coke is some sort of petroleum coke that is a final carbon-rich solid material derived from oil refining process.

Also called acicular coke, needle coke is a highly crystalline petroleum coke used in the production of electrodes for the steel and aluminum industries and is particularly valuable because the electrodes must be replaced regularly.

Shazand Oil Refinery began operations in 1993. Its annual output includes 5.2 billion liters of gasoline, 4 billion liters of diesel, 430,000 liters of kerosene, 400 tonnes of granular sulfur and 500 tonnes of propylene.

Founded in 1959 in Tehran, RIPI is a research and development arm of the Petroleum Ministry. It is a major research institute in Iran and the largest of its kind in the Middle East.

RIPI focuses on creating added value by producing and commercializing technology and indigenizing new technologies.

Bandar Abbas Refinery in Hormozgan Province also plans to build a petroleum coke unit that will use fuel oil as feedstock to produce value-added products.

The unit will take three years to complete and produce various types of petcoke, including needle coke and sponge coke.

The refinery has prioritized coke production to curb the import of the material that has extensive use in industrial plants.

It will produce 620,000 tonnes per year of sponge coke, which is twice as much of the demand of Iran's aluminum industry. The surplus will be exported.

Bandar Abbas Refinery is the third largest of its kind in the country. The feed for the refinery is heavy crude plus condensates. It produces oil byproducts such as liquid gas, unleaded premium gasoline, jet fuel, solvents, diesel, and raw material for grease, fuel oil, kerosene, asphalt and sulfur.

Oil, Gas Development under Shadow of Sanctions

The outstanding feature of the track record of the two administrations of outgoing President Hassan Rouhani would be sought in the development of joint oil and gas fields in South Pars and West Karoun. Under these two administrations, oil recovery from the fields jointly owned by Iran and Iraq in West Karoun grew five-fold, while South Pars saw its production increase three-fold over the same period.

National Iranian Oil Company (NIOC) has realized these figures in the past eight years despite restrictions caused by unilateral sanctions imposed on the country’s petroleum industry. However, had the US not imposed sanctions on Iran’s petroleum industry, oil and rate of gas recovery from joint fields would have been higher.

However, petroleum industry contractors and manufacturers were able to prevent any halt in the development of joint oil and gas fields, despite all the international constraints they faced. In the following report, we examine the performance of the two administrations of Rouhani in the development of joint oil and gas fields.

South Pars Development

South Pars, as the most important and largest project in the history of Iran’s petroleum industry, is the outcome of more than two decades of efforts made by the petroleum industry, and today, thanks to such efforts, the completion of projects related to the 28 phases of this joint field is in the final stage. Practical measures have been taken to create a daily production capacity of 1bcm/d of gas in the country in the near future.

It has been about 20 years since Iran started extracting gas from the South Pars field, and over this period, Iran's production from this joint reservoir has always increased. However, until a few years ago, this recovery was always less than Qatar. Qatar started producing gas from South Pars earlier than Iran. Iran, however, made the first gas production from this field in 2002 by developing phases 2 and 3, and output hike continued at a reasonable pacing.

The distance between Iranian and Qatari recovery widened in 2005 and afterwards. Qatar was increasing its own recovery by relying on foreign investment and technology, but Iran was lagging behind because of international sanctions. By 2008, Qatar’s recovery from South Pars was twice Iran’s.

In those years, Iran had defined 35-month phases, but in practice Iran's gas production was not increased. This production gap continued until 2013. Qatar, of course, kept its production levels constant in those years, and this led to a higher recovery than Iran. But as soon as the Rouhani administration took office, development of remaining South Pars phases picked up speed, bringing Iran’s gas recovery from South Pars to Qatar’s levees as SP12, SP15, SP16, SP17, SP18, SP19, SP20 and SP21 came online.

Gas recovery from the platform of SP18 began in June 2015. In November that year, the 17A platform became operational with a capacity of 10mcm/d. In March 2016, SP19 started producing 500 mcf/d of gas. In November that year, a 500mcf/d 18B platform came on-stream, setting a hookup and operation record.

In 2016, 28 mcm/d recovery of gas from the SP21 platform started.

In 2017, SP17, SP18, SP19, SP20 and SP21 came online to add 150 mcm/d to South Pars recovery. It was exactly when Iran reached Qatar in recovery from this giant offshore field.

In April 2018, the platform 14A came online, thereby allowing for sour gas recovery from the first platform of SP14. In November 2017, simultaneously with the end of operations for launching the 14C satellite platform in the Persian Gulf, sour gas recovery from the reservoir of the second gas platform of SP14 was started.

The first platform of SP22-24 phase development with a recovery capacity of 14.2 mcm/d of offshore gas was launched in 2018. In March 2019, the refinery of SP13 and SP22-24 came online for $11 billion. In 2019, platforms of 13A and 13C and the remaining two platforms of SP22-24 became operational.

In 2019, gas recovery from 14B started, and the last offshore platform of SP14 was loaded out. The satellite platform of 14D was installed on the jacket while some time later, associated structures were installed. The last platform of SP14 development became operational in March 2020.

In April 2020, development of SP11 began after the wellhead jacket was loaded out. The jacket was installed within a month. That marked the beginning of development of SP11. National Iranian Oil Company (NIOC) had earlier signed a deal with a Total-led consortium, but following the imposition of the US unilateral sanctions on Iran, the foreign parties to the agreement pulled out.

Development of the South Pars oil layer was one of the important programs of NIOC under the Rouhani administration. The first phase of this project came online in 2017, allowing for the recovery of 35,000 b/d of crude oil, which would earn Iran $510 million in annual revenue.  

West Karoun

Iran was just recovering 70,000 b/d from the cluster of oil field sin West Karoun in 2013. Now, this figure has jumped to 400,000 b/d. That has generated considerable wealth for Iran and let the country increase its share of recovery from the fields jointly owned by neighbors.

West Karoun fields are among the youngest oil fields in Iran. The five oil fields of North Azadegan, South Azadegan, North Yaran, South Yaran and Yadavaran totally hold 64 billion barrels of oil in place.

Therefore, efforts have got under way over recent years to increase oil extraction and boost the rate of recovery from these fields. In case Iran fails to recover oil based on its share, the Western neighbor will have enough time for recovery.

In the latest measure aimed at maximum recovery from West Karoun fields, an agreement was signed for the development of South Azadegan. Currently, the production capacity of South Azadegan stands at 140,000 b/d, which would increase to 320,000 b/d after development. In the second phase, South Azadegan would be producing 600,000 b/d. Therefore, more talks would be held with Iranian E&P companies. In order to build the central processing unit of South Azadegan, more than € 165 million worth of commodities; and Iranian contractors, manufacturers and suppliers have received order for equipment. Relying on its domestic capacity, Iran has managed to increase its recovery from the field it shares with Iraq. 

Local Firms Developing South Azadegan

The foreign contractor for the South Azadegan field was dismissed in 2014 due to repeated delays and disregarding the 90-day ultimatum set by NIOC. Then, the project was decided to be assigned to local firms. South Azadegan saw its production

capacity more than triple in less than four years. Also, the prefabricated oil processing unit was put into operation at the same time the sanctions were being imposed, with private (foreign) investment, and by late 2019, both of its trains were fully operational. The South Azadegan field, which was one of the attractive fields for foreign investors, could not use the capital and technology of foreign companies due to sanctions. Therefore, NIOC decided to strike deals with Petroleum Engineering and Development Company (PEDEC) and Petropars for the construction of the CTEP processing plant. This agreement was aimed at increasing the production capacity of the field to 320,000 b/d within 30 months. It was worth $961 million plus IRR 11,830 billion.

Yaran Field

The North and South Yaran fields are also joint fields in West Karoun. The oil production capacity of these fields is not as much as that of Azadegan and Yadavaran. However, Iran prioritized their development because of sharing them with Iraq. The local firm Persia Oil and Gas Industry Development Company (POGIDC) developed North Yaran whose production capacity reached 30,000 b/d in November 2016. South Yaran was finally developed by PEDEC and saw its output reach 25,000 b/d after a mobile oil separator (MOS) was installed there. It was the first time a domestically produced MOS was being installed in West Karoun.

Finally, POGIDC signed an IPC deal in July 2020 to develop Yaran. This agreement aims the accumulated production of 39.5 million barrels over 10 years. The direct CAPEX is estimated at $227 million. The operation costs are estimated to be $236 million.

Yadavaran Field

Trial operation started from Yadavaran in early 2016. In November that year, the field came online with a production capacity of 85,000 b/d. Production from this field has since been growing relentlessly and has even exceeded its nominal capacity. The technological development of this field has been assigned to the Petroleum Engineering Institute of the University of Tehran and enhanced recovery studies are under way there.

Yadavaran is among attractive fields for development. Sanctions forced NIOC to turn to local firms for its development. Talks are currently under way for the second phase development of this oil field.

Sophisticated Azar Field

The first phase of early production from the shared Azar field started in March 2017 with a capacity of 15,000 b/d. PEDEC announced in 2017 that Azar’s production capacity had increased to 30,000 b/d. The central processing unit of the field was completed in July 2020 while for the first time an MPFM was installed there. Azar is one of the most complicated fields in Iran. This field had been developed 6% in 2013. It came online in March 2021 with a production capacity of 65,000 b/d.

Aban, West Paydar

Two wells drilled at the Aban field became operational in 2015, increasing the field’s production capacity. In the West Paydar field, the 20,000 b/d recovery recorded in 2012 increased to 30,000 b/d in 2016. In March 2018, an agreement was signed for the development of the Aban and West Paydar fields between NIOC and a consortium of Iran’s Dana Energy and Russia’s Zarubezhneft. Development of Sohrab field was also finalized after an IPC agreement was signed with Dana Energy.

As part of its oil production capacity enhancement, NIOC signed 10 agreements with local firms, one of which was related the Naftshahr oil field. Development of Naftshahr began in 2019 and this project is under way after the drilling of one new well and workover of three existing wells with $30 million.

According to the Iranian Central Oil Fields Company (ICOFC), in light of the existing processing capacity of the Naftshahr production/desalination unit, with a view to making optimal use of these facilities and regional prosperity, development of adjoining fields including Soumar, Salman and Delavaran was also envisaged.

Gas Injection into Salman

Salman field witnessed an increase in production in 2015, and the daily oil production of this field, which at that time hosted the simultaneous operation of three drilling rigs, increased by more than 10,000 barrels. Doubling the amount of gas injected into the wells of this field played a significant role in enhancing the recovery factor and increasing its oil production.

By March 2020, the wellhead S1 platform of the Salman field, which was domestically built, was installed and launched 6 months later. The construction of this platform started in 2014 by an Iranian private company. After the installation and commissioning of the S1 platform and the operation of wells No. 61 and 64 of the Salman joint field, the completion and reclamation of the two wells 62 and 63 and the removal of production barriers were also on the agenda. Their oil production was stabilized thanks to artificial lifting by gas.

Forouzan Platforms

The year 2015 was a turning point in the implementation of the project for the construction of platforms for the Forouzan joint oil field by the Iranian Offshore Engineering and Construction Company (IOEC). In that year, construction of these platforms progressed by 34%. In 2017, the jacket of the F18 platform of the Forouzan joint field was installed and the control system of the oil platform of this joint field was designed, programmed, installed and commissioned based on one of the most advanced systems in the world oil and gas industry.

The plan to maintain and enhance oil production in Forouzan field was handed over by the Iranian Offshore Oil Company (IOOC) as the client in the form of an EPC-EPD contract to a consortium consisting of Petropars and Iran Shipbuilding and Offshore Industries Complex (ISOICO), led by Petropars.

Belal Development Decided

In 2019, a contract for the development of the Belal joint gas field was signed with the Iranian company Petropars.

In June 2021, NIOC took an operational step in using nanofluids in the implementation of enhanced oil recovery (EOR) methods with nanofluid injection into the Surmeh reservoir of the Belal field; an operation which aims to increase oil recovery and which is being done for the first time in the country.

In the first step, the objective is to inject 18,000 barrels of nanofluids into Well No. 10 of the Belal field. After examining the feasibility of injectability of nanofluids as one of the new methods to enhance the oil recovery factor, the technical knowhow for producing suitable nanostructures (nanoemulsions) has been acquired in order to facilitate the oil recovery. The project was first assigned to RIPI in 2015. NIOC Directorate of Research and Technology is steering the project.

In the first phase of this project, the formulation and technical knowhow of using nanoparticles to prepare stable emulsions at laboratory scale were designed and in the second phase, the simulation of injection of selected nanofluid into the Sourmeh reservoir of the Belal field was on the agenda. The third phase of the project was dedicated to the preparation of selected nanofluids on semi-industrial scale for enhanced recovery tests for injection into this reservoir, and in the fourth phase, single-scale operations began in one of the injection wells in the Belal field.

Farzad B Development

On 17 May 2021, a $1.68 billion buyback agreement for development of the Farzad B gas field was signed between NIOC and Petropars Limited.

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.

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 for processing between the five refineries located in Pars 2.

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

EOR Nanofluid Injection Into Belal

National Iranian Oil Company (NIOC) has taken an operational step in using nanofluids in the implementation of enhanced oil recovery (EOR) methods with nanofluid injection into the Surmeh reservoir of the Belal field; an operation which aims to increase oil recovery and which is being done for the first time in the country.

The Islamic Republic’s general policy, enacted in 2000, emphasized increasing the capacity of recovered oil in proportion to the existing reserves and the country's enjoyment of increased economic, security, and political power.

Minister of Petroleum Bijan Zangeneh has said Iran can easily bring its production to 6.5 mb/d, which would create jobs, make Iranian industries more active and boost Iran’s security. One important issue with regard to increased production pertains to the recovery rate of oil fields. Most Iranian oil and gas fields are currently in the second half of their lifecycle and based on reservoir engineering estimates, and a decline in the recovery rate in some wells is natural.

According to the International Energy Agency (IEA), Iran would be experiencing a natural annual decline in production over the 2011-2020 period. That is while there is 1.1-million-barrel demand in the world, which would require enhanced and improved recovery.

Although the recovery rate from reservoirs depends on the rock and fluid characteristics of each reservoir and no general comparison may be made, a review of the world oil and gas industry shows that the recovery rate from these fields increases significantly after secondary and tertiary recovery. The existence of nearly 120 oil fields in the country underlines the necessity of increasing recoverable reserves through EOR and IOR. Studies show that immiscible gas injection is the most suitable solution for secondary recovery and preservation of pressure in most Iranian fields. Although water injection as another important method is required in special reservoirs, recently in collaboration with the Iranian Offshore Oil Company (IOOC) and Research Institute of Petroleum Industry (RIPI), for the first time in the country, a pilot project to increase oil extraction by injection of nanofluid in the offshore Belal field has been implemented. The main purpose of the project was to investigate the possibility of injectable nanofluids as one of the new methods to increase the oil recovery rate from the reservoirs, compared with water injection.

In this research project, a broad spectrum of nanostructures were studied and the stability of nanostructures under salinity, temperature and reservoir pressure was investigated. Acquiring the technical knowhow for stabilizing nanostructures in salinity conditions and high temperatures is one of the achievements of this project.

A review of laboratory results and simulation of injection of selected nanofluid into a field-scale model showed that adding nanoparticles to the current injected water to the reservoir can significantly enhance the reservoir recovery rate compared to Persian Gulf injected water without adding nanoparticles. In order to verify these results, it is necessary to inject nanoparticles into one of the wells of the Surmeh reservoir of the Belal field.

18,000 Barrels of Nanofluids

In the first step, the objective is to inject 18,000 barrels of nanofluids into Well No. 10 of the Belal field. After examining the feasibility of injectability of nanofluids as one of the new methods to increase the oil recovery factor, the technical knowhow for producing suitable nanostructures (nanoemulsions) has been acquired in order to facilitate the oil recovery. This project was first assigned to RIPI in 2015. NIOC Directorate of Research and Technology is steering the project.

In the first phase of this project, the formulation and technical knowhow of using nanoparticles to prepare stable emulsions at laboratory scale were designed and in the second phase, the simulation of injection of selected nanofluid into the Surmeh reservoir of the Belal field was on the agenda. The third phase of the project was dedicated to the preparation of selected nanofluids on semi-industrial scale for enhanced recovery tests for injection into this reservoir, and in the fourth phase, single-scale operations began in one of the injection wells in the Belal field.

Given the pilot implementation of polymer injection, which is being followed up on by the Sahand University of Technology in the form of an EOR project, IOOC could be considered as a leading company in implementing EOR methods.

It is noted that NIOC focused on enhanced recovery based on the scientific and research capacity of universities and research centers in 2014. Thanks to such approach, technological studies on about half of hydrocarbon reserves is under way within the framework of joint cooperation between the petroleum industry and the scientific community of the country.

Maximum Recovery Inevitable

Ali-Reza Salmanzadeh, CEO of IOOC, said maximum recovery from oil reservoirs was inevitable in light of the global energy conditions and global forecasts on oil demand in coming decades. He said: “Therefore, any activity aimed at improving the rate of oil recovery would be of high significance.”

He said the nanofluid injection project was a joint initiative of NIOC Directorate of Research and Technology, RIPI and IOOC, expressing hope that the pilot would yield acceptable results.

Less Impact on Environment

Mohammad-Reza Rabi’eh, deputy head of the Belal oil platform, touched on the start of operations for injecting nanofluid into the Surmeh reservoir, saying: “The Belal oil field was developed under a buyback deal with France’s Total. It came online in 2002 with an output of 40,000 b/d.”

“With a view to countering the decline in the reservoir pressure, four injection wells were designed in this platform and currently nanofluids are being added to the injected water in the reservoir. In the first step, 18,000 barrels of nanofluid would be injected into Well 10 of Belal,” he said.

Rabi’eh said that the results of the pilot project of nanofluid injection were not expected shortly, adding: “In case of successful results, injection of nanofluid into injection wells will start.”

Belal is located about 100km southwest of Lavan Island, near Iran’s water border with Qatar in the Persian Gulf.

The oil produced in this field is carried via a 100-km pipeline to Lavan Island prior to being blended with Salman’s oil for processing and export.

Mahshahr Port's Oil Products Exports Up 50%

Nearly three years have passed since the United States imposed the toughest ever oil sanctions on Iran, with a view to reducing Iran's oil exports to zero. Three years on, not only have Iran’s exports not been zeroed, but Iran has also seen a significant increase in its petroleum product exports. Iran has become the first exporter of gasoline in the region. National Iranian Oil Refining and Distribution Company (NIORDC) has in parallel with enhanced petroleum products supply, developed and renovated its export ports with a view to increasing its petroleum product capacity. That has enhanced Iran's revenues, while Iranian petroleum products no longer face the issue of accumulated products as refined products are delivered to local or external destinations in the shortest possible time.

The three ports of Mahshahr, Shahid Rajaee and Foolad in the Persian Gulf constitute the most important Iranian ports in terms of oil and non-oil exchanges.

Mahshahr Port Renovated

Mahshahr Port is one of the oldest ports in Iran, which is located near the Abadan oil refinery. This 90-year-old port was one of the most strategic ports in Iran because of being safe from enemy attacks during the eight-year imposed war. Hossein Alizadeh, director of the Mahshahr port, said it was still one of the important export ports. He stated that the purpose of establishing this export port is to pave the way for the export of petroleum products.  

The project to increase the capacity of the Mahshahr port for the purpose of storage at and export from this terminal was put on the agenda in 2006 in a bid to pave the ground for enhancing the production of petroleum products at the Abadan oil refinery and neighboring plants. The project was 80% completed by 2019. Over the past two years, the most significant part of the project, i.e. transfer and berthing capacity, has more than doubled. The project is 100% complete now. The number of export jetties has increased from two to eight. With the renovation of old jetties, the export capacity at Mahshahr has increased from 15 million tonnes to 45 million tonnes a year. The port can accommodate vessels weighing 35,000 to 90,000 tonnes.

Alizadeh said that 17 onshore storage facilities with a capacity of 3.05 million barrels and six offshore jetties have been built, while two jetties have been renovated.

1.5bn-Liter Storage Capacity

Alizadeh told a group of reporters touring Mahshahr that the storage capacity of this export terminal had increased from 1 billion to 1.5 billion liters, while it can handle 105,000 tonnes, up from 45,000 tonnes before renovation.

Of a total 8 jetties operating at this terminal, six have become fully operational to handle a variety of petroleum products. “Transfer of petroleum products from the Mahshahr terminal has trebled. Therefore, supply is overweighing demand and providing services to vessels has increased significantly.”

According to Alizadeh, no oil tanker would be stuck in the loading congestion, adding it was a positive point in responding to Iranian customers’ demands.

The rate of product transfer has increased to 3,100 tonnes per hour, he said. “Through three jetties involved in fuel oil sales, we have sold about 7,500 tonnes of fuel oil per hour.”

Gasoline, gasoil, fuel oil, light and heavy naphtha are the major products exchanged at this port. Alizadeh said that Mahshahr would be handling LPG exports too in the current calendar year.

He said the Middle East region lacked such export capacity, which had made Mahshahr Port one of the important export ports in that region.

Abadan Refinery Run Up

Fardin Rashedi, director of operations at the Abadan refinery, said the facility was planned to produce 380,000 b/d of products, adding that the oldest refinery in Iran was currently receiving and treating 432,000 b/d of three varieties of crude oil.

He said the Abadan refinery was supplying 14 varieties of refined products. 

He highlighted 100% progress in the development of the Mahshahr terminal, adding that five oil tankers may concurrently dock at the jetties of this port, noting that it was a big achievement.

NIORDC also plans to develop Shahid Rajaee Port, which can handle vessels with capacity of 35,000 to 45,000 tonnes, and Foolad Port, which has capacity to handle 90,000-tonne vessels.

Iran’s export capacity has now increased from 26 million tonnes to 75 million tonnes a year, while the operational capacity of jetties has gone from 18 million tonnes to 50 million tonnes a year.

Mohammad Rezaei, advisor to CEO of NIORDC, said petroleum product export ports constituted the last link of value and wealth creation in the petroleum industry chain. Therefore, without petroleum exports capacity, it would be like not being able to use the wealth generated.

“Therefore, increasing export capacity is one of the major plans of NIORDC so that we can use the potential of this industry,” he said.

Rezaei also said that due to the capacity to produce 2.3 mb/d of refined petroleum products in the country there was no accumulation problem.

West Karoun Oil Fields under Development

West Karoun is home to a cluster of oil fields Iran shares with neighboring Iraq. This area in western Iran is set to form a new oil civilization in Iran. There are 11 oil fields in West Karoun. Iran Plans to develop them to increase its oil output by 1 mb/d by developing these fields.

Arvand and Phase 3 of Darquain are among these projects.

Darquain field will have a 200,000 b/d share in the above figure. Darquain which lies in Khuzestan Province is 45 kilometers north of the city of Khorramshahr and 100 kilometers south of the oil-rich city of Ahvaz. The field is expected to see its output exceed 220,000 b/d once phase 3 development is fulfilled.

Darquain is one of the 49 oil fields introduced for investment under the Iran Petroleum Contract (IPC) model.

Darquain which was discovered in 1964 following drilling one exploration well, holds over 5 billion barrels of oil in place, 1.3 billion barrels of which is recoverable. Darquain’s oil is light with an API gravity of 39. The oil produced at this field is delivered to the Ahvaz-Abadan oil pipeline.

According to estimates, the investment required for the development of Darquain-3 amounts to $1.5 billion. Darquain-3 envisages operating the Ilam and Sarvak reservoirs, as well as the untapped part of Fahlyan. To that end, water and gas would be injected into the Sarvak reservoir and gas would be injected into the Fahlyan reservoir.

Furthermore, 31 oil wells, 6 gas injection wells, crude oil processing facilities including pipelines, processing installations, gas compressors, infrastructure including crude oil storage tanks and roads are among other activities under way at Darquain-3.

Darquain-1 and Darquain-2 were developed by Italy’s Eni under buyback deals. A state-of-the-art technology – simultaneous oil and associated gas injection – is being used there.

In August 2011, an agreement was signed with an Iranian consortium for the Darquain-3 development after Eni quit cooperating with Iran due to international sanctions. But the Iranian consortium failed to handle the project and the project remains open to international investment.

In phases 1 and 2, oil was recovered from Fahlyan formation. In phase 3, oil recovery from the Ilam and Sarvak layers will be done, as well.

Darquain-1 came online in 2005. Darquain-2 required $1.3 billion in investment and demining 7.5 million square meters. Darquain-2 came online in February 2011.

Darquain-3 was expected to become operational within five years. Three years have since passed and the field is still far from startup. According to plans, in the first stage, 14,000 b/d of light crude and in the second stage, 46,000 b/d of heavy crude will be extracted from Ilam and Sarvak layers.

Darquain-3 targets the heavy crude layers of Ilam and Sarvak and the undeveloped part of Fahlyan. Eni completed feasibility studies on this project and submitted its results.

The findings of Eni studies indicate that the heavy crude in Ilam and Sarvak layers were recoverable. Due to the heavy crude oil content, the third phase is totally different from the first and second phases.

Arvand Awaiting Investment

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

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

The fields shared with Iraq have been proposed to foreign investors for future cooperation. Foreign companies may sign agreement with Iran based on the content of IPC.

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

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

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

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

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

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

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

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

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

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

Cutting Edge Technology Needed in Soroush, Reshadat

Oil and gas production from Iran’s offshore fields dates from several decades. In light of natural fall-off in production from these fields, using foreign technology and investment would be a top priority for National Iranian Oil Company (NIOC). The Soroush and Reshadat fields are under consideration.

Western companies are quite aware that NIOC offers a lucrative opportunity for investment. Few companies would ignore such a chance. Once sanctions have been lifted on Iran, projects worth dozens of billions of dollars would be open to investment. 

Iran's petroleum industry has offered 50 oil and gas projects worth $185 billion. Iran hopes to sign agreements for these projects by 2020. One of projects in the list is Reshadat oil field located in the Persian Gulf.

Reshadat development is one of the important projects introduced after the implementation of Iran's nuclear agreement with six world powers last January. Development of Reshadat would bring its output to 80,000 b/d.

Reshadat which is situated 110 kilometers southwest of Lavan area is among Iran's old offshore fields. Discovered in 1965, it started production four years after exploration drilling and installation of three platforms. The field is currently facing many problems due to pressure fall-off. The key to resolving this problem is to use cutting edge technology for enhanced oil recovery.

Geologically speaking, this oil field is made up of three oil layers known as Shouaiba, Arab and Mishreef. The bulk of Reshadat's oil is accumulated in Shouaiba layer. However, the three layers are all producing crude oil with a high percentage of water and low percentage of gas.

With the drilling of 33 wells and the construction of Reshadat 3, Reshadat 4 and Reshadat 7 platforms, light crude oil production started from this field in 1968. The high-quality oil produced from this field has an API of 36 and has many international customers. That could be one of the most important attractions of working in this field for foreign companies.

The platforms of Reshadat field were serving as the frontlines of resistance during eight years of imposed war. These platforms were bombarded frequently. With the full restoration of Reshadat field installations, the last remaining installations are restored by the IOOC.

Currently, new processing platforms (P4 and Q4) for the development of Reshadat field are under construction by Iran Marine Industrial Company. Moreover, two wellhead drilling platforms (W0 and W4) have been installed and most of new wells have been spudded. Development of this field currently needs more than ever foreign investment and technology.

A total of 28 wells have been drilled within the framework of Reshadat development. Of these 28, five wells have been spudded. The remaining wells are being drilled.

Recently, within the framework of second-phase early production, a separator has been installed in the old platform on three other wells in this field. That would bring Reshadat output to more than 20,000 b/d.

Due to damage inflicted on the subsea structures of the platforms of this field during the imposed war, drilling operations, transfer to and installation of separator in the specified spot were postponed to after the reinforcement of the structure. In the last Iranian calendar year, the separator was successfully moved to the platform after subsea structures were retrofitted.

Once the field is fully developed and all wells are drilled, production from Reshadat will enhance significantly. However, completion of this project and the start of production from this field would depend on financing and clarifications about its domestic contractor.

Iranian-Italian Oil Company (IMINICO) first discovered Reshadat in 1965. The same company developed it. This field has 33 wells in three platforms known as R-3, R-4 and R-7.

Currently, oil extraction and production is limited to Platform R4. Other platforms are non-operational. R4 will be also phased out after new wells would be completed.

Development of Reshadat started in the late 1980s to bring its production to 75,000 b/d. Therefore, drilling 30 wells, constructing a storage tank with a capacity of 500,000 b/d and building a 185-kilometer pipeline topped the agenda. Based on future plans, recovery from this field is expected to increase by 5,000 to 7,000 b/d.

Operators of this field have mobilized logistics units and offshore reconstruction group under tough weather conditions in southern Iran have handled the pipe laying, installation and testing of separator equipment. After the end of pre-commissioning and commissioning operators last September, the new separator led oil and gas into the field and significantly reduced oil in the water. After the end of development operations, the output of this field will increase from the current 8,000 b/d to more than 75,000 b/d.

The new development project for this field is being carried out in five phases for the output of 78,000 b/d. The five phases are: drilling, jacket installation, and installation of equipment on the platform, pipe laying and construction of a 500,000-barrel storage tank in Lavan Island.

In the Reshadat development project, the drilling phase is behind other phases in terms of meeting the deadline. After problems of this sector have been resolved, drilling and completion of wells will last between two and two-and-a-half years starting from the date of installation of two drilling rigs in the field.

Soroush, Largest Offshore Field

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

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

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

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

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

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

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

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

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

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

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

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

 Sustainable Production at Qeshm Gas Refinery

Mahnaz Mohammad-Qoli

Sarkhoon & Qeshm Gas Treating Company (SGTC), one of the gas refineries treating natural gas to supply clean energy, is determined to apply suitable technologies in order to guarantee industrial self-reliance and sustainable supply. This facility, which set significant production records last calendar year, has made significant achievements in supporting domestic production and protecting the environment.

The following is a review of the main achievements of this refinery:

In order to supply part of the country's energy needs in Hormuzgan and Kerman provinces, and also guarantee optimal production of natural gas for industrial, commercial and domestic purposes in the south and southeast of the country, SGTC was established in 1978 and its activities started in the recovery and refining of natural gas and associated gas liquids in the Sarkhoon gas field in Bandar Abbas and the Gorzin gas field in Qeshm Island. At present, the refinery’s natural gas production capacity stands at 17 mcm/d. Furthermore, it produces 11,000 b/d of gas liquids and 90 tonnes a day of propane and butane.

Targets Met

Mohammad Hossein Norouzi, CEO of SGTC, said the refinery met all its targets set last calendar year.

“SGTC’s major objectives and plans were fully achieved in various domains including sustainable gas production and services,” he said.

According to him, last calendar year, despite all the problems and obstacles caused by sanctions and COVID-19 restrictions, the company was able to hire expert forces to overcome the impediments in various sectors and achieve its goals in enhancing sustainable production and energy supply.

Noting that SGTC has always sought to hire specialized forces and creative and elite youth in its projects, Norouzi said: “In parallel, some very valuable steps have been taken and SGTC has managed to supply gas to households, industries, businesses and other centers in southern Iran despite pressure and tough and sensitive regional conditions and particularly bad weather.”

Increased Output

Due to the downward trend in production from Sarkhoon reservoir, reviewing and updating and studying this reservoir is on the agenda of the South Zagros Oil and Gas Production Company. According to the studies, the fracture in Sarkhoon reservoir is estimated to have occurred in 2019. Based on these results, solutions for sustained production and maintenance of the refinery were on the company’s agenda.

Therefore, according to Norouzi, after calculations and technical and engineering studies, and by obtaining necessary permits, the operational pressure reduction test to 45 Bar was conducted.

“Given the upward trend of reduced production to about 3.5 mcm/d in 2020, the scenario of gas injection into the Sarkhoon-Bandar Abbas power plant line was tested after arrangement by relevant authorities for 72 hours. The obtained scientific and technical results were reviewed and analyzed, and then the solutions and scenarios of injection into the mentioned line and consumption of low-pressure gas of the refinery were finalized,” he said.

With expert work done, the operational test began, which, with the start of this one-month test, gas production increased to 2 mcm/d while other refined products such as NGL and LPG experienced 35% and 38% respectively in output.

According to Norouzi, in parallel with supplying part of the country's energy needs and natural gas consumption as environmentally friendly energy and suitable for industrial and domestic use in Hormuzgan and Kerman provinces, the Sarkhoon gas refinery, the only gas refinery in the south of the country and Hormuzgan province, is a symbol of excellence and production continuity by National Iranian Gas Company (NIGC).

Core Strategies

The refinery has envisaged strategies in the implementation of the desired programs, including the continuation of quantitative and qualitative production and maintaining the reliability and readiness of equipment, development and improvement of HSE management with emphasis on improving the level of the HSE culture.

Self-Sufficiency in Gas Turbine Construction

Norouzi further pointed to the efforts under way for self-sufficiency in the construction of gas turbines and added: “Owing to the company’s experts and with the cooperation of domestic manufacturers, giant projects have for the first time been carried out at the national level and in the construction of equipment for the Sarkhoon & Qeshm gas refinery installations.”

Referring to some initiatives in the construction of gas turbines, he said that with such measures and initiatives, significant saving has been made in the country's oil and gas industry.

Ruston Turbine Items

Norouzi said 2,850 components of the Ruston turbine had been manufactured domestically. “In order to overcome impediments caused by sanctions, this refinery has manufactured more than 140 items including 2,850 components of the Ruston turbine, which saved financial costs significantly.”

According to him, decommissioning the gas desalination unit and replacing the H2S adsorbent, injecting water with gas into the well formation, reducing the operating pressure of the refinery through natural discharge, and following up on the scenario of using low pressure gas produced by the refinery are among the measures taken in the last seven years.

“Hormuzgan Province Gas Company is updating and optimizing the aforesaid cases while following up on the construction of a pipe to carry gas from Sarkhoon to the Persian Gulf power plant,” he said. 

Norouzi said that SGTC had registered the first CDM project of gas industry with the UN to capture and store flare gas.

Overhaul by Iranian Experts

One of the important measures of the country's refineries is to carry out overhaul, which would support continuation and development of sustainable production by refineries. Norouzi also announced the increased reliability of the equipment used in different units of Sarkhoon gas refinery facilities for the sustainable production of natural, safe, clean and standard gas as one of the main missions and policies of the company and said: “Overhaul of the refinery has started since the beginning of the current calendar year.”

According to Norouzi, “At the Sarkhoon gas refinery, we are witnessing technical maturity and careful planning of capable and experienced specialists, experts and employees in the overhaul of equipment, as well as in preserving sustained production, and these important activities are done in the shortest period of time and by observing health and safety instructions and rules.”

No-Pollution Certificate

 Compliance with HSE instructions is another measure taken regularly at the Sarkhoon gas refinery, Norouzi said, adding that SGTC had been awarded a no-pollution certificate last calendar year.

Referring to the environmental measures taken so far, he added: “15% of the total credit approved by SGTC in 2020 has been allocated to environmental activities.”

OPEC+ and UAE-Saudi Conflict

Shuaib Bahman

The ongoing discrepancies between Saudi Arabia and the United Arab Emirates (UEA), which have long been laid bare in the political and security spheres in the region, has now taken on another dimension and been extended to the energy sector.

Whereas the Saudis are reluctant to reveal their discrepancies with the UAE due to internal problems as well as widespread failures in the region, especially the Yemeni war, the UAE does not take Riyadh’s demands into consideration at all. Coincidentally, the UAE believe that the revelation of discrepancies with Saudi Arabia can resolve one of the regional problems of this country, especially the war on Yemen. However, revelation of any kind of political conflict in the relations between Saudi Arabia and the UAE will not be bound to the political spheres and bilateral relations between them. Therefore, it is important to examine what the UAE pursues in its policy of enhancing its oil production and what the consequences of the dispute with Saudi Arabia will be.

Disagreements and Tensions

The oil tensions between Saudi Arabia and the UAE are mainly rooted in the issue of production ceiling. According to the OPEC+ decision in 2018, Saudi Arabia’s oil production was 11 mb/d and the UAE’s share was 3.168 mb/d. Although at the time the UAE did not publicly oppose the decision and the quota, it is now demanding otherwise in light of its increased production capacity over recent years.

Abu Dhabi National Oil Company (ADNOC) has over recent years invested billions of dollars to bring its production capacity to more than 4 mb/d. The company plans to enhance its daily oil production capacity to 5 mb/d by 2030. The main reason for adopting this strategy is that the UAE predicts that the volume of global demand for oil will decrease in coming decades, and with the boom seen in renewable energies and their cost-effectiveness, oil will not be as prosperous as it was in the past. Therefore, according to the Emiratis, now is the best time to sell oil, and if the country wants to continue to be influential in the energy markets, it must be able to monetize its oil and invest in renewable energy technologies. The UAE has also launched its crude oil futures market in Murban. It is estimated that the oil field accounts for more than half of the UAE's production, and formation of a futures market could break the standard Middle East price limit and liquidity constraints.

According to the abovementioned approach, the UAE has called for a review of the countries' production and tends to increase its production from 3.168 mb/d to 3.841 mb/d. This has so far been explicitly opposed by Saudi Arabia. According to the Saudis, either all countries must adhere to the 2018 agreement or this agreement must be abandoned altogether.

In fact, the Saudis do not accept any revision of the countries' output. The main reason for this Saudi opposition is not the disruption of market stability and possible reduction of oil prices in order to increase production; rather, they see this as a means for the UAE to become stronger in rivalry with them. In fact, the Saudis believe that if the UAE economic situation improves due to the increase in oil sales, then not only will it become an influential player in the energy sector, but it will also break away from Saudi Arabia in politics and regional issues. This is not far-fetched given the deep discrepancies between the two countries on many regional issues.

Outlook

Given serious discrepancies between Saudi Arabia and the UAE, three possibilities are held out about the future of oil tensions between the two nations.

The first possibility is that the UAE will withdraw from OPEC to focus on investing in oil futures markets. Not only will this pose a serious challenge to the OPEC+ agreement, but it will also have a significant impact on global markets. At the same time, the UAE's withdrawal from OPEC could persuade fellow members to follow suit – an issue that could eventually overshadow international energy markets. On the other hand, it is possible that the escalation of dispute between Saudi Arabia and the UAE would not remain limited to the energy sector. In fact, these discrepancies could lead to the withdrawal of the UAE from the Gulf Cooperation Council (GCC) and the final collapse of this regional mechanism. Moreover, the Saudi-UAE discrepancies are likely to be more instrumental in some important crises, such as Yemen.

The second possibility is that Saudi Arabia, under pressure from fellow OPEC+ members, would have to accept a revision of quotas for members, in which case, every nation except the UAE would probably want to change their production status and export quotas. This, in turn, could affect the OPEC+ agreement.

The third possibility is that the UAE will give up on its oil ambitions, at least for a while, and keep quiet about enhancing production and exports for now. Any materialization of this possibility depends, on the one hand, on the consultations with other OPEC+ countries, including Russia, and on the other hand, on Saudi Arabia offering privileges to the UAE in other areas.

Although any of these scenarios is likely to occur in the future, what is the same in all of these scenarios is a serious blow to OPEC and the OPEC+ agreement to freeze oil production because the UAE’s disobedience, as an OPEC member state and a party to the OPEC+ agreement, could severely challenge the future of the world's largest oil organization, as well as the most important agreement that has brought balance back to the world energy markets.

Brazil Oil Targets: Opportunities, Challenges and Fallout

Shuaib Bahman

Brazil’s Mines and Energy Minister Bento Albuquerque has ambitiously said his country, which only began exporting more oil than it imported in 2019, will become the world's fifth-largest exporter of crude oil in 2030 thanks to a sharp increase in its production. “In 2030, when we reach production of 5.3 mb/d, Brazil will become the world’s fifth largest exporter,” Albuquerque said, adding that Brazil’s crude and liquids production is expected to increase from 3.3 mb/d now.

Currently, Brazil is among the world’s top ten exporters of crude oil, a ranking where Saudi Arabia is firmly in the lead.

Brazil’s prolific extra-saliferous oil fields have increased production over recent years and are the main driver of increased oil production. In addition, Brazil is one of the countries outside the OPEC + alliance that are expected to continue contributing to the non-OPEC supply this year and in the years to come, according to estimates by OPEC itself.

Brazil’s crude oil production in April 2021 increased 128,000 b d from March to average 2.97 mb/d. Based on preliminary production data and fewer outages due to reduced maintenance and other unplanned outages, crude production in May shows further month-over-month growth of over 50,000 b/d, OPEC said.

In 2020, Brazilian crude oil production rose 5.7% to an average of 2.9 mb/d, according to industry regulator ANP data released last month. The pre-salt basin with a production of 2 mb/d led to the increase in supply. Thanks to the increase in crude oil production, Brazil’s exports hit a record 1.4 mb/d in 2020, up 16.9% year-on-year.

More than half of Brazil’s oil production growth comes from the development of underground pre-saline fields off the coast. Thus, over recent years, pre-salt fields have attracted the attention of many large companies.

Brazil is estimated to hold 15 billion barrels of oil in its pre-salt fields. Totally, the country sits atop 30 billion barrels, making the country the 5^th largest holder of oil reserves in the world. Accordingly, Brazil has been attracting private investment over recent years to increase its oil and energy production. The country has also revised its rules to allow more oil and gas companies to bid for its projects.

Meanwhile, Brazil faces at least three significant opportunities in realizing its oil ambitions:

The first opportunity is the billions of barrels of the country's oil that remain untapped in the oil fields, thereby attracting the attention of the world's major oil companies. According to estimates, Brazil, along with Guyana, will be one of the main drivers of offshore oil production in the future.

The second opportunity is the existence of a large market called Asia, topped by China, which has an insatiable appetite for oil. In 2020, Brazil exported about 70% of its oil production to China and became one of the country's major oil suppliers.

The third possibility is that Brazil has not imposed any restrictions on its oil production and exports. At the moment, what has left Brazil free to do so in the current situation is its absence in the gathering of the OPEC+ nations. Accordingly, while OPEC+ member states are trying to balance global markets by imposing restrictions on their production ceilings and refusing to increase oil production, Brazil faces no restrictions to any output hike. According to the latest oil market monthly report in June, OPEC announced that Canada, Brazil, China and Norway will be the main drivers of supply growth in 2021.

Despite these significant opportunities, Brazil still faces challenges. One of these challenges is the lack of management of the country's domestic consumption, which in some cases has caused fluctuations in exports. In addition, global challenges such as the COVID-19 pandemic have certainly affected Brazilian oil exports, like every other oil producer in the world. Following the spread of the epidemic, Brazil's state-owned oil company Petrobras announced its decision to cut $24 billion in investment due to the financial crisis caused by the pandemic. In the company's strategic plan for 2021 to 2025, an investment of $40 to $50 billion had been planned, which shows a significant decrease in investment compared to the strategic plan of the company for the years 2020 to 2024. Accordingly, one of the main challenges for Brazil is the issue of attracting capital and technology for offshore oil extraction.

Impact on Global Markets

Brazil's ambitious goal of upgrading its position to the rank of the world's fifth largest oil exporter by 2030 has far-reaching economic and even political implications. If the country's economic conditions and oil reserves enable it to achieve this goal, then Brazil, as a non-OPEC oil producer, will be able to have a significant impact on world markets. In the future, oil bodies like OPEC will have to consider Brazil as an influential country in balancing supply and demand in markets and boosting prices. Of course, the extent to which Brazil would cooperate with an institution such as OPEC depends largely on the country's internal developments. If rightists remain in power in this country, then they want to coordinate their macro-policies with the United States, but if the power is in the hands of leftists, then the possibility of Brazil cooperating with OPEC becomes also stronger.

On the other hand, Brazil's cooperation with Asian countries such as China and India can rob this traditional market from some countries in the Persian Gulf. Undoubtedly, increasing crude oil imports from Brazil will significantly reduce China's dependence on Middle East oil. This is of strategic importance for countries such as China and India that seek to diversify their oil imports. At the same time, Brazil's increased oil exports would mean intensifying competition between oil producers in maintaining and developing their own export markets. This could become a serious problem in supply-demand balance in the future.

Petrobras Finds Buyer for Alagoas Cluster Fields

Petrobras’ board has approved the sale of the onshore/shallow water Alagoas Cluster fields in the state of Alagoas to Petromais Global Exploração e Produção (Petro+) for $300 million.

The Cluster comprises seven production concessions, which include the producing Paru field in a water depth of 24 m (78.7 ft).

Average production from the various fields between January and May was 1,900 b/d of oil and condensate and 602,000 cu m/d of gas.

Also included in the transaction is the Natural Gas Processing Unit of Alagoas, with a processing capacity of 2 MMcm/d.

Nigeria Moves Closer to New Petroleum Law

Nigeria’s National Assembly has passed the country’s Petroleum Industry Bill (PIB).

Mansur Mohammed of Wood Mackenzie’s sub-Saharan Africa upstream research team commented: “The Senate and House each passed different versions of the bill, which will now require reconciliation before it is sent to the president for assent into law. So, there is still outstanding work to do before the PIB becomes law, but we see momentum behind the bill.

“This is a significant milestone for the Nigerian petroleum industry; the bill has been nearly two decades in the making.”

Denmark Halts Offshore Wind Farm

The Danish Energy Agency (DEA) has put on hold the tender for the Hesselø wind farm offshore eastern Denmark, pending further analysis of results from a preliminary site investigation.

Soft clay formations have come to light, notably in the upper 20-30-m (65.6-98.4-ft) portion below the seabed, over large parts of the area selected for the wind farm.

Results suggest site conditions are less favorable than initially specified in the fine screening report, potentially creating technical challenges with the installation.

External consultants are undertaking further laboratory analyses to assess the strength properties of top soil in the area. Once this work has finished during the fall, the DEA expects to discuss the consequences with potential bidders.

India Plans LNG Terminal

Crown LNG Holding has started development of an LNG reception terminal offshore Kakinada, eastern India.

The company, a specialist in infrastructure for LNG re-gasification and liquefaction, has focused on a technical solution that can operate in more severe weather conditions.

Subsidiary Crown LNG India has signed an agreement with East LNG to finance, construct, and lease the infrastructure for the offshore LNG terminal at Kakinada. Crown will also operate and manage the facility through the 25-year lease period.

The Kakinada project will feature a gravity-based structure on the seabed, 11 km (6.8 mi) offshore Kakinada, designed to withstand harsh weather during the Indian monsoon season.

Australia 3D Seismic Survey Underway

Carnarvon Petroleum has issued an update on exploration operations in the Bedout basin offshore Western Australia, where the company is a partner to Santos.

Acquisition of the 1,600-sq km (618-sq mi) Archer 3D seismic survey finished on June 1, the area covered comprising the Dorado oil field and near-field prospects, in conjunction with the WA541-P permit joint venture to the southwest of WA-437-P.

Algeria Offsets Non-Renewal of Morocco Gas Deal

Algeria has taken all the "necessary measures" to ensure stable gas exports to Spain even if Morocco fails to renew a key gas transit agreement for supplies via the GME pipeline, which expires at the end of October, the CEO of state-owned Sonatrach said June 29.

Cited by the state-owned APS news agency, Toufik Hakkar said no decision had been taken regarding the renewal of the transit deal, but that regardless of the outcome there would be no impact on Algerian gas exports to Spain.

"Even if the contract is not renewed, Algeria can supply Spain without any problems and even respond to any additional demand from the Spanish market," Hakkar said.

Morocco has reportedly opted to halt talks on the renewal of the transit deal due to worsening relations with both Algeria and Spain.

Algeria sends gas to Spain via two pipelines -- the GME pipeline via Morocco and the direct Medgaz link - with volumes totaling 9.06 Bcm in 2020, according to S&P Global Platts Analytics data.

More gas was sent via the Medgaz line to Almeria (5.39 Bcm) than via the GME line to Tarifa (3.67 Bcm).

Relations have worsened in recent months between Algeria and Morocco, primarily over the sovereignty of Western Sahara, and there has been no indication of a breakthrough in talks for a renewal of the transit deal.

There have been signs that Algeria might be happy to stop using the GME pipeline, which enters Spain at the Tarifa interconnection point, and instead focus flows on the shorter, and cheaper, Medgaz line.

Turkey to Keep Searching for Gas in Mediterranean

Turkey will carry on exploring for oil and gas in the eastern Mediterranean, President Tayyip Erdogan said in comments that may revive tensions with the European Union and Greece amid attempts to repair their frayed ties.

Turkey is at odds with EU members Greece and Cyprus over energy resources and jurisdiction in the region, and tensions flared last year when Turkish and Greek navy frigates escorted vessels exploring for hydrocarbons.

Speaking in the northwestern province of Sakarya, Erdogan said Turkey had been receiving "signals of natural gas" in the eastern Mediterranean and vowed to continue defending Turkey's rights in the region.

"Whatever our rights are, we will take those one way or another. And we will carry out our oil exploration operations in the eastern Mediterranean, Cyprus, and all those seas," he said, without elaborating or providing a timeline.

EU leaders had threatened punitive measures against Ankara over its offshore activities, but later froze those plans after Turkey withdrew a research vessel from contested waters.

Ankara has since been working to repair ties with the bloc and Athens.

After Turkey brought its Oruc Reis vessel back to port in November amid threats of EU sanctions, Ankara resumed direct talks with Athens after a five-year hiatus. The two sides have held two rounds of talks since January, but have said no immediate results should be expected.

Erdogan's comments came a week after the EU promised 3.5 billion euros for Turkey to continue hosting Syrian refugees until 2024. 

COSCO to Build Two Installation Vessels

 Cadeler has awarded COSCO Shipping Heavy Industry Co. Ltd. a $651-million contract to construct two wind turbine installation vessels.

They will be built at COSCO’s shipyard in Qidong, China. The two X-class vessels are set to be delivered by 3Q 2024 and 1Q 2025, respectively.

The vessels are expected to have a deck space of 5,600 sq m (60,278 sq ft), a payload of more than 17,600 tons, and main crane capacity of more than 2,000 tons at 53 m (174 ft). The vessels will be able to transport and install seven complete 15-MW turbine sets per load or five sets of 20+ MW turbines.

The design of the two new X-class vessels incorporates Cadeler’s decade of experience as well as detailed client feedback.

Russia's June Oil, Condensate Output Drops

Russian oil and gas condensate output declined to 10.42 million barrels per day (bpd) in June from 10.45 million bpd in May, according to Reuters calculations based on an Interfax report citing energy ministry data.

It was the second straight month of decline and the lowest since March, when it stood at 10.25 million bpd.

Total oil and gas condensate production stood at 42.64 million tonnes in June versus 44.21 million in May, which has one more day, the agency said.

Russia has been restraining its output in line with a global production deal aimed at balancing the oil market.

The deal - agreed by OPEC+, a group of oil producers including Russia - was designed to cut output by almost 10 million bpd from May 2020. The cuts are to be phased out by end-April 2022 and now stand at about 5.8 million bpd.

Interfax also said Russian oil exports outside the former Soviet Union declined by 12.1% in the first half of the year to 104.06 million tonnes from the same period of 2020.

Saudi Aramco Bets on Blue Hydrogen Exports

Saudi Aramco outlined plans to invest in blue hydrogen as the world shifts away from dirtier forms of energy, but said it will take at least until the end of this decade before a global market for the fuel is developed.

“We’re going to have a large share” of the market for blue hydrogen, Aramco’s chief technology officer, Ahmad Al-Khowaiter, said in an interview with Bloomberg Television in Dhahran, eastern Saudi Arabia, where the company’s based. “The scale up isn’t going to happen before 2030. We’re not going to see large volumes of blue ammonia before then.”

Hydrogen is seen as crucial to slowing climate change since it emits no harmful greenhouse gases when burned.

India Sees Fuel Demand Recovery to Pre-Covid Level

India's fuel demand, hit by a deadly second wave of coronavirus, would recover to pre-pandemic levels by the end of this year, oil minister Dharmendra Pradhan said.

Local fuel consumption- a proxy for oil demand - in May slumped to its lowest since last August as lockdowns and restriction in several states stalled mobility and muted economic activity.

Indian fuel demand showed signs of resurgence this month due to the lifting of lockdowns by states and a gradual pick-up in economic momentum, Pradhan said at an energy summit organized by BNEF.

India, the world's third-biggest oil importer and consumer, imports over 80% of its oil needs. Asia's third-largest economy has been hit hard by a spike in global oil prices, with its tax-heavy retail prices of gasoline and gasoil touching record highs.

China Power Utilities Review Gas Procurement

High spot LNG prices and low margins have prompted southern China's gas-fired power plants to lower their utilization rates and review their exposure to the short-term LNG market, after they had ramped up electricity production for several weeks through May and June to meet tight power supply.

Lower utilization rates mean lower natural gas demand, and many Chinese gas importers have already retreated to the sidelines as negative downstream margins, including both power and trucked LNG markets, have reduced appetite for spot LNG cargoes.

Power shortages have eased with an increase in hydropower supply following the arrival of the rainy season in the past couple of weeks according to Guangdong-based utilities and China's top policy planner, National Development and Reform Commission.

Gas distributors like Guangzhou Gas have indicated that natural gas demand from gas-fired power plants has weakened and LNG prices have touched levels that many plant operators cannot afford.

Shenzhen Energy, which runs four to five gas-fired power plants in Guangdong province, has cut the operating rate of these plants to an average 50%-60% of full capacity, down from a relatively high level, a market source said.

The spot LNG price has surged to above $12/MMBtu, based on which, the power generation cost is estimated to be around Yuan 0.7-0.8/kWh, much higher than the on-grid tariffs of gas-fired power plants set by the government.

Guangdong Energy, which runs several gas-fired power plants in Guangdong province, has also seen its operating rates fall from around 80% last month along with a decline in gas demand, sources said.

Shell Opens 10 MW German Hydrogen Electrolyser

Royal Dutch Shell launched Europe's biggest hydrogen electrolysis plant at the Wesseling site of its Rheinland refinery after two years of construction, as it expands further into alternative energies.

The Refhyne plant, with a 10 megawatt (MW) capacity, will produce green fuels as part of a European Union-funded consortium which is already setting its sights on a 100 MW facility at the site near Cologne.

Refhyne II could start operations in 2024, said Marco Richrath, director of the Shell Energy and Chemicals Park Rheinland at the launch ceremony for the smaller facility.

Hydrogen is considered "green" when it is produced from renewable power from wind or sunshine through electrolysis but "grey" hydrogen from fossil fuels is currently the feedstock in many standard industry processes.

Green hydrogen can play a role in energy, mobility, heat provision, and hard-to-decarbonize industries.

Shell also aims to produce sustainable aviation fuel from renewable electricity and biomass at Wesseling as well as developing a plant for liquefied renewable natural gas (bio-LNG).

It is under increased pressure after a Dutch court ruled it must drastically deepen planned greenhouse gas emission cuts.

The Refhyne polymer electrolyte membrane (PEM) electrolyser will produce up to 1,300 tonnes a year of green hydrogen. The plant cost around 20 million euros ($23.72 million) of which half came from EU funds.

The consortium also includes electrolyser producer ITM Power, research organization SINTEF and consultants Sphera and Element Energy.

WB to Grant Iraq Gas Flaring Loan

Basrah Gas Co. - a joint venture between Iraq's state-owned South Gas Co., Shell and Mitsubishi Corp. - will receive a $360 million from the World's Bank's private sector financing arm to help OPEC's second largest producer reduce gas flaring from its southern oil fields.

The International Finance Corp. and BGC signed the 5-year loan agreement that will help the company boost its current capacity to treat and process associated gas by 40%, or 400 MMcf/d, BGC said in a June 29 statement. BCG -- a 25-year JV grouping SGC with a 51% stake, Shell with 44% and Mitsubishi with 5% -- currently has an average annual production of 900 MMcf/d, capturing some 60% of associated gas from three Basrah oil fields: Rumaila, West Qurna 1 and Zubair.

The loan will partially fund the construction of a new gas processing plant, Basrah Natural Gas Liquid Extraction Plant, part of a broader expansion plan to reduce gas flaring in southern Iraq. BGC currently provides 80% of Iraq's LPG demand.

Iraq was the world's second worst gas flaring nation after Russia in 2020, according to the World Bank.

Baghdad is seeking to spend, with certain energy partners, $15 billion to boost its gas production, the country's oil minister said May 3, as the country works on reducing reliance on Iranian energy imports.

The investment on these projects will help boost gas production to 4 Bcf/d, allowing the production of as much as 16 GW of electricity, Ihsan Ismaael said at the time.

These projects include a $3 billion development plan for BGC, with an ultimate plan for the company to reach 2.4 Bcf/d of gas production over an unspecified period, the minister added at the time.

Contracts for Hasselmus Tieback Offshore Mid-Norway

OKEA has awarded contracts for the subsea tieback of the Hasselmus discovery to the Draugen oil and gas platform in the southern Norwegian Sea.

The Subsea Integration Alliance of Subsea 7 and OneSubsea will be responsible for engineering, procurement, construction, and installation of the subsea production systems and subsea pipelines (SURF) for a single subsea well, tied back to the platform to the southeast.

The SURF scope covers around 9 km (5.6 mi) of pipe-in-pipe flowline and associated structures in water depths of around 250 m (820 ft).

Project management and engineering has started at Subsea 7’s offices in Stavanger. Fabrication of the pipelines will take place at its spoolbase at Vigra, Norway, with offshore operations to follow during 2022 and 2023.

Kyrre Fatval, project Director Hasselmus Development at OKEA, said: “Working in partnership with Subsea Integration Alliance supports an optimized project solution, early decision making and shortened delivery time, ultimately improving cost efficiency throughout the entire field lifecycle.”

Aker Solutions will perform modifications on the platform so that it can process of gas from Hasselmus. The company, which undertook the FEED for the project, has started work on the engineering, procurement, construction, installation and commissioning award for new equipment, and expects to complete this program by the end of 2023.

New Gas Hub in Northern Iran

Central Asian and European demand for gas has broadened the horizons for development of Iran's exploration blocks in the Caspian Sea. “Chalous Superstructure Drilling and Exploration” project has been assigned to Khazar Exploration and Production Company (KEPCO) with a view to forming a new gas hub in northern Iran. According to Ali Osouli, CEO of KEPCO, if the initial estimates are confirmed and exploration success is achieved in the Chalous structure, the Iranian sector of the Caspian Sea will play a significant role in gas exports to Europe in the near future, in which case Iran's new gas hub will be formed in the north to let Iran supply 20% of Europe's gas needs from this region.

KEPCO eyes “Chalous Superstructure Drilling and Exploration” project over the coming two years. Chalous structure is the second largest one in the Caspian Sea, just behind the Alborz structure. Based on various studies conducted on that structure, it is estimated to hold gas reserves equivalent to one-fourth of the giant South Pars gas field. That would put Chalous in 10th position in the world in terms of gas reserves.   

According to estimates, this structure has a production capacity equivalent to 11 phases of South Pars. If the estimates are accurate and the operation to explore the Chalous structure proves successful, the volume of recoverable gas from this structure alone would be 1.5 times the total recoverable gas in Azerbaijan and equivalent of 30% of the total recoverable gas in the Caspian Sea. On the other hand, based on available evidence, this structure can also have significant oil reserves. Chalous structure may be compared with giant oil and gas fields in southern Iran in terms of in-place and recoverable hydrocarbon deposits. Following SCSC and SMDP studies, exploration drilling has to begin in Chalous in the shortest possible time. Immediately after exploration, long-term well testing will be carried out to make a proper assessment of recovery from this reservoir in order to facilitate formulation of the best development plan for the field.

This concordance of results and evaluations has led KEPCO to start its exploration activities in the Chalous structure in the best possible way by benefiting from the maximum existing capacities and mark a turning point in the exploration of huge oil and gas resources in northern Iran.

Drilling in Roudsar Geophysical Structure

But another priority for exploration drilling is the Roudsar geophysical structure located in the shallow southern part of the Caspian Sea and separated from Ramsar structure (Ramsar structure is located in the deep part of the sea).

Emad Hosseini, Chairman of KEPCO Board, said hydrocarbon deposits in the Roudsar structure and their connection with the larger Ramsar structure may prove the high hydrocarbon capacity in this big structure.

KEPCO has defined this project with a comprehensive and strategic vision. Due to the proximity of Roudsar structure to the shore and the shallow water and in light of the experience of the Iranian petroleum industry in the shallow waters of the Persian Gulf, exploration operations of the Roudsar structure would carry the minimum risk. On the other hand, using the capacity of the private sector in the Caspian Sea in line with securing national interests has been seriously considered by KEPCO. Therefore, efforts will be made to help the private sector serve Iran's petroleum industry in oil and gas recovery in the north.

Iran’s neighbors are well aware of the high potential of gas reserves in the southern Caspian basin. That is why Azerbaijan Republic has put into operation the Heydar Aliyev semi-submersible rig at a cost of over $1 billion over recent years.

At present, Iran is operating the Amirkabir semi-submersible rig and three Caspian support vessels in the Caspian Sea. It is said that foreign companies spend $100 to $150 million to drill wells equivalent to Chalous’s proposed well. But thanks to KEPCO’s fleet, exploration will cost National Iranian Oil Company (NIOC) much less. That is because of the high value of this fleet that KEPCO considers approval of exploration drilling in the Chalous structure to be a smart decision pursuing national interests.

Hosseini also said that there is huge amount of gas in Gorgan Plain. He said the data gathered from 16 wells drilled in this area along with studies carried out indicate the necessity of changing technical approach vis-à-vis liquid hydrocarbon potential in the southern Caspian basin. The results obtained from drilling the Hirkan-1 and Qezel Tappeh-3 exploration wells would provide the final conclusion.

Seismic Experience

Meantime, with a view to integrating seismic data in the southern Caspian basin and finding the best deep drilling location, KEPCO eyes seismic survey in the offshore-onshore zone in the east of the Caspian Sea.

This project will be the beginning of creating a seismic experience in the challenging areas of sea-land transfer of the Caspian Sea, which is very important in light of the existing capacities in these coasts. 

But the issue of energy needs in the northern regions of the country is so important that it also justifies high-risk upstream operations in the Gorgan Plain. Hosseini said that seismic survey covering 830km would create short-term employment first, but long-term employment would prove successful following exploration drilling operations.

Amir Kabir Rig Operation and Maintenance

Another project approved by the NIOC Board of Directors is the project for “operating and maintenance of the Amir Kabir Iran semi-submersible rig and support vessels for operation with

minimal reparation”.

Osouli referred to studies conducted by Iranian and foreign companies proving huge oil and gas in the Iranian sector of the Caspian Sea, saying NIOC, relying on such data, eyes manufacturing of equipment or drilling, exploration and support in the landlocked lake. The outcome of this national investment has been the construction of the Amir-Kabir rig, which was the largest drilling rig in the Middle East when it was built. Amir-Kabir facilitated oil discovery in the deep waters of the Sardar-e Jangal structure.

The oil discovered in Sardar-e Jangal (2 billion barrels of oil in place) has helped Iran become a proprietor of deep-water technologies and largely increased the exploration value of structures located in the Iranian sector of the Caspian Sea. That is why KEPCO dealt with the fleet management professionally, and significantly cut the costs for the maintenance and overhaul of the Amir-Kabir rig and Caspian vessels.

An Assaluyeh in North

Osouli touched on the potential of investment attraction in the Caspian Sea oil and gas sector, saying: “This area connects Central Asian and Caucasus nations to the Middle East. Other advantages of this area include appropriate economic potentialities, big market in the country and the region, young, specialized and creative human capital, huge oil and gas reserves along with easy access to high seas and being located on the main transit route of the region and cultural affinity between Iran and northern neighbors.”

Osouli said 675km of Caspian Sea coasts lay in Iran’s territory, adding that the Caspian Sea is a key energy zone, coming after the Middle East and Siberia.

“In addition to Iran’s unique features for delivering neighbors’ energy to the rest of the world, in case of successful exploration operation in the Chalous structure and the accuracy of estimates, the Iranian sector of the Caspian Sea will become the world’s new energy hub, which would have the potential to supply 20% of Europe’s energy needs. That would mean attracting major foreign investment,” he said.

According to him, Iran has the safest route for oil and gas exports with facilities such as oil and gas facilities, port facilities, refineries and oil and gas pipeline networks, is the most suitable option for gas exports to the East and West, and based on forecasts, if exploration drilling is successful in the Chalous structure, the northern version of Assaluyeh in Iran will be on its way.

It is worth mentioning that the Caspian Sea is currently one of the most important sources of crude oil and natural gas in the world and plays a very important role in supplying energy to countries around the world. The Caspian Sea, with 3 to 4 percent of proven crude oil reserves and about 6 to 7 percent of the world’s proven natural gas reserves, as well as proximity to the main consumer market, plays a very important role in the energy supply of the world. According to some studies, the Caspian Sea has the third largest oil and gas reserves in the world after the Middle East.   

The Center for World Energy Studies also conducted field estimates, stating that one-third of the world's untapped natural gas and crude oil resources is located on the Caspian Sea shores and waters.

It is also estimated that due to the privileged geographical location of this sea, some European countries, East Asia and even the United States, will meet up to 80% of their oil and gas needs from Caspian Sea resources.

As a result, the five Caspian littoral states - Iran, Azerbaijan, Kazakhstan, Russia and Turkmenistan - have redoubled their efforts in recent years to exploit these resources.

According to estimates, Iran’s geographical location allows the country to receive more energy resources from the Caspian littoral states and deliver them to customers in the Persian Gulf. That is because none of the countries adjacent to the Caspian Sea has the privileged geographical position of Iran in the transit of Caspian oil and gas.

Iran’s increased cooperation with Central and West Asian countries in the oil and gas sector is another opportunity stemming from proximity to the Caspian Sea. Enhanced cooperation increases the economic solidarity of the countries in the region and leads to Iran’s economic growth.

Exploration in Northern Iran

Recently, exploration drilling in the Hirkan Well-1 recently started in Golestan Province. According to NIOC Directorate of Exploration, after assigning the Directorate with the mission in 2017, exploration on the onshore section of the southern Caspian basin started. 

Saleh Hendi, NIOC director of exploration, has said: “Now, traditional and old processes have given way to new management tools, and new processes have been explained in accordance with the new mission.”

He added: “The new exploration plan covers the Northern provinces and according to the new procedure, the exploration processes in the north of the country will start with short-term and agile projects and will move towards megaprojects.”

“The Hirkan well is a new step in the exploratory study of the north of the country and will pave the way for further discoveries in the three Northern provinces,” he said.

Hirkan-1 Drilling

For its part, National Iranian Drilling Company (NIDC) said: “The drilling of Hirkan-1 well in the form of a drilling contract for 6 exploration wells in the late last [calendar] year was assigned to NIDC by the NIOC Directorate of Exploration.”

Ali Rafie, director of the 6 drilling projects, said: “This project involves Namavaran in Khuzestan Province, Pars Abad in Ardebil Province, Hirkan in Golestan Province and Fars Province.”

Referring to the long-term cooperation between NIDC and NIOC Directorate of Exploration for discovery of hydrocarbon deposits, he added: “Prior to this operation, drilling of Namavaran 1 and 2 had started by using two drilling rigs. Hirkan is the third well whose drilling has recently started.”

He stated that in the implementation of this project, technical and specialized services and fluids have been provided by NIDC in an integrated manner.

Petroleum Industry Innotech Park Launched

The Petroleum Industry Innotech Park, which has been established under the aegis of the Petroleum Ministry with a view to developing technology and broadening constructive cooperation between the players of innovation and technology ecosystems, has started work. The ceremony for the inauguration of the park was attended by Minister of Petroleum Bijan Zangeneh, Vice President for Science and Technology Sourena Sattari and a group of senior oil industry managers and research and technology actors.

Addressing the ceremony, Zangeneh said the Petroleum Ministry had earmarked $500 million for the revival of low-efficient or non-efficient wells to create thousands of jobs and activate startups.

He also laid emphasis on the need for enhanced oil production by Iran.

Erected on 32 hectares of land near Tehran Oil Refinery, the Innotech Park is a state-owned and non-profit entity aimed at development of technologies associated with the petroleum industry at universities, R&D institutes, private companies and market as well as facilitating the process of knowledge-based companies through incubators, accelerators and centers of innovation.

The Innotech Park is an R&D institute falling under Article 1 of Law on Permanent Directives for National Development Plans. Seeking to upgrade and deepen technology, develop the market, promote knowledge-based economy and create specialized jobs, it provides an ideal atmosphere for professional synergism between small and medium-sized technology companies, technological centers of leading companies, specialized agencies of academic and non-academic R&D entities, incubators and accelerators, venture capitalists, innovation commissioners and industrial mentors. It complements existing capacities in the scientific and technological infrastructure in the oil and gas sector.

The Innotech Park clears the way for development of constructive cooperation between technology and innovation actors in this sector and the technological companies based in this park and other parks of science and technology, as well as active technological centers in the country.

Startups Set Future for Iran

In his speech, Zangeneh said startups would be among future projects for Iran, adding: “I will try my best in favor of development of this through youths who are prospective capitals.”

Noting that entrepreneurs constituted the most important factor in the success of industrial, service and economic development in the country, the minister said: “An entrepreneur and creative mind enjoys a higher status than a manager. An entrepreneur may bring about success or failure. Generally speaking, the youths are entrepreneur and creative. Age is not important. Vision is the key Factor.”

Recalling that during his mandate as minister of petroleum he had taken some measures to help develop technology, Zangeneh said: “The most important issue is the management’s vision of technology and its development. In the first step for technological development, we held talks with prestigious universities like the Sharif University of Technology and the University of Shiraz in order to introduce upstream petroleum industry as a university discipline whose main subject is enhanced production based on enhanced recovery. We have no problem with education now and competent forces have been trained.”

Zangeneh said the following step in the development of technology in the petroleum industry was to take into consideration operational capacities. He added: “Activation of consulting engineers and manufacturers, establishment of general contractor companies, and E&P companies is the outcome of paying attention to the operational capacities which are part of technological assets in the country.”

Noting that the final step in the development of technology would be to use new ideas emerging in the world, the minister said: “I wish the idea of establishment of the Innotech Park had struck our mind three years ago. It’s late, but we did our best.”

“I plan to spend part of my future life as an expert or mentor for developing startups and technological units because it is very important for the country and the petroleum industry. Of course, there is a weak understanding of these centers,” he said.

The minister stressed that the Innotech Park had been established focusing on the demand side rather than the supply side.

$70bn in Energy Subsidies

Zangeneh said a major weakness in the country pertained to downhole services like horizontal drilling. Noting that two leading countries were active in this field in the world, he said: “The only solution having struck my mind in this regard was to upgrade small startups to grow. It would not take too much time and we can claim the top spot in the region and in Asia in 8 to 10 years.”

The minister also touched on energy efficiency plans, adding that calculations showed that $70 billion was being allocated in annual subsidy to the energy sector. Outlining the details, he said: “The domestic consumption of liquid products stands at 1.5 mb/d or 540 mb/yr. If we set an oil barrel at $65 that would amount to about $35 billion.”

“Our raw gas production stands at 300 bcm/yr. The figure would fall to 240 bcm after refining and desalination. With gas prices at 16-17 cents per cubic meters, it would amount to $37 billion,” he added.

Zangeneh stressed the need for the presence of startups in energy efficiency schemes, adding: “That would help create tens of thousands of jobs directly or indirectly. Every party – the government, manufacturers and consumers – would be beneficiary. That is just like gas supply which everyone benefited from.”

Oil Output Hike a Must

Zangeneh said the Iranian Oil Industry Ventures (IOIV) had been launched with an initial capital of IRR 1,000 billion, adding efforts were under way to raise the capital to IRR 5,000 billion.

He said the Iranian parliament had adopted legislation requiring allocation of IRR 8,000 billion to startups.

The minister said the policies instructed in 1998 required oil production hike not just for generating revenue, rather for increasing the political, economic and security power of Iran in the region.

“When we export 1 mb/d of oil while our next-door neighbor exports 10 mb/d, the balance would be disrupted. We don’t have too much time for raising our output and we have to do it very quickly. Of course, we have already laid the groundwork for that purpose and drafted reports to be used by anyone who might be interested in,” he said.

Private Investment in Research

Vice President Sattari said at the ceremony that private investment in the research sector of the petroleum industry was a must.

“We cannot expect the public sector to supply products. That is not the case anywhere in the world. Today, the private sector’s investment in research projects associated with the petroleum industry is a must,” he said.

“Wherever the private sector is to invest, we should not run research projects,” he added.

Sattari stressed that an ecosystem should be established for research development, adding that startups should provide manpower for such ecosystems.

“We need to pave the ground for startups to show their innovation. Technology companies may provide such opportunity,” he said.

€6.5mn for 2 Petro-Refineries

Ali Aqa-Mohammadi, member of the Expediency Council, underscored the necessity of development in the petroleum industry, calling for the absorption of more knowhow and technology into the oil and gas industry.

“Currently, two petro-refineries are under construction with a €6.5mn investment,” he said.

Aqa-Mohammadi said that selling oil did not mean selling raw materials. He added: “We are well aware of oil and gas production capacities in the country. Therefore, investment in the petrochemical projects of the upstream sector has been done fully and in the 7th National Development Plan, the idea is to complete the downstream sector.”

Aqa-Mohammadi went on to highlight comprehensive studies conducted in line with oil production capacity in the country, saying: “Fortunately, extensive and justified scientific research is under way by petroleum industry experts and universities. Some research estimate Iran’s oil production capacity at 6.5 mb/d while others put it at 7.4 mb/d. All estimates rely on scientific and expert work.”

“Based on these scientific findings, with an investment of $120 billion to achieve the production capacity of 7.4 mb/d, we can earn $1,500 billion. That would be the most important source of development of the petroleum industry in the future. But it should not enter the state economy,” he said.

Aqa-Mohammadi also said that the launch of the Innotech Park showed that major capacities were being formed in Iran’s petroleum industry, whose main objective would be to attract national investment. He added that development of advanced and modern technologies in the petroleum industry would lay the groundwork for a strong presence in the global markets.

Tech Companies Facility

Aidin Khatlan, director of the Innotech Park, said: “The activity of technological companies operating in the sectors related to the petroleum industry would be facilitated.”

He said it was the fourth independent organ affiliated with the Petroleum Ministry after the Research Institute of Petroleum Industry (RIPI), Petroleum University of Technology (PUT) and the Institute for International Energy Studies (IIES).

Khatlan said like the trio, the Innotech Park was owned by National Iranian Oil Company (NIOC). He added that the Board of Trustees of the park was chaired by Minister of Petroleum.

Referring to the Innotech Park’s Board of Trustees, he said it comprised four real and five legal persons nominated by the Minister of Petroleum.

“In light of the nature of the park, we have tried to name the CEOs of the largest customers of the petroleum industry technology in the Board of Trustees. Representatives of the Ministry of Science, Research and Technology as well as Plan and Budget Organization constitute the legal members,” he said.

History

Khatlan also touched on the history of formation of the Innotech Park, saying: “The idea of this park dates back to 2019. After surveys, it was located in October that year and an agreement was signed for designing the park in February 2020. In March 2020, NIOC filed a request with the Ministry of Science, Research and Technology for the establishment of the park.”

He said the permission for the establishment of the park was issued in September 2020 by the Council for Higher Education Planning. The Constitution of the Innotech Park was communicated last February, he said. Zangeneh named Khatlan as the director of the Innotech Park in November 2020.

Khatlan said parks enjoyed such legal exemptions as tax exemption, noting that it would facilitate the activity of technology companies located in the Innotech Park.

“The Innotech Park would provide up to IRR 5,000 million directly in facilities to the technological units. At higher levels, it would offer support through IOIV that had been established before the park,” he said.

He said that of 44 parks in the country, 42 were involved in technology supply and two in technology demand.

“The two parks on the demand side include ICT affiliated with the Ministry of Communications and the Innotech Park affiliated with the Petroleum Ministry. Both have been established in line for meeting technological needs,” said Khatlan.

He said technological parks would be complementary to universities and research institutes in addition to serving as a bridge connecting research and market.

“The Innotech Park belongs to the petroleum industry. In other words, one outstanding feature of this park is its affiliation with the Petroleum Ministry and NIOC. NIOC is the founding organ of the Innotech Park,” he said.

Khatlan said the Innotech Park provided a venue for introducing the technological needs of the subsidiaries of the Petroleum Ministry, the Persian Gulf Petrochemical Industries Company (PGPIC), refineries and petrochemical plants. “Helping overcome impediments to technological companies in production through removal of financing problems, granting standards, setting up reference labs, better and easier access to sampling workshops and labs top the agenda of the park.”

Khatlan said: “In the park, we believe that with patience we will be able to manufacture many products which we are now importing. Today, many clients and manufacturers have changed sanctions' threats to opportunities to boost technology, and the Innotech Park is trying to say that more youths may become active in the petroleum industry, manufacture products and upgrade the level of technology.”

5 Memorandums Signed

On the sidelines of the inauguration of the Innotech Park, five agreements were signed on technology. They were signed with Ministry of Science, Research and Technology, Isfahan Scientific and Research Park, University of Shiraz, Iran University of Science and Technology and Amir Kabir University of Technology.

The first agreement was a technological grant agreement that was signed between the Innotech Park and the Ministry of Science, Research and Technology. The agreement for the establishment of a joint college was signed between Innotech Park and Isfahan Scientific and Research Park. Three agreements on establishment of joint incubators and innovation centers were signed between the Innotech Park on one side, and University of Shiraz, Iran University of Science and Technology and Amir Kabir University of Technology, on the other.

Naft Abadan Futsal Standard-Bearer

Women’s sports and leagues in Iran were not immune to the consequences of the coronavirus pandemic. Last calendar year started with several leagues that had not been finished the year before due to the outbreak of COVID-19. However, due to unfavorable conditions, the case of all these files was closed. In the first half of last calendar year, women’s sport and leagues came to a halt due to the pandemic conditions, but it started again in the second half the league. Seven teams representing the petroleum industry were involved in the women’s section. In the light of the pandemic and the economic conditions, all of them obtained acceptable results.

The women’s basketball team of Palayesh Naft Abadan and the basketball team of Gaz Tehran ran for titles in the Women’s Basketball Pro League of Iranian Clubs. The women’s futsal team of Palayesh Naft Abadan and the women’s futsal team of Melli Haffari Ahvaz were present in the Iranian Clubs Women’s Futsal Pro League. The women’s handball team of Tasisat Darayei was present in the Iranian clubs’ pro league. The women’s handball team of Naft-o Gaz Gachsaran was present in the first league matches while the women’s football team of Palayesh Gaz Ilam was present in the Iranian clubs’ women’s football pro league matches.

The women’s oil teams participating in various competitions mainly hired young and local players. That is a step ahead in oil sports. Apart from the results of the women’s basketball team of Gaz Tehran, six other teams managed to achieve acceptable results.

Championship in Futsal

The women’s futsal league matches of Iranian clubs was the last women’s match held in the country and the Palayesh Naft Abadan team won the championship title for the second time. They were the only petroleum industry representatives to win the championship title in the women’s sports matches. The women’s futsal team of Melli Haffari Ahvaz was another representative of the petroleum industry to advance neck-to-neck with Palayesh Naft Abadan. It topped its own group to go for the finals, but it finished in fourth place. It is noteworthy that the Melli Haffari Avaz team, despite coming fourth, was instrumental in the championship of Palayesh Naft Abadan.

Basketball

In the women’s basketball super league, the petroleum industry had two representatives: Palayesh Naft Abadan and Gaz Tehran. Thanks to its head coach, Palayesh Naft Abadan made a powerful start and finished in first place in the preparatory stage. After leaving behind the playoff phase into the semi-finals, they failed to make a strong show and they suffered two failures. Finally, they finished in fourth place. The Gaz Tehran team, which claimed to be the league champion, made a very weak appearance in the past season. It had a weak presence in the playoff, and it fell to the first league. Now it has to go through a tougher road to return to the super league next season.

Handball

In handball, the petroleum industry had two representatives: One in the pro league and one in the first league: Tasisat Darayei, one of the top teams, had always been among the top four in the first league of Iranian clubs. In the last season, it finished in fourth place. The Tasisat Daryaei team finished in second place in its own group to go to the final matches, but it suffered two defeats. However, the Naft-o- Gaz Gachsaran handball team, present in the first league, did not get a title better than fourth place. It hired local and young players to return to the super league. In the group matches’ stage, it finished second and found its way into the semifinals, but it was defeated twice and it finished in fourth place.

Football

The women’s football team of Palayesh Gaz was the seventh oil team taking part in the championship matches. The women’s team of Palayesh Gaz Ilam was participating with a local and young lineup. It had to face the champion and runner-up of the previous round. Finally, it finished in third place after scoring 18 points. But the score and third place position was not enough for the semi-finals and finals.

Given the results obtained by women’s teams representing the petroleum industry in sports matches in the last season, it could be argued that they had a successful year and they were a source of honor and pride for the petroleum sector’s sport activities. These women showed that they would go ahead in parallel with men, and they even outdo them in some disciplines. In a year when only one of men’s teams became champion in the super league level due to the high number of men’s teams (Pars Jonoubi), women did an excellent job.

Iran Petroleum Industry Book Review

(Part I)

The present piece of writing reviews major books written on the history of Iran’s petroleum industry.  

From Tehran to Caracas

This two-volume book compiles memories of Manouchehr Farmanfarmayan, one of the first graduates of petroleum engineering in Iran. What specifically makes this book interesting is that Farmanfarmayan is not only a historian outside Iran’s petroleum industry, but also he relates the story of oil in Iran from the viewpoint of a spectator.

Due to the numerous posts he held at Iran’s petroleum industry in Pahlavi era, the author has recounted his memories in extended details. Among books written on the history of oil, rarely is found a book containing memories. That is an outstanding feature of "From Caracas to Tehran". The book familiarizes readers with lots of details on the petroleum industry’s economic and political developments dating from the Pahlavi era. Farmanfarmayan held three key posts under the Pahlavi regime: head of Oil and Concessions Administration, deputy head of National Iranian Oil Company (NIOC) for sales, Board member at International Petroleum Consortium.

From Petroleum to Story

It is common knowledge that the story of oil in Iran and the emergence of the petroleum industry pertains to southern Iran, specifically Masjid Soleyman. Today, National Iranian South Oil Company (NISOC) is the largest producer of oil in Iran. The heart of Iran’s petroleum industry is beating in NISOC-run areas. Discovery of oil and development and expansion of associated industries did not have specifically technological impacts; rather it left widespread social, cultural and artistic impacts on southern and southwestern Iran. Authored by Shabnam Hatampour, From Petroleum to Story highlights a key aspect of the impact of the petroleum industry on the culture and art of NISOC-run areas. With a historical and analytical view, the book seeks to show how writers from southern Iran have described oil. Although it pertains to storytelling, the book offers a historical view of oil storytelling in southern Iran. This book would be attractive to story lovers.

Mr. Rahbar

Gholam-Reza Rahbar was a journalist, reporter, documentary writer and host at Abadan National Oil Radio. Qassem Hosseini has sought to offer a collection of memories of colleagues of Rahbar. The highly interesting point about Mr. Rahbar is that the history of the petroleum industry is visible between the lines of memories. The book recounts the history of the petroleum industry based on what was told by those involved in it. The details of this history have been related precisely and technically. The book familiarizes readers with the world of petroleum industry staff and one of the most renowned martyred employees of the petroleum industry in the country. In describing collection of memories, the author puts it as follows: “In order to preserve the historical continuity, I have tried to put together the memories chronologically in a bid to offer a linear account of Gholam Reza Rahbar, from life to martyrdom. Some of these memories were undated. I managed to discover the date of some of memories based on the context; however, some memories remained undated. In the final edition, I sought to match them.”

Failed Reformism

The book "Failed Reformism; Theoretical Analysis of National Oil Movement and Mossadeq Democratic Government" has been authored by Abbas Naeimi. The historical-analytical book focuses on the views of Dr Mossadeq and his administration officials. While talking into account facts and events, this book seeks to examine and analyze the method of governance, as well as socio-political actions of Mossadeq and his allies from the viewpoint of history of thinking. Although the author properly concludes that Mossadeq’s movement failed to reform social and economic affairs of the country under Pahlavi II, the main issue in the book is its proper knowledge and perception of this failure. It focuses more than the actions and reactions of influential forces in the oil nationalization movement than the circumstances and personalities of influential persons involved in the movement. The book provides significant analyses whose study would offer an analytical and intellectual history. At first glance it may sound boring, but as you go ahead you will see the deeper layers of a period of Iran’s history.

Firefighters, Unregistered Soldiers

The book of oral history has sought to offer an account of the activity of firefighters working in NISOC-run regions to display the chronology of the presence of these forces in Iran’s petroleum industry in various periods. Oil firefighters have registered memorable periods in history. Those interested in learning about their activities are recommended to read the book to learn about sweet and bitter memories. The book’s overleaf reads: “The book is categorized under the Iranian petroleum industry’s oil history. Nasser Sa'di, former head of the Department of Safety and Firefighting of Gachsaran Oil and Gas Production Company, relates his memories and experiences in three sections: The first section contains memories about the presence of foreign companies in Iran up to the time of Islamic Revolution; the second section covers the era starting from the Imposed War to post-war reconstruction; and the third section is about the post-war events until 2011.”

Oil Strikes and Islamic Revolution

In the run-up to the 1979 Islamic Revolution, a highly significant event was instrumental in the victory of the national revolt. Iranian oil industry strikes were such influential on the Islamic Revolution developments that they disrupted all calculations of the Pahlavi dynasty and its international backers. Printed by the Islamic Revolution Documents Center, "Oil Strikes and Islamic Revolution" is a valuable collection of documents and correspondence of that period and that big event. The book describes chronologically the strike by Iranian oil industry staff. The regime’s reactions at the local and central levels have been also explained. The book is specifically recommended to those interested in history. Some letters and documents are such interesting that the reader would have the impression of watching a documentary.